PetSmart acquired Pet360 for $130 million in cash and up to $30 million more in future performance-based payments.
Online all the time, the 21st century shopper puts pressure on e-retailers to deliver great dealsand service.
Just more than a year ago, online retailer AccessoryGeeks.com began sending marketing e-mails to consumers who had left items in the site's online shopping cart. The e-mails contained coupons meant to push shoppers to buy cell phone, iPod and iPad accessories.
The retailer also added more coupons and deals to the site's home page, many located via clicking on the 'Coupon' and 'Sales & Deals' tabs. The retailer was reacting to sales and checkout stats that showed its customers—some nursing recession-era habits—were more likely to complete purchases when offers were spiced up.
AccessoryGeeks.com also changed customer service procedures to adapt to new shopper behavior. The retailer now responds to e-mails around the clock, aiming to serve the all-the-time shopper. It also responds by text; recognizing that more than 15% of its sales come from mobile devices.
The e-retailer also beefed up the content on its product pages—more information and better quality photos, the thinking goes, will prevent tech-savvy, device-loving shoppers from jumping to other sites.
When he talks about the past year, David Byun, the e-retailer's president, sounds both worn and awestruck, like a mountain climber who's topped a peak he wasn't quite sure he could conquer. "2011 was one of the tougher economies in the U.S.," he says, "and customers online, they demand more and more and more as time goes along."
Byun won't disclose the financial impact of the changes he made, but his strategy illustrates how one e-retailer is striving to keep up with the changing behavior of the online shopper, one who is more empowered than ever before.
Fresh off a strong 2011—online sales increased 16.1% to $194.3 billion from $167.3 billion in 2010, the U.S. Commerce Department says—e-retailers can feel confident about their place in the retail jungle. They again took market share from bricks-and-mortar competitors in 2011, as total retail sales grew only 7.9%, the Commerce Department says.
But online shoppers are more confident, too, forcing merchants to deliver better deals and service, and to master the art and science of both marketing via online social networks and listening to what consumers say about them on networks like Facebook and Twitter. They're working hard to tailor shopping for a variety of web-enabled devices—devices that increasingly blur the boundaries between physical stores and the web. And, above all, they must deal with a consumer who has access to all kinds of information that enable her to find the best deal.
"One of the key shifts in behavior we've seen," says Andrew Lipsman, vice president of industry analysis at web measurement firm comScore Inc., "is that people in every income group, they've learned the behavior to price shop and comparison shop—and they are doing it even as we've come out of a recession." E-commerce and the 21st century consumer will be the theme of the Internet Retailer Conference & Exhibition 2012 June 5-8 in Chicago. (For more information, see inside back cover.)
One way e-retailers are responding to those recession-hardened, smarter consumers is with free shipping offers: 52% of online transactions in the fourth quarter of 2011 charged nothing for shipping, compared with 49% for the same period in 2010, the previous record, according to comScore.
Such offers contributed to the largest day ever for e-commerce, the first Monday after Thanksgiving—commonly known as Cyber Monday—when online shoppers spent $1.25 billion, the web measurement firm says. During the holiday shopping season, in fact, 75% of big online retailers offered free shipping at some point, with 55% keeping the promotion alive for the entire period, according to e-mail marketing messages from 100 major e-retailers tracked by Responsys Inc., a provider of e-mail marketing services.
Free shipping has become so ingrained that some retailers must find other ways to entice sales. "Last year it was clear customers really expect some way to get free shipping," says Bradley Rosen, partner at SportsWorldChicago.com. Winning the sale required the relatively small sports merchandise retailer to do more—for instance, offering rewards points to encourage repeat customers—and simplifying the checkout so it is only one page long.
Free shipping, though, tells only part of the story of how web shoppers are finding the deals they seek. Nearly a third of online shoppers, or 31%, check out deal-of-the-day or group-buying sites such as Groupon, LivingSocial or their scores of imitators while shopping online, says e-commerce research firm Compete Inc. And 27% visit shopping comparison sites to ensure they find the best prices.
Other data also suggest that consumers are almost always shopping with a future discount or deal in mind, says Charles Nicholls, founder and chief strategy officer of SeeWhy, which sells technology that helps retailers retarget consumers who leave items in online shopping carts. During the 2011 holiday shopping season, more than 7 of every 10 items shoppers put into carts remained there without purchase; the figure reached 8 of 10 during the first few shopping days after Thanksgiving. "Consumers like having a permanent shopping cart," Nicholls says. "They use it almost as a wish list. Customers are getting more sophisticated and waiting for promotions."
The spread of web-enabled smartphones and other mobile devices promises to make deal-hunting even easier for consumers. 41% of consumers who owned such devices had used them to check prices within the past three months, according to the Compete survey, which was conducted just prior to the 2011 holiday shopping season. And 39% of those consumers had downloaded bar code scanning apps that make it easy to check prices, usually inside stores; 20%, meanwhile, had downloaded comparison shopping apps.