Online sales grew by more than 30% in the fourth quarter, but store sales slid by 6.1% year over year.
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5. Making things faster and easier is what counts for the customer. Search and quick-shop both play formidable roles on e-commerce web sites. Successfully executed searches provide a way for the customer to find what she’s looking for and the chance to buy it right away, while quick-shop features facilitate browsing offline and buying online, which produces a formidable combination for retailers.
6. Up-sells and cross-sells online offer great potential. More merchants are placing greater emphasis in this opportunistic area, though today up-sells and cross-sells are not a standard practice. As word gets out about successful automated cross-sell and up-sell techniques, their use will surely spread.
7. The web is an ideal gift-shopping medium. Increased interest among consumers and the web’s excellent capability as a gift-shopping medium create great emphasis in this area. But even more than in other tool sets, gift-shopping techniques function on a category-by-category basis.
8. The strong presence of multi-channel players results in continued and innovative use of features that drive traffic to offline channels. Information intensive categories are heavily focused on delivering robust content where customers respond by purchasing both online and via store channels. Comprehensive content that is well integrated throughout the site positions the merchant as a voice of authority and trusted expert. Because retailers can present much more of this information online than they can in stores or catalogs and because customers can view this information at their own pace, the web becomes much more powerful in this regard than other channels.
9. Merchants continue to focus on providing more comprehensive customer information to facilitate self-service shopping. Since the revolution of self-serve retailing 100 years ago, customers have shown loud and clear that they prefer the self-service mode. The secret on the web is to make it efficient for shoppers to use self-serve while addressing the different needs of repeat and first-time customers to a site.
10. Once considered essential to online retailing, community features are fading from retail sites. The reason: poor return on investment and limited interest among consumers. A number of merchants told us that over the past five years they tested many community features, but found they were often a distraction to selling. These features tend to attract browsers rather than serious buyers.
Having surveyed retailers and their sites to determine the use of merchandising tools online, the e-tailing group is making some predictions as to the future of merchandising over the next year.
1. Given its utilitarian value for shoppers, there will be a greater emphasis on improving search functionality and the product attributes that customers can search on. Making product and information easier to find is essential. Customization of search must be executed on a category basis to ensure that the parameters mirror consumers’ behavior. For example, a department store or specialty store that features many categories must allow shoppers to use the search function to find products by price, brand, color size and as the holidays approach, by gift recipient or occasion.
2. Product enhancement tools will enable merchants to show all critical elements of any product. Vendors have implemented significant improvements in techniques that assist shoppers to make the best selection including color change, zoom and 3D technology. Further improvements are expected in this area given its influence on product selection and impact on reduced return rates. It is important to note that many of the early technologies were expensive and unable to make a financial case for merchants to test them. Today with pricing more reasonable, merchants can test technology to better understand the user experience and expected lift in sales.
3. Multi-channel players will leverage their web investment in-store. Chain retailers in particular will work to optimize their Internet investments, encouraging web shoppers to visit stores and in-store personnel to use the web for ordering, product inquiries and training. For example, Macys.com encourages couples who use the online bridal registry to visit local stores for consultations, thus giving store personnel the opportunity to up-sell and cross-sell the couple. Thus Macy’s achieves the economies of an online registry while not forgoing the opportunity to increase customers’ spending.
What this all boils down to is that merchandising in the new era of retailing will change as retailers’ and consumers’ experience with the web grows. Just as retailers thought three years ago they had the answers, only to find the landscape quickly shifting, so retailers today need to be alert to what’s coming. Some of these techniques will become the classic practices of online merchandising that set new standards. Others will be passing fads.
The key to successful merchandising online is the same as offline-be alert to what’s new and what best of breed merchants are executing effectively, keep testing to make sure what you’re doing still works and be quick to change as a technique’s efficacy fades. The twist that the web adds is that it’s so much easier to adopt, test and change a merchandising technique than it is offline. Retailers who fail to take advantage of that may find no need for merchandising techniques either online or offline.
Lauren Freedman is president of the Chicago-based e-tailing group Inc. and author of the new book It’s Just Shopping. She can be reached firstname.lastname@example.org.