IRCE 2007: Report from the Conference

E-Retailing Technology:
Making the Right Decision
June 5, 2007: Track A

Juggling I.T. projects
How to Prioritize Your Technology Investments
Luke Friang, vice president and CIO, Drugstore.com
David Lonczak, vice president of marketing, Drugstore.com

See these other reports from IRCE 2007: General Sessions Workshops Media Center Interviews

Drugstore.com has established a framework for approaching and prioritizing technology investments. There are steps to take, however, before tech spending projects can be ranked, Luke Friang, vice president and CIO, said at IR2007. "First we identify company objectives to provide goals and identify business and functional strategies," Friang said. Checking progress against those goals throughout the process is critical to success, he added.

The next step is creating business and functional strategies to serve as a bridge between company goals and tactics, said David Lonczak, vice president of marketing at Drugstore.com.

"Each team goes out on their own to brainstorm and strategize what that team needs to do to reach the goal," Lonczak said. In the case of the company`s recent redesign of its Beauty.com e-commerce site, that meant how to market the new site and setting up a public relations campaign, he added. All core initiatives have representatives from the business, marketing and I.T. departments working alongside project managers.

Test for tech success
Avoiding Disaster: Managing a Technology Implementation
Kristin Montella, vice president, online operations, Lillian Vernon
Matthew Poepsel, vice president, performance strategies, Gomez Inc.

One of the most fundamental, and overlooked, steps in a technology implementation is testing. Testing should take place both pre- and post-launch to ensure problems are caught before they reach web site shoppers, said Kristen Montella, vice president of direct marketer Lillian Vernon`s online operations. "E-retailers need multiple systems environments that mimic production," Montella said. "It`s critical to test new implementations before customers see them. Not ad-hoc, but a real plan for real testing, not just for new code but for everything."

Although customers should not be guinea pigs for new technology implementations, they still must be accounted for, said Matthew Poepsel, vice president, performance strategies, at Gomez Inc. Changes to web page presentations and functions are "great as long as you develop appropriate experiences along the way. If the experience is negative and the customer is waiting, you have a problem," Poepsel said.

Tools for buying decisions
Identifying E-Retailing Solutions Shoppers Like
Maris Daugherty, consultant, J.C. Williams Group

Keyword search and store locator are the top decision-making tools consumers use when visiting e-retailers` sites, says a study by consultants J.C. Williams Group. Next up: Product comparison and zoom/rotate features.

"Transforming the Multi-channel Shopper" found that such basic tools are essential for a positive online shopping experience, said J.C. Williams consultant Maris Daugherty. The study was conducted with Start Sampling, a marketing company specializing in web-based consumer product sampling, and The e-Tailing Group Inc., an online marketing research and consulting company.

Basic tools drive basic actions. For example, Daugherty said the store locator function is "probably the most under-utilized by multi-channel retailers on a web site. A customer who goes there is probably going to walk into your store." Hosting and monitoring blog conversation is a good way to learn about customer preferences and how well web sites are serving their needs. The study was conducted in April, with 1,972 U.S. on- and 500 offline shoppers.

Collaboration is critical
Making E-Retailing Music: When I.T. and Marketing Harmonize
Jeff Parnell, independent consultant and former vice president, Blair Corp.
Mark Layton, CEO, PFSweb Inc., parent of eCost.com
Rob Garf, director of research, AMR Research

Catalog apparel and home furnishings retailer Blair Corp. spent seven years learning how to blend marketing and information technology efforts to buy and deploy technology tools. Jeff Parnell, former vice president at Blair Corp. and now an independent consultant, says the process is unique to each company. Communication up front and along the way helps ensure successful technology implementations, Parnell said.

Bringing information technology to the forefront of e-retailing business strategies is an important step toward online sales success, said Mark Layton, CEO at PFSweb Inc., parent of web-only electronics retailer eCost.com.

A shift to more collaboration between marketing and information technology occurred recently, said Rob Garf, director of research at AMR Research, an e-commerce and technology consulting company. That`s a far cry from the dark days of the late 1990s. "There were no brand strategies and online functions weren`t integrated with other functions," he said.

AJAX will drive Web 2.0
What Technology Is Coming and Why You Should Care
Gene Alvarez, vice president, retail e-commerce, Gartner Inc.
David Fry, president, Fry Inc.

