November 30, 2004, 12:00 AM

Mass Merchants / Department Stores: Winning by leveraging more of what the web can do

(Page 3 of 5)

Office Depot Inc.`s OfficeDepot.com is one of those retail sites that consistently and quietly delivers, year after year. This is its fourth appearance in the Internet Retailer Top 50, a record exceeded only by the six appearances by Amazon and Lands` End. "Their web site shows that they really understand their audience," says Heather Dougherty, senior analyst with researchers Nielsen/NetRatings.

With sales in 2003 of $2.6 billion, Office Depot is No. 3 in Internet Retailer`s Top 300 Guide to online retailers. But the success of OfficeDepot.com is measured in more than sales--it`s also measured in how it has changed the relationship with the customer, says Monica Luechtefeld, executive vice president of e-commerce. For instance, 15% of communications with large customers has moved from phone to e-mail as has 30% with small customers. "That`s a huge behavior shift," she says.

That in itself raises other challenges that Office Depot is addressing, such as hiring the right contact center staff to handle written communications and finding ways to make sure that answers are prompt and thorough.

In content, Office Depot has beefed up its site in the past year with improved search functionality--"Search will always be big; we will continue to invest in search," Luechtefeld says--and has improved customers` ability to serve themselves. For one thing, it has developed in-house technology to help customers configure computers online. And it has taken that capability to the stores with web-enabled kiosks. As a result, Office Depot`s customer-configured PC sales both online and in stores have tripled.

It also has developed a search technology that helps customers narrow down their choices from hundreds to a few. "If a customer enters a generic word like `printers,` it`s not helpful to give them hundreds of results," Luechtefeld says. "So you ask them some simple questions like What do you print? Do you use a lot of color? Do you want high volume or low volume? and so on. By asking relevant questions in a language they understand, you narrow their search." The goal: provide four to eight options in the customer`s price range.

"They know who their customers are and they provide them with the tools to make decisions," Dougherty says.

Office Depot Inc.
2200 Old Germantwon Road Delray Beach, FL 33445
Date Launched
January 1998
Unique visitors (monthly)
3,425,000*
Annual Web-Based Sales
$3,000,000,000 (2004 est.)
Vendor Relationships
Site Design
Verso, In-house
E-Commerce Platform
NA
Web Hosting
NA
Site Search
In-house
Content Management
In-house
Order Management
In-house
Payment Processor
Midwest Payment Systems, CCS, American Express
Fulfillment
WMS
Affiliate Marketing Management
LinkShare

E-Mail Marketing
XactMail
Web Analytics
Coremetrics, WebTrends, Keynote


Rich Media
Scene7

*comScore Networks report, October 2004


Overstock.com
Beyond surplus

What began as a means to liquidate merchandise from bankrupt e-commerce companies during the Internet bust has evolved into not only a strong online vehicle for selling surplus goods, but also a new player in the online sales of books and CDs and in the online auction business.

This fall, during its first month in the auction business, Overstock.com managed 25,000 auctions and moved into the number-three spot in the online auction business. That is in addition to its discount retail business that sells more than 50,000 products.

Meanwhile, Overstock is pursuing Amazon and other top online book companies by offering a full line of book titles at what the company claims is 15% below the price of Amazon.com.

"We are pushing price and customer service," says Patrick Byrne, president. "We make it easy for shoppers to call us with questions and our prices are typically a lot lower than Amazon."

The attention to customer service is paying off. In a recent American Customer Satisfaction Index rating, Overstock got the highest first-time score ever, putting it among the top five online retailers and put it ahead of every brick-and-mortar retailer surveyed.

Besides getting into new businesses, Overstock is also hot on new services. It recently launched Club O, a loyalty program in which shoppers pay $29 per year and get 5% discounts on purchases and free shipping. It also has Club O Gold, for the b2b market in which companies pay $99 per year and get discounts between 25% and 30%.

The low prices and aggressive marketing are what many believe sets Overstock apart. "This company has clearly done a good job growing revenue, in bringing people to the site and in moving merchandise," says Derek Brown, analyst with San Francisco-based Pacific Growth Equities.

It remains to be seen whether that success in selling discounted merchandise will translate into success in the new ventures. "There will be some hits and some misses," says Brown.

To get consumers to its site, Overstock relies on both online ads and mass-media marketing. "About 75% of our advertising is done online and we`re not afraid to pay for performance," Byrne says.

Overstock.com Inc.
6322 S. 30000 East Suite 100 Salt Lake City, UT 64121
Date Launched
June 1999
Unique visitors (monthly)
10,000 000
Annual Web-Based Sales
$294,000,000 (2003)
Vendor Relationships
Site Design
In-house
E-Commerce Platform
Vcommerce

Web Hosting
In-house
Site Search
Endeca Technologies
Content Management
In-house
Order Management
In-house
Payment Processor\
Cybersource, PayPal, Bill Me Later

Fulfillment
HighJump, In-house
Affiliate Marketing Management
LinkShare

Search Engine Management
In-house
E-Mail Marketing
In-house
CRM
In-house
Web Analytics
In-house
Content Delivery Network
In-house/Akamai Technologies


Sears.com
Leveraging Lands` End
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