Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
This year’s Hot 100 retailers have a knack for anticipating shoppers’ needs, and satisfying them in novel ways.
It's safe to say the novelty of shopping online has worn off. More than 70% of all online adults in the United States bought products from e-retailers during the second quarter of 2012, each placing an average of 3.3 orders during that period, according to online behavioral data tracked by comScore Inc. That means the majority of adults are each month turning to e-retailers' web sites to supply the products they want or need and are finding at least one retailer that meets their expectations enough that they place an order.
The moving target in this equation is what it means to satisfy online shoppers' expectations. With online shopping more or less routine, the e-retailer that gets the sale today is the one that convinces the shopper it offers her something she perceives to be more valuable than what she can find elsewhere on the web or in a retail store. That may be the lowest price, a flexible return policy, a differentiated product selection or a more enjoyable overall shopping experience.
To provide this value, e-retailers need to anticipate what their target consumer is going to want from them. They have to think like their customers and do the things that will make their site or app the place consumers think of when they think about the products—or even the lifestyle—the e-retailer sells. This can mean having a cutting-edge augmented reality mobile app like Amazon.com Inc. has with Amazon Flow, which encourages shoppers at home or in stores to do a price check on Amazon.com. With Flow, app users focus the phone's camera on a product and the app displays product details and Amazon's price for the same product.
For women who are all about beauty and the latest cosmetics trends, BH Cosmetics has a library of makeup tutorial videos on YouTube that show how to execute the looks. Those videos, which have collectively been viewed in excess of 5.3 million times and are further featured on the e-retailer's web site, Facebook page, Twitter feed and Pinterest boards, help consumers engage with the brand, and that translates into sales for the e-retailer, says Fred Sadovskiy, the retailer's CEO.
Home goods and home décor retailer Casa.com delivers on anticipated needs by highlighting products its staff has tried and recommends as "Casa picks" and offering a styleboard tool where consumers can mix and match products they like to outfit a room in their home. "Inherently, we think about our customers as relationship-oriented rather than transaction-oriented, and all that we do on the site is about building that long-term relationship," says Sumaiya Balbale, Casa.com site director.
Anticipating these wants and delivering tools and content that satisfy them are why e-retailers like Amazon, BH Cosmetics, Casa and 97 others are featured in the 2013 Hot 100 or Mobile Top 10. Each of this year's featured e-retailers goes the extra mile to provide the value that convinces a consumer to click the buy button. No site is perfect on all counts, but each in its own way has gotten something right that other e-retailers can learn from.
That something right may be as simple as identifying with the sinking feeling many consumers get when considering the purchase of artwork. Jen Bekman, founder and CEO of art e-retailer 20x200.com recalls finding art galleries intimidating, and that they exuded an elitism that warned off consumers who might want to buy art but felt excluded because they didn't have an art history degree or know who the new, hip artists were. She set out to change that via e-commerce.
Eliminating these hurdles and providing the tools and information customers want is what drives 20x200.com's merchandising philosophy. Its tagline is "Art for Everyone." "We thought about what expectations people have, what they need to make an informed decision," Bekman says. "We always strive to strike a balance between delivering on the expectations the online consumer is going to have, while retaining everything that is special and unique about art. Our proposition is that these two things can coexist."
That means telling shoppers all about the artists whose work the site sells, providing multiple shopping options, such as shopping by subject category or color, and clearly showing prices—all things a lot of galleries don't make transparent or easy for consumers who walk through the door. Having celebrated its fifth anniversary this spring, 20x200's formula appears to be working. Many repeat customers sent e-mails and posted messages on the web congratulating the e-retailer on five years in business and reflecting on how 20x200 had helped turn them into art collectors.
Less than a year old, accessories e-retailer LittleBlackBag.com is another e-retailer that takes cues from offline behaviors and morphs them to the web in a new and larger way. Based on a "lucky bag" retail concept big in Japan, online shoppers buy what is largely a mystery bag of accessories and cosmetics. After purchase, the site reveals to a participant what is in her bag, and if she doesn't like something she can trade it with another customer for something she does want, making as many swaps as she wants for up to a week. Then LittleBlackBag.com ships her final picks.
This online swap meet makes shopping social, and adds a competitive aspect, similar to how women shop and trade products among friends. Online, however, a circle of friends is much larger. CEO Dan Murillo says consumers spend an average of 30 minutes on the site per swap session, much longer than the e-commerce industry average visit of fewer than three minutes according to data analytics provider Sumall, and the site processes more than 1 million trades per month.
Making a difference
E-retailers like 20x200 and LittleBlackBag may have come up with sales strategies that are new to e-commerce, but that doesn't mean retailers have to have had a million-dollar idea to make the 2013 Hot 100. Applying tried-and-true sales tools and tactics—but doing so in a fresh, customer-informed way—also landed many e-retailers on the list.