E-retailers should take a "Web 2.0 look" at their web site for opportunities to use new rich media tools. "AJAX is a great place to start," Gene Alvarez, vice president, retail e-commerce at Gartner Inc., a research and consulting company, told an IR2007 audience.

AJAX, or Asynchronous JavaScript and XML, is a technology that enables web pages to be more interactive and display images quickly without moving to multiple pages. E-retailers are beginning to use AJAX to improve the customer experience along with sales, but the use of such Web 2.0 tools has far to go, Alvarez said.

Web 2.0 technology enables customers to get more product information and interact with e-retailers, said David Fry, president, Fry Inc., an e-commerce development and services provider. Tools include customer ratings, user-generated content and even customer photos showing how they use a product. "We think AJAX is the most important technology to be using now," Fry said.

The E-Retailing Echo Effect for
Multi-Channel Merchants
June 5, 2007: Track B

Taking the reins in e-commerce
Elevating the Retail Chain E-Commerce Chief
James Connell, director of e-commerce, Roots

In the early days of online retailing, James Connell and other managers at Roots, the Canada-based designer and retailer of outdoor apparel, were out to change the world of retailing. "We were going to reinvent the world with e-commerce," he said at IRCE 2007.

When the Internet investment bust hit, most e-commerce managers left the company. But Connell remained, and over the years since he has learned to get beyond a primary focus on information technology to fill a more comprehensive role in marketing, finance and merchandising. Now, as director of e-commerce, he says, he takes a multi-channel view of Roots to push for optimal operations across stores as well as on the web.

The e-commerce chief must also ensure that the retailer`s brand is presented properly through online marketing as well as through the order and fulfillment process, Connell said. "You have to control that branding experience," he said.

Finding the right partners for growth
E-Merger Mania: Making Sure the Acquisition Is Right for You
Roger Hardy, chairman, president and CEO, Coastal Contacts Inc.

Why do an acquisition? At Coastal Contacts Inc., the answer is because acquiring four companies over the last few years has provided a market reach across 20 countries, sparked growth leading to $81 million in total 2006 revenue, and put it on a track to triple revenue over the next three years, chairman, president and CEO Roger Hardy said at IRCE 2007.

Although growing internationally has created challenges, such as dealing with several brands and staffing a call center with agents who can speak 12 languages, it has established strong bases in several markets, Hardy said.

In Sweden, for example, where Coastal Contacts acquired Lensway AB for $18.85 million in 2004, Lensway produced $45 million in 2006 revenue, more than half of Coastal Contacts` total. "Sweden is a small market, but we already have a 25% market share," Hardy said. Lensway expects to do $60 million this year, he added.

Making store kiosks friendly
The Web-Centric Store of the Future
John Rocco, director of kiosks, Indigo Books and Music

When Toronto-based Indigo Books and Music, Canada`s largest book retailer, offered in-store kiosks to shoppers as product-finding tools, things didn`t go as planned. The kiosks, originally intended only for employees, were comprised of desktop computers placed on tables in cluttered work areas. After Indigo wanted customers to use them, "they didn`t know where the kiosks were or that they could use them," Indigo director of kiosks John Rocco said at IRCE 2007.

But things took a turn for the better when Indigo installed stand-alone web-based kiosks identified as easy-to-use tools with large "SEARCH" signs and placed where customers would be sure to see them, Rocco said. In addition to letting shoppers search for in-store titles, the kiosks let shoppers order out-of-stock products online for delivery to either the store or their homes.

Indigo is planning further uses of the kiosks, including employee recruitment, self-serve gift card production and the disbursement of coupons, Rocco said.

Finding and keeping good employees
Recruiting and Retaining Top Retail Talent
Les Gore, managing partner, Executive Search International
Mark Brohan, director of research, Internet Retailer

With a shrinking workforce and competition from high-paying companies like Google Inc., it`s getting tougher for Internet retailers to find and keep qualified professionals experienced in managing the many aspects of web sites, Les Gore, managing partner of Executive Search International, said at IRCE 2007.

Gore suggested retailers broaden their scope in searching for talent, including exposure on social networking sites. While industry groups should establish university scholarships to attract more students to e-commerce, retailers should also check for talent at local community colleges. "You can find good people right in your hometown," he said.

