August 1, 2007
E-tail: The Next Generation
Over 50 percent of retailers intend to roll out upgrades of their websites over the next two years, according to the RIS News Retail Technology Study, as they try and create online environments that engage consumers on a deeper level.
Jeff Roster of the Gartner Group authored the RIS News report. He said upgrades being made by retailers are part of “the natural evolution of the Web into next-generation technologies, especially in such areas as logical search and navigation, recommendations based on best sellers or previous purchases, product comparisons and reviews, live chat and social communities.”
Aerosoles is one retailer identified by RIS News as having gone the upgrade route.
The company has improved the visual presentation of shoes on its site with zoom functions along with imaging capabilities that enable shoppers to see designs in a variety of colors with the click of the mouse.
Aerosoles has also upgraded its search and navigation capabilities. Shoppers can search for shoes by style, color, heel height, and size. Keywords can help to further refine the search.
Discussion Question: What technology upgrades do you think hold the greatest promise for retailers looking to build sales online or in cross-channel environments? What technology do you think is most over-hyped and probably not worth the investment?
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Gosh, Richard Seesel, can’t a guy or gal browse a bit before buying? Amazon–owner of the absolute best, most efficient shopping website extant–has so much great stuff to look at. I use the site half-a-dozen times per week, am very familiar with it, and spend a great deal of time surfing it. That’s a good thing. Ask brick-and-mortar retailers if they prefer that shoppers spend more time in their stores rather than less time, and they’ll all say YES. Waccamaw Pottery, the iconic Myrtle Beach tourist destination that practically invented discovery shopping, enjoys an average visit time of over three hours and checkout times of just a few minutes. They love it and hope to increase the visit time.
More time spent on a website before purchasing does not automatically point to checkout difficulties. Rather, it indicates that there’s a bit of browsin’ going on.
Online stores are being upgraded all the time because the analytics flow is continuous. Minute by minute, online retailers see which pages get the most attention, which items get the most returns, which media (alliances, pay-per-click, search engine optimization) are most lucrative, which demographics are most profitable, etc. Online stores are soaked every minute in reported key process indicators. They all have built-in business intelligence dashboards. So it’s easy for them to see the return on investment from every change, minor or major, almost immediately. To maximize the alphabet soup: continuous KPI feedback based on BI = better ROI.
The recent news story about the length of a typical e-transaction (almost 40 minutes) points out that most websites have room for improvement. Ease of site navigation and checkout are the biggest technological opportunities. There may be strategic merit in keeping your customer “browsing” for extended periods of time, in order to drive multiple sales into the shopping cart–but most e-tailers could learn from bricks-and-mortar stores that pay plenty of attention themselves to navigation and checkout issues.
When it comes to utilization of technology, I love the line I heard somewhere years ago on why online sites measure everything…that’s because they CAN. Now these developers are turning information into intelligence by understand more about each transaction and applying this information.
The one place where I think that online merchants may want to focus more on is making sure that their sites are easy to navigate for those people who have some kind of disability. This is a major part of the market that is under served.
Cross-channel transparency is the most important technology improvement needed. This requires:
– a single view of the customer (and purchase history);
– a single view of inventory;
– a single view of product information;
– fulfillment capabilities that extend from distribution centers to vendors to stores;
– flexible systems that allow pieces of functionality to be used across any and all channels and points of purchase.
The days of “this item is available online only” or “this item is available in stores only” are coming to an end. Consumers want options in the way they order, receive and return merchandise.
I also believe retailers, particularly in North America, have not yet grasped the stunningly disruptive nature of broadband mobile phone technology. This new channel provides even more choices for today’s consumer, as they can look at a product in a store (and try it on, or touch it) and order it elsewhere without walking out of the original location.
Retail e-commerce sites are rapidly upgrading to Shopping 2.0. The key component of this stage is a gradual shift from transactional improvement to experiential improvement. Enhanced site navigation and constant shopping carts provide benefits in both arenas, while consumer reviews and rich media live squarely in the new world.
E-tail executives have been focused on two incredible statistical anomalies: shopping cart abandonment and conversion rates. With millions and sometimes tens of millions of unique visitors a month, even modest improvements in both metrics drive measurable and significant online volume growth. Still, we are talking about moving conversion rates from 2% to 2.5%. A 25% increase in volume! The real prize are the 97.5% of the consumers who still aren’t purchasing on the site.
