Alphabet Inc. today reports that Google’s advertising revenue rose 19.5% in the second quarter.
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That thinking has turned some barriers to shopping on the web into assets by developing work-arounds compelling enough to attract people to the site and engage them once they are there. My Virtual Model, which debuted on the site in 1998, tackled one of the biggest barriers to shopping for clothes online by letting shoppers create and store an online depiction of themselves that can sample the look of different outfits. The online model, which has undergone three major upgrades that have made it increasingly lifelike, is today used by 15% of LandsEnd.com’s 1 million monthly visitors, and where it’s used, it boosts conversions and order size.
Ditto My Personal Shopper, a product recommendation tool LandsEnd.com rolled out in 2000. Though less widely used by shoppers—44,000 in July and August last year—it’s an effective selling tool with its audience. Average order size is 30% higher and conversion rates rose more than 80% among customers who got recommendations from My Personal Shopper.
LandsEnd.com’s latest major addition, last fall’s Lands’ End Custom, takes the interactive experience to a new level by letting online shoppers order chinos cut to their own measurements.
Source of new customers
Apart from sales, the web drives a growing list of functions that support not only other channels but also strategic objectives. “The Internet last year was the number one source of new customers for the whole company as well as the number one source of catalog requests, even though we put BRCs in our catalogs and in our national magazine advertising,” Nelson says. “We bring them in online and then they become catalog customers.”
The Internet has also become core to concept and product testing. The company has opened ex-U.S. markets with an online-only debut. And just within the past six months, it’s launched two new lines—plus sizes for women and maternity wear—entirely online. Last fall’s online plus size offering was so popular the company built it into its catalog business and will drop five plus-size catalogs this year. The maternity clothing launched online in April could go the same route: demand has been so great the line has run into inventory problems.
“We use the web to test new products. Before, we had to make a commitment to a product based on a merchant’s knowledge,” Nelson says. “Now, the web provides a medium that can take some of the risk out of making that commitment.”
By Mary Wagner
Americans are willing to spend big on what entertains them—just look at the weekend gross of any movie blockbuster. QVC Inc. became one of the first merchants to ride that train when it launched its TV/retail network 15 years ago. Now, with annual sales of $4 billion, it’s giving another new spin to the definition of electronic retailing by harnessing the power of the Internet.
QVC was the first TV shopping network to add a web channel, launching QVC.com in 1996. So far this year, the web accounts for 9% of QVC’s U.S. sales and it’s growing fast. At $285 million in 2001, web sales were up 46% from the previous year.
QVC’s web strategy is simple: the web drives growth by providing product line and category extensions, broadening QVC’s traditional offering of jewelry, home, and health and beauty products into categories such as books, videos and sports gear. And it’s deepening selection across the board.
Limited TV time
Driving much of the push into new territory has been QVC.com vice president of operations Steve Hamlin. “There are only so many minutes in a TV program, so you can only sell so many products,” Hamlin says. “But the Internet is infinite. QVC.com is QVC-plus; it has all the items available on TV, plus more.”
With a background in database merchandising and long experience in virtual warehousing, Hamlin was hired by QVC in 1994, more than a year before the web site went live, to build out a drop-ship network that could source and manage fulfillment of the much larger assortment QVC planned to offer on QVC.com. And since he arrived, Hamlin has forged the manufacturer and technology partner relationships to source and fulfill the 800,000 SKUs available on QVC.com as seamlessly as it does the 16,000 SKUs on offer during any week on QVC TV. Proof of success is in QVC.com’s customer service awards, including a recent Forrester Research Inc.’s PowerRanking that gave it the top spot in online general merchandise.
To help with new product categories on the web, QVC.com has outsourced to some category leaders. Shoppers who click on its “Ready, Set, Sports” button are delivered to a web site maintained by Global Sports Inc. Shoppers are automatically returned to complete purchases through QVC.com’s shopping cart at checkout time. For books, videos and DVDs, shoppers are routed to CommerceHub and returned to QVC.com at checkout. CommerceHub also provides a fulfillment network that translates data for speedier communication between QVC.com and its suppliers.
QVC.com now is turning its sights on new ways to merchandise goods. It’s identified QVC’s 75 top-selling brands and will build boutiques for those brands on the web site as an extension of the TV offering. It’s looking at adding technology to automate up-selling across product categories. And though not active in this arena in the U.S., it’s once again pushing the definition of electronic retailing with QVCActive, an interactive television channel in the U.K.
Any development of interactive TV selling in this country will only reinforce what the web already has taught QVC: its most valuable customers shop its multiple channels. QVC.com and QVC TV customers buy three times as much as TV-only shoppers and seven times as much as Internet-only. It’s a dynamic QVC supports with cross-promotions of the web on TV and TV on the web and with web site features such as “24-hour product review” that extend product presentations beyond their TV time slot.
“That’s a great way to capture people who couldn’t make up their minds during that 3- to 6-minute TV segment,” says Retail Forward senior analyst Mary Brett Whitfield. “It’s a good example of how QVC is using the web for what it’s best at.”