Mark Brohan, director of research for Internet Retailer, cited a recent Internet Retailer survey that found: 46.6% of retailers said turnover of e-commerce staff was a significant problem, 50% found it now takes three months or more to find a senior online marketing professional, and 15.5% said e-commerce salaries were "much higher" than a year ago.

Driving a business for the long term
Keeping a Growth Engine on Track
Joe Alter, president and CEO, Smooth Fitness
Jay Steinfeld, CEO, Blinds.com

Growth at Smooth Fitness, a retailer of exercise equipment, rose 63% from 2004 to 2005, then another 53% last year to total online sales of about $28 million. "Pick a niche, and be the best in your spot," CEO Joe Alter said at IRCE 2007, noting that Smooth Fitness expects to spend 12% of sales on marketing and advertising this year, up from 9.5% last year. Smooth Fitness also has developed its own brand, Evo, which it sells through dealers as well as direct to consumers online.

At Blinds.com, the No. 1 performance metric is gross margin per visitor, said CEO Jay Steinfeld. "As gross margin per visitor goes up, business goes up and we can afford a lot more experimentation" in merchandising, he said. Blinds.com follows orders with automatic e-mails that ask customers what it could to improve service, helping it do about 40% of its business through repeat customers and referrals. Build It, Run It, Sell It: What New Merchants Need to Know

Build It, Run It, Sell It:
What New Merchants Need to Know
June 5, 2007: Track C

Give the lady what she wants
Assessing the Real E-commerce Opportunity
Lauren Freedman, president, the e-tailing group

Lauren Freedman once worked for Marshall Fields, which, she recalls, had an old saying it made sure all employees knew well: "Give the lady what she wants." This is precisely the advice she offers e-retailers looking for new or unrealized opportunities in e-commerce.

Internet retailers must carefully consider and outline customer service plans that help ensure their customers are happy and content, Freedman said at IRCE 2007.

Freedman, president of consulting and research firm The E-tailing Group, said the key elements of a thorough and successful web retailer customer service plan are:

--A web site with a comprehensive customer service destination

-- An easy-to-find phone number and list of customer service hours

-- Inventory status notification on product pages and/or in shopping carts

-- Guest membership capability

-- An efficient checkout process

-- A privacy policy and guarantee

-- Timely fulfillment, within three to five business days

-- A clear and concise returns policy

Finding the engine to drive sales
Be in the Driver`s Seat When Choosing an E-commerce Engine
Patti Freeman Evans, retail analyst, Jupiter Research
Diana Nelson, CEO, Kazoo & Co.

The majority of web merchants use custom-built, in-house e-commerce platforms--it`s the dominant way retailers perform commerce and manage technology. At the same time, a majority of e-retailers are looking to change their platforms this year.

These are the conclusions of recent research presented by Patti Freeman Evans, retail analyst at JupiterResearch, at IRCE 2007. Freeman Evans added, when it comes to building in house vs. buying technology, "There aren`t too many platform vendors out there that offer serious options for everything an e-commerce platform needs to do."

Diana Nelson, CEO of toy retailer Kazoo & Co., is reviewing e-commerce platform vendors. She launched the company`s web store in 1999 using the Yahoo Stores platform, which she still uses today. Her company brings in about $3 million a year. One problem Nelson is finding in her search is that most e-commerce platform vendors` products are geared toward e-retailers that sell more than $10 million a year.

The host with the most
Making the Right Web Hosting Choice
Adrian Martinez, president of DogCatRadio.com
James Pappas, e-commerce manager, J.L. Hufford Coffee and Tea

Shortly after DogCatRadio.com launched in 2005, the New York Times, "Good Morning America," the BBC and other media outlets were all over the Internet radio station/e-retailer. The wave of publicity caused a tsunami of traffic that left a surprise for the web site operators: a monthly bill from Earthlink, its web hosting company, for $87,000, up from its regular $3,000 to $4,000. "So we decided to go to another web hosting company, and we had a disaster there, too," said Adrian Martinez, president of DogCatRadio.com.

Ultimately the company found a new web host, IPower. Martinez advised session attendees that the most important thing when looking for a web hosting firm is "to find one that can grow with you."

