In its second-largest acquisition, Amazon buys the company for $970 million.
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Testing more effective search marketing strategies. As Roots and other retailers say they expect lower ROI from paid search while emphasizing more natural search, Burke advises retailers to tie search marketing efforts to limited time offers to create urgency.
Retailers should also coordinate online marketing with offline marketing and merchandising, Dias says. Multi-channel retailer Dick’s Sporting Goods, a GSI client, for instance, generated 60% more revenue through e-mail in 2007 over 2006 by coordinating promotions with store activity as well as by promoting the online channel when stores were closed. Dick’s generated an 80% lift in revenue from a catalog-style e-mail design, and its most effective e-mail overall was its Thanksgiving Day after-hours sale, Dias says.
Other short-term fixes can stem from a careful review of operations. Roots, for example, routinely monitors logs of customer service calls during the peak shopping season-a tedious job, but one ripe with information on how to improve service, Connell says.
Spending one hour per week to review tapes of customer calls and e-mails into its contact center, Roots found that during a recent shopping season some people didn’t receive packages delivered to their apartment buildings because the delivery driver did not know how to buzz them from the lobby. Packages were either left in the lobby, where they could become misplaced or stolen, or returned to the retailer. “There was a fairly small incidence of this, but it was significant enough to increase our cost of shipping and hurt our record of on-time delivery,” Connell says.
Roots redesigned its checkout page with a clearly marked window for entering an apartment buzzer identification. It also started sending more orders in flexible packages after realizing that many recipients couldn’t receive larger cardboard packages in their mailboxes-a move that also saved it packaging and shipping costs.
Retailers can also take steps as late as summer to ensure accurate presentation on sites of available inventory. While one of the biggest challenges every year is deciding which hot-sellers to build up in inventory, retailers should take steps in mid-year to ensure an uninterrupted flow of goods as hot stocks dwindle, experts say.
“A traditional holiday season challenge is figuring what products will be hot, but it’s also a challenge for online retailers to continually make recommendations,” Alvarez says. “Their recommendation engines must be dynamic enough so that when they sell out of one recommended product they can immediately offer something else.”
A retailer selling a popular product like Apple Inc.’s iPod Nano media player, for instance, should configure site search and navigation and cross-selling engines to present the most popular alternatives in case a run on the Nano depletes inventory.
At the same time, retailers should consider arranging extra drop-shipping contracts with suppliers as a way to back up inventory of popular products kept in a retailer’s own distribution center, says Kasey Lobaugh, direct-to-consumer practice leader at consulting firm Deloitte LLP. “Margins may be lower this way, but it’s better than disappointing shoppers,” he says.
Managing product inventory as well as the web site infrastructure that sells it, of course, also takes long-term projects that retailers must address on an ongoing basis to ensure a quality experience for holiday shoppers.
“We have to make sure especially during the holiday season to deliver on a promise that whatever data we put on a site, like product specs and inventory status, is 100% accurate,” says Patrick Colletta, director of e-commerce for computer products retailer PC Universe Inc. “But keeping accurate and up-to-date inventory with 300,000 items is quite a challenge.”
Most major upgrades to infrastructure should begin in January, if not in the prior year, be fully tested by August and be ready to go live in September. “Retailers should use the back-to-school season as a test of any major upgrades before the holiday season,” AMR’s Garf says.
PC Universe works throughout the year with content delivery network Internap Network Services Corp. to ensure web servers are operating properly and supporting quick page loads and pulls of information from product databases. “We make sure that whatever technology we’re developing throughout the year is working at optimal levels,” Colletta says.
The retailer also drills down into critical applications like checkout. Working with AlertSite, which tests e-commerce applications, it can simulate typical shopping cart clickstream experiences of customers logging onto its site from multiple locations. “If anything fails during any step of a checkout transaction-for example, if an error page appears or information can’t be added to a billing address form-AlertSite notifies us via e-mail and text messages to our cell phones,” Colletta says. “We do this to make sure we deliver on our promise of a good shopping experience.”
PC Universe uses the Internap and AlertSite services throughout the year. It will also commission a web site usability specialist like LeftClick once every year or two to see if its online shopping features offer the kind of experience customers want. In the first half of last year, for example, it determined it needed a more user-friendly checkout. After a series of A/B tests, it went with a simpler though multi-page design that led to increases in conversion rates and average order values for the 2007 holiday shopping season, Colletta says.
At Zappos.com Inc., which plans to launch a redesigned site in time for this year’s fourth quarter, an in-house team of software developers plans months and even years ahead of time to prepare for the holiday seasons, says Brent Crowley, director of software and technology development. “After every holiday season we look back to see what went well and what didn’t,” he says. “But we have to be careful with upgrades, and we do a lot of analysis up front.”