Internet retailing anywhere, anytime—but with an emotional tie
By Paul Demery
A shopper stares fully engaged with the screen on her mobile phone, intrigued by the antics of a character on her favorite TV show. Then she touches an ad on the screen to fire up an e-commerce page to purchase the shoes the character is wearing.
Before clicking to purchase, she forwards an image of the shoes to her friend’s Facebook page and a note to Twitter about what she’s doing. Within minutes, she receives text messages from friends saying the shoes are fabulous, a must-buy. Then she flicks to another friend’s MySpace page featuring a popular shoe retailer’s e-commerce widget, where she finds the same shoes at a better price.
But, just before clicking the Buy button, she happens to get an e-mail from her favorite footwear retailer, clicks to its site, finds the shoes and then buys them with matching apparel—not online, but in that retailer’s nearest store identified on her GPS-connected phone. What clinched the sale? A life-size image flashed on one of the store’s merchandising windows of an outfit featuring her must-have shoes.
That’s the future of e-commerce, and it’s not far off. In fact, the technology to provide that kind of shopping already exists. And experts say it won’t be long before some retailers are putting the pieces together to enable such a socially interactive, multi-channel, flexible shopping experience.
“Growth in Internet retailing will not necessarily come directly through the traditional retail channels, but through all the multiple connections consumers use,” says Janet Sherlock, research director on the retail strategies team at research and advisory firm AMR Research Inc. “There are a lot of moving parts.”
And while such investments may seem risky during an economic downturn, online retailers have to realize that there’s no longer a rising e-commerce tide that will automatically lift all retailers’ boats, says David Fry, president of e-commerce design and development firm Fry Inc. “Now that the tide is about to go out, the question is will retailers swim with the tide or get stuck behind in the mud.”
To compete in the coming decade, experts say, retailers must not only reach consumers in new ways but also project a trusted brand that stands out in a market broadened by the Internet. “It always comes back to how you make that emotional connection,” says Jim Okamura, senior partner at retail consultants J.C. Williams Group. “It’s what makes great brands great—making strong personal connections without being intrusive.”
What shoppers want
Innovative retailers like computer maker Dell Inc. and shoe retailer Zappos.com Inc. are doing just that, starting with ambitious ways to reach out to shoppers, then bringing them to e-commerce sites that offer the kind of helpful, social and multi-channel retailing environments that online shoppers increasingly demand, experts say.
To find out directly from consumers what they want, for example, Dell has launched an online forum called IdeaStorm.com that has generated more than 11,000 ideas for better products. Dell included six consumer-generated ideas in its new Latitude line of laptop computers last summer, including back-lit keyboards. “We’ve implemented more than 260 consumer ideas overall,” says Bob Pearson, vice president of communities and conversations.
Not only has that helped sales of the Latitude, but the emotional ties Dell forges with IdeaStorm participants complement the company’s presence on social networks Facebook.com and Twitter.com, where users may share information from IdeaStorm, Pearson adds.
Voice of the customer
Dell has also brought the social experience to Dell.com. With more than 100,000 online customer comments developed with the Bazaarvoice ratings and reviews application, Dell recently rolled out a “Voice of Our Customer” program that injects customer-generated content throughout the online purchasing process. On a laptop category page, for example, Dell may display a logo with the tag line “Customers are Talking” and a quote about a featured laptop line from a customer-generated review.
“It can be too jarring for customers if they leave the social environment of Facebook or Twitter and go to a commercial site with no social content,” Pearson says. “We want them to have a similar social experience on Dell.com, because they want to hear from peers throughout the purchase process.”
Zappos, which connects with consumers through MySpace, Facebook and Twitter, as well as video site YouTube.com, is also focused on building emotional ties to consumers, says Brian Kalma, director of user experience, who is in charge of redesigning Zappos.com to better take advantage of such ties.
Nearly a third of the retailer’s employees, about 450, regularly use Twitter, and the retailer’s Twitter.Zappos.com site which aggregates all Twitter mentions of Zappos so the retailer can learn from and respond to comments.
