In its second-largest acquisition, Amazon buys the company for $970 million.
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ShoeMall.com, part of Mason Companies Inc., took a slightly different route to site personalization and rolled it into a web site redesign. The redesign was led by Fry Inc. and site personalization was a byproduct of that effort, says Adrienne Hartman, Internet director. Web analytics and data mining tools are new to ShoeMall, but will help the company bond with customers.
“Site personalization was a new arena for us,” she says. “We knew some of the basic information about our customers, such as order history, but we looked to Fry for assistance.”
Walking into a shoe site
ShoeMall.com’s redesigned site launched in September 2006 and the retailer now can show targeted content based on a customer’s prior experience on the site. Fry offered options such as defining walk-in vs. registered shoppers and presenting specific products or product groups from a shopping cart or wish list. ShoeMall is determining how many of the targeted content tools it will deploy and plans to begin testing all of them once it has fully implemented web analytics technology, Hartman says. For example, using the site manager tool from Fry, first-time shoppers will see a generic home page. But returning customers are greeted by name and can see their favorite shoe styles based on past views and purchases.
In the five months since the site personalization feature rolled out, the company has received positive feedback, Hartman notes. “Customers like the fact they don’t have to log back in and they can see their order history,” she says. The latter point is important because some shoppers reorder the same shoe style regularly.
E-retailers have different specific reasons for pursuing web site personalization technology, but cementing ties with the customer is the focus. Higher conversion rates follow if the customer gets the impression of being treated like an individual, experts say.
Determining how to measure the effects of deploying personalization tools often outweighs the challenge of deciding what technology to use, says Darryl Gehly, executive vice president at Molecular Inc., a web technology consulting and implementation firm. “The biggest challenge is to truly understand what the e-retailer hopes to achieve with the tools,” he says. “Often the premise for developing or buying tools isn’t sound, such as ‘because everyone is doing it.’ And without true metrics in place they will have a hard time deciding if it is beneficial.”
Due Maternity has decided that the investment in personalization has been beneficial. It attributes multiple gains to its site personalization efforts, led by a sales increase of about 30% over 2005. “We also made great gains in web community members,” DiPadova says. “We can reach out to more than 50,000.” Due Maternity community members get special offers and weekly deals on the site and via e-mail. The apparel featured in the offers, such as a $20 discount on a $98 outfit, usually sells out before non-members ever see it, he adds.
DiPadova notes that the site personalization technology cost $30,000 to $40,000 and includes most of the site design work and back-end programming.
Building the technology in-house meant considerable savings for Due Maternity. DiPadova, whose background includes digital media development, estimates it could have cost at least $100,000 “just to get set up. And I recently talked to a company that would have recreated what we have for $200,000,” he says.
One drawback to self-developing site personalization technology is that it can take longer to implement than if a retailer were to contract with a third party. DiPadova estimates his system could have been installed in half the six months it ended up taking. “But our budget and the time it would take finding someone capable of doing it limited our options,” he says. “Due Maternity has grown organically from the start. We took revenue we had on-hand when we launched and have moved along as fast as we could with the resources we had.”
E-retailers don’t have to spend a lot of money on site personalization tools if their underlying system architecture is sound, says Gehly, the consultant. Today’s service-oriented architecture enables site developers to place data on a page based on the type of data. Most e-retailers who are building new sites are using service-oriented platforms, Gehly says. But some still are using older three-tier technology and it limits what they can do with personalization. “It’s easier and less expensive to present information, such as products viewed and purchased when it’s in a service-oriented environment,” Gehly says.
While cost factors are relative, smaller retailers-those selling $10 million to $50 million via e-commerce-need to make a commitment to technology, Gehly advises. “They have to place their bets,” he says. “It’s clear e-commerce is going to continue to grow. If they are going to be in the e-retail space, they’re going to have to bite the bullet.”
Know what you want
But the key is to understand the desired outcome, more so than selecting the technology. “If you want a site that allows you to personalize content, you have to look at the revenue you are driving through the online channel and what kind of ROI you would get by adding personalization,” Gehly says. “If a retailer is generating $5 million through the online channel, what’s the incremental gain from adding personalized content? The real expense is in the diligence of execution.”
For instance, Jeffers, which operates JeffersPet.com, wants site personalization to yield conversion rate and sales increases, says Ide, the director of e-commerce. But the online pet supply retailer knows there’s a step between deploying technology and logging revenue.
Jeffers is working with InterCerve Inc.’s nTarget site and e-mail personalization technology. The software greets customers by name, presents past purchases and suggests other products based on previous visit registration and log-in. The personalization technology rolled out in February with a customized e-mail campaign. The e-mails generated $100,000 in sales on the day after it debuted-a company record, Ide reports.