Investments in a web retail operation in today’s economy don’t have to suffer. The trick is finding the low-cost approaches that create a quick return.
Before retailers slash their investments in e-commerce systems looking to weather the drop off in retail sales, they should carefully look at making low-cost upgrades to their e-commerce platforms that increase conversions and revenues. In the current economic environment, retailers can stretch their I.T. budgets by identifying economical technologies that enhance the shopping experience and deliver the fastest return on investment.
“A retailer can create a true competitive advantage, within a limited budget, by identifying areas of their site that can be upgraded to better meet consumers’ expectations and demands,” says Jeff Zisk, CEO of SpeedFC Inc., provider of e-commerce and transaction management services. “These upgrades often quickly produce measurable returns and may be quickly implemented with the right technology. E-retailing is still showing great growth potential in this economy and there are opportunities for retailers to make inexpensive investments that yield big benefits.”
Becoming more nimble
A more flexible platform allows retailers to make changes to a site that meet online shoppers’ evolving needs and expectations and that provide to marketing and merchandising managers more direct control over management of the web site.
Applications that deliver this type of flexibility allow retailers to be more nimble when it comes to implementing changes in real time to keep marketing and merchandising strategies fresh.
“To be truly competitive in this economic climate retailers need e-commerce platforms and applications that are retailer driven, not I.T. or vendor driven,” says John Marrah, CEO of e-commerce platform provider ProfitCenter Software Inc. “Retailers have to run their businesses more cost efficiently in this economic environment and implementing applications that provide greater control over marketing and merchandising helps ensure that every dollar they spend on the e-commerce platform either generates a sale or delivers greater operating efficiencies.”
Some areas of their platforms that retailers want to consider adding or enhancing include the product recommendation engine, customer-generated content, site navigation, the checkout page, click-to-call and live chat. Upgrading each of these technologies can be a relatively low-cost fix that can enhance the shopping experience, increase conversions and reduce site abandonment.
“Retailers looking to make upgrades with low, upfront costs and who want a quick return on investment will want to look at these areas of their online business,” says Bill Zujewski, vice president, product marketing for e-commerce solution provider ATG. “Short-term I.T. strategies involve increasing conversions and revenue and improving customer interaction, more than reducing total platform operating costs or expanding their business to new markets.”
A starting point
Improving product recommendations is often a good starting point for economically upgrading the web store because it provides retailers options for steering shoppers to products with the highest profit margin or sale items likely to appeal to shoppers and meet their budget.
“If sales are down, steering shoppers to higher margin items, such as accessories, is a cost-effective way to boost profits,” says Tony Svanascini, CEO of web site design firm Americaneagle.com.
When guiding shoppers to accessories, retailers must make sure the accessories appear both with the item they complement and as stand-alone products with links to related products, in case the shopper is looking specifically for the accessory.
“If a shopper is looking for a cell phone battery, the retailer wants to categorize it as a stand-alone product with links to the car charger for the battery, and as an accessory to the cell phone it fits as well as the car charger,” Svanascini says. “Once the logic behind these rules is built into the platform, retailers don’t have to do much to maintain it.”
Adding product recommendation categories that can be highlighted more creatively on the site is another cost effective way to recommend products. Highlighted recommendations can include best sellers, items other shoppers in the same geographic region purchased, new arrivals that reflect seasonal changes to the retailer’s product catalog or gift centers that feature items based on the selling season.
Creative rankings
Adding this capability requires changes to the merchandising configurations within the product recommendation engine. Retailers don’t necessarily need to base most popular, for example, on actual sales; they can select most popular based on such criteria as page views or search queries.
Online retail systems can also make product recommendations based on a combination of criteria. ATG uses dynamic behavioral models to analyze each shopper’s past and current behaviors to predict what she’ll want to see and buy. ATG uses data from the retailer’s catalog, historical shopping information, clickstream data, web site information and visitor information, including the geographical location of the shopper’s Internet connection, to anticipate behavior and predict highly relevant recommendations.
“The ATG recommendation engine increases the personal relevance of the product recommendations, can be up and running within a couple of weeks, doesn’t cost much, and can quickly yield a substantial return,” Zujewski says. “Automated gift recommendations are a great way to selectively highlight those updates to the product catalog that occur every few weeks on a select basis.”
