Computers / Electronics / CDs / DVDs:
Staying ahead in a high-tech market
Internet Retailer`s Best of the Web 2005
BestBuy.com
Blockbuster.com
CircuitCity.com
Crutchfield.com
Dell.com
FirstStreetOnline.com
Napster.com
Netflix.com
Succeeding as an online retailer is difficult enough, but when you`re in the market of selling high-tech electronics products and media services, the job gets even tougher. The winners are the ones who continue to evolve with technology - both the technology they`re selling and the systems they use to serve customers.
Take FirstStreetOnline.com. Recently relaunched from the former TechnoScout.com, FirstStreetOnline has evolved with both its e-commerce platform and its merchandising strategy to appear in this year`s Top 50 online retailers along with market leaders BestBuy.com, Dell.com and CircuitCity.com. Selling high-tech gadgets ranging from TV watches to a laser-beam device that shows how far to pull a car into a garage, FirstStreet extends its expertise in high-tech to the way it serves customers on its web site. Spend a few moments gazing at displays of its innovative products, for instance, and a smiling image of a live chat agent will float across the page offering instant assistance.
"The floating live chat is a cool feature, it`s unique," says Neil Stern, senior partner with retail consultants McMillan/Doolittle, adding that FirstStreetOnline`s product line needs the support of thorough descriptions and responsive customer service. "They do a good job of promoting live chat to help explain products."
The other leaders in this category are also forging ahead with both products and services. Dell.com, which pioneered the use of online configurators for custom-ordering computers, is expanding that service to its new offerings in digital media products. The idea is to give online shoppers the same comfort level that they might receive in a store, says Michael Farello, vice president of marketing and e-business for Dell`s U.S. consumer business. "We`ve launched new product categories like TVs and MP3 players that more often are shopped at retail, so we are seeking to attract that customer as well," he says.
The recently redesigned CircuitCity.com makes it easier for online customers to find and compare products. "Circuit City`s new web site is a big improvement over its prior site, especially when it comes to product comparisons and information," says Geoff Wissman, vice president with consultants Retail Forward Inc. "They have made a move in the right direction."
Crutchfield.com published more than 100 new articles this year in its Crutchfield Advisor, which operates as a separate content site linked to the e-commerce site. The Advisor goes beyond the usual how-to-buy information to include system installation videos and articles on how to use and enjoy consumer electronics. The articles link contextually to relevant products on the core e-commerce site.
In the digital music world, Napster.com continues to lead with innovation. This fall it launched Napster to Go, the first subscription service that lets customers buy songs and play them on a portable device. What`s more, it introduced with AT&T and Audiovox the first service that lets subscribers carry their music around on a cell phone.
And in the hot market of online rentals of DVDs, Netflix continues to set a pace for others. By analyzing subscriber activity and improving the way it fulfills orders, it is now able to send its subscribers their top DVD choice 95% of the time, says CEO Reed Hastings. That has helped reduce subscriber churn, as the number of subscribers has tripled this year to over 2 million.
BestBuy.com
Making shoppping fun
If recreating the in-store shopping experience is essential to success as an Internet retailer, then BestBuy.com takes top awards. The retailer has created a web site with all the sparkle and energy of its stores through crisp graphics and an eye-popping layout that is easy to follow and navigate.
"Visitors to the site get the feeling of having fun, just like they do when walking into a Best Buy store," says Geoff Wissman, vice president of consultants Retail Forward Inc. "It is a well laid out site for shopping and information gathering."
That fact became evident to the rest of the Internet retailing community in early October when BestBuy.com supplanted long time ratings champ eBay as the consumer electronics site capturing the most unique visitors for the week ending Oct. 10, according to Nielsen/NetRatings. Best Buy attracted 1.71 million unique visitors to eBay`s 1.54 million. The victory was a coup for Best Buy, since it trailed eBay considerably in the previous Nielsen/NetRatings report for the week of Sept. 5. In that report, eBay ranked number one with 1.79 million unique visitors, compared to Best Buy`s 1.48 million.
A recent addition is the ability for shoppers to download, crop and enhance the quality of digital photos. Shoppers can order prints for home delivery or pickup, and even create photo albums. Photos can be imaged onto greeting cards and calendars and users have the ability to select the size and finish of their photos. Users can also receive technical information and assistance from a service representative.
The service was developed in conjunction with imageLab, which offers similar services at Best Buy stores. The inclusion of the digital photo feature is part of a multi-pronged strategy by Best Buy to cater to consumers who purchase and use digital cameras. Shoppers, who are required to register with their postal and e-mail addresses before using the feature, are provided links to pages detailing BestBuy.com`s inventory of digital cameras.
