August 14, 2001, 12:00 AM

Sales alone don’t measure web’s value, says Forrester

Merchants must look at offline sales influence and added operating efficiencies when rationalizing web site investment, Forrester says.

E-retailers have moved beyond earlier ROI metrics such as page views to start clamoring for sales. But multi-channel sellers need to look farther if they’re to determine the real value of their web site to the organization, according to a new report from Forrester Research Inc.

Multi-channel sellers that look only to sales generated on the site miss the boat on a site’s two other potential contributions to overall profitability, says Forrester analyst Evie Black Dykema: influencing offline sales and improving operational efficiencies. But while these two measures are vital to quantifying the web’s contribution to a multi-channel strategy, capturing the data can be elusive. Such systems as The Sharper Image’s to track cross-channel purchase histories for 80% of customers, track the influence of channels on each other and assign costs based on the respective contributions to overall profits are rare among retailers, says Dykema.

Attempts to quantify a web site’s organizationwide ROI are more often hamstrung by fragmented decision making and competing technology needs among departments that leave web retailers unclear on the impact of various sales channels and in the dark on which are the most valid metrics, Forrester says. To maximize web site returns and justify web investments, says Dykema, multi-channel sellers should start by looking at the type of goods they sell. Replenishment goods need only a basic site, she says. “Replenishers offering anything more than the basics – product information, prices, e-mail reminders -- are making a mistake,” she says. Researched goods such as consumer electronics require a more sophisticated site to support shoppers in need of more handholding as they contemplate bigger-ticket purchases, while convenience goods such as toys and clothes also fare best on more sophisticated sites. “Merchants that calculate company-wide ROI will find that online retail investments pay off, but only with the right technology,” Dykema says.



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