James Pappas, e-commerce manager at multi-channel retailer J.L. Hufford Coffee and Tea, added, "Research the hell out of hosting companies. That can`t be stressed enough."

Three rules to finding employees
Hidden Gold: The Small E-Retailer`s Quest for Talent
Tom Cox, president and CEO, Golfballs.com

To find and hire the best employees, there are three basic rules, Tom Cox, president and CEO of Golfballs.com, told attendees at a breakout session. "First, senior management must recognize the importance of hiring great employees," he said. "Second, quantify the direct and indirect costs of a bad hire. A poor e-mail marketer, for example, ultimately can cost a business quite a bit. And third, get the right people on the bus. If you have the right people, they know where to go."

E-retailers must generate a pool of applicants to have on hand at all times, Cox added. "Create and leverage connections," he advised. "Look to trade groups; universities where I speak six or seven times a year; the business community, such as a local chamber of commerce; and industry events. I never say no to a speaking opportunity."

Sometimes smaller is better
Marketing on a Budget: Promoting Your Web Site Without Going Broke
Mitch Lieberman, president and CEO, OneWayFurniture.com
Alan Rimm-Kaufman, president, The Rimm-Kaufman Group

When it comes to optimizing paid and natural search engine marketing efforts, retailers are better off using three solid, relevant keywords rather than going for 100, Mitch Lieberman, president and CEO of OneWayFurniture.com, told IRCE 2007 attendees. "Search engines will change their algorithms all of a sudden and the burst of traffic you get from 100 keywords will disappear," he said. "Smart and relevant keywords go the distance."

Retailers can identify effective keywords through trial and error. "What works, grab it," Lieberman said. "Then find and kill keywords that don`t. And make sure to regularly trim the fat to hone keywords, which saves money."

IRCE 2008 Conference Multi-Media CD-ROM

Co-speaker Alan Rimm-Kaufman, president of The Rimm-Kaufman Group, agreed. "One should do broad testing," he said. "Throw them up against the wall and see what sticks. Ultimately, retailers will get a lot of use out of only a small number of keywords."

Retail Merchandising at Web Speed
June 6, 2007: Track D

Hitting the best margins
How the Internet Creates Commodity Pricing-- and What You Can Do About It
Joseph Ryan, e-commerce director, US/EMEA, eClerx
Donald Cohen, CEO, Tool King

While the web supports competition that forces down retail prices, it also offers opportunities to sharpen pricing strategies and produce maximum profit margins, Joseph Ryan, e-commerce director at eClerx, provider of pricing optimization services, said at IRCE 2007. A retailer should combine internal information such as inventory levels along with external data available on the web, including competitors` pricing and product availability. "Use as many factors in your pricing decisions as possible," he said.

Don Cohen, CEO of Tool King, advised not to reward irrational price competition. "Compete on price, but not only on price," he said. "Compete with high value, not just low cost." Cohen said retailers should rely on customer surveys and analysis of shopping behavior in determining pricing strategies, and determine cost and ROI by each department. Retailers should also work closely with suppliers to get favorable terms in freight delivery costs, rebate programs and other price promotions, he added.

Getting personal
The New Personalization: Making Suggestions Relevant
Albert diPadova, vice president, Due Maternity

Due Maternity, an apparel and accessories retailer for mothers-to-be, expects to do about $3 million in sales this year through five boutiques and DueMaternity.com. It`s growing online sales by using a variety of tools and strategies to better understand its customers and give them what they want, vice president and co-founder Albert diPadova said at IRCE 2007.

Running on a Yahoo Merchant Solutions e-commerce platform, Due Maternity uses HitsLink.com from Net Applications to analyze the source of online customer traffic and shopping behavior, and Zoomerang software to survey customers about their interests. POS IM point-of-sale software from Ensign Systems, which handles and integrates e-commerce and store sales data, provides reports on customer purchases including lists of their preferred items. The POS IM system also contains modules for running loyalty programs, gift cards and web site promotions. The retailer also uses VerticalResponse e-mail marketing software to send out personalized offers, diPadova added.