"Best Buy does a much better job than many of its competitors when it comes to evolving its web site," Wissman says. "From a purely
e-commerce standpoint their site works extremely well."
Best Buy Co. Inc.
7601 Penn Ave. South
Richfield, MN 55423
Date Launched
1998
Unique visitors (monthly)
8,179,000*
Annual Web-Based Sales
$928,140,000**
Vendor Relationships
Site Design
In-house
E-Commerce Platform
ATG
Web Hosting
NA
Site Search
Verity
Content Management
Interwoven, Vignette
Order Management
In-house
Payment Processor
Clear Commerce
Fulfillment
Yantra, in-house
Affiliate Marketing Management
Commission Junction, In-house
Search Engine Management
Inceptor
E-Mail Marketing
Unica
Web Analytics
WebSideStory
Content Delivery Network
Akamai Technologies
*comScore Networks report, October 2004
Blockbuster.com
Raising its game
After years of flying below the radar in the online movie rental arena, Blockbuster.com is gaining altitude fast. In August, the retailer relaunched its ho-hum site with the express intent of competing more effectively against rivals such as Netflix.com. Key to the makeover is allowing customers to rent DVDs online and have them mailed to their homes.
The new look came after Blockbuster.com spent two years learning about home delivery and marketing the service through its now shuttered Filmcaddy.com subsidiary, which the company purchased in 2002.
Blockbuster.com`s thrust into online rentals is not only expected to pull in new customers, but provide a lift to the entire online movie rental industry by leveraging the power of its brand. "Blockbuster`s brand is certainly powerful enough to pull customers from competitors like Netflix," says Tod Chanko, entertainment analyst for Jupiter Media. "Their brand is also powerful enough to benefit the whole category by heightening awareness of it."
Since August, more than 50% of customers who rented online from Blockbuster.com had not rented from its stores in the 12 months prior, according to Shane Evangelist, senior vice president and general manager for Blockbuster.com. In addition, Blockbuster has seen an increase in spend rates and in-store visits from existing customers that rent online.
"The site is a way to pull in new customers and enhance customer loyalty," says Evangelist. "One lesson we learned from Filmcaddy.com is that people who shop online still visit the store."
To increase store traffic, Blockbuster is offering online subscribers coupons for two free in-store movie rentals per month. Subscribers pay $17.95 for unlimited rentals of the more than 25,000 DVDs and games. Titles are delivered from the company`s warehouse within three business days and there are no due dates. Customers receive a postage-paid return envelope with each rental.
In 2005, Blockbuster will integrate its 6,000 stores into its distribution channel to guarantee next-day delivery. The multi-channel strategy will also reduce the inventory of older DVD and game releases sitting on shelves.
Blockbuster Inc.
1201 Elm St.
Dallas, TX 75270
Date Launched
1999
Unique visitors (monthly)
6,356,000*
Vendor Relationships
Site Design
In-house
E-Commerce Platform
In-house
Web Hosting
NA
Site Search
Mercado Software
Content Management
Vignette
Order Management
In-house
Payment Processor
Cybersource, Chase Merchant Services
Fulfillment
In-house
Affiliate Marketing Management
Performics
Search Engine Management
Avenue A
E-Mail Marketing
In-house
CRM
In-house
Web Analytics
Omniture
Rich Media
Scene7
*comScore Networks report, October 2004
CircuitCity.com
A bold makeover
There comes a time when every Internet retailer must retire its original site design regardless of how many times its has been tweaked. CircuitCity.com came to that conclusion about a year ago when it realized its site had become clogged with such an abundance of information and products that it made shopping--its reason for being--difficult.
The aim was to create a site that simplified navigation and centralized product data and customer product reviews. These ideas culminated in a new web site design by R/GA which was then developed by BroadVision. The new site, which took 11 months to create, debuted in September. Circuit City relied heavily on consumer input before starting the redesign.
"Circuit City`s new web site is a big improvement over its prior site, especially when it comes to product comparisons and information," says Geoff Wissman, vice president with consultants Retail Forward Inc. "They have made a move in the right direction."
Visitors can compare up to five products at once and the information section offers a glossary of technical terms that will help shoppers better understand product specifications. In addition, educational articles, a longstanding feature of the site, are now categorized under a "Click & Learn" section.
"Customers told us we had added a lot to the site over the years, but that the design had become disorganized and hard to navigate," says Fiona Dias, president of Circuit City Direct. "They told us we had a lot of good stuff on the site, but that it was mostly found by their stumbling across it."
