In its second-largest acquisition, Amazon buys the company for $970 million.
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When shopping for clothes in a store, notes Fry, consumers will see a display of shirts near displays of coordinated pants and sweaters, then take a bunch to a checkout stand to buy them, perhaps picking up an impulse item like a belt displayed near the cash register. Now apparel web sites designed with more innovative merchandising-enabled by software that allows retailers to display more images and information on a single page, without forcing shoppers to click and wait-will have a more store-like experience. “In apparel sites, we’ll see more wardrobe opportunities that let shoppers put several products in a contextual fashion,” Fry says.
A fourth-quarter 2005 study of 100 online merchants by The E-Tailing Group Inc. showed several year-over-year increases in the percent of deployment of rich media applications. Displaying alternate views of products showed the sharpest increase, growing to 48% from 21% (see box, p. 27).
Broadband-supported development tools like Dynamic HTML, AJAX, Rich Internet Applications and Macromedia Flash 7 are creating eye-catching new shopping features that work faster and more smoothly than anything seen before, thanks to the way they process applications. Instead of requiring a user to click an image or button on a computer screen to request an image or software process from a distant network server-causing the user to wait for the requested image or process-the new development tools and applications are designed so that most of their software processing sits in a consumer’s web browser, with partial amounts of supplementary data that can be quickly pulled from another server when necessary. That’s basically what happens when someone uses Google Earth, experts say, and the same principle applies to rotating product presentations, product configurators, and new-age shopping carts-the goal in each case to make the online shopping experience more like real life.
Joe Chung, a founder and former CEO of leading e-commerce technology provider Art Technology Group, recently founded web tools developer Allurent Inc. to do just that-building rich media applications like online shopping carts that are easier for shoppers to use as well as simpler for retailers to use as merchandising tools.
The online shopping cart is an ideal use for the latest in Internet applications, Chung says. When he was looking for a way to apply cutting-edge Rich Internet Application technology after having retired from ATG, he and his colleagues brainstormed about which industry could best benefit from an improved customer experience. “It was obvious that it was retail,” he says. “It wasn’t too much of a leap to get from the broadband revolution to online retail, where we can deliver a better customer experience for an immediate ROI.”
Indeed, the aggressive growth alone of large retailers is pushing more development of rich media, and some product suppliers are beginning to show a willingness to help foot the bill because they see the potential to sell more goods. “In some cases, product suppliers are paying for new product images because of what the new technology can do,” says Duff of REI.
The fact that many retailers have finally hit their stride in producing large profits is also driving up interest in rich Internet applications, Chung says. “Show me another industry whose top 100 players are doing $40 billion and growing 20% or more a year,” he says.
Defining a strategy
While choosing which forms of broadband-supported features to dress up a web strategy, retailers need to define how it fits into their customer-serving strategy, experts say. “You have to ask first, who’s your customer,” says Lauren Freedman, president of The E-Tailing Group. “If you have rich media, make sure it’s intriguing and easy for a shopper to use.”
BordersGifts.com, for instance, was designed to extend the atmosphere and forte of its stores into an online experience that, in turn, drives more traffic into its stores as well as its e-commerce site. With its stores known as informative places to shop, with experts on hand to suggest books and CDs, the retailer’s BordersGifts.com and its Season of Surprises gift finder were designed to offer the same-and more online. “We understand the passion people have when they read books, so we try to incorporate our ability to entertain and advise on BordersGifts.com in a spirited way,” Tam says.
The success of BordersGifts.com is crucial to Borders, which years ago forfeited a major direct e-commerce presence. Its e-commerce sales are all conducted through Amazon.com and accounted for less than 1% of Borders’ total 2004 revenue of $3.9 billion, according to the retailer’s financial statement. Indeed, analysts have criticized Borders for losing out on sales of music CDs, which industrywide are moving online but still take up valuable floor space in Borders stores.
It’s no surprise, then, that Borders put a lot of thought and effort into developing BordersGifts.com and its Season of Surprises gift finder, which sit on Borders’ own servers instead of Amazon’s-though they link to Borders.com on Amazon’s platform when a visitor wants to make an online purchase.
BordersGifts.com functions as a typical merchandising site, though with a series of changing home page photographic images to illustrate a special feature running in its stores-the pop-up story books of Robert Sabuda, for example. The biggest online differentiator for Borders, however, is its Season of Surprises gift finder, Tam says. Developed by a team of Borders’ own experts on books and music CDs, and New York site design firm Firstborn Multimedia Corp., it offers a playful, interactive tool that lets a visitor build a profile of a friend or relative based on the recipient’s interests, then receive a list of suggested books, movie DVDs and music CDs.
Spirited and engaging