Searchandizing

When Fingerhut re-emerged in November 2002 following its breakup under former owner Federated Department Stores Inc., its new owners inherited a known brand and inventory, but none of the old Fingerhut`s web technology infrastructure or customer lists. With much to develop in its two-channel strategy of selling through the web and catalogs, but with limited capital to make it happen, the company faced tough choices on how to re-launch its web site, Fingerhut.com.

"We realized we wouldn`t be able to drive a Cadillac right away," says Mike Sidders, director of e-commerce at Minnetonka, Minn.-based Fingerhut Direct Marketing Inc., a unit of Petters Group Worldwide. "We`d have to start with a Yugo."

Cool technology

But one area where it knew it had to invest: Site search. In fact, a new site search-and-navigation tool deployed last October led to $1 million in incremental sales through the last four months of Fingerhut`s fiscal year ended Jan. 31. "It salvaged our holiday shopping season," Sidders says.

Fingerhut is a general merchandiser with more than 25 catalogs selling everything from apparel to sporting goods to consumer electronics. Web sales are expected to account for more than 20% of Fingerhut`s sales this year. In the past year, Fingerhut has been stepping into more sophisticated e-commerce, leading to a shopping experience that has proven to be more productive for both its customers and its own efforts to grow revenue, Sidders says.

Fingerhut`s move to more productive site search is supported by an underlying technology trend that is turning site search engines into combined search-and- merchandising tools. "It`s pretty cool technology-it`s `searchandising,`" says Eric Peterson, web site operations and technology analyst at Jupiter Research.

Retailers like Fingerhut, eToys Direct Inc. and Bloomingdales.com are using site search tools from vendors like EasyAsk, Mercado Software, Endeca Technologies Inc., Fast Search and Transfer, iPhrase Technologies Inc. and Atomz to exert more control over site-search results presented to shoppers. The tools serve three purposes:

l identifying and fixing failed searches, where shoppers search on a term that produces zero useful results;

l producing search results and navigation options that are most likely to lead to sales;

l pushing products according to a retailer`s other business objectives, like reducing inventory of overstocked items or increasing sales of high-margin products.

More products, more sales

While site search technology vendors have been addressing those issues for some time, they are beefing up their offerings even more today, with some focusing on ways to personalize search results based on previous purchases, behavior on a site and even on which Internet search engine referred the shopper. "Personalization is the next logical direction for site search," Peterson says.

At eToys, more organized and broader shopping options presented through site search results have led to a 25% increase in the average number of pages viewed per search, from 8 to 10, says CIO Chris Cummings. "That means guided navigation is bringing people through more products and helping them find what they`re looking for," he says. "The more we interact with the customer, the more likely we`ll convert that customer to a sale."

Web shoppers, meanwhile, are beginning to demand better site search experiences as they`ve become more accustomed to the ease of beginning their shopping excursions through Internet search engines, experts say. And as more web shoppers use Internet search to find products, the number that go on to use site search also rises, increasing the demand on retailers to offer effective search features. "The big thing now will be to develop dynamic landing pages," says John Squire, vice president of product management for Coremetrics Inc., whose web analytics technology can be used to improve site search results. "People expect to have as good a site search experience as they had on Google and other Internet search engines."

Searching to buy

Of the approximately 150 million web users in the U.S., 100 million or more frequent web portals to begin shopping efforts, and about 70-80 million use web search monthly, according to a recent report by Safa Rashtchy, analyst who follows e-commerce stocks at investment firm Piper Jaffray & Co. And site search users are more likely than non-users to go on to make a purchase and to produce higher average order values, Squire says.

"We have a client where 10% of their visitors use site search but account for 37% of sales, and another client where 25% of visitors use site search and make up 40% of buyers," Squire says. "In each case, the average order value of site searchers is higher than the AOV across a whole site."

At Fingerhut, the EasyAsk tool, combined with reports on web site analytics from a Coremetrics application, produced results soon after first use, Sidders says. "Getting senior management to sign off on this was easy," he says.

But he and others add that producing better business results through new site search-and-navigation tools requires ongoing learning. And the more time and personnel dedicated to using the tools, the more that can be gained from them. The early benefits Fingerhut has gained, Sidders says, have been the relatively easy pickings. "We`ve gobbled up the low-hanging fruit so far, gotten most of the `ah-hahs,`" he says. "But we don`t have a good handle yet on what more we can gain."

Taking full advantage of Fingerhut`s new search-and-navigation technology would require the attention of several dedicated analysts and managers. "We could have teams of people doing nothing but optimizing search, because there`s always something more that could be done, but it gets to the point of what resources a company is able to dedicate," Sidders says.

The search-and-navigation tools are also designed to monitor on an ongoing basis the impact of a web site operator`s strategies, giving managers the insight and ability to modify them as necessary. "We`re constantly monitoring performance, so we can modify search results to produce a better customer experience and achieve our business objectives," Sidders says.

Start with the failures

Although its EasyAsk/Coremetrics set-up can be accessed through a web browser by several product managers, Fingerhut has dedicated a single e-commerce analyst to maintain it as a liaison between merchandise managers and the web site. By toggling back and forth between the Coremetrics and EasyAsk applications on a computer screen, the analyst, Andrew Deikel, can view Coremetrics data that indicate which search results are leading to clicked links and sales or which are producing no or insufficient results due to such reasons as out-of-stock inventory or misspelled search terms. The EasyAsk application also provides similar analytical data, but Fingerhut has chosen to continue using data from the Coremetrics application, which the retailer had installed prior to the EasyAsk application.

"We`ll often start with the Coremetrics data, that`s the easiest place to start," Sidders says. "We`ll take a look at what`s failing from a search standpoint, and why it`s failing. Maybe it`s a search for something that`s out of stock, or something we don`t carry at all."

