Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
As any traditional Main Street or mall retailer knows, merchandising that speaks newness, high-value and usefulness will turn consumers into shoppers, and offering great service and ease of shopping will keep them coming back as buyers. Build the store’s brand, give people a reason to come inside, and capture them with quality and service. It works in physical stores, and the biggest online players are making it work on the web as well.
Internet Retailer Best of the Web 2006
Some of the biggest retail chains and online pure-plays are proving they have what it takes to turn consumers into loyal customers. As any traditional Main Street or mall retailer knows, merchandising that speaks newness, high-value and usefulness will turn consumers into shoppers, and offering great service and ease of shopping will keep them coming back as buyers. Build the store’s brand, give people a reason to come inside, and capture them with quality and service. It works in physical stores, and the biggest online players are making it work on the web as well.
Big retailers are also leveraging the uniqueness of the Internet channel to continue offering consumers more reasons to shop online, whether or not they also frequent physical stores.
Take J. C. Penney Co. Inc. It sets an example for national merchants by making its web site as useful and friendly as a favorite department store, as its web sales rose 35% year-over-year in the first half of 2005. In addition to offering shoppers a broad merchandise selection, JCPenney.com simplifies the shopping experience. “The home page presents a clean design with clear product categories and features that make it easier for shoppers to locate and browse for items,” says retail consultant Manivone Phommahaxy of Molecular Inc. “The category landing pages provide additional filtered views-shop by brand, shop by special size-to allow shoppers to quickly zero in on specific items that match their criteria.”
But J.C. Penney and other large merchants in this year’s Best of the Web Top 50 don’t rest on their laurels. They constantly improve the online shopping experience. Office Depot Inc., ranked third in Internet Retailer’s Top 400 Guide to Retail Web Sites, with $3.1 billion in 2004 sales-making it the Guide’s top-ranked brick-and-mortar retailer-continues to find new ways to please shoppers. “It’s about focusing on the basics and a ruthless commitment to exceeding the expectations of customers,” says Noah Maffitt, director of e-commerce and customer experience. Among OfficeDepot.com’s latest upgrades: the deployment of new analytics and site search technology that lets shoppers find more quickly what they need.
Staples Inc., ranked fourth in the Guide with $3 billion in 2004 sales, actively involves its customers in improving Staples.com’s shopping features. Earlier this year, thousands of customers participated in a usability project that resulted in a streamlined home page. Staples has made other shopping improvements after visiting customers and watching how they order products online.
The experiences of the web’s largest mass merchants, Amazon.com Inc. and eBay Inc., indicate that a single online brand has no limit to the sales volume it can generate. EBay, with $34 billion in 2004 gross merchandise sales, serves as a selling channel for 724,000 retailers selling anything and everything under the sun, and it has egged on Amazon to act as more of a mass merchant.
And Amazon, with about $8 billion in retail sales this year, continues to innovate ways for people to shop. Having evolved from an online direct merchant of books into a true mass merchant, Amazon’s innovative technology has even retouched its roots by letting shoppers buy digital sections of literature at 49 cents each.
Even after more than 10 years, Amazon.com still has a knack for pushing the envelope. Over the past year, it has introduced innovations that only add to its image as a cutting-edge retailer. In one instance-a deal with CoinStar Inc., provider of electronic cash-processing machines in grocery stores-Amazon found a way to make cash a payment option for online purchases. Under the agreement, consumers trade their spare change and dollars in for certificates redeemable on Amazon.com.
It also launched a program-Amazon Shorts-that allows customers to sample the work of new authors through exclusive short-form literature for 49 cents. Customers have three options for reading the pieces-on the web site, via a PDF file or by e-mail. And Amazon.com just last month announced that it is developing two programs that will enable customers to purchase online access to any page, section, or chapter of a book, or an entire book. The programs build on Amazon’s 2-year-old Search Inside the Book technology, which allows customers to search the complete interior text of hundreds of thousands of books.
One of every two books sold in the U.S. by Amazon are in the Search Inside the Book program, Amazon said. Based on those results, Amazon recently launched the program in the United Kingdom, Germany, France, Canada and Japan.
In another program, Amazon.com enables customers to create custom diamond rings in the Amazon.com Jewelry & Watches store. Customers can select from loose diamonds of various shapes and sizes and virtually set the stone into one of more than 200 setting styles.
Amazon.com is skilled at finding features that boost sales while creating value for customers, says Patti Freeman Evans, retail analyst at Jupiter Research. For example, before the holidays, Amazon.com tells customers how long they have to purchase an item if they wanted it delivered by Christmas. “There is certainly a business strategy behind that to create a sense of urgency to get people to buy,” she says. “But it’s also useful information for me when I’m planning.”
These innovations have paid off for the retailer. Net sales are expected to be between $8.4 billion and $8.7 billion this year, with operating income projected to range between $403 million and $478 million.
When eBay launched in the late 1990s, no one ever thought the online marketplace would continually change the definition of online retailing, but that is exactly what it has done. From bicycles and cameras, to furs and vintage guns, whatever consumers are looking to buy, chances are they will find someone selling it on eBay.