Amazon not only sold $2.5 billion worth of goods, it introduced Prime members to new services. How should rivals compete in 2017?
Free or low-cost tools offer big potential to retailers with small budgets—as long as they can cover the hidden costs.
There’s a new buzzword on the block: Free. In fact, it seems the more Wall Street flounders, the more the word is used as a selling point. From ‘Free with purchase’ to ‘Buy one, get one free’ the concept of getting something for nothing is more potent than ever amid today’s grim economy.
As online merchants seek creative ways to pinch every penny, more are taking a second glance at free or low-cost tools and services. And there are a lot-from data-rich web sites to software and applications designed to save retailers time and money.
Many tools do offer value and save on expenses, merchants say. But there are downsides. Free services don’t always stay that way, particularly as usage ramps up. And if something goes awry, the merchant’s typically on its own to find a fix. Plus, such services are often less reliable than their paid counterparts.
Still, the pros outweigh the cons in many cases, merchants say. And although there may be some sacrifices, it’s all worth it when the monthly bill comes-or doesn’t come-in the mail.
Answer the call
Troy Lawson, chief technology officer at Best Kiteboarding LLC, says free tools present a great opportunity for growing companies like his.
“We’re a very tech-savvy company, and we’re open to trying new things,” Lawson says of the retailer and manufacturer of kiteboards, which launched its e-commerce site in 2004. “If it’s a new tool, we know full well that it hasn’t been proven over time. But for small businesses that don’t need 100% up-time, free tools can offer real benefits.”
Those potential benefits led Lawson and his team to try the free voice-over-Internet telephone service Skype just months after it hit the market in 2003, and to gradually add additional Skype services as they became available. Skype is now owned by eBay Inc.
Best Kiteboarding signed on, at first using the service for employee-to-employee calls instead of dialing extensions. Staff used headsets plugged into their computers rather than phones. Soon after, Best Kiteboarding wanted more-especially when it got wind of other low-cost Skype programs that seemed likely to save the company a significant amount of money.
And so the retailer started using SkypeOut for outgoing calls. The service allows Best Kiteboarding to place unlimited outgoing calls to 35 countries for about $10 a month, Lawson says. About a year ago, the merchant added a third Skype service to accept incoming calls, and essentially did away with its old phone system altogether.
“We basically just dropped all of our phone lines,” Lawson says. “Today we have one line and that’s a fax line.”
For the newest incoming call portion of Skype, Best Kiteboarding uses a service from vendor PrettyMay that routes incoming calls to the retailer’s Skype Internet phone system. It costs money, but Lawson says the savings and return on investment is substantial. The PrettyMay system cost $500 to implement and charges about $400 a month. By comparison, his old $4,000 Nortel phone system came with a $1,500 monthly fee. Moreover, Lawson says the new system is much more advanced.
“The Nortel system we were using basically only answered calls and collected voice mails. The system we have set up now would cost $7,000 or $8,000 if we went out and bought it from a standard provider,” Lawson says. “It will e-mail voicemails to our employees, and we can export all calls going through our phone system into an Excel file.” That lets the retailer analyze incoming calls so it can see the busiest times or what the missed call rate is during a specific time period so it can be more efficient in scheduling employee hours.
Design on a dime
While Skype helped Best Kiteboarding save money on direct communication with customers, other low-cost programs can help merchants convey an overall brand image.
Industry analyst Keven Wilder, president of retail consultancy Wilder Inc., says merchants can get free or inexpensive design services by tapping the creative minds of amateur artists through tools like CrowdSpring.com, part of crowdSPRING LLC.
The service allows businesses to post ads for creative work-from company logos to t-shirt designs-and name a price they are willing to pay. Artists submit their creations and the winner gets the cash prize. The service also includes a free contract establishing the company’s ownership of the design.
The going rate for work typically is in the $250-$500 range-a small percentage of what a retailer might pay if it hired an ad agency. “You could get the perfect logo from a janitor by day for a fraction of the price you would pay normally,” Wilder says. What’s more, postings typically receive 68 entries, and, while a retailer can’t use the ones it doesn’t buy, submissions can be a great source of inspiration, she says.
Beyond providing a service or filling a need, some free or inexpensive tools offer solutions to problems that a retailer can’t afford to pay-or pay very much-to fix.
Such was the case with online ski, snowboard and apparel retailer evo. The company needed a way to manage data its customer service reps were receiving from shoppers, such as price-match requests or international shipping applications.
“They were coming through e-mail and in lots of different formats that we would have to centralize and compile manually,” says Nathan Decker, senior human of e-commerce at the retailer.
Evo found a tool called Wufoo from Infinity Box Inc. that helped it add HTML forms to its e-commerce site that customers can fill out and send to evo with a click. Now, instead of receiving hundreds of e-mail requests for things like price matching in varying styles collected by numerous customer service employees, the retailer can access all the data in one spot and one format. Wufoo also will export the information into charts and graphs.
“The service stores data so it doesn’t fall off the radar and we can make updates to forms instantly,” Decker says. Wufoo builds and hosts the database that stores the information and other back-end technology.