Online retailers are faced with a highly unpredictable 2009 holiday season, but they’re not paralyzed by fear. Instead, they’re betting on varying ways to appeal to skittish consumers.
By Bill Siwicki
The 2009 holiday shopping season is the most unpredictable in the history of online retailing. With this recession, consumer confidence is tied closely to the stock market—where Wall Street goes, so, too, may web retailing, says Sucharita Mulpuru, principal analyst at Forrester Research Inc.
“If there’s another skeleton to come out of the financial services closet and the economy goes into freefall again, we’ll be in trouble,” says Mulpuru of Forrester, which, like other research firms, has not yet released formal holiday predictions. “History says we should have a recovery by the end of the year, and some signs are pointing to a recovery. But we can’t be overly optimistic because we’ve never been in this situation before. Anything can happen.”
Anything can happen. So how does one plan for that?
Retailers are taking varying approaches today to planning for the holidays. Some retailers are creating teams to overhaul and optimize their sites. Others are turning to technologies like live chat to help increase conversion. Some are adding new product categories or many more products, sometimes with the aid of drop shipping. Still others are trying altogether new programs, like behavioral targeting for on-site promotions.
One tactic getting a lot of mentions is expanded use of social networking.
This medium is really striking a chord with some retailers, in part because social marketing costs generally are so low and social network use is so high. In the April Internet Retailer survey, for example, 30.5% of retailers said social network presences will perform better as a marketing vehicle this year than paid search or search engine optimization. Nearly one-third is quite a statement given the proven power of search.
Where the customers are
Retailers testing and using social networking insist it’s where their customers are. In fact, Nielsen Online revealed in March that consumers now spend more time on social networks than they do with personal e-mail. The retailers say social networking helps them build repeat sales as well as increase their customer base through the power of viral marketing. And retailers putting more time and energy into social networking for the 2009 holiday season say firming up the base is critical during a period of economic volatility.
“Social is now a huge aspect of the web—you can’t deny it and you have to go with it,” says Howard Wyner, CEO and chief of e-business at fragrances e-retailer Scentiments, which is testing promotions on its Facebook page and Twitter account. It hopes to determine social marketing best practices and build its fan and follower bases by the holidays. “We’re offering our Facebook fans special deals. We’ll be doing the same with Twitter followers, such as tweets offering a product just for them for $9.99 today only.” (Tweet is the term for a message sent via Twitter.)
Jodi Bresina, Internet director at ShoeMall.com, says the retailer has for months been “playing in the social media sandbox,” working on a social strategy it can more formally apply as the holidays approach. She says communicating with customers in more personal ways and offering them special deals can increase customer loyalty and attract new customers as satisfied shoppers pass on the word to friends and family.
ShoeMall.com operates a Facebook page, Facebook application and Twitter account, and is test-driving contests and giveaways to create buzz and boost traffic. It’s using its web analytics to judge what works well and what does not. To help create more buzz about the brand and products and reach out further in the social realm, ShoeMall.com will be launching a blog in time for the holiday season.
For holiday 2009, Buy.com Inc. is focused on one social network—its own. For years Yub.com has been a stand-alone entity complementing the efforts of Buy.com. Reacting to the widespread adoption of social media overall, Buy.com this year is adopting a new approach—integrating aspects of Yub.com into the retail site.
“We’ll be helping users connect in a social manner while continuing with their purchasing needs,” says Neel Grover, president and CEO of Buy.com. Grover is keeping details of the integration close to the vest. “Looking at the holidays and how important social networks are to our customers, we feel social features will further help them when it comes to finding the right gifts. But this won’t just be for the holidays—social networking is here to stay.”
Chatting and selling
While social networks can facilitate enhanced communication between retailers and their customers, live chat literally makes it happen. And chat is increasingly being used for selling, not just answering questions.
Apparel and accessories retailer Gotham City Online has been using BoldChat live chat technology from vendor Bravestorm LLC purely as a customer service tool, and observed that shoppers who opt to chat convert between 40% and 50% higher than shoppers who do not. So earlier this year, the retailer launched what it calls its “conversion project” for the holidays. It’s working with the vendor to explore ways to boost the conversion rate even higher while getting more shoppers to chat.
On a basic level, it may expand the hours it offers live chat; currently staff is on hand between 9 a.m. and 5 p.m. But the main goal is to decrease shopping cart abandonment, and that will require a more sophisticated chat deployment.
“We need to know why consumers are not completing a transaction,” says David Topkins, president of Gotham City Online. “Does it have to do with information we’re providing or not providing in the cart, is it because they don’t understand their order total, do they not know if a coupon was applied? Or is it something more sinister, like they don’t trust us, or don’t have the confidence they will receive an order on time? It is critical for us to understand this and it’s not something you can really get through e-mail or other means.”
