September 1, 2009, 12:00 AM

Converting Creatively

At a time when consumers are reluctant to click the Buy button, innovative category merchandising can make the difference.

E-commerce continues to grow and evolve despite the times, and merchants must be cognizant of changing consumer dynamics and the need to deliver proven return on investment in these rough and tumble times.

The focus is clearly on ROI and how to do more with less. At the same time, merchants must address such daily questions as, "How are we going to get the sale today?" and "Do we have the requisite resources and the right functionality to deliver the customer experience that exceeds customer expectations?"

The marriage of the right merchandising and the comprehensive content required to give customers the confidence to buy online has never been more critical.

Category merchandising
Merchandising should always start at the category level. Each merchant`s customer base expects the merchant will showcase the assortment to both engage and inspire the shopper. At the same time, the selection of merchandising tactics should support both short- and long-term business goals, delivering profit and performance for the merchant. Continual analysis and refinement are required.

Reflecting the challenges facing merchandising strategies, improvements in conversion rates slowed in 2008, with consumers likely researching products more, including through comparison shopping, as a result of the tough economic times.

When asked in The E-tailing Group`s first quarter 2009 8th Annual Merchant Survey how web site conversion rates had performed in 2008, 42% of merchants said their conversion rates were higher and 35% said they were lower. By comparison, in the year-earlier survey, 57% said their 2007 conversion rates were higher than in 2006 and 17% said they were lower. Others either said the rates had stayed about the same or didn`t know if the rate had changed.

But merchants should move beyond industry-wide conversion rates to understand category performance, factoring in their unique brand and customer base. Several online features can improve conversion rates, with merchants rating keyword search the highest, followed by sales and specials, cross-sells, and e-mail as a merchandising vehicle.

The emphasis on search continues beyond keyword search, with advanced search and guided navigation securing prominent positions as well.

And the highly utilized site search must continually be tweaked for usability and performance. A good example is the e-commerce site of Sam`s Wine & Spirits, which provides multiple ways to narrow site search.

Merchants` desire to grow the average order value can be seen in the strong positioning of upsells and cross-sells. Among sales and specials, free shipping serves as a powerful perk for shoppers amid promotional incentives to buy.

In tough economic times, all promotional tools are in play, and effective placement and messaging is integral to their success.

Apparel and accessories retailer Roots Canada Ltd., for instance, positioned a limited-time "20% Off Tees" event above the masthead on its home page; to ensure that shoppers didn`t miss the messaging, Roots repeated the offer in colorful graphic displays within each drop-down category menu. The marriage of accessibility, merchandising, and promotion is clearly in play with this strategy.

Promote everywhere
From the product page to the shopping cart and post-order communication pages, all web site locations are fair game for promotional selling.

A limited-time offer with free shipping, such as one that cosmetics retailer Bare Escentuals has run on its home page, is a tactic that was used by 42% of the 190 merchants surveyed in The E-tailing Group`s 8th Annual Merchant Survey, up from 18% a year earlier.

In another example from RoadRunner Sports, the online retailer of athletic footwear, apparel and accessories has run in its shopping cart the message, "Wait, There`s Still Time," with the lure of 10% off and free shipping to those who join its loyalty club before checking out. At the same time, RoadRunner underscores its customer-centric strategy by providing a toll-free number at the top of every page for calling a fit expert who can advise on how to find the right running shoe.

Customer engagement tools
37% of e-retailers surveyed in the fourth quarter of 2008 by The E-tailing Group offer interactive on-site tools, 27% have product configurators and 24% allow online personalization of products. In addition, merchants are evolving tools and tactics that build community and foster brand loyalty. These kinds of tactics are particularly effective in enthusiast categories where impassioned consumers want to connect with a brand.

Toymaker and retailer Lego`s downloadable "Digital Designer," for example, enables a shopper to design and buy customized creations. It also provides a "Tell Us What You Think" link for on-the-spot customer feedback.

Gardener`s Supply Co. engages online customers with a "Kitchen Garden Planner," which includes a drag-and-drop map to configure how many plants are needed to create one`s own three-foot by six-foot garden. The retailer offers 30 options, and a print-this-garden-map feature and a learning center complete the application. The planner presents a deep and broad selection of products, and customer participation leads to growth in sales and average order value.

Web merchants must give customers sufficient information so they feel 100% confident when they consider making a purchase. This includes a combination of visual cues, product information, and rich tools that make products come to life.

Once merchants address specific category merchandising, they can confidently move into other important aspects of selling and servicing the customer.

Lauren Freedman is president of online retailing consulting firm The E-tailing Group Inc. This article was excerpted from "Five Web Strategies for Gaining Market Share in a Rough and Tumble Economy," a report sponsored by e-commerce platform provider Demandware Inc.

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