Site navigation is also an area where upgrades can pay quick dividends. Consumers can easily get lost in sites that are difficult to navigate and they then abandon the site out of frustration. Rectifying this problem requires evaluating the clarity and directness of the navigation paths.
“If the site design is a mess, shoppers will give up quickly and go to another store,” Svanascini says. “Shoppers’ expectations of navigating a web site are no different than getting around in a store. If a store is poorly laid out, shoppers will have trouble locating the right department and products within each department and won’t spend much time there. If the store is well laid out, they are more likely to browse other areas after finding what they want.”
Know the customer
Effective site design starts with knowing the customers and their needs. “Once a retailer understands their audience, they can properly design a site that delivers the desired value proposition,” Svanascini says.
In addition to site design and development, Americaneagle.com provides site hosting, content management, search engine marketing, multimedia, streaming audio and video services.
A more advanced form of site navigation is guided navigation, which provides an intelligent search capability which leverages such tools as drop-down menus, buttons and site search to assist the shopper to find appropriate products with the fewest clicks possible. Once shoppers are at the desired page within the site, retailers can program their guided navigation technology to help shoppers drill down further into product or information categories.
Profit Center Software’s guided navigation application asks shoppers questions about the product for which they are searching after they have clicked on a product category. A retailer of gardening products, for instance, can serve up a series of progressive questions to shoppers who clicked on flower seeds, such as their ZIP code, the type of sunlight conditions in their garden, and whether they want flowers that bloom continually during the growing season or only once.
“Asking questions via a survey engine helps the retailer guide the shopper to the desired product using the shortest navigation path, rather than having to click through multiple subcategories,” Marrah says. “Additional questions can be asked the deeper the shopper drills into the site, but the goal is to guide the shopper to the right product and accessories that go with it without making it a complex process.”
Retailers can also use site search to guide shoppers to alternative brands with higher margins or to clearance items of similar quality. For example, customers entering a search query for black Prada pumps can also be shown results for other high-end brands in the retailer’s catalog, such as black Christian Louboutin pumps.
Relevant—and profitable
“Site search accounts for about 20% of sales, so retailers want to deliver the most relevant results possible, but also profitable or cheaper alternatives, depending on what they know about their customers’ preferences and their marketing and merchandising strategy for those products,” Svanascini says. “It’s simply a matter of creating rules within the site search engine.”
Guiding shoppers to the desired product and suggesting viable alternatives can significantly reduce site abandonment. “The more quickly and easily a shopper can navigate, the more enjoyable the shopping experience and the less likely they will be to abandon the site,” says SpeedFC’s Zisk. “Any upgrade that can increase speed and ease is going to provide a measurable return—and is usually not expensive to implement.”
When directing shoppers to specific products it is best to support those efforts with unique product content, such as customer-generated product reviews. “Shoppers now expect user reviews, especially from retailers with the best-known brands because that information reflects the quality of the brand,” Svanascini says. “High-end retailers that lack this kind of unique content can actually diminish the value of their brand.”
Marketing and merchandising applications are not the only areas where retailers make low-cost enhancements to their site that deliver a fast ROI. Adding one page checkout improves convenience by getting shoppers through a critical phase of the purchasing process faster. Just as shoppers look for the shortest checkout line in a store, they want an online checkout process that involves as few steps as possible.
Streamlining is easy
Steps such as registration; creating accounts for first-time customers; requiring customers to enter state, city and ZIP code into data fields separately for shipping and billing addresses; and gathering of other personal information make the checkout process cumbersome. Making checkout difficult to navigate can drive shoppers to abandon the shopping cart, especially if there is more than one page to the checkout process.
Features such as guest checkout that allow shoppers to skip creating accounts and automatically populate data fields for city and state by entering a ZIP code create a more user-friendly experience. “Streamlining the checkout process is an easy way to improve conversions, but many retailers haven’t evolved to a one-page checkout yet,” says SpeedFC’s Zisk.
Proactive click-to-call and live chat are another way that retailers on limited budgets can improve the user friendliness of web sites. Merely offering the option of live chat is not enough as shoppers can overlook it or choose not to initiate it when they need help. “Click-to-call or chat needs to be offered up at the first sign a shopper is struggling with navigation, filling out a form or any other situation that may require the assistance of a service representative,” Zujewski says. “Not being proactive in these situations can lead to cart or site abandonment.”