The retailer is in the process of building rules, scripts and graphics to catch shoppers who quickly exit the site and for proactive live chat invitations to help get shoppers past any hesitation they have of buying.
“We’re coming up with messaging to really encourage people to work with us through chat,” Topkins explains. “We don’t want shoppers to feel like a chat offer is trying to address a problem, like you’ve been here 45 seconds and haven’t done anything, is something wrong? We want to say things like, ‘You’re looking at this style of shoes, is there anything we can assist you with,’ or, ‘What size are you?’ We want to use chat in a way where we approach people more like a personal shopper.”
Optimizing the site
Jewelry Television also is focusing sharply on boosting conversion, creating a site optimization team charged with increasing conversion at JTV.com during the challenging holiday season and beyond.
“In this economy, for every qualified customer we get to the site, regardless of how they get to us, we have to focus on conversion,” says James Thome, senior vice president of e-commerce at Jewelry Television. “We have been running a conversion rate between 3% and 5%, a little north of the industry standard. But industry standards are not acceptable performance levels in today’s economy.”
Thome says the biggest challenge has been improving conversion during the checkout phase and in the shopping cart. And it’s been because of a unique obstacle: These pages are under the control of the retailer’s software engineering team, not e-commerce. Changes have to go through a long process from prioritization through quality assurance. So the retailer has decided to switch to an outsourced e-commerce platform from a vendor it cannot yet disclose. This change will bring all pages under e-commerce, giving the department full control.
“With that new control, a lot of testing and a sharp focus on conversion,” Thome says, “we expect to have a very effective online retail vehicle for the holidays.”
The more the merrier
While some retailers are focusing on conversion, others are focusing on adding products and categories to the mix to boost holiday sales.
ShoeMall.com just launched a Kids category and a deal center. It sees Kids as rounding out its offerings for the entire family, and the deal center appealing to today’s cost-conscious consumer. It’s trying them out now to see how they might work best for the holiday season.
Buy.com also sees adding products and categories as a winning strategy this year. Further, it will be adding more retailers to its marketplace.
“We just added jewelry and watches, perfumes, apparel and shoes, and home and outdoors. That added more than one million products we didn’t have before,” Grover says. “In the next few months we’ll be launching more categories, including automotive and health and beauty, and adding more sellers. We want to make sure when the consumer comes to our site they can quickly and easily find the best product and the best price.”
JTV.com is planning a major addition for the holidays, and likely will be facilitating it through drop shipping. Thome says Jewelry Television sells more than $100 million in loose gemstones a year, but has offered only a limited variety of castings and settings. So it is exploring relationships with companies that specialize in castings and settings to expand these offerings, and it can do so now more easily because of a change in I.T. infrastructure.
“We have not drop shipped because of the old, complex, inflexible, hard-coded systems we have in place,” he explains. “But with the new e-commerce platform, we’ll have the ability to easily link partners into our system and drop ship and thus broaden our selection. We are hoping to have this in place for the holidays. We’re looking at new verticals and new inventory strategies to have the right product for the right person on a highly converting site. The web is driving a lot of change in our enterprise overall.”
Trying something new
While Jewelry Television is working with a conventional technology, Scentiments is studying a new technology as a possible tactic for the holiday season.
“We’re testing with a company called Monetate. It is a software-as-a-service way where we can personalize in-house banners and overlays without all the programming that would be involved,” Wyner says. “For instance, the system can create a geotracking-generated banner that says, ‘Chicago loves our prices and service—click here for an additional 5% off.’ Or it can key in on where you came from online: ‘Hey Google shoppers: Get 5% off your order today.’ And we can target people who have purchased Dolce & Gabbana, for example, serving up an overlay on top of an image that says, ‘Save 50% if you buy another Dolce & Gabbana fragrance.’ It’s all about calls to action.”
If the test shows increases in conversion rates and average order values, Scentiments may deploy the system in advance of the holidays. So far, the new system is creating a 6% lift in conversion, Wyner reports.
“We could do 100 of these customized campaigns on all kinds of products as opposed to an unfocused e-mail blast trying to hit them all,” Wyner says. “And these campaigns are targeted at customers right at the time they need them, like when they’re doing a search. This would help us during the holiday season by enabling us to swiftly and easily offer any kind of offers we think are necessary.”
So retailers are placing their bets today on strategies and technologies, even though they can’t be sure what this holiday season will bring. However the season turns out, the e-retailers best prepared to deliver a great online shopping experience are more likely to have the happiest holidays possible.
bill@verticalwebmedia.com
