July 27, 2006, 12:00 AM

Internet Retailer 2006: Report from the conference

(Page 7 of 9)

Brave new shopping world

When TV and the Internet Merge, Web Shopping Explodes
Patrick Gates, executive vice president, Consumer Direct, Discovery Commerce
Robert P. Myers, vice president of merchandising, QVC.com

As media channels and outlets have expanded, they`ve changed marketing forever, Patrick Gates told session attendees. Having considerable impact is what Gates called "disruptive technologies." The Internet is the most disruptive of those, he notes, with the iPod, cell phones, and wireless computers coming up fast.

In the future, Gates said, those technologies will create more marketing opportunities. For a preview of marketing on new web-enabledtechnologies he advised attendees, "Watch what the leaders are doing--like Amazon, QVC, and Nike."

QVC`s Robert Myers noted that manyretailers are wondering what approach to take on video, which isbroadening thedefinition of whatconstitutesmulti-channel retailing. QVC handles that by presenting itself uniformly acrosschannels. "We are one brand in the customer`s eye," he said. "Take the approach that you are multi-channel, and how the consumer gets there is less important."

Myers added that celebrities showing merchandise live on video is simply an evolution of the earlier use of static images. Still more evolution has produced a platform in Japan that has the ability to stream live TV to and sell merchandise through mobile devices, and an interactive TV platform in the UK.

A Closer Look at Web Site Financials
Track D -- June 7

Making the sale

Conversion Rates: The Key to Profitability
Lauren Freedman, president, The E-Tailing Group Inc.

Web retailers will have to work harder and smarter if they expect to increase their sales conversion rate, Lauren Freedman, president of The E-Tailing Group, told IR2006. 21% of companies taking part in The E-Tailing Group`s most recent annual merchant survey reported a sales conversion rate of between 3% and 4%. Anadditional 12% reported significantly higher conversion rates of between 8% and 15%.

But web retailers will have to work harder to diversify their merchandising strategy if they expect to convert even more browsers into buyers. They also need to invest in technology and programs that will help them better understand customer behavior. "Retaining customers has taken priority over acquisition and it`s getting harder to move the needle," Freedman said. "To increase conversions, merchants need to try different tactics and then measure each tactic from an ROI and brand awareness perspective."

Follow the money

Internet Retailer Profit Survey: How Retail Sites Stack Up on the Bottom Line
Mark Brohan, director of research, Internet Retailer
Mary Brett Whitfield, senior vice president, Retail Forward

Web retailers are optimistic about their financial performance. A recent Internet Retailer survey of more than 200 web merchants reveals that 47% expect their web sales to grow by at least 30% in 2006. "Web merchants are very bullish about this year," said Mark Brohan, director of research, Internet Retailer.

The key to sustaining profitability isdeveloping a comprehensive multi-­channel strategy. "Focus on aligning the overall strategy and not in bits and bites," Mary Brett Whitfield of Retail Forward said. Whitfield cited Casual Male, which has a new multi-­channel program that enables customers to select a style and shopping coach online, create a wardrobe, then shop for the apparel in stores or at CasualMale.com. "They are focusing on profitability by making marketing more relevant," she said.

The money men

What Venture Capitalists Expect of E-Retailers
Mike Golden, president, Home Décor Products
Wayne D. Kimmel, managing partner, Eastern Technology Fund

Online retailers in search of venture capital face an uphill climb, said Mike Golden, president, Home Décor Products. Typically, venture capitalists receive thousands of proposals a year, 90% of which are rejected quickly. Only a lucky 1% to 2% of companies succeed inattracting investors, he said.

Investors are looking for companies that will rapidly increase sales and profits, Golden said. They invest for long-term capital gains, not for interest income, and want to recover their investment within three to five years, he said.

Eastern Technology Fund looks at business plans only from companies "referred to us by someone we know," said Wayne D. Kimmel, managing partner. "You need to have a reference--that`s a really important point."

Key characteristics Eastern looks for are an experienced, passionate management team, a well-thought out business plan, realistic financial projections, near-term profitability, and big growth potential, he said.

The view from Wall Street

Wall Street Takes a Second Look at E-Retailing
Safa Rashtchy, managing director and senior Internet analyst, Piper Jaffray

Unless a company has highly specialized products and a low cost of operations, e-commerce players need economies of scale to succeed, Safa Rashtchy, managing director and senior Internet analyst, Piper Jaffray, told a final session at IR2006.

"E-commerce is still a very attractive market, but you need either big scale and efficiency or you really need to stand out," he said. "But it`s more difficult to stand out, because search has made it very easy for people to find all types of merchants."

E-commerce is now a basic utility, and consumers have increased confidence in buying online, Rashtchy said. Shoppers also are more sophisticated, increasingly adopting comparison shopping and search and using online research with offline purchase, he said.

Piper Jaffrey estimates that the e-commerce market will reach $159 billion, excluding travel, by 2010, about 3.5% of total retail sales.

The Keys to Successful Online Merchandising
Track E -- June 7

Finding products and selling them too

Site Search`s New Role: Promoting the Right Products
Beth Grimsley, e-commerce director, Beckett Media

With 4.3 million sports collectibles SKUs, the demands on site search on Beckett Media`s Beckett.com are steep. Beckett`s move into a new generation of site search from the solution it had used since 1999 illustrates that site search today doesn`t just find products: it helps sell them, too.

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