Today and tomorrow
Retailers look for technologies that create
a quick return now and position them for growth
when the economy recovers
E-retailing may be outperforming other retail sales, but online retailers still need to create a satisfying site experience to drive traffic and boost conversions. To achieve this goal, retailers must consider upgrading key areas of their technology platform to differentiate their brand, attract new customers and engender customer loyalty.
Some of the platform components retailers need to consider upgrading are search marketing, site design and navigation, personalization, and content. In addition, retailers ought to reevaluate performance metrics to reflect changes in how the applications that make up a web site are delivered over the Internet to a shopper’s browser. Retailers that upgrade any or all of these core platform applications will be in the best position to lead the market, not only now but also when the economy rebounds.
“Now is the time for retailers to return to the basics of e-retailing technology and fix the foundation of their platforms,” says Jay Heavilon, president of content management and analytics provider ARS Interactive. “Prior to the recession there was a lot of focus on adding the bells and whistles that put retailers on the cutting edge technologically, but didn’t necessarily enhance the value of the online shopping experience or boost conversion. Retailers that make the investment now to fix their technology foundation will be better positioned for near- and long-term growth.”
First step: Nab the searchers
The first step in the process is to address search marketing. This includes both paid search and organic search campaigns since both are excellent ways to attract customers.
“Unless a retailer has an established, well-known brand, organic and paid search marketing are the best ways for retailers to extend the reach of their brand online and enable new customers to find them on the web,” says Bernardine Wu, CEO of consulting firm FitForCommerce. “Outreach marketing programs, like e-mail, are going to attract about 20% of new shoppers; the other 80% are going to come from organic and paid search, so retailers need to be sure shoppers can find their site when they search for a product.”
One way to boost organic search results is for retailers to gather reports from search engines about specific and generic keywords shoppers use to search for merchandise on their sites and then weave those keywords into their site content.
Web site design firm Americaneagle.com, for example, is creating a new site for the Chicago Bears of the National Football League that places more emphasis on including actual keywords and terms entered by shoppers on search engines when looking for Bears merchandise. The goal is to make certain the Bears site ranks either first or second for any product search of Bears-related merchandise.
“There are sports retailers that carry Bears apparel, but there is no reason they should rank higher than the team’s official site, which should always rank first and no lower than second for any search related to Bears merchandise,” says Mike Svanascini, COO of Americaneagle.com. “Incorporating keywords and terms shoppers actually use to search for products makes the site platform more search engine-friendly.”
Retailers can also gain insights into search terms shoppers use through their own site search engines and customer reviews. “The site search engine and customer reviews are excellent sources for gaining insights into how shoppers actually refer to a product and which keywords should be purchased in paid search campaigns or woven into the site’s content,” says Suzy Sandberg, president of Internet marketing firm PM Digital.
Identify the non-brand words
Identifying non-branded keywords used in search descriptions, such as “short, white, summer dress,” can help significantly boost paid search conversion results if the keyword purchased is a good match for what someone is actually searching for.
“Non-brand keywords also generate a large amount of new customers to a merchant’s brand as opposed to those shoppers that use paid search to search for the merchandiser specifically,” says Sandberg.
In addition to search marketing, retailers can extend their reach to consumers through online banner and display ads placed on other sites. Rather than take a mass marketing approach, banner ads can be personalized. Taking information gathered from shopping behavior and purchases can help retailers identify what types of ads to place in front of the shopper on third-party sites.
“Personalizing ads based on what a retailer knows about their customers can drive incremental sales, improve the performance of ad campaigns, and reduce the waste in the ad budget by eliminating ad clutter,” says Pedro Santos, chief strategist, e-commerce, for Akamai Technologies Inc., provider of content and application delivery services. “The goal is to put the right ad in front of the right consumer at the right time so the ad is not viewed as noise.”
Akamai enhanced its ability to place more relevant ads in front of shoppers through its acquisition last October of Acerno, an online retail co-operative. Acerno operated an ad network of several hundred retailers. Retailers participating in the network can place ads on third-party sites in the network. Anonymous shopping data is used to determine when to show a specific ad to a consumer. “Serving up more relevant ads increases conversions,” adds Santos.
Using personalization applications to attract customers to the site represents only a portion of how retailers can effectively use the technology. Once a shopper arrives at a retailer’s site, the shopper needs to feel as though the retailer understands her needs by making product recommendations geared to her personal preferences.
