In its second-largest acquisition, Amazon buys the company for $970 million.
(Page 2 of 2)
Justifying the cost involves not only whether the site is experiencing increased conversion rates, but also whether the technology increases the average order value or prompts more offline sales. Thus retailers must be able to measure the right metrics before they will know if new search technology has created a payback. “This technology can pay back the initial investment easily,” Berk says. “But you have to be in a position to do the proper cost/benefit analysis.”
Nonetheless, the market may be turning around, site search vendors say. “We’re seeing the beginnings of a revival,” Damianakis says. “People are a lot more interested in what’s out there than they were before.”
In settling on site search technology, retailers need to determine first if the search-and-navigation function makes sense to their goals and how important robust spell-correction technology is. “If you have a lot of named products, like books and CDs, spell correction is very important,” Manning says. “If you’re selling apparel, it’s probably less so. Most people know how to spell ‘turtleneck.’”
Putting it through the paces
A retailer who decides on the navigation function must make sure that the appropriate data are in a relational database and, if the data are in more than one database, that the search technology can work across multiple databases.
Next, the retailer needs to put the technology through a test by actual users to make sure they can easily set the business parameters that will guide search results. “Retailers can’t be in a position of asking their IT department to get ready for a sale this weekend and have the IT manager say, ‘We’re busy, but we can get to it first thing on Monday,’” Manning says. Therefore, non-technical business people must be able to access the software and easily make changes. “The interface should make sense to the average person,” he says.
Further, retailers need to weigh the value of search and browse vs. better search results, Damianakis urges. “Is navigation a fad or will it produce numbers?” he asks. “Any retailer who is going to use it has to ask if it will help end users and thus help revenues.”
Whichever approach retailers choose, however, the focus needs to be on the return, Berk says, and that return should be calculated across channels. “You should be able to do a cost/benefit analysis and you should do it on the basis of influencing sales, whether they’re online or offline,” Berk says.