Retailers that add proactive click-to-call and live chat can reduce cart abandonment up to 20% versus shoppers who receive no live help. Retailers can program their platforms to offer live help if a shopper receives an error code when filling out a form, toggles between product pages multiple times or spends several minutes searching the site for unique product information, such as customer reviews.
“Retailers want their service representatives to proactively offer assistance to shoppers that appear to be in need of help, just as they want sales associates to do so in a physical store,” Zujewski says.
Getting the right tools
When implementing any upgrade to the e-commerce platform, retailers want to be certain they have access to the tools to get the most out of the application. This is especially important when it comes to creating and implementing promotions, which may change hourly, daily or weekly based on consumer response.
ProfitCenter Software allows retailers to establish promotion stacking rules that govern the order of precedence of processing promotions that run simultaneously, a level of technological sophistication that many retailers don’t possess in house or that they will pay dearly to have.
For example, a retailer may be running a promotion for free shipping on orders of more than $100 and one for 10% off select items. The retailer would want the 10% off promotion applied first, reducing the order value before evaluating to see if the order meets the $100 threshold for free shipping.
Retailers can also enhance their promotional strategies by setting rules that rotate the frequency of a promotion. If a shopper has taken advantage of a buy-one-get-one-at-half-price promotion, for instance, then returns while the offer is still valid, the retailer may want to push another offer. “This kind of control over promotions can have a big impact on profits and allow for more creative promotional strategies,” Marrah says.
That level of hands-on management is typically available through vendors of on-demand platforms, which makes many of the add-ons affordable. Vendors that offer on-demand applications such as SpeedFC, ATG, Profit Center Software and Americaneagle.com create applications and platforms using a common core code base within their application that allows upgrades to be made across the entire user base as often as once a month. Retailers can customize their individual sites using tools accessed through an executive dashboard.
While customization tools represent about 20% of a platform’s features and functionality, they deliver the features that retailers need to be more creative in managing site content and customer interactions, while leaving platform maintenance and upgrades to the vendor.
From a cost perspective, the major advantage of on-demand platforms is that retailers typically pay a flat monthly fee which makes measuring the ROI clearer because retailers aren’t charged for add-ons to the platform and ongoing maintenance. “Our goal is to provide retailers with the tools they need to manage marketing and merchandising, while we take care of the platform architecture from end-to-end,” Zisk says.
Do the due diligence
SpeedFC, which provides web development services in addition to fulfillment, order management and customer service, bases its fee structure on the retailer’s revenue stream after implementation of its technology.
Before selecting any e-commerce vendor in this economic climate, retailers ought to test or get a demonstration of the vendor’s technology to make sure it works as advertised. Talking with at least three customers and one analyst that follows the company to provide a third-party perspective on the vendor’s financial strength and reputation for quality in the market is also recommended. “It is important to perform due diligence on a prospective vendor and get as much objective feedback on them as possible,” Zujewski says.
Another factor to weigh when selecting a vendor is how much the vendor spends on research and development to make the technology more flexible. “A vendor that continues to invest in technology is able to provide clients with a platform that is constantly evolving to meet the needs of a rapidly changing marketplace,” Zisk says. “This dedication to research and development ensures competitiveness for the retail client with ongoing flexibility and increasingly robust functionality.”
Finally, retailers should seek vendors that solicit ongoing feedback from customers about the performance of the technology. “Retailers are best served by vendors that genuinely listen to what retailers have to say about their technology,” Marrah says. “There is really no need for vendors to be defining the technological needs of their customers.”
Indeed, e-commerce technology is changing faster than ever and e-retailers that take the time to understand their customers’ needs and preferences will be in the best position to obtain the technology they need to thrive in the midst of the current recession without breaking their budget.
“E-commerce is still the cheapest investment in retailing,” Svanascini says. “It costs more to open a store or launch a print catalog and there are few e-retail sites that don’t recoup their investment. Investing now in e-retailing is a much more affordable, stronger and safer way for retailers to thrive in this economy, and differentiate themselves in a big way once the economic climate improves.”
