That sums up both e-retailing and the world’s largest e-retailing show, the Internet Retailer Conference & Exhibition. This year’s event was 24% larger than last year’s, and discussion at the show focused on the key to online sales growth: delighting the increasingly sophisticated online shopper.
By Don Davis
The Internet is firmly entrenched as part of the mainstream of U.S. retailing, which means an e-retailer is as likely to be competing for each sale with a retail chain like J.C. Penney Co. Inc. or a manufacturer like Skechers Inc. as with a web-only merchant like Buy Inc. How do retailers succeed amid such stiff competition? By catering to the customer in every possible way.
How to do that successfully was the thread that ran through the Internet Retailer Conference & Exhibition in Chicago June 9-12. Participants shared insights on the best ways to attract consumers to e-commerce sites, help them find what they want once they get there, and make online buying even a bit of fun.
And while there were plenty of reports on what has been shown to work and what does not, speakers also made clear that online retailing and the web itself are still evolving rapidly. What Bob Young, CEO of online publishing site Lulu Inc., said about the Internet in his address to the conference could as easily apply to e-commerce: “It’s still a wild and crazy place, full of opportunity.”
That opportunity to grow online at a time when stores are struggling helped draw a record 5,177 attendees, a 24.2% increase from the 4,168 who attended last year in San Jose. There also were 326 exhibitors, up 30% from 250 in 2007.
Web-only merchants accounted for 25% of attendees, retail chains 16%, consumer goods manufacturers 10% and catalogers 9%, with the rest coming from a variety of other industries. In terms of size, companies with more than $1 billion in revenue accounted for 14% of attendees, $100 million to $1 billion 18%, $10 million to $100 million 29% and under $10 million 39%.
While online retail grew by 22% last year, an impressive showing when same-store sales were largely flat, growth was not uniform across e-retailing segments, noted Internet Retailer publisher Jack Love in a presentation on the Top 500 Guide. He noted web sales of retail chains grew only by 18%, while catalogers grew by 30%, and manufacturers and web-only merchants by 22%.
“Chain retailers have the power, brand and expertise, but they are not dominating the online retailing market,” Love said.
J.C. Penney’s strategy
Some retail chains, however, are increasingly focused on the web. And that includes J.C. Penney, whose executives view its e-commerce site, JCP.com, as “the hub of the brand,” executive vice president and chief marketing officer Mike Boylson told attendees in a keynote address.
He noted that JCP.com is Penney’s fastest-growing sales channel and attracts the retailer’s youngest and most affluent customers. The retailer recently combined its $300 million annual online marketing budget and its $1.1 billion offline budget into a single pool of funds, and, Boylson said, “We see JCP.com as the No. 1 priority as we go forward as far as where that money will go.”
Recognizing that fewer consumers, especially those under 35, read newspapers, Boylson says Penney is seeking to reach customers through the web and mobile phones. Noting that 90% of U.S. consumers are expected to have web-enabled cell phones by 2011, up from 13% today, he observed, “It’s becoming a mobile world.”
He also noted that Penney has consolidated creative and marketing teams that previously had been divided by channels such as store, catalog and web site. “Everything is in one house, we’re beyond the channel silos, and we’re all focused on what is right for the customer without regard to who gets credit for the sale and what channel it comes from,” Boylson said.
That determination to delight the increasingly valuable online shopper also was a focus of featured presentations from catalogers, manufacturers and web-only retailers.
For Redcats USA, which traditionally sold through catalogs and call centers, the web customer has become increasingly crucial, as online sales now account for 40% of its business, up from 5% in 2001, said Eric Faintreny, CEO of the apparel, sporting goods and home furnishings retailer, in a featured address on June 10
As with J.C. Penney, Redcats’ online customers are younger and have more money to spend, Faintreny said, pointing out that the retailer’s average online customer is 47 with an income of $60,000, compared with offline customers’ average age of 54 and income of $52,000. More and more, he said, the images Redcats uses across its 14 e-commerce sites and catalogs are aimed at younger consumers.
