September 18, 2007, 12:00 AM

Online retailers plan major investments in improved web site design

Internet retailers are focused on improving their web sites, with 88% planning to upgrade product pages and 80% planning to add alternative images, according to the second part of the annual State of Retailing Online report released today.

Internet retailers have ambitious plans for improving their web sites, according to the second part of the annual State of Retailing Online report released today by Shop.org and Forrester Research.

88% of the 150 retailers responding to the survey have prioritized improving product detail pages, 80% adding online images and 76% A/B testing of offers and promotions. In fact, 14 types of web site improvements were rated investment priorities by more than half of the merchants participating in the survey.

“Today’s online shopper is extremely web-savvy and expects more than ever, forcing retailers to raises the stakes,” says Scott Silverman, executive director of Shop.org, the online retailer trade group that is part of the National Retail Federation. “Companies are investing in new features that will keep customers coming back, and home pages everywhere are getting a major facelift.”

The report released today focused on marketing, web site features and multi-channel strategies. Other findings include:

  • E-mailing to a retailer’s own list was the top marketing tactic, used by 91% of retailers, and 88% calling it an increased priority this year. Pay-per-click advertising was the next most common tactic at 88%, followed by affiliate marketing at 67%, comparison shopping engines at 56% and search engine optimization at 51%.
  • Search engines remained the top source of online customers last year, at 30%, but that was down from 36% in 2005. Affiliate programs, comparison shopping engines, e-mail campaigns and portals all showed small gains.
  • The average retailer in the survey purchases 32,970 search terms for advertising purposes and pays an average of 92 cents per click on those ads.
  • 80% of retailers say they offer free shipping under certain conditions and 71% say they will use that tactic more often this year. 67% say they will offer a gift with purchase more often this year; 63% did so last year.
  • 27% of retailers offer live chat, and 33% rated it an investment priority for this year. 58% rated zoom as an investment priority and 51% streaming video clips or podcasts.
  • 13% of customers who started as store shoppers now shop mainly via the web, the retailers report. 42% of online customers also shop at another one of the retailer’s channels. The average annual spend of a multichannel customer is $466, versus $313 for a customer who uses only one channel.
  • Retailers estimate 27% of offline sales are influenced by the web, up from 22% in last year’s survey.
  • 66% of retailers say they measure a catalog’s success by how it increases web sales.

    The first part of the State of Retailing Online 2007 study, released earlier in the year, included a forecast of online sales and reported on profitability and the organizational structure of online retailers.

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