E-commerce grew 20% for Costco in fiscal 2015—20 times faster than store sales.
Robert Worsley has encouraging words for retailers who fear they lack the techno savvy to lead their companies into the Internet age. “The next 25 years will not belong to those who invent technology,” says the CEO of SkyMall Inc. “It will belong to those who become pioneers of convenience, knowing how to build one-to-one relationships with customers.”
Worsley, whose company publishes the gift catalog that’s tucked into seat backs aboard many commercial airline flights, was the keynote speaker at Internet Retailer World. Successful Web retailing doesn’t depend on knowing how to build advanced technology, Worsley says, but in knowing how to use technology that others build to “make life better for everyone.”
Catalog retailers have a built-in edge, says Worsley, because of their long history catering to niche markets. Through its catalog, for instance, SkyMall markets high-end gifts and novelty items to business people and other frequent travelers. But the Internet is allowing the company to expand its niche by providing the tools to create “a comfortable environment for each individual shopper.”
Creating those environments has meant adding more shopping channels. Along with an estimated 1.4 million flyers who see the SkyMall catalog each day, more than 50 million people can find it in hotel rooms around the world each year. In 1996, SkyMall launched its main Web site. Today, that’s accompanied by AtWork, an online channel available to more than 1 million people whose employers have agreed to link the site to their corporate intranets. Other Internet-based businesses include an online florist and a travel site that attracts 250,000 visitors each month.Today, a third of SkyMall’s $80 million in sales comes from the Web. That’s quite a contrast to its early efforts at e-commerce. Over its first 20 months in existence, SkyMall’s online business generated a pale $16,000 in revenue before turning the corner to produce $300,000 in sales in the 1997 Christmas season.
Those numbers caused SkyMall to make some critical decisions early in 1998-such as replacing its client/server-based backend system with a Web-enabled infrastructure. Any enhancements that SkyMall makes to its backend systems today are automatically translated into services that make online shopping more convenient. Any order placed with SkyMall-whether online, by telephone, fax, or air phone-goes through the same backend infrastructure.
“We can create a superior experience on the Web,” Worsley says. That experience starts with lots and lots of products. The SkyMall Web site features more than 10,000 items from more than 100 well-known manufacturers, compared with 2,000 products in its catalog.
Beyond that, the site allows customers to use one shopping cart to purchase goods from any merchant listed there. The shopping cart is linked to programs that calculate all taxes and shipping charges on the spot. In another move to boost customer convenience, SkyMall has a dedicated staff answering e-mails.
Worsley expects Internet sales to account for half of his company’s business by the end of 1999. Though the Web is drawing some customers away from the SkyMall catalog, that doesn’t bother him. In fact, the company plans to insert a CD-ROM containing SkyMall’s entire product selection in every catalog. Travelers toting laptops can use the disk to shop while airborne and download their orders once the plan lands.“The end game is cannibalization,” he says. “It is going to happen. So, you can cannibalize your own channels, or you can let someone else do it for you.” And there’s an upside to SkyMall’s cannibalization: the average sale on it’s Web site is $183, compared with $93 for an average catalog sale.
Worsley cites four basic building blocks that every retailer needs to build a successful Web presence: good content, strong channels, a solid technology infrastructure and good people. None of these building blocks is more important than the others. “Don’t get hung up on any one element,” says Worsley, “because it could affect the balance of the experience you are trying to provide for your customers.”
Content means selling quality products with strong brand names, and Worsley cites a few in the SkyMall portfolio: Sharper Image, L.L. Bean and Hammacher Schlemmer. Both offline and online channels provide exposure for these goods. “Be creative in doing this,” Worsley says. “Buying ads in offline media is a good way to bring exposure to your Web site, if you can afford it.”
A solid information technology infrastructure provides a reliable means of filling all orders-and the means to bringing back customers. SkyMall got into the online flower delivery business by acquiring a company that was unable to recover after its fulfillment system crashed on Mother’s Day. “They literally had a home phone for a call center,” explains Worsley, “and they couldn’t handle the volume of orders they were getting. So, they decided to sell out to someone who could manage the backend.”
All this flows from finding good people and paying them to perform, says Worsley. “You cannot skimp in this area and expect to be a big player in the Internet space.”
And being a player means expecting the evolution of that space. Worsley forsees television converging with the Web. Rather than viewing a commercial on diamonds, for example, consumers could watch a video about how to select a diamond. After that, shoppers could select gems via online shopping carts.
That sort of experience comes from understanding what consumers want. The movie Contact, in which aliens want to meet a scientist from Earth, is an extreme example, Worsley says. To make the scientist feel comfortable in their world, the aliens downloaded her memories of her father, then used them to create a familiar environment. Retailers are building databases that tell them what will make their customers more comfortable, says Worsley. It’s how they use this data that will separate the best from the rest.