Leverage information
“The goal of personalization is to leverage information from every interaction with the customer to create a shopping experience that best matches their wants and needs, because margins are getting squeezed from stiffer competition in a lot of retail categories, especially electronics and games, which tend to be more price-sensitive,” says Bob Cell, CEO of MyBuys Inc., provider of personalized product recommendation services.
Information that can be used to personalize the shopping experience includes product categories and pages viewed, price points, and navigation paths the shopper takes across the site. “Once retailers have this type of information, they can show a deeper knowledge of the customer’s preferences and make recommendations accordingly,” Cell says.
Simply deploying search and personalization strategies to attract shoppers to the site and boost conversions is not enough. Retailers also need to pay close attention to site performance if they want to create a relevant and satisfying site experience that keeps shoppers on their site.
“Shoppers are often unhappy about the performance of the site more than retailers realize,” says Eric Schurr, senior vice president of marketing for Gomez Inc., provider of web performance management solutions. “Page download times can be widely different from one location to another, transactions can fail, applications may not be compatible with certain web browsers, or the site or individual pages can be unavailable. Shoppers today expect a higher level of site performance and don’t have the patience to try and work through the problem.”
Assuring proper site performance starts with taking the customer’s point of view when it comes to application delivery over the web. Increasingly, consumer expectations of site performance are being set outside of the e-retail sector. Sites setting the bar for performance include search engines and YouTube.
“Retailers need to understand that not just direct competitors are setting the standards for the performance bar, but indirect competitors, too,” says Schurr. “They can’t have their head in the sand about which sites are setting customer expectations for performance.”
A plan of action
Once retailers understand the order of progression to creating a satisfying site experience—starting with drawing shoppers to their site—they can effectively develop and implement a plan of action.
Content management is the core of any effective search marketing strategy. “Most retailers put up content on their sites without standardizing image size or determining the content’s validity,” says ARS’s Heavilon. “For content to be search-optimized, guidelines need to be put in place at the outset.”
ARS, which is an online marketing agency, provides content management for web sites, e-mail, search and affiliate marketing campaigns, as well as web analytics consulting to determine the effectiveness of a retailer’s content through all customer touch points.
Optimizing content begins with understanding what shoppers want to know about each product in a retailer’s catalog. Identifying the keywords that shoppers are most likely to search for can optimize organic search results. It also helps retailers zero in on the right keywords and apply resources more efficiently.
For example, shoppers looking for an appliance will want detailed descriptions about the features, such as whether it comes with a built-in filter for dispensing water or its Energy Star rating. Savvy retailers will put hot links into the copy around these features to deliver more details about them.
How are they shopping?
In contrast, shoppers searching for a game are more apt to search for the best price since they are most likely familiar with its features from having played it and consider it a commodity product.
“Lengthy creative descriptions are not necessary for commodity products such as games because the shopper isn’t searching for that kind of information,” says Heavilon. “An appliance is a different story because this is something the shopper will use for years and shoppers want to be certain they find the products with the features they want.”
Content management is also applicable to yielding a good volume of sales from the comparison shopping sites. The growing popularity of these sites has dramatically increased competition on them, yet many retailers do not take the time to tailor their product descriptions in a compelling way from a sales standpoint in order to get maximum appeal given the limited space on these sites.
Subsequently, shoppers do not get the desired information on what they are looking for despite the fact that a merchant may carry exactly what it is a person is hoping to find.
“What a lot of retailers do is send the product description from their site to the comparison site without editing it for space constraints,” explains PM Digital’s Sandberg. “So what shoppers end up seeing for the product description could be the creative introductory copy from the retailer’s web site rather than key features.”
As part of its services, PM Digital will write and edit copy to be placed on comparison shopping engines so shoppers get the information they need to make the purchasing decision. “Having a product description that gets right to the point on a comparison shopping site can make a difference in conversions,” says Sandberg.
Online marketing services provided by PM Digital include pay-for-placement search engine marketing, data feed marketing (comparison shopping engines and paid inclusion), search engine optimization, online media planning/buying, multichannel planning/strategy, e-mail marketing, and creative.
One of the challenges of writing product descriptions for a comparison shopping site, or the retailer’s own site, is to make certain the copy includes keywords the shopper uses to describe the product. A retailer that names a magazine rack a “magazine butler,” for example, must incorporate the words magazine rack somewhere in the product description, as that is how shoppers are likely to refer to the product.