Web-only merchants like Shutterfly Inc. and Lulu have taken advantage of the web to enable consumers to create customized products. In the case of Shutterfly, that includes photo albums that a customer creates by uploading digital photos; the retailer’s Shutterfly Gallery social network lets consumers share and rate each other’s photo albums, explained CEO Jeffrey Housenbold. Lulu.com lets aspiring authors produce their own books.
For Skechers, the challenge as recently as three years ago was not to break new ground in e-commerce but just to sell shoes online, said Laura Christine, vice president of direct marketing and e-commerce. While Christine was unable to buy a pair of shoes at the Skechers site in 2005 when she was preparing to interview for her current job, the site is more functional today, and sales on Skechers.com and the company’s Soholab.com nearly doubled last year, Christine told IRCE attendees in a featured address June 11.
Now she is moving into more sophisticated online marketing, such as retargeting consumers who visit Skechers but leave without making a purchase. Working with a dozen online advertising networks she can present ads to those consumers as they move to other sites, reminding them of the Skechers products they viewed. Skechers is getting a 900% return on that ad spend, Christine said.
Delivery dilemmas
In some categories, persuading consumers to buy online is a particularly tough sell. For instance, only 5.7% of home improvement shoppers made even a single online purchase in that category last year, Christian Friedland, president of e-retailer Improvement Direct Inc. told the conference in a featured address June 10.
A big obstacle to buying appliances and other large products online is that the major business-to-consumer delivery services like UPS and FedEx won’t handle them, forcing retailers to ship via freight carriers that are less consumer-friendly. Improvement Direct has tackled that by creating a video explaining what will happen when a freight carrier handles a delivery, including how to inspect an item upon delivery and what to do if items are missing or damaged.
Several speakers described how they redesigned sites to better serve customers. Among them was Neel Grover, keynote speaker June 11 and CEO of online general merchandiser Buy.com, whose new site includes predictive search that provides likely choices as visitors type query terms in search boxes and presents related products consumers might want on search results pages. The new site also includes a forum that enables visitors to post questions that Buy.com experts answer.
While video is hot, it’s not a panacea, attendees learned in a session entitled “The Best of Retail Video.” “There’s not a screaming demand for video,” said analyst David Card of JupiterResearch who noted that only a minority of consumers find video useful on retail sites. Shoppers should be able to turn videos off, added co-presenter Laura Evans, executive studio director for marketing agency Resource Interactive.
Site design
Some online retailers reported going through multiple site redesigns as they learned more about selling online. Action Envelope, for instance, has designed its site four times since it began selling online in 2000.
Action Envelope spent more than $200,000 on its latest redesign that features a new Made-to-Order tool that allows customers to create customized envelopes by size, color, stock and window.
This redesign, completed this year, took the retailer and Alexander Interactive Inc., its New York design firm, almost 8,000 programming hours to complete. “When we redesigned the site in 2004, it took us 2,160 hours and this last time the total was 7,657 hours,” said CEO Seth Newman.
The retailer credits its latest redesign with generating web sales of about $985,000 the first month after it launched.
Getting site design right is crucial because visitors decide in a fraction of a second whether to stay on a site they’ve landed on, especially for the first time, said Sacha Loughton, creative director at design firm FastPivot, speaking with Newman in a session entitled “The Basics of Web Site Design and Content: Engaging the Shopper for More Sales.” That’s why it’s important that the site be clear about what it’s offering, well organized and credible, she says.
Customers told CPA2Biz.com, which sells publications and products to accountants, that the site was hard to read and products hard to find, reported Melissa Rothchild, vice president of marketing. After redesigning the site to feature a bold and prominent left navigation bar throughout the site, traffic and sales went up 20%, Rothchild said.
Making sure search engines can find content on a site is also increasingly important to retailers. Nowhere was that more in evidence than in the session “Web Site Design Spotlight: Live, On-the-Spot Critiques of Retailers’ Sites.”
