July 27, 2006, 12:00 AM

Internet Retailer 2006: Report from the conference

(Page 5 of 9)

For some retailers, outsourcing an e-commerce platform upgrade can save time and money. But merchants also must show senior management how the company will achieve a solid return on investment, said ComputerGeeks.com director of marketing Doug Allen. For instance, the marketing department was able to purchase new site search and analytics applications after it demonstrated how better technology could improve sales conversions. "The improved technology helped us to increase sales by 40% in 2005," Allen said.

Outwitting the crooks

Taking Security Into Your Own Hands
Julie Fergerson, vice president of emerging technologies, Debix Inc.
Ezzie Schaff, vice president of risk management, Ice.com

Some fraud-prevention measures most commonly used by online merchants are losing their effectiveness, said Julie Fergerson, vice president of emerging technologies for Debix Inc. and a member of the board of the Merchant Risk Council.

"Merchants must continually invest in new tools," Fergerson told the IR 2006 conference, noting that as the number of merchants adopting a specific anti-fraud measure grows, the effectiveness of that tool decreases.

And online retailers need to use a suite of fraud-­prevention tools, rather than a single measure, if they want to successfully battle fraud, said Ezzie Schaff, vice president of risk management for online jewelry retailer Ice.com.

Today`s crooks have easy access to information, such as addresses, card account numbers and cardvalidation codes, that is used by retailers to verify a shopper`sidentity, Schaff said. That means retailers relying on a single anti-fraud tool--for example, the Address Verification System--are vulnerable.

The un-credit cards

Alternative Payments: Moving Beyond Credit Card Only
Dan Schatt, analyst, Celent Communications
Alicia Berry, director of operations, DVDEmpire.com

The lack of alternative online payment options to credit cards is slowing the growth of e-commerce, Dan Schatt, senior analyst at Celent Communications, contends. "There are lots of consumers who just simply will not make an online purchase because they are concerned that their credit card data is going to be misused or intercepted," Schatt said.

Alternative payment options could account for 26% of all online payments by 2009, up from 14% this year, he says.

But implementing alternative payment options is not easy, said Alicia Berry, director of operations for DVD Empire. "There are all different kinds of problems and issues," she said. "You`re dealing with other companies, other servers, all different kinds of people, a turnover in salespeople."

Because of the massive effort needed to introduce a new payment option, retailers need to know their customer base before starting the process, Berry said.

General Sessions
June 7

The big get bigger and more influential

Revealing & Analyzing America`s 500 Largest E-Retailers
Kurt Peters, editor-in-chief, Internet Retailer
Larry Freed, president, ForeSee Results Inc.
Matt Poepsel, vice president and general manager, Gomez Inc.

The Internet`s biggest retailers keep on growing, but it`s the top 100 that dominate and set the standard for customer satisfaction and web site performance. The web`s top 500 retailers registered 1.42 billion visitors per month in 2005. The Top 500 also rang up combined sales of $68.9 billion--63% of all U.S. Internet-based sales, Kurt Peters, editor-in-chief of Internet Retailer, told the IR2006 conference.

The Top 100 accounted for 54.5%--$59.6 billion--of all web sales in 2005, Peters said. But the Top 100 retailers also have a direct impact on other key market drivers, including customer satisfaction. ForeSee Results teamed with FGI Research to look at browser satisfaction levels among the top 40 online retailers as ranked by annual sales in the Top 500 Guide. Of the top 40 online retail sites measured by ForeSee and FGI, four scored 82 or higher on the 100-point scale; 82 is considered a superior rating. Netflix.com was the leader in browser satisfaction with an 85, followed by Amazon.com at 83 and QVC.com and Newegg.com each at 82. "Measuring satisfaction is very predictive of an online retailer`s future performance," said ForeSee president Larry Freed.

NASCAR.com Superstore was the most consistent performer of all the Top 500 retailers Gomez evaluated on factors such as web site availability and response time. "They delivered the best overall performance," said Gomez vice president Matt Poepsel. "That`s important because web shoppers are less willing to wait for a home page to load."

Day 2 Keynote: A multi-tiered lesson plan for e-commerce

The New Role of Market Segmentation
Seth Radwell, president, e-Scholastic.com

Scholastic Corp. is making the successful transition from a one-track content provider into a multi-faceted web retailer that`s generating revenue by combining online shopping, content and an interactive community into a single business model, e-Scholastic president Seth Radwell told attendees during his second day keynote address.

Scholastic is building an online business model that provides content, as well as products and services, to e-Scholastic`s primary customers: teachers, parents and students. E-Scholastic also is using what Radwell calls "Internet enablers" tocreate synergies with parents,teachers and students. For instance, e-Scholastic is using really simple syndication feeds to augment its interactive marketing program with messages that convey more than just a sales offer to the customer. "Our customer segmentations need to be leveraged to take advantage of the unique capabilities of the online environment," he said.

E-Scholastic is evolving from a subscription service into a web business that offers a unique experience to each user, he says. For example, teachers can use Scholastic.com and additional microsites to shop online for educationalmaterials, as well as download curriculum material, create interactive lesson plans and post and track individual homework assignments. "We provide each user with a customized view of the information they need," Radwell said.

Scholastic`s established brand and business base offers e-Scholastic an excellent opportunity to reach an audience that includes 100,000 schools and 1.5 million teachers. "We can leverage our extraordinary reach," Radwell said.

Loyalty pays

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