Letting customers talk up products
Using Customer Product Reviews to Attract Loyal Shoppers
Patti Freeman Evans, retail analyst, JupiterResearch
Geoffrey Robertson, vice president, e-commerce, J.C. Whitney

When consumer-generated product reviews show four or five stars out of a maximum of five, sales of that product on auto parts and accessories site JCWhitney.com increase 8-16%, vice president of e-commerce Geoffrey Robertson said at IRCE 2007.

Robertson said the reviews increase customer loyalty through interaction among shoppers, and create pertinent online content that helps increase natural Internet search rankings. "It helps to provide a comfortable and efficient shopping experience," he said, noting that J.C. Whitney uses the Bazaarvoice reviews program. He added that J.C. Whitney uses e-mail marketing and sweepstakes to encourage customers to write reviews, and cautioned that reviews with two stars have led to a decrease in sales.

Patricia Freeman Evans, retail analyst with JupiterResearch, noted that 48% of online shoppers find customer-generated reviews or ratings helpful when deciding whether to purchase products, and that 60% look to other customers to get a sense of a product`s quality and reliability.

Watching the web
The New Must-Have Content: Online Video
Michael Hong, director of marketing, LG USA

Online video is one of today`s must-have features for a web site, but it comes with risks, Michael Hong, director of marketing for electronics manufacturer LG USA, told conference attendees. "People who watch video content on the Internet are engaged," he said. The reason is simple: Viewers choose the content they want. "Internet video is more active than TV," Hong said.

LG uses web video to give shoppers more detail about products and is looking at ways to expand not only the number of videos but also the content to make them entertaining as well as informative, Hong said. But video comes with risks, Hong noted. Video content is not search friendly; downloadable videos are subject to manipulation, not always positive, by consumers; getting viewer`s attention is becoming harder; and maintaining quality is difficult.

Nonetheless, the pluses outweigh the minuses: "Everyone should have video in some form or fashion," Hong said.

What customers want
Mining the Big Portal Sites for Rich Data Nuggets
Alexander Tabibi, president, Pets United
Amy Vener, retail category director, Yahoo Search Marketing

To know what customers want, watch what they do on a web site. "The data is there for the picking," Alexander Tabibi, president of Pets United, told attendees. And usually, the information is unbiased. "What you get is not affected by the questions you ask," Tabibi said.

For instance, Pets United added "horse tack" to its product descriptions when it found shoppers weren`t using Pets United`s terminology "horse supplies." In addition, the data a retailer learns from online users often contradicts offline experience. "Thirty years of data said doghouses never sell through catalogs," Tabibi said. But the company found a market for doghouses at dog.com. "Every day thousands of people look for doghouses," he said. "It`s hard to get to them with a catalog, but they`ll find you online."

Amy Vener of Yahoo said retailers should pay attention to shoppers` Internet searches as a way to understand their market and product mixes.

Building Web Sites with
Better Marketing & Richer Content
June 6, 2007: Track E

What works, what doesn`t
E-Commerce Blogs: Finding Their Long-Term Value
Ted Demopoulos, consultant, Demopoulos Associates
Jeanie Bunker, vice president, sales and marketing, Alibris

Business blogs provide communication with a market, add personality to a corporate image and establish the blogger as an expert, said Ted Demopoulos. For e-commerce, blogs can drive traffic to a site. And, because they are frequently updated, blogs rate high in search spiders` estimation of relevancy.

But blogs have their own rules, Demopoulos cautioned. Writing endlessly about products and taking a hard sell don`t work, he said. What does work is "providing valuable information to your marketplace," he said.

Alibris expected its blog to generate repeat traffic and sales, leveraging existing content and content contributed by sellers and buyers, said Jeanie Bunker. However, it didn`t generate traffic hoped for.

But valuable learnings from the blog were that customers wanted ideas on what to read and the ability to comment on books. That led to the launch of customer reviews on the site. Based on insights gained from its first blog, Alibris will likely relaunch a blog with a different look and feel, Bunker added.

Strong integration, strong stores
Back to the Future: Going Offline to Drive Sales Online
Zhennaa Gallagher, senior director of offline marketing and advertising, VistaPrint

Many online companies realize that offline marketing can bring in customers and drive volume more quickly. The challenge is quantifying its effects.