Don’t get cutesy
“While the term ‘magazine butler’ is a unique name for a magazine rack, it is not a term many shoppers will enter when searching for a magazine rack in a search engine or a comparison shopping site,” says Sandberg.
The retailer does not necessarily have to change the name of the product for it to be visible to the search engines, provided keywords commonly used by shoppers to describe it are in the product description.
That said, when considering the limited space and the nature of how people search to find products on the Internet, an intuitive naming strategy for merchandise makes a lot of sense and can cut out some of the middle steps that are required to ensure products will show up in search engines and the comparison shopping sites, such as adding relevant keywords throughout the copy, Sandberg adds.
After shoppers arrive at a retailer’s site, guided navigation becomes an important element of the site experience because it gets shoppers to the products they want expeditiously.
One strategy for improving guided navigation is to make the feature the mandatory starting point for any onsite product search. Americaneagle.com has developed just such a guided navigation system for Weathertech.com, a retailer of auto parts and accessories. After logging onto the site, shoppers are required to enter the make, model and year of the vehicle for which they are buying accessories, or they can enter the product type. In both cases shoppers select the required information from a pull-down menu.
Shoppers that enter the make, model and year of the vehicle are shown product categories specific to that vehicle and can drill down further from that point by clicking on a category. Shoppers selecting a product are shown that product. The change into guided navigation from open-ended search boosted the retailer’s conversion rates from less than 6% to 10%.
“The retailer wanted to improve the way shoppers search for products specific to a vehicle, as well as specific types of products, and decided that steering shoppers into guided navigation was the best way to eliminate the risk of having site search return unsatisfactory results,” says Americaneagle.com’s Svanascini. “In the current economy, guiding shoppers to the products they are looking for in as few steps as possible is going to create a more satisfying shopping experience and boost conversion rates.”
In addition to site design and development, Americaneagle.com provides site hosting, content management, search engine marketing, multimedia, and streaming audio and video services.
A powerful tool
Searched keywords are among the most powerful tools in marketing as they can provide clues as to what phase of the purchase cycle a shopper is in. A good content strategy will ensure that shoppers with more generic searches get exposed to a wider range of products.
Translating web analytics into useful insights is a significant challenge for most online marketers. That’s why establishing key performance indicators is critical to accurately gauge the performance of search marketing efforts. For example, the time spent on entry pages is a good KPI to measure search relevance, according to ARS’s Heavilon.
Getting shoppers to the desired product, however, is not enough to ensure a sale or prevent the item from being returned. Product descriptions are critical to putting the right product in the shopper’s hands.
“Without a detailed description and an image, shoppers may be less inclined to buy,” Heavilon says. “There is an ROI associated with content.”
Processing a return costs the retailer money and often leads to customer dissatisfaction. An incomplete product description is often one of the main reasons for returns. Effective content management is about proving the content’s validity so it delivers measurable gains in sales and eliminates unexpected surprises that can lead to returns or customer dissatisfaction.
“We had one client with return rates of more than 20% on a specific item because there was not enough data in the product description,” Heavilon says. “Customers would get the item, discover it was not what they were looking for and return it. After using analytics to identify the problem, then fixing it, return rates dropped below 5%.”
Retailers will find that a comprehensive strategy that encompasses effective content management, well-executed search marketing and accurate key performance indicators provides significant ROI and growth. “Content management is about proving the validity of the content so it delivers measurable gains in sales and eliminates unexpected surprises that can lead to returns or customer dissatisfaction,” Heavilon says.
Let’s get personal
The next level of content management is personalization.
“Shoppers expect to see a more personalized shopping experience in which they receive product suggestions just as they would from a sales associate in a store that knows their preferences and criteria for making a purchase,” says FitForCommerce’s Wu. “Personalization is quickly evolving past recognizing the customer when they return and flashing a personal greeting such as ‘Welcome back, John.’ Personalization has to be specific to a shopper’s order history and behavior patterns.”
Achieving that level of personalization requires paying attention to more than what the shopper buys. Instead, retailers ought to be looking for trends in their clickstream data such as price points, favored product categories, preferred colors and favored brands. Once these and other preferences are identified, values are assigned to them based on the role the preference is likely to play in the purchasing decision and a customer recommendation is made.
“This is the kind of information that gives retailers deep knowledge about their customers’ product preferences,” says MyBuy’s Cell. “Retailers who know what matters most to a customer are more likely to make product recommendations that convert into a sale, much like a suggestion from a personal shopper in a store.”
