Retailers shift their ad spending from TV, radio and print ads to digital ads.
The online merchant converts 44% of chats into sales.
When footwear e-retailer Inkkas started in 2012 selling shoes made with traditional South American textiles, the market was new, says founder Dan Ben-Nun. But the response was immediate. That first year, the company did $1 million in sales. This year, Inkkas expects to hit $3 million.
But as its order volume grew, so did the number of consumers asking questions, such as how the shoes fit, and what is the retailer’s return policy. “We were spending an enormous amount of time answering e-mails,” Ben-Nun says.
So a little more a year ago, Inkkas began working with LivePerson Inc., which sells live chat technology. Two dedicated Inkkas employees handle the live chat inquiries in the North American and European markets during normal business hours. After hours, consumers can submit questions that the company addresses via e-mail the following business day.
The technology has paid off. The average order value for a consumer who uses live chat on the site is double that of a consumer who does not use the tool. Moreover, 44% of the consumers who use live chat make a purchase on the site on the same visit after engaging with an employee over live chat.
Ben-Nun estimates the return on investment to be 10 to 20 times what the company spends on the technology each month. LivePerson prices its technology on a per-engagement basis, meaning the retailer pays only when consumers use the live chat platform to chat with an employee. The cost varies, but Ben-Nun estimates Inkkas pays around $300 per month for live chat.
The company started as a direct-to-consumer business, but the interest from retailers wanting to sell the product started almost immediately. Now, about 60% of its sales are wholesale to such retailers as Journeys, Hollister, Free People, Urban Outfitter and Nordstrom Inc.
LivePerson is the most-used live chat software and services provider to the Top 1000 e-retailers in North America, as ranked by their sales in Internet Retailer’s 2014 Top 500 and Second 500 Guides. It has 97 e-retail clients in the Top 500 and 77 in the Second 500. With 18 e-retailer clients, it is also the top provider to e-retailers ranked in the 2014 Europe 500.