No longer a supporting actor, video stars on some retailers' e-commerce sites.
Allison Enright , Editor
Coming across video on an e-commerce site these days is fairly routine. Of the 100 mid- and larger-sized e-retailers tracked by retail consultancy The E-Tailing Group Inc., 85% used video in 2012 to merchandise in some way, most commonly on product pages. But a sprinkling of e-retailers are going much further, making video their primary sales tool.
Take specialty discount e-retailer PulseTV.com, for example. The e-retailer—whose name refers to its roots as a seller of video anthologies through direct-response TV advertising, not its focus today on merchandising with online video content—began creating original video content in mid-2011 after it saw consumers clicking to view manufacturer videos PulseTV talked up in its daily-deal promotional e-mails.
When its early tests showed that video viewers converted into buyers at a higher rate than non-viewers, the e-retailer decided to transform the look of its site and put video front and center. Visit PulseTV.com today and where consumers might see a hero shot photograph on most e-commerce home pages, they instead see a freeze frame from a video superimposed with a Play button. Pressing Play launches a clip featuring PulseTV staffers pointing out a product's merits or uses, and, sometimes, its failings. "We like to tell a story, and get down and dirty about what it is about," says PulseTV co-founder Anisa Ali. "We're not afraid to point out problems with a product."
Ali says that a mix of personality and honesty is helping set PulseTV apart from the competition, communicating to consumers that PulseTV is made up of real people with a real customer-service focus. "We are a smaller company trying to compete with Amazon," Ali says. "We do it by our service, but it is still not always easy. The videos make us real people to our customers, people they are comfortable associating with."
For PulseTV, that comfort level is helping drive sales. Ali says customers today who press Play on a product convert at a rate four times greater than those who do not. Sales overall in 2012—the first full year the e-retailer had video as its merchandising focus—were up 70% in dollars. "Video was not the only improvement we made, but it has been a huge part of it," Ali says. And PulseTV projects sales will increase more than 50% in 2013. Approximately 70% of products added to PulseTV.com now have an original video featuring a PulseTV employee talking it up.
PulseTV is part of a vanguard of online merchants that eschew routine merchandising tactics in favor of inviting consumers in with video. These merchants say video makes the products they sell, and the retailers themselves, come to life online, creating a welcoming, differentiated environment that encourages consumers to buy. And some merchants are finding these storytelling videos gain them wider exposure that draws more traffic. They also say the details they can show in videos prompts fewer returns and service inquiries because consumers have a better understanding of what to expect, which serves to drive down overall operational costs.
Out of the ordinary
Another e-commerce company with a focus on video is DailyGrommet.com, whose 10-person production staff records five to 10 videos every Wednesday morning in its offices outside Boston. Daily Grommet, an online marketplace that specializes in marketing stylish products from small manufacturers, features one new video each day on its home page.
On a day in December, for example, the home page video—which is hosted on and streamed from Google Inc.'s YouTube—featured several kitchen tools from manufacturer Prepara, including a flexible silicone roasting laurel designed to elevate a chicken or other food item off the bottom of a roasting pan. Clicking Play on the home page took shoppers to the product detail page, where the video appeared at the top, followed by text that details its creation story and a product detail tab that lists product specifications. The page also incorporated social network modules and has the manufacturer answering questions from Daily Grommet shoppers.
Two Daily Grommet staffers narrate and appear in the two-minute video. One talks about how she tried the laurel during a cooking class and how it worked out, noting, for example, how she tossed it in the dishwasher afterward and it came out squeaky clean. The video also features one of the product's inventors talking about his design approach and the product's usefulness. The video further incorporates some manufacturer-supplied media assets, commonly called B-roll, like product photos and videos of its creators.
Telling a good story
The approach is designed to tell a layered, deep story, rather than simply show the product like a lot of product videos on other e-commerce sites do, says Joanne Domeniconi, co-founder and chief discovery officer of Daily Grommet. She says that helps forge a connection between product creators and consumers. "Building rich media around commerce, and personalizing and humanizing this experience is the future," she says. "Video can bring products to life. It helps to replicate the interaction between the shop owner and the consumer online."
As a marketplace, Daily Grommet takes a cut of each sale sold through the site; Domeniconi declined to say how much. Sellers are asked to share in Daily Grommet video production costs, although Domeniconi declined to say to what extent or what an average video costs to produce. After a video is produced sellers can use the video on their own web sites.
A promotional tool
E-retailer and marketing platform Sharpmen.com takes a similar storytelling approach with video. The site, which sells apparel, accessories and gadgets aimed at men, works with a collection of brands and manufacturers to showcase their products in exchange for about a 40% cut in any sale, says CEO Yazid Aksas. That cut includes video production costs.
The site, which launched as a video-driven flash-sale retailer less than a year ago, quickly morphed into a hybrid e-retailer and advertising platform when it realized it was getting more video views than direct sales, Aksas says. "We realized that the views the videos were getting were valuable for the brands we were promoting and we started thinking more about the value proposition we were bringing," he says. "We could have a mix of advertising and commerce. Usually you are one or the other."
He says the new business model is proving more profitable than the flash-sale model. Consumers who view a video on Sharpmen.com as it operates today convert approximately 3.75% of the time, greater than the 2.99% average of North America's top online retailers as ranked in the Internet Retailer Top 500 and Second 500 guides.
The top videos featured on Sharpmen.com's home page—there are nine that cycle through at any given time—usually run about two to five minutes each and tell the stories behind the brands. These longer, more story-like videos comprise about 30% of the videos on the site. The videos comprising the remainder are generally about a minute long and are more straightforward, with a host talking up product features and benefits.