Retailers feed clickstream and customer data to MyBuys, which uses it to build individual customer profiles stored on its servers. Once the profile is built, the retailer implements a JavaScript applet that attaches a tracking cookie to the device the shopper uses to access the site so the shopper can be identified on return visits.
The applet also records each shopper’s behavior. Scoring algorithms are used to weight attributes within the profile based on customer behavior patterns and optimize recommendations for each customer.
By digging deeper into understanding a shopper’s product preferences, retailers can recommend new products to individual shoppers on their home page; suggest accessories for a previous purchase; and offer products within a customer’s preferred price range.
7x growth in conversion
“Most retailers only personalize at the category level, so with the strategy of personalization at the category level someone who frequently shops for sheets would be shown the bed and bath category, making it easier to find what they want,” Cell says. “You can’t pitch the same message to everyone or generic messages and call it personalization.”
Cell adds that shoppers receiving a personalized product recommendation are seven times more likely to convert than those that don’t receive such recommendations.
Personalization can be applied on a more macro level for retailers that sell regional products. Akamai applies this principle through its Content Targeting solution so that retailers can adjust web page content based on location, bandwidth connection or device type. By mapping IP address to location, Akamai can work with retailers to ensure the right content is provided to the shopper connecting to the retail site in a specific region.
For example, during winter shoppers logging onto the site of a home improvement retailer in a part of the country that was hit by a major snowstorm can be shown snow blowers, while those outside the area of the storm see something else.
“Retailers continue to look for ways to leverage shopper information at the micro and macro level to deliver more personalized and relevant products and advertising,” says Akamai’s Santos. “Greater precision in content placement yields more relevancy and delivers retailers a higher return on their investment.”
Applying personalization to e-mail marketing campaigns, which merchants tend to treat as a mass marketing tool, can dramatically boost click-through rates. An e-mail with personalized recommendations can generate click-through rates three to 10 times higher than standard e-mail campaigns, according to Cell.
“A lot of retailers don’t create granular e-mail marketing messages,” Cell says. “Instead, they create mass marketing messages such as a sale in a product category or free shipping on purchases over X amount. The aim is to target the message to a specific product or tendency in the shopper’s behavior.”
When mass e-mails don’t work
A shopper who has looked at one or two digital cameras over several weeks could be waiting for those products to go on sale. What the shopper doesn’t want is an e-mail announcing a camera sale that excludes the desired products because they are, say, high margin, best sellers that rarely go on sale.
“Personalized e-mail marketing is knowing the specific products, brands and categories that interest shoppers and what will trigger their purchasing decision,” Cell says. “Too many retailers look to appeal first to the masses and worry about personalization later. It ought to be the other way around.”
Regardless of how effectively retailers create a personalized shopping experience, the one inescapable truth about e-retailing is that if site performance does not meet shoppers’ expectations a return visit by the shopper is unlikely, even if they did make a purchase.
A recent Aberdeen study showed that even a one-second delay in response time can reduce site conversions by 7% and page views by 11%. However, the opposite is also true: an increase in performance can improve web site conversions. One Gomez customer, eBags, has seen a 10% increase in conversions since working with Gomez.
“A lot of retailers are under the impression that they have no control over the application delivery chain beyond their own firewall because load testing used to be performed only within their firewall, but that is not true,” says Gomez’s Schurr. “Retailers need to understand the problems first if they are going to fix them and the only way to do that is to adopt an outside-in customer point of view for web performance management and load testing.”
That’s an important advancement because many retailers incorporate third-party content and service into their web sites, such as shopping carts, e-mail and text messaging, video, and social networking. Hence, many web sites are composites assembled in the web browser that communicate with multiple servers. Most web sites today have an average of six applications provided by third parties.
The outside-in approach
“Performance testing has to be done on the applications flowing into the web browser,” says Imad Mouline, chief technology officer at Gomez. “With today’s site architecture, retailers must take an outside-in approach to performance testing.”
Opening these external applications can make up 50% or more of the time the shopper spends waiting for page downloads through a retailer’s site. Regardless of whether performance issues are the fault of the outsourcing partner, shoppers will hold the retailer responsible. The recent problem with Google Analytics that impacted millions of people is a telling example of how third-party services can impact retailers’ web site performance.
