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The big chains weigh in
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For example, to better engage shoppers with a more personalized shopping experience, Goldspeed recently deployed within a few weeks technology from MyBuys for providing more effective online cross-sells and upsells and for sending out personalized marketing e-mails to shoppers who abandon shopping carts. “That’s already producing a good ROI,” he says.
While large merchants like Penney also sell jewelry online with special offers, their broader scope makes it more difficult to target customers with useful product offers, Kugelman figures. “The big guys have multiple criteria that we don’t have to meet, such as trying to get customers to open more credit card accounts or purchase non-jewelry items,” he says. “They can’t delve into personalized offers like we do.”
In many cases, technology most known for giving big retailers an edge is available to smaller merchants as well. Digital Element, for example, provides IP geolocation technology to Ace Hardware Corp. that automatically recognizes the IP addresses and ZIP codes of visitors to AceHardware.com; the vendor makes the same technology available to smaller retailers starting at about $500 per month.
“Some retailers who operate regionally use this technology to refer visitors from outside their selling area to other retailers, earning referral fees,” says Rob Friedman, executive vice president of Digital Element.
The new eVanity.com deployed in 100 days on a hosted, software-as-a-service platform from MarketLive with the technology flexibility Schmelz says he needs to compete with his more established multi-channel competitors.
Part way into the deployment, for instance, he decided to add moving images of models on the home page. The video images, designed with a white background to make the models appear as if they had just walked onto the page, were designed by Fargo, N.D.-based Network Central Inc. using content delivery technology from Akamai Technologies Inc. With the open and flexible technology of the MarketLive platform, the new imaging was deployed without delaying the site’s planned debut, Schmelz says.
In addition, working for a relatively small company, Schmelz was able to make the decision to add the moving images quickly and without having to move the request up the chain. He figures the rapid movement on that decision has benefited Vanity by providing an online partner that extends the chain’s fashion-forward image on the web and caters to its customers’ expectations of a Web 2.0 rich media online shopping experience.
And because the MarketLive platform operates in an on-demand environment, eVanity can get the power available to a large retailer without having to invest in more infrastructure than it needs, he says.
“We get the same operating power as larger retailers when we need it, but we don’t need to invest in 100 servers to run our system all the time,” he says. MarketLive also came pre-configured with order management technology from OrderMotion Inc. to support fulfillment. The MarketLive platform costs about $75,000 in start-up fees plus an annual subscription starting at under $100,000 based on a retailer’s revenue.
Cutting the red tape
Schmelz, a former e-commerce manager for a large hardware and home improvement retailer that could be slow to make changes in product lines or online shopping features, says he enjoys the ability at a smaller retailer to make changes more quickly with technology as well as business strategies.
“In the fashion world we have to be on the cutting edge,” he says. “If we see some sudden shift in the market-for example, miniskirts are out-we can pop them off our site and replace them with long skirts in a new online presentation within hours. Being a smaller, more nimble retailer, I can make adjustments on the fly unlike when I was in a red-tape environment at a larger retailer.”
The ability to react quickly to take advantage of new technology and strategies in merchandising and marketing, experts say, is the ace in the hole for smaller retailers. “The toughest thing is that Internet retailing changes so quickly,” Okamura of J.C. Williams says. “The bar keeps getting raised and customer expectations keep ramping up. But smaller retailers with the right strategy can differentiate from large retailers and excel.”
Investment in the web by big retailers will increase even more as top executives at the largest retail chains become more aware of the power of the web in driving multi-channel sales, says Kasey Lobaugh, direct-to-consumer practice leader at consultants Deloitte LLP.
Many retailers today, he says, don’t realize that store sales preceded by visits to retail web sites account for about 20% of sales and online-only sales for another 7%, accounting for 27% of total sales in one way or another driven by the web.
“Today, most retailers only see it as a 93%-7% split, where the 93% of sales are in stores and 7% online; they don’t realize that 20% of store sales are influenced by the web,” Lobaugh says.
But that mindset is changing fast among senior retail executives, he adds, especially as the percentage of total sales driven directly or indirectly by the web grows to about 50% over the next few years. “CEOs will soon recognize that what they thought was 7% of sales driven by the web is actually about 50%, so there is going to be a big shift in investing in a web-focused multi-channel retailing environment,” Lobaugh says.