Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
Matt Poepsel of Gomez lays out 10 performance practices that deliver long-term competitive advantages.
A word of caution: this overview of ten insider secrets for long-term success in online retailing will disappoint you if you’re expecting to see the tools, technologies and techniques used by the biggest and best-known names from traditional retail. That’s because brand name leadership in the traditional retail market does not always translate automatically to a parallel presence online. Despite their apparent similarities to traditional retail, online storefronts require a new approach for maximum effectiveness.
Whether online or in a physical store, retail growth and market dominance are driven by the shopper’s experience. Is that a profound revelation? Hardly. But believe it or not, some of the best-known retailers in the world have mastered and maximized, measured and manipulated their physical retail environments in a quest for maximum volume and margin, but they have missed the point in their online stores. As different as the online world may seem by comparison, a fundamental truth remains: if you make products hard to find, customers won’t buy them.
While “retail is retail” no matter where it happens, things have changed in the online world. In an incredibly short time, online buyers have matured. They have had enough online experiences to form discriminating value judgments about your brand and your product quality, often on the basis of your web site, and they usually do so in a matter of just a few seconds.
This means e-retailers of any size and scope should not merely take comfort in the often-reported predictions of big annual increases in online spending. Certainly a rising tide lifts all boats, but it has no bearing whatsoever on whether your ship will come in if customers decide you’re not up to the task. Growth that until now has been fueled by a steady stream of new online shoppers will be increasingly generated by existing buyers. For organizations that seem to be indifferent to their customers’ online experience this situation will become even more dire when, as recent research predicts, by 2010, half of all offline, in-store purchases will be influenced by buyers’ online research. Uh oh.
To ride the coming wave, retailers need to assess their online readiness. While too many retailers rely on subjective self-assessments or anecdotal evidence that their site is better or worse than another, today’s category leaders are more demanding. They expect superior performance of their online storefronts and they plan to succeed. They go well beyond the usual subjects-availability and response time-and turn their attention to delivering consistency for users in different locations and with different connections. They examine additional components of the entire end-user-facing business processes that online shoppers unanimously cite as key to their experience and their impression of an online provider’s goods, services, and brand. These leaders want to ensure that their products can be found, seen, carted, and easily purchased quickly and enjoyably-every time.
All of this brings us full circle to fundamentals of retail: how is customer loyalty secured, how is the shopping experience optimized, and what can be done to make the entire process more efficient? Surprisingly, the answers are fairly simple. They will sound familiar to anyone steeped in the traditions of managing a brick-and-mortar retail store. And yet, these practices are not well-known or routinely implemented online. Why? Because in some cases, even the most recognized e-retailers don’t know these solutions exist.
In some cases, they claim their online site is competitively appropriate because it “looks” like other sites in their sector. And, in other cases, these logical online retail experience checks are rejected because they would force organizations to align line of business managers, web site designers and developers, and operations professionals around a shared set of end-user performance goals and considerations. If that hits a bit too close to home, have no fear. Employing the following performance practices may represent the best chance any organization, regardless of size and market presence, has to gain alignment and win more than its fair share of the online market opportunity.
1. Know your strengths … and weaknesses
For years, traditional retailers have visited competitors’ stores to benchmark themselves. But in the online retail world, it’s rare to find organizations that routinely take a walk through a competitor’s site from a performance perspective. In the absence of empirical comparisons, how can an online retailer know whether its online store performs better than competitive sites or whether it lags the pack? Today’s benchmarking technologies enable any online retailer to quantify where its site ranks against its competitors, understand gaps, and take steps to improve. Smart retailers benchmark early and often.
2. Know your users
Where do they live, from which networks do they visit, what connection speeds do they enjoy, what are their peak usage times and patterns of site visitation? These are critical questions for performance leaders. Knowing these things puts retailers in the best position to make decisions and can eliminate a long list of items that “could” be the culprit. (“Could” costs retailers a lot of money.) Retailers who know their users can improve their overall performance and online experiences. Internet performance measurement technologies can put hard metrics on these experiences and let e-retailers recoup lost revenue opportunities.
3. Test the entire system
Just as you can’t know a person’s health from a single data point such as blood pressure, the vitality of an online retail site can’t be determined by looking only at a handful of IT metrics such as server CPU utilization or network quality of service. Tests that exercise the entire application infrastructure, from the “outside-in” and across all relevant systems should be put in place. An internal-only view of performance can miss problems that impact the customer experience and lead to abandonment and damage to the brand.
4. Monitor what matters