Gomez provides services that test web sites and measure their performance across the entire web application delivery chain all the way to the end user through a software-as-a-service model to more than 2,000 customers. Web site and web application performance, as well as the customer’s actual web experience, can be measured from design and development through deployment and production.
To meet shoppers’ expectations of site performance, retailers need to broaden their approach to defining performance metrics to include measurements that indicate whether they are engaging shoppers in a meaningful way.
“As retailers add more rich content to their sites, such as video, it enhances the shopping experience, but also degrades performance,” Santos says. “Consumers compare the performance of a retailer’s site to that of the last site they were on. So even if the less than four second threshold for page downloads is the industry standard, if the consumer was on a site that loaded a page in two seconds, that becomes the shopper’s expectation.”
Still, the acid test for meeting a shopper’s expectations for performance is whether the retailer can do so during peak shopping times over a large or even global geography. Akamai provides retailers with the infrastructure needed to support performance through its EdgePlatform, which is comprised of more than 48,000 servers in 70 countries within nearly 1,000 networks. Each server continually monitors site traffic, looks for trouble spots and assesses overall network conditions to ensure reliable performance for e-retailers.
Know the starting point
Putting performance metrics into perspective begins with getting a baseline measurement of competing sites. Baseline metrics include site and transaction availability, speed of page downloads, and consistency in the performance of the web site. Baselining helps retailers set goals for performance and eliminate guesswork about which metrics reflect customer expectations for performance and the financial health of the site.
Baseline metrics include site and transaction availability, speed of page downloads, consistency in the performance of the web site, and if the site renders correctly and performs well with all available web browsers.
“Retailers need to take an ‘outside-in’ view from their customer’s perspective when it comes to performance monitoring and measure their site across the locations, browsers and devices that matter to fully understand how their site performs,” says Schurr. “A lot of retailers are stunned to find out that there are problems at any one of these levels that impact customer behavior.”
Increasingly a major aim of performance testing is to track metrics that measure performance in relation to the cost of the conversion. Every malfunctioning page link or slow-loading page raises the possibility the shopper may contact a customer service agent for help or abandon the transaction and the retailer all together. That is expensive since the cost of having a service agent handle a customer inquiry is three to five times the cost of self-service through the web site.
“In today’s economy, it is all about ROI, cutting operating costs, and whether the technology can enhance the shopping experience and drive incremental sales,” Santos says. “It is incumbent upon vendors to show retailers they can meet these criteria.”
Thinking of metrics as a measure of a site’s financial health pushes retailers to consider all the angles of performance, not just the most obvious ones. Using this line of thought, analytics can be applied to determine whether product pages are showing up in site search results.
A page is visible to a site search engine only if it is tagged with the proper HTML code. “If an apparel retailer is not seeing much traffic to related pages from site searches for women’s slacks, that’s an indication those pages may not be properly tagged and aren’t showing up in the site search results,” says PM Digital’s Sandberg.
Test keywords
It is also recommended that retailers regularly test keywords in their dictionaries. This is important because keywords purchased for paid search may unexpectedly rise in price or deliver a less than expected ROI and need to be replaced with more effective alternatives.
With retailers tightening their search marketing budgets in these tough economic times, they must continue to test long-tail keywords and match types in an effort to lower costs.
“It’s important to test more long-tail, exact-match keywords since they are more cost-effective. This testing could yield higher sales even if the search marketing budget has shrunk,” Sandberg says. “Retailers that don’t test continually are at risk of falling behind the competition, especially if budgets suddenly do increase.”
Tighter budgets, however, are the norm for retailers in this volatile economic climate. While some retailers may not necessarily shrink their operating budgets, they are adhering to them more strictly. As a result, the decision to purchase new technology is undergoing greater scrutiny.
“Performing more due diligence before making the decision to buy a new technology ought to be the norm,” says FitForCommerce’s Wu. “In the past there hasn’t been enough due diligence by retailers or focus on the ROI from a technology investment, which sent retailers rushing into new technologies because everyone was adding them, even though they weren’t critical to increasing conversions or generating larger orders.”
When performing due diligence on any new technology, retailers should demo the technology to see how it works firsthand. By doing so, retailers can determine if the technology will actually meet their needs or if they are buying features likely to be underutilized.
“The economic slowdown has woken a lot of retailers up to the need to better evaluate the technology and make sure it’s what they need,” says Americaneagle.com’s Svanascini. “Retailers should also be talking to the vendor’s customers to find out how well implementation went, and whenever possible, staffers that have experience running the application, since they are closest to it.”