A new metric needs to be used in evaluating website investments. Multichannel conversion accepts as a basis that one of the primary purposes of a retail e-commerce site (for a multichannel retailer) may be to drive consumers in-store. The technologies of the future, Shopping 3.0, are designed to enhance conversion across multiple channels. I suggest that aggregations of existing technology (known as mashups) and empowerment video programming are the core functionality within Shopping 3.0.
Online merchants might do well to take a step back and reorient themselves in the consumer psychological process which begins with “interest” and ends in “conversion.” Classical marketing has documented these stages for decades, and state of the art advertising has designed different messages, delivered through different media, at different times to address each of these. Has the online world adapted and used this insight? Or perhaps, have we seen ourselves as either the starting point (search/navigation improvements) or the end point (shopping cart process improvement)? And if so, is it any wonder that consumers visit multiple sites before reaching conversion, or that 30 hours pass between start and finish of their process?
I am a proponent of targeted email, in-store kiosks, click-to-call, “right channeling,” search engine marketing, mobile phone marketing, customer reviews, real-time customer feedback, RFID, RSS (okay, maybe that one is over-hyped), gift cards, loyalty programs, in-store point-and-scan devices, appropriate music and scent, consumer-driven replenishment systems, buy online/pickup in store, and other technology upgrades. But before technology comes strategy, and management and leadership commitment.
To build true cross-functionality requires technologies for both the back office and consumer interface. Retailers should present a unified view to consumers across channels, and have a unified view of products, markets, inventory and customers for themselves.
As detailed every month in Integrated Retailing, multi-channel integration is the strategy being pursued by retail industry leaders and winners–those who are seeing growth in sales, profits, market share and share of consumer. They are investing hundreds of millions of dollars in technologies and systems. But challenges are immense: unaligned organizational structures, disaggregated merchandising and inventory management; uncoordinated customer operations, disparate database and enterprise management technology systems.
An integrated multi-channel retailing strategy must entail significant change not just in technology, but in organizational structures, business processes, staffing, supplier relationships, and customer relationship management. Support from upper management, up to and including the CEO, is required!
Retailers need to integrate their web store’s value proposition with their physical stores, and vice versa. For most retailers this means they can trim their brick and mortar assortments, driving web traffic for end sizes, unusual colors, and companion purchases. Key items need to be very strong on both channels. A key feature is in both channels is to have inventory availability online to provide good answers to the “Do We Have It?” question.
I also think the industry should follow the example of Circuit City and Sears to enable local stores to fulfill web orders.
In some sectors where end of season clearance markdowns are a way of life, multi-channel retailers should consider reverse auction sites to clear out their old stuff.
People want to be attached emotionally to their retailers. To that end, retailers would be very smart to build virtual community sites to allow customers to find each other and to pursue more knowledge and more depth of experience in the categories where it is appropriate.
Retailers who use their web sites as an extension of their brick and mortar locations will be able to better engage their customers, and create loyal long-term shoppers. The retailers are realizing that they do not necessarily have to sell product online, but provide better information online that is accessible in multiple formats.
Imagine a retailer who allows consumers to provide personal profile information, and then obtains permission from the customer to provide promotional information to the customer via text messages to their phone. Using this technology, and location marketing, the retailer can create personalized promotions for each consumer, that changes based on the time of day that the consumer shops.
Creating social networks that allow consumers to connect with consumers, talking about products and services that the retailer offers is another technology that needs to be integrated immediately. The sooner the retailer realizes that they need to be less about selling product, and more about offering solutions, the more successful the retailer will be.
There are several areas where retailers have the opportunity to improve their internet presence. The unique capability of the internet is that it offers the retailer the ability to be “whatever the consumer wants.” This means that the first thing a retail website should do is ask the customer “why are you here today?” Their response could lead to a completely different experience based on whether this is a “just browsing” visit or “got to have something for my mother-in-law by Sunday” visit.
But brick and mortar retailers must find a way to make their existing physical infrastructure the trump card in the retail purchase decision. This means better integration between the website and each individual retail location. It may even mean changing the layout of the retail locations so that there is room for reserving inventory for online customers who purchase online and come to the store for pickup. It may also mean that stores become places for quick exchange, returns, or resolution of online ordering difficulties.
There are a lot of opportunities here….
I agree there is a place for browsing in the world of e-retail. Many times, the browsing helps a consumer move through the exploring phase to the planning, or more active phase of the shopping journey. But just because they don’t buy on any particular site visit, doesn’t mean they don’t intend to buy later. Personally, I have at least six web sites bookmarked with items I like, and I will revisit each of them when I actually begin a redecorating project in the fall. With any luck, a few of those items may even be “on sale” by then!
