April 9, 2008, 12:00 AM

Internet merchants turn to analytics to help boost conversion rates

Online merchants are reporting lower conversion rates as online shopping matures and a recession looms, according to E-Tailing Group ‘s 7th Annual Merchant Survey of more than 200 merchants in the first quarter of 2008.

Online merchants are reporting lower conversion rates as online shopping matures and a recession looms, according to E-Tailing Group ‘s 7th Annual Merchant Survey of more than 200 merchants in the first quarter of 2008. To combat the trend, more are using analytics to better market themselves to potential customers.

11% of the merchants surveyed report conversion rates of less than 1% in 2008, up from 7% who reported conversions in this range last year. The largest share, 37%, report conversion rates of 1% to 2.9% in 2008, up from 36% last year, while 23% report conversion rates between 3% and 4.9% for 2008, down from the 26% that reported conversions in that range last year.

Merchants are putting more data behind efforts to grow business, using tactics such as behavior-based marketing driven by analytics to better target customers, the study shows. Specifically, merchants were asked to list, in order, the three areas in which leveraging analytic data is most important. Conversion was listed in the top three by the largest share of merchants, 46%; followed by shopping cart abandonment, 41%; and search marketing efforts, 40%.

Web site merchandising features considered most valuable by merchants are keyword search, ranked very valuable to somewhat valuable by 94% of those responding; sales or specials, 90%; and cross-selling, 89%. Promotional incentives are rated very valuable or somewhat valuable by more merchants this year – 71% compared to 66% last year – as were online outlets, which are viewed as valuable by 50% of merchants this year compared to 46% last year.

Some promotional features declined in terms of their presence on sites. These include limited-hour sales, used by 49% of sites this year compared to 56% in 2007; and contests, implemented on 64% of sites compared to 69% last year. Conditional free shipping is available on 85% of sites this year compared to 88% a year earlier; the presence of unconditional free shipping is lower this year: 64% this year versus 88% last year.

Among product and content features, the survey found also found that ratings and reviews are continue their upward climb in terms of perceived value among merchants as well as site presence. Ratings and reviews are rated very valuable to somewhat valuable by 57% of merchants compared to 48% last year, and are present on 62% of sites queried, compared to 54% a year ago. . E-Tailing Group president Lauren Freedman is speaking at the Internet Retailer Conference & Exhibition, June 9-12 in Chicago, in a session entitled Web site design spotlight: Live, on-the-spot critique of retailers` sites.

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