Due diligence
The last piece of the puzzle is to perform due diligence on the financial health of the vendor. The shaky economy has weakened many companies financially. Requesting copies of a vendor’s financial statements is an acceptable business practice, especially during a recession.
“Prospective clients ask us all the time now to review our financials before signing off on the deal,” Svanascini says. “It is very understandable in this climate because we are seeing more e-commerce vendors open to the idea of acquisition because of their financial health than we have seen in recent years.”
Ultimately, the question every retailer must answer before purchasing new technology is whether the time is right to do so. “It’s a big debate, but retailers that take the steps to upgrade the core parts of their platform will be the ones positioned to leapfrog competitors when the economy rebounds,” says Svanascini.
Raising the bar on customer service
Technologies that help retailers keep pace with consumers’ rising expectations of customer service provide a key point of differentiation
Just as e-retailers are evaluating new technologies to create a more satisfying site experience they are also upgrading customer service technologies that are less visible to shoppers but which impact the customer experience nonetheless.
Customer service, specifically live chat, and fulfillment are where retailers do the blocking and tackling that complements the site experience and creates post-sale customer satisfaction.
Making any customer service strategy work requires flexible, seamless technology.
“Regardless of how good a retailer’s site experience and architecture may be, if the customer service experience isn’t top-notch, then the shoppers the retailer fought so hard to attract and convert into customers won’t be coming back,” says Bernardine Wu, CEO of consulting firm FitForCommerce. “Customer service is a moment-of-truth factor in the retail business and retailers that lack the technology to deliver in that moment of truth will not be on solid footing.”
A culture of impatience
Indeed, retailers can ill afford to let shoppers down from a customer service standpoint in today’s volatile economic climate.
“E-retailing has helped create a culture of impatience among consumers,” says Steve Castro-Miller, president and CEO of Bold Software, provider of the BoldChat live chat product, as well as click-to-call and e-mail management applications. “To help balance out the lack of patience among online shoppers, retailers must use live chat to proactively reach out to shoppers that appear to be stuck on a page or struggling with a decision through live chat.”
There is a difference between being proactive and intrusive, Castro-Miller cautions. “Live chat is meant to be a form of assistance, not a nuisance,” he says. “If a shopper declines the offer to launch a chat session, don’t keep coming back to them. They know chat is available and will engage if it is needed. The offer of assistance will be appreciated even if it is declined.”
Customers also expect items to be in-stock when they shop online. Retailers that can transparently fulfill the order through one of their stores when the item is out of stock at the warehouse can dramatically boost sales and customer satisfaction.
Unlike ordering online and picking up in-store, fulfillment through the store makes in-store inventory seamlessly available for sale online. An e-retailer can fulfill orders from the store closest to the shopper or a store where inventory is aging on the shelf.
“The last thing a shopper wants to see from an e-retailer is that an item is out of stock or on back order,” says Sharon Gardner, co-founder and president of VendorNet, provider of web-based supply chain management solutions. “There is no reason multichannel retailers can’t leverage their store inventory to supplement their online inventory. Having the option to use store inventory to fulfill a purchase for an item out of stock in the warehouse increases customer satisfaction and helps retailers move in-store inventory before it ages on the shelf.”
Flexible pricing, volume discounts
The so-called last mile in the customer service chain is shipping, the cost of which has been rising in recent years as private carriers such as FedEx and UPS continue to pull more package delivery business away from the United States Postal Service.
Determined to win business lost to these package carriers, the U.S. Postal Service has licensed select desktop mailing software vendors to provide applications that enable retailers to prepare packages to U.S. Postal Service specifications, print mailing labels and postage in-house, and arrange for an on-site pick-up.
“Shipping is a growing cost for a lot of retailers and FedEx and UPS have a lot of surcharges that increase the cost of shipping through them,” says Harry Whitehouse, chief technology officer at Endicia, a Newell Rubbermaid Inc. company and provider of desktop mailing software. “The USPS offers flexible pricing and volume discounts and will pick up packages at the retailer’s shipping center, so it is in the retailer’s interest to expand their shipping options, especially if it reduces costs, and there is no drop-off in service.”