Improving how merchandise is categorized has become critical since
CircuitCity.com has added 500,000 music titles that can be downloaded to a shopper`s computer. The titles are available through MusicNow, which the retailer purchased in April.
In addition to categorizing product and information better, CircuitCity.com added real-time inventory. Shoppers interested in purchasing a product online and picking it up at a store can check to see availability of merchandise across all of the retailer`s 600 stores. "Circuit City makes good use of marketing integration between its stores and the web site," Wissman says.
Circuit City Stores Inc.
9950 Maryland Dr.
Richmond, VA 23233
Date Launched
1991
Unique visitors (monthly)
6,657,000*
Annual Web-Based Sales
$440,820,000**
Vendor Relationships
Site Design
RG/A
E-Commerce Platform
BroadVision
Web Hosting
In-house
Site Search
Endeca Technologies
Content Management
In-house
Order Management
In-house
Payment Processor
Fifth Third Bank
Fulfillment
In-house
Affiliate Marketing Management
Commission Junction
Search Engine Management
Advertising.com, iProspect
E-Mail Marketing
CheetahMail
Web Analytics
WebTrends
Content Delivery Network
Speedera Networks
Rich Media
Sharpe Partners
*comScore Networks report, October 2004
**Internet Retailer Top 300 Guide est., 2003
Crutchfield.com
Putting its expertise online
With $200 million in annual sales across its catalog, call center and web site, Crutchfield Corp. says the Internet has become customers` preferred channel, accounting for more than 50% of sales and growing. The trend reflects more than consumers` increasing adoption of the web--it also shows how adept the retailer has become at presenting online the tremendous depth of product knowledge it`s developed over the past nearly 30 years. "As the web takes hold as a leading channel, we are finding that some of our earlier investments are
really paying off," says vice president of e-commerce Lawrence Becker.
Crutchfield agents get several weeks of training before taking a seat at the call center, followed by ongoing manufacturers` training. This year, Crutchfield has pushed even more of that human expertise online by cross-training more agents in chat and expanding the hours during which it`s offered.
Crutchfield has sharpened up online merchandising, adding more robust analytics capacity and using it to test and refine different copy treatments, formatting and merchandising tactics online, with the payoff in improved results, says Becker. But what really leaves the online competition behind is the Crutchfield Advisor. A pure content site linked to Crutchfield.com, it published more than 100 new articles this year alone, going beyond the usual how-to-buy information to include system installation videos and articles on how to use and enjoy consumer electronics. The articles link contextually to relevant products on the core e-commerce site.
Jupiter Research analyst Patti Freeman Evans says Crutchfield`s web site reflects the company`s core strength. "In their direct mail business, they were very informative and educational, and they do that well online. Not every shopper is going to want the Crutchfield Advisor, but those that do find it tremendously valuable," she says.
While Becker says that customers who use Crutchfield Advisor are some of the company`s best customers, he notes that Crutchfield has invested in all three channels: web, catalog and call center. "What all three have in common is that we are trying to create the most informed and prepared consumer electronics shoppers," he says.
Crutchfield Corp.
One Crutchfield Park
Charlottesville, VA 22911
Date Launched
March 1996
Unique visitors (monthly)
1,800,000
Annual Web-Based Sales
$100,000,000 (est. 2004)
Vendor Relationships
Site Design
In-house
E-Commerce Platform
Microsoft
Web Hosting
Broadband Network Services Inc.
Site Search
In-house
Content Management
In-house
Order Management
In-house
Payment Processor
First Data Merchant Services
Fulfillment
In-house
Affiliate Marketing Management
Performics
Search Engine Management
Rimm-Kaufman Group
E-Mail Marketing
In-house
CRM
In-house, Talisma
Web Analytics
Coremetrics
Content Delivery Network
Akamai Technologies
Dell.com
Tech savvy and consumer-friendly
As the PC moves to the center of home entertainment systems, Dell.com`s consumer business this year builds on last year`s efforts to capture the purchase of other system components, but with a twist: the site that wins by catering to the tech-savvy is now also reaching out to the less-so.
"We`ve launched new product categories like TVs and MP3 players that more often are shopped at retail," says Michael Farello, vice president of marketing and e-business for Dell`s U.S. consumer business. "We have a terrific experience for consumers predisposed to shop direct. Now we`ve got to create excitement for those accustomed to shopping in a store."
To appeal to that broader audience, enhancements at Dell.com this year seek to translate online the excitement and urgency consumers may experience at retail. The site prominently features the day`s hot deals near the top of the consumer home page. It supported the launch of the TV category with rich media, adding 3-D product imagery and Flash to get the attention of shoppers more used to seeing TVs in a retail setting.