“We don’t want to push our products on Twitter, but we have 50,000 conversations with our followers on Twitter every day,” Kalma says. “That allows us to create an emotional and personal connection that’s stronger than any advertising.” Recent tweets from Zappos customers on Twitter, for example, ranged from a favorable comparison of the retailer with high-end merchant Nordstrom, to a request for help from a customer who wanted to return a pair of shoes but didn’t have a shipping label.
While not aiming to sell through social networks, Zappos provides links from those networks to its retail web site, and Kalma is determined to make Zappos.com a better extension of the social experience, he says.
Using some of the latest web site design technologies like product recommendation engines and Ajax, which supports fast loading of images and other content, Zappos will provide shoppers with the ability to shop in a manner that is both more personalized and more social, Kalma says. A customer who wants to shop for size 8 black high heels under $150, for example, could, with a few clicks, see a page full of such products plus complementary apparel outfits. Mousing over each pair of heels would activate Ajax pop-ups that offer product details and facilitate sending comments to friends in social networks.
No more pogo sticks
New technology also makes it possible to move beyond what Fry calls the pogo stick approach to web site navigation—“hopping from the home page to the category page to the product page and then the shopping cart”—to a more uninterrupted experience in which one page can encompass a vast number of products relevant to a particular consumer.
The Memorabilia section of Hard Rock Café International Inc.’s HardRock.com provides a glimpse of what’s possible. On a single page, music fans can scroll through and zoom in on 610 high-resolution images, including of John Lennon’s sunglasses and a piece of paper on which he wrote the lyrics to “Don’t Let Me Down.”
The user could reduce the entire block of 610 images within a second to the size of a dot, then just as quickly zoom back in. With a few flicks of a mouse, a single word from Lennon’s lyrics page can be made to fill a screen. Visitors can also click each image to pull up a window with details, and e-mail the image to a friend. The site is built with Microsoft Corp.’s new Silverlight imaging platform, including its Deep Zoom application, also known by its laboratory name Seadragon.
A particularly compelling feature of the Memorabilia page for online merchandisers is its ability to quickly pull any sub-group of images from the entire block of 610 images. A click on a Beatles tab, for example, instantly pulls all Beatles images into a new group of images. On a retail apparel site, that application could allow shoppers to view an entire collection of women’s wear, including images submitted by customers, then quickly pare that down to spring season outfits, zooming in on the tiniest details of each item. Each product could pop up its own shopping cart window.
Sharper images
Vertigo, the design firm that developed the Memorabilia page, has not yet developed a Silverlight application for online shopping carts, but says it’s not far off. “I definitely see this moving in that direction,” says Blake Sorrell, manager of business development. Vertigo used its own Big Picture imaging application to develop the Memorabilia section on the Silverlight platform, which is based on Microsoft’s .Net web-based integration technology.
The fact that many online retailers already use .Net technology makes the Silverlight platform a natural for e-commerce sites, experts say. And it comes at a time when online merchants are poised to expand the use of high-end imaging, says Mike Julson, chief technology officer of Escalate Retail Inc., a multi-channel e-commerce platform provider.
“Over the next five years, retailers will continue to invest in video content and high-resolution images that customers can use in purchasing decisions,” Julson says. “The more prevalent high-definition imaging is, the better products look, making it more likely shoppers will buy.”
Until now, some of the most innovative online interfaces have been on products like Apple Inc.’s iPhone, which lets users touch the screen to scroll and enlarge images. New technologies under development will also make the iPhone-like interface more common on other mobile phones, Julson and others say, making it easier for retailers to interact with consumers as they move through their mobile, web-enabled, socially networked world.
These new interfaces will also extend within a few years to in-store kiosks and digital signs, where consumers who belong to a retailer’s loyalty program will be able to use touchscreens to quickly sort through personalized merchandise offers, Julson adds.
In another in-store development, Escalate Retail and Microsoft recently demonstrated Microsoft Tag, a color-coded product identification tag. When a shopper scans the tag with a web-enabled camera phone, it can call up a web page of product details and a Buy button. Retailers can design the application so that the shopper can send information on a scanned product to friends via social networks.
New partners
Opening up e-commerce may include sharing the source code of an e-commerce platform with suppliers or other retailers to create new kinds of shopping features. A supplier or a retailer of fishing rods, for instance, might develop an online game to promote sales through a revenue-sharing agreement on the site of a retailer that sells fishing boots. “With open source codes, the cat is out of the bag for bringing big changes to a lot of retailers,” says Sucharita Mulpuru, principal analyst for e-commerce at research and advisory firm Forrester Research Inc.