VistaPrint measures the success of offline efforts at driving online sales by using short URLs and coupon codes in print material intended to drive customers to its site, Zhennaa Gallagher said. It looks for address matchbacks between direct mail pieces and online orders, conducts web site surveys, and trains call center agents to ask for referral sources.

Offline campaigns can drive customers who don`t use a campaign-specific URL to VistaPrint`s site, diverting revenue to other acquisition channels and making it difficult to fully track a print campaign`s success, Gallagher notes. With direct mail, about 24% of direct mail responders use the advertised URL, she said.

Direct mail tracking allows VistaPrint to compare the names and addresses of listed prospects to newly acquired customers regardless of how they came in, she said.

New opportunities with search
Benefiting from the New Competition Between Search Engines
Charlene Li, analyst Forrester Research
Nathan Decker, director of e-commerce, Evogear.com

"The reality is that people use multiple search engines," Charlene Li said. "People do searches on social computing sites. Are you, the retailer, there too?" Li also noted alternative venues for searching out products include such options as local search, YouTube and Facebook.

Spending 40% to 50% of the online budget on search represents a good ratio, Li said. Retailers also need to rationalize spending on paid vs. natural search, she said. She also recommended retailers consider contextual and behaviorally-targeted ads in search. "You reach people with different messages at different points," she said.

Evogear.com`s search strategy has evolved, Nathan Decker said. In its early years, the focus was on producing traffic more than keyword relevancy. Now, search terms have grown more expensive and there is more competition for them. That`s shifted Evogear`s search strategy to greater scrutiny of keyword selection and ROI. Today, Evogear`s search strategy extends beyond Google to include paid search on Yahoo and MSN.

Efficient management of keywords
Getting Better Mileage from the Search Engines
Bill Tancer, general manager of global research, Hitwise
Gary Ervin, vice president of customer acquisition, Shopzilla

Search engines are the cornerstone of online marketing, said Gary Ervin, vice president of customer acquisition at comparison shopping site Shopzilla.com. But time and resources dictate what an e-retailer can do in search engine marketing, and so merchants must focus their efforts to make search marketing profitable and meaningful, he added.

Generally, more keywords are better, but only if they are relevant, Ervin said. A greater number of keywords consumes more time; a merchant who chooses this route must learn to manage keywords in an efficient manner, Ervin advised. To do so, he said, e-retailers must mind the objectives they set for a search engine marketing campaign, keeping return on investment, conversion rates and brand building top of mind.

Overall, e-retailers must clearly define their objectives and budget, focus on keywords that best describe products, develop messaging and landing pages that easily connect shoppers to products, and use web analytics tools, he concluded.

Narrowing site search results
Site Search: Zero Results Ring Up Zero Sales
Susan Aldrich, senior vice president, The Patricia Seybold Group
Rex Creekmur, director of marketing, Rugs Direct

E-retailer Rugs Direct conducted research about site operations and the results were conclusive: Users could not find what they were looking for. It`s one thing to offer 60,000 choices, but when faced with too many choices many shoppers opt to make none.

To rectify the problem, Rugs Direct sought outside help, selecting Endeca Technologies Inc.`s InFront system. The e-retailer assigned two I.T. staffers to the project who spent several months linking new site search functions with the Rugs Direct product database, explained Rex Creekmur, director of marketing at Rugs Direct. The new site search system enables shoppers to easily and significantly narrow searches by selecting via options on the search results page color, shape, size, price range, material or any combination of parameters.

For site search success, added Susan Aldrich, senior vice president at The Patricia Seybold Group, e-retailers should test drive search in real world scenarios and consider whether their sites are set up efficiently for site search.

Build It, Run It, Sell It:
What New Merchants
Need to Know, Part 2
June 6, 2007: Track F

Work of art
Timely, Fast and Cheap: The Qualities of Good Delivery and Fulfillment
Curt Barry, president, F. Curtis Barry & Co.
Peter Hantman, general manager, distribution and fulfillment operations, Metropolitan Museum of Art

Improved systems integration is helping The Metropolitan Museum of Art expedite order management. An antiquated order management system often resulted in poor service for the museum`s web shoppers, Peter Hantman said. "After the Friday downloads, no pick tickets were issued until the following Tuesday," he said. Outdated systems also resulted in the museum processing less than 80% of orders on the same day.