It`s borrowed from its own online computer configurator to create similar options for entertainment systems. Shoppers can swap out elements of systems and see the impact on price in real time. Dell`s also tweaked online configuration on the computer side, providing a core starting point on featured systems for those who don`t want to start from scratch, and then recommendations on options. "We have consumers of different sophistication levels and we want to provide an experience that accommodates that whole spectrum," Farello says.
This year, Dell added to the customer self-service available at Dellsupport.com. But it`s also placed its 800 number on pages throughout Dell.com, while some other marketers bury toll-free numbers to discourage customers from using this more expensive service channel.
Jupiter Research analyst Patti Freeman Evans says that`s a critical differentiator. "It`s best practice," she says. "Consumers say they are more inclined to shop again with a retailer where that number`s visible. Driving customer loyalty is not easy, and if you are going to keep customers, you have to offer them what is of value to them."
Dell Inc.
One Dell Way
Round Rock, TX 78682
Date Launched
1996
Unique visitors (monthly)
23,920,000*
Annual Web-Based Sales
$3,200,000,000 (2003)
Vendor Relationships
Site Design
Critical Mass
E-Commerce Platform
Web Hosting
In-house
Site Search
FAST Search & Transfer
Content Management
In-house
Order Management
In-house
Payment Processor
Chase Merchant Services
Fulfillment
In-house
Affiliate Marketing Management
LinkShare
Search Engine Management
In-house
E-Mail Marketing
PeopleSoft
CRM
In-house
Web Analytics
In-house
Rich Media
In-house
*Worldwide visitors to US consumer site
FirstStreetOnline.com
Mission: Innovation
The innovative atmosphere of FirstStreet is hard to miss. Spend a few moments gazing at a product display of, say, a pocket-sized video player or a TV watch, and the smiling image of a live chat agent will begin scrolling across the page offering personal service. Like its products, the site itself is designed to bring innovation to shoppers.
"The floating live chat is a cool feature, it`s unique," says Neil Stern, senior partner with retail consultants McMillan/Doolittle, adding that FirstStreet`s product line needs the support of thorough descriptions and responsive customer service. "They do a good job of promoting live chat to help explain products."
Like its live chat feature, the retailer itself isn`t sitting still. "We`re constantly working to improve our site and make it more fun and helpful," says Anne Richardson, director of Internet.
A unit of TechnoBrands Inc. formerly known as TechnoScout.com, the site re-launched in July with its new name and a mission to broaden its customer base. For long a retailer of technical gadgets like a laser-beam device that shows how far to pull a car into a garage, the old site appealed predominantly to men. Now, with a brand that combines a "you-saw-it-here-first" attitude with the image of a shopping mall, FirstStreetOnline.com is designed to appeal to more women.
A new home-and-garden category, for example, offers products like self-extinguishing rope candles and outdoor electric kettles for deep-frying turkeys.
But FirstStreet is also making shopping easier. New drop-down navigation menus let shoppers drill down faster to particular products within different categories, and the shopping cart now provides a running view on each page of what a shopper has placed in it. The checkout process has been streamlined. The overall result, Richardson says, is that shoppers take fewer steps to find what they want, and sales conversion rates have gone up.
Since the July relaunch, FirstStreet has reduced its cart abandonment rate. "We`ve noticed that people are getting to where they want to go faster, and our shopping cart abandonment rate has gone down," Richardson says. "About 20% more shoppers who access a shopping cart go on to complete their order."
FirstStreetOnline.com/TechnoBrands Inc.
1998 Ruffin Mill Rd.
Colonial Heights, VA 23834
Date Launched
2000
Unique visitors (monthly)
200,000
Annual Web-Based Sales
$10,000,000 (2004)
Vendor Relationships
Site Design
in-house
E-Commerce Platform
IP/Synaro
Web Hosting
AT&T
Site Search
In-house
Content Management
In-house
Order Management
IP/Synaro
Payment Processor
Paymentech
Fulfillment
In-house
Affiliate Marketing Management
Commission Junction
Search Engine Management
In-house
E-Mail Marketing
DoubleClick, In-house
Web Analytics
WebTrends
Content Delivery Network
Mirror Image
Napster.com
Songs to go
Like a hip David surrounded by corporate Goliaths, Napster, the one-time bad-boy of digital music, is bringing innovation to one of the web`s hottest markets. "They`re absolutely innovative, they`re building as robust an offering as anyone can," says David Card, vice president and senior analyst with Jupiter Research.
Napster has formidable challenges in the young digital music market. Competing against some of the biggest names in electronic retailing--Apple Computer Inc.`s iTunes, Wal-Mart Stores Inc.`s Walmart.com and Real Networks, to name a few--it`s truly a midget among giants. "But its weakness could also be its strength, because it could be a faster, more nimble company," Card says.
