November 6, 2003, 12:00 AM

Larger e-retailers achieve profits but lag in site merchandising

Just 14% of the $10 million-plus retailers surveyed offer personalized recommendations versus 22% of all sites, Forrester finds. Big retailers that don’t buff up site merchandising practices could risk losing share to smaller, scrappier competitors.


Online retailers are now likely to be in the black – of 130 reviewed by Forrester Research Inc. recently, 70% reported profitability. But while some of the biggest among these may lead on financial metrics, many are lagging on other web site performance benchmarks relating to merchandising and marketing, according to Forrester.

These big, established online retailers could lift sales even higher with further fine-tuning of merchandising tactics on their sites, Forrester concluded after examining merchandising practices on the sites of two dozen e-retailers having online revenues of greater than $10 million. While they’re doing many things right to boost conversions--91% display related products on product detail pages, and 75% feature a top-seller section--opportunities exist in other areas, Forrester found. For example, just 14% of the larger retailers surveyed offer personalized product recommendations on their sites, versus 22% of all retailers surveyed. Only 45% of the larger retailers offered zoom compared with 49% of all retailers; and just 27% featured customer ratings and reviews versus 39% of all retailers.

“These retailers must step up cross selling efforts,” Forrester says. Successful personalized cross-sell recommendations will blend art--what merchandisers know from experience works--with science--what technology can reveal, such as an item left on a wish list, Forrester says. Larger retailers that don’t buff up merchandising functionality on their sites “run the risk of falling behind and allowing smaller, scrappier competitors to threaten their market share and online sales leads,” says the research firm.


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