To achieve better results, the museum purchased new technology from Manhattan Associates Inc. and CommercialWare Inc. and renegotiated shipping rates. Today the fulfillment department`s same-day order processing rate is well above 80% and annual shipping costs have been reduced by more than 20%. "We eliminated a lot of manual counting," Hantman said.

New technology is important, but constant training and realistic employee performance objectives will also expedite fulfillment, Curt Barry said. "Direct labor is more than 50% of the total cost," Barry advised attendees. "Hire experienced managers and keep on training them."

The customer is right
How a Small Retailer Handles Customer Service
Timothy Jackson, president, PlumberSurplus.com

PlumberSurplus.com takes complaints and unusual requests in stride--like the elderly customer who e-mailed to ask if PlumberSurplus.com sells a seat belt that could be installed on a specific type of toilet seat. When dealing with customer service, small retailers need to take both the good and bad in stride, Timothy Jackson told attendees.

Smaller web merchants also need to grow their customer service department as the company evolves and to be open to quickly implementing new ideas. "Wait for perfection and you will never go live," Jackson said. To build up its customer service department, PlumberSurplus.com hires employees with advanced communication skills that can be utilized as the business grows.

The online retailer hired reps fluent in Spanish to help expedite phone calls and e-mails from Hispanic shoppers. "We call them shining stars," Jackson said. "The shining is required, but the customer service experience not so much because we can train them."

Order to go
How to Choose an Integrated Back-end Solution
Donny Askin, CEO, OrderMotion Inc.
Neil Kugelman, CEO, GoldSpeed.com

There comes a time when most web retailers need to seriously consider investing in an order management system that can keep pace with business development and customer demand, said Neil Kugelman, CEO of Goldspeed. With about 20,000 SKUs in its online inventory and numerous drop shipping relationships, Goldspeed.com uses a hosted order management system for better flexibility and to access information in real time. "If I don`t get to work, the phones would be answered," said Kugelman. "If there`s a blizzard, I can log on for anything."

A typical web merchant can expect to spend 0.6% to 1.25% of annual sales on a hosted application, said OrderMotion CEO Donny Askin. In comparison, the cost of maintaining an outdated internal system can cost as much as 6% of annual revenue. "With the pace of technology today, no company can be good at everything," Askin said. "You want an instant view of your business at any time."

`Til death do us part
Show Me the Money Without Showing Me the Door
Scott Potter, partner, San Francisco Equity Partners
Toni Sikes, CEO, The Guild

Finding the right investor to help build a business is like finding a marriage partner: It`s a process of getting to know each other, finding out whether both share goals and can get along.

Toni Sikes has obtained capital from several venture capital funds for her business, The Guild, which sells artists` work online. "The key is planning," Sikes said. She said a company`s owners have to figure out how much money they need, how much equity they`re willing to part with, and whether they`re looking for an investor with particular expertise.

Scott Potter, partner with San Francisco Equity Partners, one of the investors in The Guild, explained that he wants a concise summary of the market and the business. "Address competitors," he said. "Take it on and explain how you`re going to win."

Once a deal is done, Sikes emphasized that it`s important to keep investors informed. "Our investors get an e-mail every morning showing sales, traffic and other metrics from the day before," she said.

What investors want
Selling Your E-Business on Your Terms
Mark Mahaney, analyst, Citigroup/Smith Barney
Steve Antisdel, COO, WorkingPerson.com and former owner of FurnitureFind.com

With online retail sales growing three to four times faster than offline sales, online retailing and technology will be hot categories for mergers and acquisitions in coming years, predicted Mark Mahaney, Citigroup/Smith Barney analyst. Prime targets will be companies involved in mobile commerce, online advertising tools and user-generated content.

He said Citigroup projects U.S. online retail sales will grow 18.5% this year to $127.1 billion, and increase 16.5% and 15.0% in 2008 and 2009.

How do you attract investors? "Create a sustainable, competitive advantage," said Steve Antisdel, chief operating officer at WorkingPerson.com who built and sold FurnitureFind.com. "That`s what buyers are interested in buying."

Among the ways to do that, he said, are to select products that are right for your customers, use great photography to show them off, provide plenty of information about your merchandise and encourage customer reviews. Finally, he added, "Be easy to buy from. The whole process should be clear and simple."