For retailers, the first steps of engagement in customer service are making the shopper aware that assistance is available if needed, and delivering customer assistance when needed. As a result, live chat is fast becoming a major part of the retailer’s value proposition. More retailers are taking the time to make certain the technology is in harmony with their site design and prominent enough so that shoppers know it is just a click away, without being a distraction to the shopper.
“Live chat is a tool to save a sale if the customer service agent senses the shopper needs assistance to make the purchasing decision or guidance to the product that meets their needs,” says Castro-Miller. “Online shoppers may be more impatient than ever, but retailers ought to look at live chat as a way to overcome that issue, rather than be afraid of it.”
BoldChat’s live chat application includes chat invitation acceptance tracking, operator productivity reports and service-level reporting. Service agents are able to follow shoppers’ navigation paths through a site via a tracking cookie. The information can tell service agents whether the shopper entered the site directly, through a paid search or banner ad, or organic search results.
In addition, customer service agents can see the pages the shopper has viewed in the current shopping session and whether the shopper is a repeat customer. Service agents can call up a repeat shopper’s live chat history to provide insights into prior problems they encountered and how they were resolved.
A must—if done right
Service agents can use the information about a shopper’s movement through the site to decide if an invitation to a chat session should be offered to help close the sale.
“Live chat is a must-have technology if a retailer can do it well,” says FitForCommerce’s Wu. “Service agents that enter a chat session blindly without any idea of the problem the customer faces are going to come across as unprepared and lose the customer. In-store sales associates can see if a shopper is having trouble making up their mind or wandering around the store to find something, so they have some sense of what the problem is before offering assistance. It should be the same for online service agents.”
One aspect of live chat that retailers overlook is that it is an information-gathering tool about customer expectations. Information gathered by Bold Software includes identifying the pages on which shoppers initiate a chat session and under what circumstances they accept an invitation to launch a chat session. These data can help retailers identify potential flaws in their site design or content that prompt customers to launch a live chat session.
In addition, live chat is a feedback tool. Savvy retailers will use the technology to ask shoppers if the site design, product inventory and level of service provided meet their expectations, and if not, what could be done to improve customer service.
“Store managers and sales associates will take the time to get customer feedback about their business when engaging a customer, so there is no reason for an e-retailer not to do the same. All it takes is one or two quick questions,” Castro-Miller says. “More consumers are expressing a desire for live chat, so they aren’t likely to shy away from questions about their shopping experience during a chat session.”
A recent consumer survey commissioned by Bold Software revealed that 58% of respondents said they were positively influenced to make a purchase if a retailer offered live chat on their site.
“We have had clients report sales increases between 20% and 40% after installing our product,” says Castro-Miller. “They have also reported less cart abandonment and abandonment at checkout.”
Make all products available
Just as live chat can help retailers save sales, so too can fulfillment. No shopper wants to log onto a retailer’s site only to discover the item is out of stock or on back order. Worse is seeing an item in a store and attempting to buy it online only to find out the retailer’s web store does not carry the item.
Shoppers, however, encounter these problems more often than retailers realize. “A lot of multichannel retailers do not carry all their available SKUs online and it is not uncommon for an e-retailer to understock their online warehouse,” says VendorNet’s Gardner. “There is no reason why multichannel retailers can’t seamlessly aggregate their store inventory online.”
The business case for doing so is predicated on the fact the inventory is a retailer’s biggest expense. “Why let seasonal items languish in the store and be sold at a discount at season’s end if the same inventory is moving briskly through the web store and can be sold at full price?” Gardner says. “Aggregating inventory across sales channels increases sales through greater availability of inventory.”
VendorNet’s supply chain technology is a web-based, middleware application that communicates with and receives inventory feeds from the retailer’s order management system in its warehouse and stores. Inventory levels in the stores and warehouse are reset either in real-time—provided the retailer’s order management system supports this capability—or as often as the order management system permits.
When an online order cannot be fulfilled through the warehouse, the application scans available inventory in the stores and selects the appropriate store to fulfill the order. Store staff is notified of the order through VendorNet’s web-based application portal, which also generates the packing slip and shipping label for store personnel. The item is packed in the store and shipped the same day.
Retailers can set rules for which store fulfills the order, such as the one closest to the customer, which offers the lowest shipping cost, or the store with the highest level of inventory for that product. Retailers can increase sales through their online channel by as much as 40% using the application, according to Gardner.
“It’s a way to make the stores an additional warehouse that supports the web store and expands the online catalog,” Gardner says.
