The e-retailer heads into the holiday shopping season behind a 30% increase in fulfillment spending and a widening net loss. North American sales increased ...
As consumers` use of high-speed Internet access spreads, retailers make their sites do more.
If only Boo.com were still around. The once snazzy online apparel retailer, whose animated Ms. Boo greeted visitors with shopping tips, tried to wow shoppers with futuristic technology before dying an early death, having blown hundreds of millions of dollars on a site few consumers could appreciate.
But that was five years ago, when consumers accessed the web on dial-up connections and waited-and waited-for Ms. Boo and other such pages at other sites to load.
Today things are different. Just listen to an avatar talking head on Chrysler.com, step into the shoe configurator launched last month at Reebok International Ltd.’s RBKCustom.com, or zip through the latest “Season of Surprises” book, DVD and music CD gift finder at Borders Group Inc.’s BordersGifts.com. With more consumers using broadband connections to access the web in seconds, at a fraction of dial-up speed, retailers like these are not only wowing shoppers with new features but also showing results in higher sales and conversion rates.
“The capabilities of the Internet have never been as good as they are now,” says Michael Tam, senior vice president of marketing and the top e-commerce executive at Borders Group, noting that the Season of Surprises gift finder has boosted traffic from throughout the world to BordersGifts.com and brought a “significant uplift” in store as well as online sales. “Now we’re primed to take advantage of the Internet because of the capabilities of broadband and rich media technologies. We see the Internet now as a really important means for us to differentiate Borders going forward.”
Indeed, the broadband environment is a watershed in the evolution of the Internet that has the potential to put a gulf between leading retailers and their less innovative competition, experts say. Although there’s still a risk that retailers could push the broadband envelope too far and alienate customers with confusing or useless features, broadband and the technology it supports are offering retailers the opportunity to charge ahead of their less forward-looking rivals. “If retailers do it right, this will absolutely help them leapfrog the competition,” says Sucharita Mulpuru, senior analyst in the consumer goods and retail practice at Forrester Research Inc.
The boom in broadband
The revolution is being driven by in-home broadband Internet access: In 2005, the proportion of online households accessing the Internet via broadband reached 51% and that number will balloon to 79% within two years, according to Forrester Research, which based its findings on a survey of nearly 70,000 households for its 2005 report, The State of Consumers and Technology Benchmark.
Other projections are even higher. eMarketer Inc., using sources including the U.S. Department of Commerce and Internet access providers, figures that 50% of U.S. online households used broadband in 2004, and estimates broadband’s share at 59% in 2005 and 84% by 2008.
Researchers can differ on the actual extent of broadband, but no one doubts that it presents retailers with a new set of opportunities as well as challenges. The opportunities go beyond whiz-bang web pages featuring cutting-edge merchandising displays. Rich media applications like Gap Inc.’s new interactive “quick look” merchandising pages and shopping cart-which let shoppers expand product information or add to their carts without leaving the page they’re on-or the new engagement ring configurator on Borsheims.com may be the most noticeable effects of broadband.
But there are several other broadband-driven developments that are having an impact on marketing strategies and consumer shopping behavior as well as online merchandising. Altogether, these developments are thrusting online retailers into a new environment where they can interact with consumers in more ways and more often than most merchants had ever thought possible. “Communicating with customers on the Internet is becoming more important,” Tam says. “The spread of broadband allows us a way to communicate with them in an engaging way.”
Borders and other retailers now send e-mail marketing messages imbedded with rich media images, audio and video clips, or they stream constant product updates to consumers’ desktops through really simple syndication, or RSS. And though RSS itself doesn’t need broadband to be distributed, broadband’s always-on capability makes it more likely that RSS messages will be seen by their targeted audiences.
Retailers can no longer ignore the opportunities and challenges broadband is placing on them, experts say. Rich media and other broadband-enabled applications, they add, are no longer just extra fluff to dazzle a highly targeted group of shoppers, but, rather, are features that more than half of online consumers expect. “We used to say that these were good things to aim at a broadband customer,” says David Fry, president of web site technology and design firm Fry Inc. “Now we say these are things that most if not all customers will expect. Broadband is effectively your customer base.”
Until recently, most web sites that have been using broadband-supported technology to its fullest have been outside of the retail industry, Fry adds. “The cool stuff happening on the Internet by and large has not been happening in retail,” he says. “It’s been on Google and social networking sites like MySpace.com.” Google has its cutting-edge “Earth” and “Local” mapping services that let users scroll around the world in an unending series of map impressions, and MySpace offers access to multiple media from a single profile page of one of its members.
But more retailers are getting on board with broadband-supported features, and Fry and other site developers note that 2006 should see a more aggressive move into rich media and other technologies and strategies designed to enrich the online shopping experience and communicate with consumers more broadly and effectively.
Although many retailers are not ready to announce their plans, a common strategy in the works is to give online shopping more of the real-life experience of shopping in a store, experts say.
“We have aggressive plans to enrich our entire shopping experience, with a lot of enlivened product presentations in 2006,” says Mark Duff, director of web strategy at outdoor sports and apparel retailer Recreational Equipment Inc., which is working with Bothell, Wash.-based site developers Heck Yes Productions, whose web site, HeckYes.com, shows a demo of a backpack that can be zoomed, rotated and opened all in one movement of a computer mouse. “With 360-degree-view technologies, shoppers will be able to turn our canoes around and see the ribbing inside,” Duff says.