In its second-largest acquisition, Amazon buys the company for $970 million.
E-retailers can trade time for money as they seek to restrain site redesign costs.
If e-commerce sites were automobiles, Rugs-Direct.com was on the road to becoming a jalopy. The site was still chugging along with basically the original design it had based on the look of Amazon.com, circa 1998. Over the years, the e-retailer kept bolting on new features.
“Every time we thought of something new, we just added it, never taking anything out,” says Rex Creekmur, director of marketing at site owner Rugs Direct. “We knew intuitively our web site needed a revamp—it was looking very ‘90s.”
With its internally built e-commerce platform groaning under the weight of the gradual add-ons and limiting future site enhancements, Rugs Direct knew it had to ditch its ad hoc approach to site updates. But the retailer, which sold $23.2 million online in 2009 by Internet Retailer’s estimate, had to come up with a plan that would provide the kind of e-commerce functionality required but still fit within the company’s budget.
Rugs Direct’s first step was to hire a consultant to figure out what the online retailer really needed. And that’s a smart move for a retailer contemplating a redesign, says Betsy Emery, CEO of web design and strategy firm Tellus.
“Oftentimes people start with the idea that they are going to look at all the options in the marketplace and then try to decide where they fit in all of those options,” Emery says. “The better way to go about it is to start by understanding yourself and your business and where you are.”
Once a retailer understands its needs and its business it can set priorities, which can keep the cost of a redesign down. Other ways are to rely on in-house staff to redesign a site—although that is likely to be slower than engaging a design firm. And some retailers have kept cost low by serving as guinea pigs for vendors developing new e-commerce technology.
Many retailers are facing the question of how to redesign within a budget: Two-thirds of online retailers that responded to an Internet Retailer survey early this year said they planned a web site redesign in 2010. Before selecting features—the fun stuff—retailers should assess what they need most and how they plan to pay for the project, experts say.
An inside job
That’s the approach Rugs Direct took. The consultant it hired carried out a needs assessment, looked at customer feedback and checked out new developments at industry shows, then put all that information together to create a plan of what to include in stage one of a phased redesign.
A key filter it applied in selecting what to include and what to leave out of phase one is instructive for any retailer doing a site redesign. Rugs Direct concentrated on the changes it believed would bring in the most revenue the most quickly, hoping that added revenue would fund phase two of the redesign. For example, it said yes to improving its navigation and no, at least in the first round, to developing more cross-sells.
Two years in development, the internally redesigned site debuted in April, and it’s already producing an average conversion rate of about 2.6% compared to the average of 1.2% prior to the redesign. “For us, that’s dramatic,” says Randy Kremer, president. “Now we are going to be testing things like cross-merchandising. We’ll be looking long and hard in the next month or two at the next feature set.”
After getting a bid of $80,000 for the redesign work, Rugs Direct decided to have its own staff do the work. “We didn’t spend externally, but the trade-off we made was time,” Creekmur says. “The outside web design firm probably would have spent six weeks doing what it ended up taking us two years to do.” The redesign project pushed back other needed tasks from the development team’s schedule.
There’s another danger: Retailers may not know all that goes into a top-notch redesign, which requires more than staffers with web graphics skills, says Tom Nawara, managing director of digital strategy and design at e-commerce and m-commerce consulting firm Acquity Group LLC. “They may not have the user experience qualifications to do primary research on customers and develop true user experience flow,” he says. “There are things beyond the visual design aspects that go into the process of redesigning a site.”
The experience of Wholesale Furniture Brokers, an online furniture retailer, illustrates another way to bring down the cost of a site redesign. The e-retailer brought its redesign in at about $22,000 by agreeing to be a beta site for an outside agency, Convert Marketing, that was developing a new product to offer retailers, and by putting a lot of its own staffers’ time into the project. Dave Zirnhelt, the retailer’s president, estimates that over a four-month period the design and implementation required nearly 700 hours on the part of its internal technology team, another 80 hours from the retailer’s management staff and 260 hours from the marketing team.
Those hours were spent implementing changes prioritized by the vendor after it examined the site’s Google Analytics data. The project team wrote new code for more than 50 pages and tested it all extensively before the site went live. The redesign didn’t alter any of the back-end technology supporting the site, such as its order management system or shopping cart.
What Wholesale Furniture Brokers got for its investment of time and money was better-looking, better-organized templates for key pages, which the retailer could easily populate with fresh content as needed.
The new pages produced better results—a slight re-casting of a checkout page, for example, boosted by 23% the number of visitors who go on from that page to create an account. Overall, conversions have increased by 58% since the redesign in January, accomplishing the primary goal of the project.
Zirnhelt says that even at the low cost of about $22,000, the company, with annual web sales of just under $4 million, spent more than it had expected to in dollars and developer time. “At a 58% increase in conversion, we paid back our investment in the first few weeks—but you don’t know that until you do it,” he says.