The match game
Having matching inventory between the store and the web is a must, according to consultant Wu. “Consumers expect to find the same products on a retailer’s web site that they do in their stores,” she says. “Retailers don’t want the store to serve as a major fulfillment center, but fulfillment through the store on a spot basis can effectively fill the holes when an item is out of stock or on back order.”
Making store inventory available online can also help retailers clear out seasonal merchandise that is selling well online but is aging in the store, without necessarily having to put the item on sale in-store.
“Shoppers pretty much know when stores start their end of season clearance sales, but in many cases, the same item is still selling well online and doesn’t have to be discounted just yet,” Gardner says. “Exposing store inventory to the web store is a way to squeeze out a higher margin.”
In addition to fulfilling orders through stores, VendorNet can link e-retailers directly to the manufacturer to place a drop-ship order, which can help web-only e-retailers fulfill orders for items out of stock in the warehouse. “Our technology acts as an intelligent order broker,” Gardner says.
While bringing transparency to inventory across all sales channels can improve availability of inventory online, getting the order to the customer in a timely fashion and holding the line on shipping costs is becoming a focal point for retailers as they expand their customer base into more rural areas.
To reduce their shipping costs, many e-retailers either shop their business among carriers to find the best rate per shipping batch or will commit all their business to a single carrier in the hope of negotiating a discounted rate.
What retailers overlook, however, is that any private carrier levies surcharges for such services as delivering to a residential or rural address and for Saturday delivery and pick-up. Surcharges are also levied for sending a package to what turns out to be an undeliverable address, which requires the carrier to look up the correct address to complete delivery.
Low prices, high quality
“In this economic climate retailers are looking to hold down shipping costs without sacrificing quality,” says Endicia’s Whitehouse. “There are a lot of factors that affect shipping costs that many retailers aren’t aware of until they get their invoice at the end of the month.”
One alternative carrier that can help retailers reduce shipping costs, but which retailers tend to overlook, is the U.S Postal Service. Endicia provides software that enables retailers to print out USPS shipping labels and USPS approved postage, verify an address prior to shipping, pre-fill customs forms for orders to be shipped internationally, and prepare packages to be shipped using any of the USPS’s premium delivery services, such as Priority Mail.
Endicia’s U.S Postal Service mailing application can be integrated with mailing and shipping applications that support other carriers using XML. Retailers can also use Endicia software to compare shipping costs between the USPS and other package carriers on a per-package basis.
Retailers can download Endicia’s basic mailing software, which is compatible with PCs and Macs, free of charge. Shipping labels and postage stamps can be printed on any laser printer or with a DYMO printer, which can be rented through Endicia. Monthly service packages, which include such features as address verification and customized label printing, start at $9.95 per month.
“The USPS will discount Priority and Express Mail packages 5% to 11% from retail postal rates as part its Commercial Base and Commercial Plus rate plans for retailers using PC postage services,” Whitehouse says. “When surcharges are factored into the base rate charged by private carriers, the cost to ship through them can be as much as three times higher than the USPS. For retailers that ship a lot of packages under five pounds, such as jewelers, the USPS is a more cost-effective alternative.”
In addition to lowering their shipping costs through the U.S Postal Service, retailers also gain the benefit of being able to ship to a P.O. Box or military (APO/FPO) address, something they can’t do with a private carrier. Retailers can prepare packages with signature confirmation through Endicia and purchase damage insurance for 65% less than the USPS charges. The USPS will pick up packages from the retailer as part of its daily carrier service.
“One of the benefits of choice is that retailers can cherry pick which carriers to use in order to get the lowest shipping cost on packages, based on weight and shipping zones,” Whitehouse says.
Everything is ROI-focused
An e-retailer’s ability to cut shipping costs and operate more efficiently without compromising customer satisfaction is critical in any economy. A bad economy shines more light on the issues.
“Every aspect of a retailer’s business is ROI-driven,” says FitForCommerce’s Wu. “Any cost efficiencies a retailer can bring to the fulfillment side of the business without sacrificing the quality of service have to be seriously considered, especially in this economy.”
With shoppers expecting a higher level of customer service from e-retailers, and demonstrating less patience with those that fall short of the mark, upgrading live chat, inventory management and shipping applications is a must for retailers.
“Customer service is a point of differentiation in a competitive business,” says Bold Software’s Castro-Miller. “Retailers may be more cost-conscious, but customer service is not an area retailers want to shortchange.”