One thing e-retailers might add to their sites is a more robust feedback capability, beyond product reviews. Consider some questions to help them do more sophisticated segmentation of shoppers usage patterns, needs and wants, as is being done in the bricks and mortar retail space. Integration of efforts is critical. As marketers, we need to remember that if we ask them, they WILL indeed tell us what we need to know to serve them better and make our relationship with them more productive (read profitable).
Today, search and navigation functionality are givens–they are the price of entry. What really drives significant value for retailers is cross-channel capabilities (e.g., online purchase with in-store pick up, “endless aisle” inventory in-store ready for immediate direct-to-home delivery) because these enable incremental sales amongst, typically, a retailer’s best and most profitable customer segments. This is e-tailing’s “holy grail.” For the next few years, retailers across almost every line of trade will be striving to achieve a near seamless brand and purchasing experience between their various channels.
A few months ago at the Retail Systems Conference, Google did a presentation on unifying the checkout processes into a single interface for multiple stores that I thought was great. To me, unification would be the greatest advantage. One password, one place to enter my name and information into, and only one time to verify my credit card.
The best e-upgrade would be a process in which my “check-out” information is done once, and saved for multiple transactions, and (gasp!) multiple retailers.
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Gosh, Richard Seesel, can’t a guy or gal browse a bit before buying? Amazon–owner of the absolute best, most efficient shopping website extant–has so much great stuff to look at. I use the site half-a-dozen times per week, am very familiar with it, and spend a great deal of time surfing it. That’s a good thing. Ask brick-and-mortar retailers if they prefer that shoppers spend more time in their stores rather than less time, and they’ll all say YES. Waccamaw Pottery, the iconic Myrtle Beach tourist destination that practically invented discovery shopping, enjoys an average visit time of over three hours and checkout times of just a few minutes. They love it and hope to increase the visit time.
More time spent on a website before purchasing does not automatically point to checkout difficulties. Rather, it indicates that there’s a bit of browsin’ going on.
Online stores are being upgraded all the time because the analytics flow is continuous. Minute by minute, online retailers see which pages get the most attention, which items get the most returns, which media (alliances, pay-per-click, search engine optimization) are most lucrative, which demographics are most profitable, etc. Online stores are soaked every minute in reported key process indicators. They all have built-in business intelligence dashboards. So it’s easy for them to see the return on investment from every change, minor or major, almost immediately. To maximize the alphabet soup: continuous KPI feedback based on BI = better ROI.
The recent news story about the length of a typical e-transaction (almost 40 minutes) points out that most websites have room for improvement. Ease of site navigation and checkout are the biggest technological opportunities. There may be strategic merit in keeping your customer “browsing” for extended periods of time, in order to drive multiple sales into the shopping cart–but most e-tailers could learn from bricks-and-mortar stores that pay plenty of attention themselves to navigation and checkout issues.
When it comes to utilization of technology, I love the line I heard somewhere years ago on why online sites measure everything…that’s because they CAN. Now these developers are turning information into intelligence by understand more about each transaction and applying this information.
The one place where I think that online merchants may want to focus more on is making sure that their sites are easy to navigate for those people who have some kind of disability. This is a major part of the market that is under served.
Cross-channel transparency is the most important technology improvement needed. This requires:
– a single view of the customer (and purchase history);
– a single view of inventory;
– a single view of product information;
– fulfillment capabilities that extend from distribution centers to vendors to stores;
– flexible systems that allow pieces of functionality to be used across any and all channels and points of purchase.
The days of “this item is available online only” or “this item is available in stores only” are coming to an end. Consumers want options in the way they order, receive and return merchandise.
I also believe retailers, particularly in North America, have not yet grasped the stunningly disruptive nature of broadband mobile phone technology. This new channel provides even more choices for today’s consumer, as they can look at a product in a store (and try it on, or touch it) and order it elsewhere without walking out of the original location.
Retail e-commerce sites are rapidly upgrading to Shopping 2.0. The key component of this stage is a gradual shift from transactional improvement to experiential improvement. Enhanced site navigation and constant shopping carts provide benefits in both arenas, while consumer reviews and rich media live squarely in the new world.