Sharpmen.com shoots seven to 10 videos a week, usually all on one day, using freelance videographers and editors. Aksas says Sharpmen.com spent about $15,000 to buy cameras, lighting equipment and set up the studio space.
The storytelling approach prompted several online media outlets to reach out to Sharpmen.com to ask if they could use the longer, featured videos on their own sites, Aksas says. "Everyone is looking for content," he says. Sharpmen.com now syndicates some of these videos to about a dozen news and lifestyle sites, including EliteDaily.com, which targets Gen Y-aged consumers and MadeMan.com, a site for guys.
Aksas says sharing the content free of charge with these sites has helped increase brand exposure and draw traffic to Sharpmen.com. The brands featured in the syndicated videos also pay an additional fee, which Aksas says is low, on a cost-per-thousand basis for Sharpmen.com to syndicate their brand video in these channels.
Daily Grommet handles customer service inquiries and returns on behalf of its sellers. Although she declined to reveal Daily Grommet's return rate, Domeniconi says video has brought it down. "Our credit card processor was absolutely blown away by how low our return rate is, and we credit video with that because consumers are getting a more layered view of the product," she says.
Ali at PulseTV also credits that retailer's video efforts for helping keep returns low. "Our return rates have always been very low, under 2%," she says. "We credit our customer service and how, when we have a more complex product, we try to show all aspects of it."
She says video has had a greater effect on the number of calls made to PulseTV's customer service line. She describes how, before the video push, the e-retailer sold several flashlight models that required consumers to remove the top and pull out a plastic insert before installing the batteries. It included this information on product detail pages, and with the shipped product. Still, customer service agents regularly received calls from consumers saying their flashlights didn't work.
Once PulseTV added a video to the product pages showing consumers that they had to remove the insert, calls about the issue became nearly non-existent. "People just don't like to read," Ali reasons. "I think it's the MTV mentality."
Like any operational area, web merchants at the forefront of video commerce work to contain costs. PulseTV, Daily Grommet and Sharpmen.com all host and stream video via YouTube. PulseTV and Daily Grommet both initially worked with online video hosting vendors and say they were pleased with their services, but they decided to move to YouTube because it provided enough of what they needed and was free to use.
PulseTV, which gradually increased its investment in video, has 22 employees in its offices, including one multimedia person in charge of video and graphics, one full-time editor and a video editor who works part-time. But even non-media people pitch in. "Everybody who is not camera shy goes on," Ali says.
The retailer first started recording video with a smartphone, then, as it saw results, invested in a better camera. An unused office became a studio. It added acoustical tiles to help audio come through more clearly, then painted the office to convey a more professional studio look. "We were really hesitant to spend any money at first, but now we are spending more and budgeting for more," Ali says. She declined to say how much.
Between setup, filming, editing and uploading, Ali says each video takes an average of four and a half hours of staff time to produce. That excludes the time it takes to write original web copy for each product, which the PulseTV team does first to familiarize themselves with the product.
Although the videos are largely unscripted, the team uses the information it learns from writing the product description to help it know what to talk about in the video. "We always do the web copy first so we understand the features, and playing with the product sometimes makes us think of different ways the product can be used, and then we use that when go and film," Ali says. "I feel better prepared to do the video after I've written the deal copy or read somebody else's."
Joyus.com, a year-and-a-half-old specialty e-retailer backed by nearly $8 million in venture funding, also makes video its primary selling point. The tagline on its home page reads: "Joyus is shopping that really speaks to you." And it does. A video automatically starts rolling when consumers arrive at Joyus.com, and when they navigate to any category page—or "channel" in Joyus lingo—such as beauty, home and lifestyle. Joyus videos feature hosts, marketed as experts in their category, so return customers see the same personalities over and over.
"We believe having a trusted personality helps the level of experience customers have online, and better customer experiences turn into better conversion rates," says Surj Gish, Joyus director of marketing. He says consumers who view an entire video buy more than three times more often than those who do not.
Joyus, which produces up to 20 videos per week, records videos daily. 90% of all its video production work is done by in-house staff, most of whom came from the TV industry, Gish says. Videos, averaging around two minutes each, have slick production values akin to what consumers see on TV, and largely are recorded in Joyus' in-house studios, or on the streets of San Francisco.
Videos are hosted and streamed by video platform BrightCove Inc. Gish declined to reveal what it pays BrightCove, but the vendor says it structures fees according to the number of videos hosted and the bandwidth required to stream them. It charges $499 per month for 500 videos and 250 gigabytes of bandwidth to stream them, for example. Custom pricing is also available.
A magazine tie-in
The high production values of Joyus videos last year helped spur a 16-week co-branded promotion with Time Inc.'s People magazine web feature PeopleStyleWatch.com. In those videos, a People StyleWatch editor showed off fashionable products that consumers could click to buy on Joyus.com. Joyus and Time shared the resulting sales revenue.
Without disclosing details, Gish says the promotion, which at times included video placement on People.com's home page, drove a lot of traffic to Joyus.com. He says it was Joyus' video quality that helped make that promotion happen.
Studios take up about 40% of the e-retailer's office space, and the company maintains individual studios by product category. For example, there's a kitchen studio for food and kitchen product demos. Gish says Joyus.com wants each video to have the "Joyus touch" that helps convey its brand, and so it rarely uses manufacturer stock B-roll in its videos.
Gish admits it's rare for a young e-retailer to be able to invest heavily in this level of video production, and that it is probably out of reach for a lot of retailers. "But folks can produce pretty good video these days with a simple set-up too," he says.
After starting with such a set-up, PulseTV's Ali says she's planning to expand the office space dedicated to filming video to include space to record more instructional-type videos rather the single-camera, people-focused videos it typically produces. The videos will still maintain the personable elements consumers have come to expect, she says. "We're expanding videos because they work."