So far, Napster has lived up to that potential. It recognized early that subscriptions to buy digital music would be a popular alternative to purchasing single song downloads, the only option offered by iTunes. "We emphasize the subscription model because we think that is where digital music is going," says COO Laura Goldberg.
And it`s taking bold steps to set itself apart. This fall it launched Napster to Go, the first subscription service that lets customers buy songs and play them on a portable device. What`s more, it introduced with AT&T and Audiovox the first service that lets subscribers carry their music around on a cell phone.
Napster`s market innovation also extends to the fundamentals of marketing and merchandising. Its introduction of gift cards and Napster-branded merchandise, including blank CDs and CD cases, in Best Buy, Target, Radio Shack and other stores has given it a strong multi-channel presence. "You can go into 30,000 retail stores and buy a prepaid Napster card," Goldberg says.
While other digital music retailers offer products like videos and games, Napster is sticking to a clear message about serving the digital music market, Goldberg adds. "Having a clean, succinct message has helped us a lot," she says. It is making that message clearer by divesting its software business and focusing on Napster, even changing its corporate name from Roxio to Napster.
The former bad boy also avoids pushy sales. "We have a user-friendly web site that lets users find what they want before having to commit to a purchase," Goldberg says.
Napster Inc.
9044 Melrose Ave.
Los Angeles, CA 90069
Date Launched
2003
Unique visitors (monthly)
1,723,000*
Annual Web-Based Sales
$35,000,000 (est. FY `05)
Vendor Relationships
Site Design
In-house
E-Commerce Platform
In-house
Web Hosting
AT&T
Site Search
Verity
Content Management
In-house
Order Management
In-house
Payment Processor
PayPal, Paymentech
Fulfillment
In-house
Affiliate Marketing Management
Commission Junction
Search Engine Management
In-house
E-Mail Marketing
In-house
Web Analytics
Omniture SiteCatalyst
*comScore Networks report, October 2004
Netflix.com
Movie maven
When Netflix Inc. arrived on the DVD rental scene a little over five years ago, it didn`t take long to win loyal customers. Revenue is closing in on $500 million this year, nearly double the $272 million of 2003. "What we`re seeing in online DVD rentals is a rare phenomenon," boasts CEO and founder Reed Hastings.
But it`s not all smooth sailing ahead for Netflix, as it faces mounting competition from among the biggest names in retail. Wal-Mart Stores Inc.`s Walmart.com offers a similar online DVD rental service at a lower price; Blockbuster Video has introduced a combined online and store-based rental service. Netflix recently cut its monthly subscription to $17.99 from $21.99 after Hastings heard that Amazon.com might enter the market.
But Netflix gets credit for founding the market and it keeps forging ahead. It now has 29 warehouses to support overnight deliveries for 80% of customers. To maximize efficiency, Netflix ships whatever is available in inventory from among a subscriber`s top three movie preferences. By analyzing subscriber activity and improving the way it fulfills orders, it is now able to send the top choice 95% of the time, Hastings says. That has helped reduce subscriber churn, as the number of subscribers has tripled to over 2 million
Netflix receives high marks for its web site as well as its delivery process. "The site is clean, fast and informative," says Peter Franczak, a partner at Consumer Consulting LLC.
The challenge ahead, he says, is for Netflix to build on its brand and reputation to offer additional products and services. Hastings says Netflix will continue to expand its movie selection, already at 25,000 titles, up from 15,000 a year ago, and will introduce more service improvements next year.
It will also launch in 2005 a service with TiVo Inc. that will let consumers download movies from Netflix.com to TiVo digital movie recorders.
But DVDs will remain the Netflix mainstay for several years, Hastings says. "There`s $8 billion in store-based DVD rental revenue in the U.S.," he says, "and the vast majority of store customers will try online rentals over the next two years. The land grab for those consumers will be an amazing market phenomenon, but we`ll win because our service works."
Netflix Inc.
970 University Ave.
Los Gatos, CA 95032
Date Launched
1999
Unique visitors (monthly)
8,249,000*
Annual Web-Based Sales
$500,000,000 (est. `04)
Vendor Relationships
Site Design
E-Commerce Platform
NA
Web Hosting
NA
Site Search
In-house
Content Management
NA
Order Management
In-house
Payment Processor
Retail Decisions
Fulfillment
In-house
Affiliate Marketing Management
LinkShare
Search Engine Management
NA
E-Mail Marketing
NA
Web Analytics
NA
*comScore Networks report, October 2004
