August 27, 2008, 12:00 AM

Great expectations

While it’s still early, merchants have big plans to deploy more social network, mobile web and personalization technology.

While it’s still early, merchants have big plans to deploy more social network, mobile web and personalization technology

By Mark Brohan

With new web applications such as social networking advancing at light speed from the drawing board to widespread implementation, some Internet technology analysts are already calling today’s online shopping environment the end of the horse-and-buggy era. Within 18 months, more retailers will replace their static web site features and functions with new interactive applications that let customers post videos, instantly share product information and shop online using handheld devices, according to Internet Retailer’s latest survey.

The survey on emerging technology finds that 94% of web retailers consider it important-including 41.5% as very important-to stay current with technology and give consumers even more options to personalize their shopping experience, communicate with friends and family, and connect to online retailers using the web and mobile phones. For example, while only 36.4% of merchants currently offer product and education videos on their web sites, 53.3% expect to do so within a year-17.3% in six months or less.

Retailers also have ambitious plans over the next year to roll out initiatives for mobile commerce, social networking, widgets and personal product recommendation tools. Today the implementation of many emerging web applications is only in an early phase of adoption.

Big change

Only 39.3% of the 124 web-only merchants, chain retailers, catalog companies and consumer brand manufacturers taking part in the research have a social network program today and just 6.8% offer mobile commerce. The use of widgets-small applications designed to enable a specific function or set of functions in a contained visual space-and personal product recommendation tools, which offer visitors product suggestions based on factors such as purchase history and personal preferences, is also limited. Only 18.8% of merchants in the survey deploy widget technology on their e-commerce sites and 27.6% offer visitors personalized product recommendations.

But in as soon as one year, as wireless carriers keep building out the national infrastructure for mobile commerce, 51.9% of merchants expect to operate an m-commerce site for users of wireless devices. 57.1% also expect to design and maintain pages on social networks that give shoppers options to download digital coupons, upload videos, and participate in blogs or forums.

“We are seeing a fundamental shift in how retailers are deploying new web technology and that trend is going to accelerate over the next year,” says Evan Gerber, principal consultant, user experience, with Molecular Inc., an e-commerce consulting and web design firm. “Web shopping isn’t about creating the best desktop experience on a hard-wired personal computer any more. The retailers that make best use of emerging technologies such as mobile commerce and social networking are the ones that will build the best brand recognition and create the most diverse means for shoppers to complete a transaction.”

Top priority

Finding new customers and offering more sophisticated features and functions are the main objectives driving web retailers to implement new technologies. The survey was e-mailed in early August to subscribers of IRNewsLink, the magazine’s e-newsletter, and all responses were collected and analyzed by Vovici Corp., which has partnered with Internet Retailer in a series of surveys of the e-retailing industry.

Attracting new shoppers heads the list of reasons for deploying new technology, cited by 79.2% of respondents, followed by retaining existing customers, 72.5%; improving customer service, 56.7%; better advertising, 55.8%; increased brand awareness, 52.5%; and more multi-channel sales, 46.7%.

“More than ever consumers want to use the web to shop and share information by any means they want whether it’s doing so online on their home and office PCs or over their BlackBerry after text messaging with friends,” Gerber says. “The next generation shopping experience is already here and most retailers are going to be re-evaluating their planning priorities and deploying advanced technology that best meets this demand.”

Most merchants’ top priority is using emerging technology to build applications that showcase the merchandise, give shoppers more ways to review products and make highly personalized purchasing recommendations. Customer ratings and reviews head up the priority list, cited as a priority by 56.7% of merchants; followed by blogs and forums, 50%; video or interactive rich media, 48.3%; social networking, 42.5%; and personalized product recommendations, 40.8%.

Of the retailers that currently post product and informational videos on their web sites, most are starting on a small scale. 86% of retailers in the survey host 100 videos or fewer. But within a year, 87.5% of merchants expect to add up to 250 new videos, including 10% that will add 500 or more.

Video production can be expensive. Even when the work is done internally, it can take up to 30 days and several thousand dollars to write a compelling script and then film, edit and post a professional-looking video.

Gotta have it

But customer ratings and reviews and videos are quickly becoming must-have applications for many retailers for a simple reason: they drive sales. Online merchants such as PetsUnited LLC, a niche pet supplies retailer with 10 e-commerce sites, reports that the average sale tied to a video is 50% higher than if the shopper places the order after viewing just text and a product photo.

Online camera and consumer electronics retailer Ritz Interactive Inc., which has deployed about 200 product demonstration videos, says video was a big reason for a 36% uptick in year-over-year sales through June.

“What started as a trickle of web retailers deploying advanced technology such as videos, customer reviews and personalization is about to become a torrent,” says Corbin de Rubertis, a principal with Fry Inc., now a part of Micros Systems Inc., and president of Qponix LLC, developer of widget applications for retailers. “Shoppers that view videos and read customer ratings and reviews spend more. Even in a weaker economy, retailers are going to spend money on better technology if it drives traffic and converts sales.”

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