Attendees in a jam-packed room offered their sites for critiques by Stephan Spencer, CEO of search engine marketing company Netconcepts, and consultants Lauren Freedman, president of The E-Tailing Group, and Amy Africa, president of Eight by Eight. The three displayed sites on projection screens.
While many sites did a lot of things right, none did everything right. The most common problem were redirects that shunt a user from a site with one URL to another site where the actual content resides and transactions take place. If not done properly, such redirects prevent sites from ranking high in natural language search engine results.
Other problems ranged from too much white space— “ If you saw this white space on a TV screen, you’d probably turn it off,” Africa told Bulbtown.com—to odd placement of standard elements, such as a Checkout button on the home page before a customer even starts shopping, or having a search box in a hidden location.
New ways to connect
Among the many marketing initiatives discussed, perhaps the most radical was iFloor stopping all online marketing efforts for a few weeks to see what would happen. Site sales dropped by 30% and store visits attributable to Internet leads plummeted 60%, reported Theron Andrews, chief marketing officer.
Online marketing techniques can be more effective than traditional methods, but they have to be tested, Andrew said. “When in doubt, cut it out,” he added. “Test the impact of eliminating certain elements and evaluate the return.”
In another session on marketing through social networking, Dell Inc. reported on its ReGeneration.org site designed to build relationships between the computer maker and consumers concerned about the environment. Visitors can post information on the environment and Dell reports on its eco-friendly initiatives.
Thousands of visitors have posted content, said Sean McDonald, Dell’s director of global online. When Dell posed the question, “What does green mean to you?” 7,900 individuals posted responses and there were 1 million votes on the value of those responses.
Several other major online retailers are recognizing that web users are spending more time on social sites like MySpace and Facebook, noted Heather Dougherty, director of research for Internet traffic measurement firm Hitwise. Sears Holdings Corp. enables consumers to exchange comments and to buy prom dresses on a Facebook page, and more than 350,000 consumers have been attracted to Victoria Secret’s PINK page on Facebook, Dougherty said.
There were many other tips from online retailer speakers on a variety of topics.
Taking the view that a relationship with a customer begins with the end of the first sale, Julie Swatek, president of online scrapbooking site ScrapYourTrip.com, includes a handwritten thank-you note with every order. To deal with customers complaining of missing items, computer retailer CDW Corp. takes digital photos of the contents of every box, and makes those photos available to both customers and customer service agents, said Doug Eckrote, senior vice president of operations.
The mobile future
A final day workshop focused on the next frontier of electronic commerce, selling to consumers through their mobile phones.
“Mobile commerce isn’t a 2009 thing, it’s a 2008 thing,” said Nic Covey, director of insights at Nielsen Mobile, a unit of research firm The Nielsen Co. “With the success of m-commerce sites like Amazon.com, which more than 2 million people have visited, and eBay, which more than 3 million have visited, this shows a critical mass that represents a real opportunity for retailers.”
For outdoor gear and apparel retailer Moosejaw Mountaineering, its mobile commerce site and goofy text messages are part of a strategy of engaging customers in their favorite channels and making shopping as convenient as possible, said Gary Wohlfeill, executive vice president of marketing, in a keynote address to the mobile commerce workshop.
Among the ways Moosejaw is employing the mobile channel is texting package tracking numbers to customers’ cell phones, enabling customers to use their mobile PayPal accounts to pay at Moosejaw stores, and putting a Text to Friend button on its web site that lets a visitor recommend a product to a friend by sending an m-commerce site link to the friend’s mobile phone.
Moosejaw may be out in front of most retailers today in promoting mobile commerce. But such testing is part of online retailing’s DNA. As Robert Antall, CEO of retail consulting firm Lake West Group put it, “Today’s experiment is tomorrow’s expectation.”
Given all the innovations discussed at this year’s Internet Retailer Conference and Exhibition, it’s likely consumers will be expecting a lot more from online retailers by the time of the next IRCE in Boston June 15-18, 2009. l
don@verticalwebmedia.com
Click Here for the IRCE 2008 Products & Services Guide
