April 4, 2006, 12:00 AM

Merchandising topping e-retailers’ to-do lists as online retail matures

As the online market matures, it’s harder to boost revenue. Merchandising moves to the forefront as e-retailers look for what features will make customers buy, The E-Tailing Group’s 5th Annual Merchant Survey finds.

Online merchandising is the top site improvement initiative planned by e-retailers this year, according to results of the Fifth Annual Merchant Survey by The e-Tailing Group, with 75% of those survyed citing it in their plans for the year versus 71% who mentioned it on last year’s survey.

 

“The online channel is now truly established, often growing at a faster rate than either catalog or store channels,” says Lauren Freedman, E-Tailing Group president. “Merchandising is at the forefront as features are assessed to figure out what will engage customers to buy.”

E-mail marketing ranks almost as high in the survyed merchants` plans for this year, with 74% saying they are looking at more targeted e-mail programs this year, versus 76% who said so last year. Content development is also on merchants` minds, with 50% saying it was in their plans for 2006 versus only 33% who cited it in last year’s survey. Plans for enhancing customer service were up, cited by 36% of merchants this year versus 30% last year; interest also has increased in tools that automate functionality, cited by 30% of those surveyed this year versus 20% last year. 14% say they’re planning a live chat initiative for 2006, versus only 7% who cited this feature last year.

 

The survey also determined that conversion rates are on the rise. 21% of those survyed this year report conversion rates in the 3% to 4% range, versus 15% who said they were in this range last year. While the majority of online merchants surveyed are still on the lower end of the spectrum, merchants reporting conversion rates between 8% and 15% have doubled -- 12% versus 6% since last year’s survey.

Traditional online merchandising features remain well-regarded by merchants, with 94% of those survyed rating keyword search as very valuable to somewhat valuable, versus 91% who said so last year; and sales and specials cited by 92%, versus 90% last year. 91% of merchants rated cross-sells as a very valuable to somewhat valuable tactic, versus 84% last year.

Promotional tactics rated as valuable by merchants included coupons and rebates, cited by 73% this year versus 67% last year; limited hour promotions, cited by 33% this year versus 24% last year; and online outlets, a new metric in this year’s survey, cited as valuable by 47%.

Given the maturation of online shopping, Freedman notes, metrics are more stable with few radical shifts. Nevertheless, she advises, “Merchants should not be impatient as growth slows, but methodically continue to improve the customer experience based on analytics while running their businesses smartly.”

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