Because some shoppers will always search for products a retailer doesn`t carry, it`s impossible to get the number of failed searches to zero, but retailers can approach zero by fixing common problems, experts say.

IRCE 2008 Conference Multi-Media CD-ROM

Business rules

Among the easiest problems that Fingerhut has discovered and fixed, for example, were searches that could not produce results for synonyms, plural terms or common misspellings of the names of products it carries. "If a customer searched for `chairs,` they wouldn`t find anything, but if they searched for `chair,` they would," Sidders says. "Our failed-search rates were up to 50% of searches."

Some of the problems producing failed searches were corrected once Fingerhut installed the EasyAsk site search engine, which comes with a built-in ability to handle a broad range of terms, including synonyms and misspellings, that would otherwise result in empty search results. By reviewing the Coremetrics analytical data, Fingerhut could identify remaining problems where search keywords didn`t connect with associated products, then modify the EasyAsk search engine to recognize and produce better results.

Going beyond finding and fixing problems, Fingerhut also applies business rules to the EasyAsk search results for pushing particular inventory. "Sometimes our business needs would outweigh what the Coremetrics data showed, such as when we have 100 digital cameras that we need to move," Sidders says. In that case, Fingerhut could modify the search results for "cameras" queries to make those digital cameras appear higher in the search results.

In addition to producing search results that serve both the interests of shoppers and the business needs of retailers, the search-and-navigation tools also enhance the shopping experience by showing navigation options that help shoppers extend their initial search through related browsing.

If a shopper searches on "Barbie" on eToys.com, which uses Endeca`s InFront site search and navigation tool, for instance, she`ll see not only a list of images and descriptions of products eToys sorted either by best-seller or price, but also sections of specially promoted, related items and a navigation bar that can take her to virtually any of eToys` 8,000 products, says Cummings, the CIO.

By dynamically creating web pages based on a shopper`s search terms, the site search and navigation tool has enabled eToys to replace 80 distinct boutique sections of its site that required extensive time for managing links and content. "In the old way, we practically had to work around the clock to manually maintain boutiques, replacing links to out-of-stock products with links to replacement products," says Brian Bass, director of product development.

With Endeca, the site search and navigation tool automatically removes out-of-stock products from search results pages, eToys says. "Now it`s more like having an unlimited number of boutiques," Bass says, adding that maintaining the Endeca tool takes about eight to 16 hours per week.

Pushing margins

The average cost of licensing Endeca`s InFront tool is $300,000, plus about 15% annual maintenance costs, though the licensing fee varies according to an e-commerce site`s size and performance levels. A small implementation could run about $50,000, while Endeca`s largest customers, who may serve thousands of searches per minute, may spend $1 million or more, an Endeca spokesman says.

EToys displays search-results pages divided into several sections. The basic search results appear in the center and can be ranked by the shopper according to price or best-sellers. A left-side navigation bar presents further options to drill down into the same product category by multiple characteristics such as brand or sub-category. Specially promoted products are listed on the right side of the page, and a banner across the top might offer a view into related content, such as a history of the Barbie doll.

Among the products eToys has promoted in search results are DVDs and accessories in search results for video game consoles. The consoles tend to be popular but low-margin items that generate a lot of searches, so the special promotions let eToys generate profits through sales of the higher-margin DVDs and accessories like mobile console display screens, Bass says.

As retailers continue to learn to use site search to better serve customers and increase sales and profit margins, they`ll also move more into offering search results personalized to each shopper`s behavior, experts say. Combining site analytics and search functions, for example, can let a retailer tailor search results based on where a site visitor came from, says Squire of Coremetrics.

"Retailers are beginning to look at the referring Internet search site, whether it`s Google, AOL or MSN," Squire says. Because each referral site can be shown to deliver types of shoppers with particular spending habits and interests, retailers can modify search results based on the referral site, he adds.

Tailoring results

Retailers are also beginning to use site search from vendors like Mercado to present search results tailored to a shopper`s interests. Mercado`s Commerce Search and Navigation application includes an administrative console that business managers can use to set rules on what search results and cross-selling presentations appear according to information on a shopper`s personal demographics and historical and real-time personal shopping behavior, the recorded interests of other consumers, and the goals of the retailer regarding moving merchandise.

Mercado`s CSN application starts at about $50,000 plus annual maintenance fees, says vice president of sales Bill Martin.

Site search personalization is such a new development that few retailers have any experience yet that they can discuss. But Jupiter Research`s Peterson says it`s a natural evolution of site search technology combined with web analytics. He predicts it will become more common, considering the trend toward bringing together analytics and search technologies, the latest manifestation of which is web analytics firm WebSideStory`s planned acquisition of Avivo Corp., which operates as site search company Atomz.

"If you have customized results based on priorities like profit margins, inventory or just what sells, the next logical direction is toward customized results based on where a customer came from and what her interests are," Peterson says.

Leaving the site

Another new option for site search, offered by Searchfeed.com and Ace-Installer.com, enables retailers to present sponsored ads along with their site search results. Even if a retailer has limited inventory for searched-for product or category, it can offer sponsored listings as both an information service and a source of revenue. So even if a shopper leaves the retailer`s site by clicking a sponsored ad, the merchant can still earn revenue, the companies say. "We`re now able to offer a paid exit strategy for web sites," says Ace-Installer CEO Andrew Newby.

As site search continues to develop new and better ways to improve the online shopping experience, retailers say they expect to produce more loyal customers. "At the end of the day, that`s what e-commerce is all about--giving customers relevant content and the ability to act on it," Sidders says.

paul@verticalwebmedia.com

Click Here for the Guide to Site Search Products & Services