May 2, 2008, 12:00 AM

Raising the Stakes

(Page 2 of 4)

That helps explain the broad response to video from all types of web shoppers. FirstStreetOnline.com, which sells gifts, gadgets and household products aimed at older consumers, last year introduced a weekly video called FirstStreetReports in which a mature man provides non-technical explanations of products First Street sells. Sales and conversion rates on those products went up by double-digit percentages, says Mark Gordon, president and CEO.

Targeting a different demographic, affluent women in their 40s, Saks Direct, the online arm of tony department store Saks Fifth Avenue, realized enough of a sales lift from introducing video interviews with fashion designers last year that Saks.com launched in March a video catalog of 17 ensembles. All the items can be purchased by clicking on the “shop this look” link next to the video window.

Retailers are also making use of other rich media products, such as three-dimensional views of products that allow consumers to view items from all sides. Improvement Direct has in the past year created such 3-D views of more than 3,000 of its best-selling products, boosting conversion rates 20-30%, says Christian Friedland, CEO.

Zoom is a highly valued feature, rated somewhat or very important by 86% of online shoppers with broadband connections, according to a Netpop survey. Zoom is especially important in the clothing & accessories and décor & home improvement categories, Netpop says.

Aiming to provide ready answers to customers’ questions, StylinTrucks.com, the truck accessory retailer, has integrated videos, how-to articles and Frequently Asked Questions pages into site search, and added product reviews. That’s increased the time visitors spend on the site by at least 10%, Bielewicz says.

Customers create content

For Newegg.com, which launched in 2001 as a site primarily selling computer components to video game players, informational content on the site comes largely from customers themselves who post product reviews and ask and answer questions on the site’s community forum. “People will ask, ‘What’s in your system? What graphics card did you use? What power supply? These guys love to talk to each other,” says Bernard Luthi, vice president of merchandising at Newegg.

As evidence, he points to the more than 900,000 reviews posted to the site since its launch, including more than 250,000 in the past year. Newegg is preparing to enable customers to video their reviews and upload them to the site.

While Newegg employees participate in forum discussions, they don’t recommend products. And the company does not measure the value of the forums and reviews by whether they directly drive purchases.

“It’s about getting closer to that customer, making sure we’re giving them every opportunity to give us feedback. That’s what drives our business,” Luthi says. He’s convinced the strategy is working because more than half of new customers are referred by other customers and because the company, which has been one of the fastest-growing online retailers since its launch, grew again by more than 25% last year to $1.9 billion in online sales.

Most of Newegg’s customers are tech-savvy men between 18 and 35. But the challenge of staying close to customers as they use the Internet crosses all demographics, including the mostly women shoppers targeted by eFashionSolutions LLC, which hosts web sites for some 30 fashion and entertainment companies.

Those clients-which include luxury brands like DKNY and Oscar de la Renta as well as more moderately priced marks like baby phat and JLo-find their profit margins challenged by the growing number of consumers who use comparison shopping engines to find the best deals online. Traffic to comparison shopping sites was up 17% in February over the previous year, according to web measurement firm comScore Inc.

Blogger power

Part of the answer is segmenting customers and making them offers based on their preferences, says Ed Foy Jr., CEO of eFashionSolutions. But he also embarked late last year on a strategy of leveraging social networking, by finding consumers who love the brands he supports and who will express their love for DKNY or JLo on social networks and blogs.

That’s part of creating a buzz around those products, which is the best protection against those brands becoming commodity items that can be compared to the many other apparel brands available online. “If it’s a trend setter, it’s not affected by price comparison,” Foy says.

Foy recently experienced the downs and ups of the social web. It began when a consumer attacked one of his clients on a blog over the conduct of an online sweepstakes, feedback he calls “a retailer’s worst nightmare, especially when it’s so transparent to the rest of the world.”

But other customers, including the sweepstakes winner, came to the defense of the brand in subsequent posts, neutralizing the criticism. Experiences like that convince Foy of the importance of identifying and cultivating online brand advocates. That includes making sure their orders are shipped the same day, providing them with special packaging, and sending them thank you notes and gifts.

Teen hangouts

It’s early days for such initiatives, and still hard to calculate return on investment. The same can be said of e-retailers’ efforts to generate sales from the explosively growing social networks, of which the two most important are MySpace and Facebook.

While only launched in 2003 and 2004 respectively, MySpace and Facebook have become as much a part of the life of U.S. teenagers as McDonald’s and iPods. MySpace was the top U.S. Internet site in terms of page views in February, and Facebook was sixth, according to comScore.

But consumers go to these sites to socialize, not shop, data suggests. Only 3% of online shoppers said they used social networks to research purchases in a survey last year by JupiterResearch. And ads on these sites generate relatively few clicks: the average cost of an order from an ad on a social network site was a hefty $50.11, compared with $19.33 for paid search and $6.85 for e-mails to customers, according to a retailer study this year by Forrester Research and online retailer association Shop.org.

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