April 30, 2009, 12:00 AM

Anything can happen

Online retailers face the most unpredictable online holiday season ever, but they’re not paralyzed by fear. Instead, they’re investing, cautiously.

By Bill Siwicki

The 2009 holiday shopping season is the most unpredictable in the history of online retailing. With this recession, consumer confidence is tied closely to the stock market-where Wall Street goes, so, too, may web retailing, says Sucharita Mulpuru, principal analyst at Forrester Research Inc.

“If there’s another skeleton to come out of the financial services closet and the economy goes into freefall again, we’ll be in trouble,” says Mulpuru of Forrester, which, like other research firms, has not yet released formal holiday predictions. “History says we should have a recovery by the end of the year, and some signs are pointing to a recovery. But we can’t be overly optimistic because we’ve never been in this situation before. Anything can happen.”

Anything can happen. So how does one plan for that?

Retailers are taking varying approaches today to planning for the holidays. Some retailers are creating teams to overhaul and optimize their sites. Others are turning to technologies like live chat to help increase conversion. Some are adding new product categories or many more products, sometimes with the aid of drop shipping. Still others are trying altogether new programs, like behavioral targeting for on-site promotions.

One tactic getting a lot of mentions is expanded use of social networking.

This medium is really striking a chord with some retailers, in part because social marketing costs generally are so low and social network use is so high. In the April Internet Retailer survey, for example, 30.5% of retailers said social network presences will perform better as a marketing vehicle this year than paid search or search engine optimization. Nearly one-third is quite a statement given the proven power of search.

Where the customers are

Retailers testing and using social networking insist it’s where their customers are. In fact, Nielsen Online revealed in March that consumers now spend more time on social networks than they do with personal e-mail. The retailers say social networking helps them build repeat sales as well as increase their customer base through the power of viral marketing. And retailers putting more time and energy into social networking for the 2009 holiday season say firming up the base is critical during a period of economic volatility.

“Social is now a huge aspect of the web-you can’t deny it and you have to go with it,” says Howard Wyner, CEO and chief of e-business at fragrances e-retailer Scentiments, which is testing promotions on its Facebook page and Twitter account. It hopes to determine social marketing best practices and build its fan and follower bases by the holidays. “We’re offering our Facebook fans special deals. We’ll be doing the same with Twitter followers, such as tweets offering a product just for them for $9.99 today only.” (Tweet is the term for a message sent via Twitter.)

Jodi Bresina, Internet director at ShoeMall.com, says the retailer has for months been “playing in the social media sandbox,” working on a social strategy it can more formally apply as the holidays approach. She says communicating with customers in more personal ways and offering them special deals can increase customer loyalty and attract new customers as satisfied shoppers pass on the word to friends and family.

ShoeMall.com operates a Facebook page, Facebook application and Twitter account, and is test-driving contests and giveaways to create buzz and boost traffic. It’s using its web analytics to judge what works well and what does not. To help create more buzz about the brand and products and reach out further in the social realm, ShoeMall.com will be launching a blog in time for the holiday season.

For holiday 2009, Buy.com Inc. is focused on one social network-its own. For years Yub.com has been a stand-alone entity complementing the efforts of Buy.com. Reacting to the widespread adoption of social media overall, Buy.com this year is adopting a new approach-integrating aspects of Yub.com into the retail site.

“We’ll be helping users connect in a social manner while continuing with their purchasing needs,” says Neel Grover, president and CEO of Buy.com. Grover is keeping details of the integration close to the vest. “Looking at the holidays and how important social networks are to our customers, we feel social features will further help them when it comes to finding the right gifts. But this won’t just be for the holidays-social networking is here to stay.”

Chatting and selling

While social networks can facilitate enhanced communication between retailers and their customers, live chat literally makes it happen. And chat is increasingly being used for selling, not just answering questions.

Apparel and accessories retailer Gotham City Online has been using BoldChat live chat technology from vendor Bravestorm LLC purely as a customer service tool, and observed that shoppers who opt to chat convert between 40% and 50% higher than shoppers who do not. So earlier this year, the retailer launched what it calls its “conversion project” for the holidays. It’s working with the vendor to explore ways to boost the conversion rate even higher while getting more shoppers to chat.

On a basic level, it may expand the hours it offers live chat; currently staff is on hand between 9 a.m. and 5 p.m. But the main goal is to decrease shopping cart abandonment, and that will require a more sophisticated chat deployment.

“We need to know why consumers are not completing a transaction,” says David Topkins, president of Gotham City Online. “Does it have to do with information we’re providing or not providing in the cart, is it because they don’t understand their order total, do they not know if a coupon was applied? Or is it something more sinister, like they don’t trust us, or don’t have the confidence they will receive an order on time? It is critical for us to understand this and it’s not something you can really get through e-mail or other means.”

The retailer is in the process of building rules, scripts and graphics to catch shoppers who quickly exit the site and for proactive live chat invitations to help get shoppers past any hesitation they have of buying.

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