Retailers are also likely to share their online real estate more with other merchants in coming years, experts say. Though only a handful of online retailers, including Amazon and Buy.com, currently channel sales for other online merchants, the number will soon grow to as many as 100, says Scot Wingo, CEO of ChannelAdvisor Corp., which specializes in connecting retailers to e-marketplaces. Indeed, one reason why Amazon recorded a 29% year-over-year rise in 2008 sales amid far lower industrywide sales was because it provides a sales platform for other merchants, notes Colin Sebastian, an Internet analyst at securities broker Lazard Capital Markets.
Say cheese
Retailers will also continue to develop new ways of operating. Amazon, for example, has developed an application for the iPhone that lets consumers take photos of virtually any product—a friend’s unusual wristwatch, for instance—and have the image automatically sent to Amazon to see if it’s available on Amazon.com.
Smaller and start-up retailers are also breaking new ground. Since launching last year and building its brand on social networks, fashion apparel and accessories retailer ideeli.com has reported surging growth from members-only special sales events. Because it routinely sells out of its limited inventory and attracts repeat customers, ideeli operates with minimal inventory and marketing costs, says founder and CEO Paul Hurley.
The convergence of television and the web is another trend already emerging. Backchannelmedia Inc. recently began providing dozens of local TV stations a system that lets viewers click their TV remotes to connect with online retailers advertising on TV shows.
And it won’t be long before retailers tie mobile phones more closely together with both web sites and stores, says Chris Fargiano, founder and president of Envisa, an e-commerce technology consulting firm.
With geographic location technology combined with mobile phone operating systems and wider use of the Silverlight imaging platform, for example, the typical new-age shopper could soon have another attraction pulling at her attention. Recognizing that the shopper browsing its web site is near one of its retail stores, a merchant could send an offer to her phone and when she arrives at the store she would see a bigger-than-life projection on the store window of the same product information flashed on her phone screen. “I would be astonished if that is not commonplace in 10 years and within five years at more progressive retailers,” Fargiano says.
If what the shopper sees in the store window stirs her emotions to buy, she may decide to purchase it immediately in the store or through her phone, or first check with her social networks and her bevy of friends and preferred merchants. Technology gives her plenty of options, and the retailer with the strongest emotional tie will likely win the sale.
paul@verticalwebmedia.com
Crunching the numbers
U.S. online retail sales are projected to grow nearly 11% this year to $156.1 billion, representing 6% of total sales, up from $141.3 billion and 5% of sales in 2008, according to a report last month from Forrester Research Inc.
Although e-commerce growth rates over the next several years will run between 8% and 13%, far lower than the 25% increases of past years, the web will continue to take share from stores, says Vikram Sehgal, research director at Forrester. “Of the U.S. Internet population, about 75% buy online, so there’s not much room to grow from new buyers coming online,” he says. “But there will still be a lot of growth from wallet shift.”
Forrester bases its projections on data compiled from consumers and retailers. Forrester several times a year questions a panel of about 60,000 consumers on such topics as the number of product categories they purchase online and their annual online spending. Forrester also surveys online retailers for information such as average order values and the number of product categories ordered from suppliers. “We balance all that data together,” Sehgal says.
One of the indicators of rising online sales, he adds, is that the average consumer now buys five product categories online every year, up from 4.2 five years ago, though not necessarily the same categories each year.
New technologies also are driving more sales online. In 2007, for example, Forrester projected tepid sales of Amazon.com’s new Kindle e-book reader. But Amazon sold out of the Kindle during the 2007 and 2008 holiday shopping seasons, and Amazon CEO Jeff Bezos says Kindle customers still buy the same number of physical books online while purchasing about 1.6 e-books for every conventional book. Forrester now projects e-book sales could hit $100 million this year and surpass sales of physical books by 2012.
Another source of growth is in global online sales. In its most recent global online survey, Nielsen Online projected that about 40% of the world’s population, or 875 million consumers, shopped online last year, up from 10%, or 627 million, in 2006.
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