A Profitero study showed Target’s online prices were 25% more expensive than Wal-Mart’s, which were just slightly more expensive than prices on Amazon.
It`s hard to recover when your outside provider screws up. The lesson: Get it right the first time.
A man’s sweet-tooth cries out, so he walks down to his corner store only to find a locked door with a sign: “Back In 15 Minutes.” He could wait, but he needs a candy bar-and fast. So he walks a bit further to another corner shop, which is open and filled with sweets. Mission accomplished.
This bricks-and-mortar scenario happens often in electronic commerce, only it’s the web hosting service that’s on a break, not the clerk.
“For an e-retailer, it’s knee-knocking time when you can’t get a web hosting problem fixed right away,” says Denise Houseberg, drop ship diva at MarketExpo Inc., a home and garden pure-play that sells at MarketExpo.com. “Hosting problems mean lost shoppers and lost sales.”
Web hosting is one of the most crucial aspects of Internet retailing. Hosting options are varied. And web hosting companies run the gamut from a concierge at The Ritz to a snake oil salesman. Choosing the wrong hosting company can have disastrous effects on a web retailer’s business, effects that are difficult to remedy quickly.
Many retailers, whether new pure-plays or multi-channel merchants with vast experience, find themselves in unfamiliar territory when launching a business on the web, says Derek Vaughan, chief marketing officer at TechPad Agency, an online advertising and marketing agency specializing in resources for companies seeking web hosting services. “They require considerable assistance and web hosting products that are easy to use.”
Three e-retailers seeking assistance but who wound up suffering more than their share of web hosting problems-MarketExpo.com, DogCatRadio.com and PortableSink.com-all reached the same conclusion: The key to a successful web retailer/web hosting company relationship is communication. And in their experience, a dearth of communication indicated much deeper problems.
The lack of communication from the web hosting company led to downtime, lost opportunity and frustration, says Adrian Martinez, president of DogCatRadio.com, a content and e-commerce site. “People couldn’t access our web site. We would make several calls to our hosting provider, practically begging them to look into the matter ASAP,” Martinez recalls. “The company took too long to resolve problems, and their lack of communication and customer service was the deal-breaker.”
Houseberg echoes Martinez. “Our previous web hosting provider typically responded via e-mail. They never called, not even when the site was down or performing slowly,” Houseberg says. “The company assured us our site was ‘fully managed.’ But we were the ones that had to watch the site and let them know when things weren’t right.”
The echo continues. “We’ve changed our web hosting provider several times during the last few years. Communication was always a problem,” says
Joseph Mosis, president of Monsam Enterprises Inc., which operates PortableSink.com, a retailer of sinks that provide hot and cold running water without plumbing. The retailer tried big web hosting companies that advertise all over the Internet and small local firms that promise to do what no one else can, Mosis says, but what the hosting companies said and what they did often were two different things.
An active market
Web hosting companies should take note of these retailers’ conclusions if they wish to compete in an extremely crowded field. 78% of 180 respondents to a July survey of multi-channel retailers, catalogers, pure-plays and consumer brand manufacturers who are Internet Retailer readers use web hosting services. Among all respondents, 22% reported they plan to replace their current hosting company or hire their first in less than two years; 13.5% were uncertain regarding the fate of their hosts.
Extrapolated, this translates into a sizeable number of retailers seeking web hosting services in the near future-and a small fortune to be made by web hosting companies, good or bad. Of course, it’s the bad that merchants of all stripes must be wary of. And there are plenty of lessons to be learned from retailers who already have been there.
Case in point: PortableSink.com. A competent web host along with shopping cart and content updates are the most important factors for the company because its e-commerce site is its primary source of revenue, Mosis explains. Competent, however, is not the word the retailer would choose to describe its previous web hosting company.
“The company attracted us by advertising a very low and competitive rate on their web site,” Mosis says. “But then, when we started working with them, they billed us for every minor thing, saying the rate shown on their site is just the basic rate and doesn’t cover things we were requesting.”
The web hosting deal Mosis signed with his previous host, for example, included in overall services the enhancement of product images with background colors and images, he says he was told. Later, when PortableSink.com sent product images to the host for enhancement, the host said it would take about 90 minutes to tend to each picture, and that each enhanced picture would cost about $100. When he asked why he was being charged for something that was supposed to be part of the overall service, Mosis was told by the host that there must have been a misunderstanding. “The word ‘miscommunication’ was very popular with them,” he says.
So once again, the key issue of communication reared its head. “We needed an easy way to communicate with the hosting company,” he says. “We sent e-mails that never got replies, and we were on the phone for hours.”
On top of costs and communication, timing and accuracy were problematic. “When we request an update or change to the site, we need it done now-and I mean now. But I sometimes waited 48 to 72 hours for site updates, and that affects sales,” Mosis says. “What’s more, sometimes after waiting all that time the update wasn’t done right. Links led shoppers to unknowingly order the wrong items, for instance. This meant additional expense in shipping to replace the product, as well as a drop in customer satisfaction.”
The straws that broke the camel’s back were calls from customers and a decline in sales. “It takes time and effort, as well as money, to find a solid hosting company, but it is essential to my business,” he says. “It took a while to find a good, reliable company that met all of my needs at a good price.”