E-tail executives have been focused on two incredible statistical anomalies: shopping cart abandonment and conversion rates. With millions and sometimes tens of millions of unique visitors a month, even modest improvements in both metrics drive measurable and significant online volume growth. Still, we are talking about moving conversion rates from 2% to 2.5%. A 25% increase in volume! The real prize are the 97.5% of the consumers who still aren’t purchasing on the site.
A new metric needs to be used in evaluating website investments. Multichannel conversion accepts as a basis that one of the primary purposes of a retail e-commerce site (for a multichannel retailer) may be to drive consumers in-store. The technologies of the future, Shopping 3.0, are designed to enhance conversion across multiple channels. I suggest that aggregations of existing technology (known as mashups) and empowerment video programming are the core functionality within Shopping 3.0.
Online merchants might do well to take a step back and reorient themselves in the consumer psychological process which begins with “interest” and ends in “conversion.” Classical marketing has documented these stages for decades, and state of the art advertising has designed different messages, delivered through different media, at different times to address each of these. Has the online world adapted and used this insight? Or perhaps, have we seen ourselves as either the starting point (search/navigation improvements) or the end point (shopping cart process improvement)? And if so, is it any wonder that consumers visit multiple sites before reaching conversion, or that 30 hours pass between start and finish of their process?
I am a proponent of targeted email, in-store kiosks, click-to-call, “right channeling,” search engine marketing, mobile phone marketing, customer reviews, real-time customer feedback, RFID, RSS (okay, maybe that one is over-hyped), gift cards, loyalty programs, in-store point-and-scan devices, appropriate music and scent, consumer-driven replenishment systems, buy online/pickup in store, and other technology upgrades. But before technology comes strategy, and management and leadership commitment.
To build true cross-functionality requires technologies for both the back office and consumer interface. Retailers should present a unified view to consumers across channels, and have a unified view of products, markets, inventory and customers for themselves.
As detailed every month in Integrated Retailing, multi-channel integration is the strategy being pursued by retail industry leaders and winners–those who are seeing growth in sales, profits, market share and share of consumer. They are investing hundreds of millions of dollars in technologies and systems. But challenges are immense: unaligned organizational structures, disaggregated merchandising and inventory management; uncoordinated customer operations, disparate database and enterprise management technology systems.
An integrated multi-channel retailing strategy must entail significant change not just in technology, but in organizational structures, business processes, staffing, supplier relationships, and customer relationship management. Support from upper management, up to and including the CEO, is required!
Retailers need to integrate their web store’s value proposition with their physical stores, and vice versa. For most retailers this means they can trim their brick and mortar assortments, driving web traffic for end sizes, unusual colors, and companion purchases. Key items need to be very strong on both channels. A key feature is in both channels is to have inventory availability online to provide good answers to the “Do We Have It?” question.
I also think the industry should follow the example of Circuit City and Sears to enable local stores to fulfill web orders.
In some sectors where end of season clearance markdowns are a way of life, multi-channel retailers should consider reverse auction sites to clear out their old stuff.
People want to be attached emotionally to their retailers. To that end, retailers would be very smart to build virtual community sites to allow customers to find each other and to pursue more knowledge and more depth of experience in the categories where it is appropriate.
Retailers who use their web sites as an extension of their brick and mortar locations will be able to better engage their customers, and create loyal long-term shoppers. The retailers are realizing that they do not necessarily have to sell product online, but provide better information online that is accessible in multiple formats.
Imagine a retailer who allows consumers to provide personal profile information, and then obtains permission from the customer to provide promotional information to the customer via text messages to their phone. Using this technology, and location marketing, the retailer can create personalized promotions for each consumer, that changes based on the time of day that the consumer shops.
Creating social networks that allow consumers to connect with consumers, talking about products and services that the retailer offers is another technology that needs to be integrated immediately. The sooner the retailer realizes that they need to be less about selling product, and more about offering solutions, the more successful the retailer will be.
There are several areas where retailers have the opportunity to improve their internet presence. The unique capability of the internet is that it offers the retailer the ability to be “whatever the consumer wants.” This means that the first thing a retail website should do is ask the customer “why are you here today?” Their response could lead to a completely different experience based on whether this is a “just browsing” visit or “got to have something for my mother-in-law by Sunday” visit.
But brick and mortar retailers must find a way to make their existing physical infrastructure the trump card in the retail purchase decision. This means better integration between the website and each individual retail location. It may even mean changing the layout of the retail locations so that there is room for reserving inventory for online customers who purchase online and come to the store for pickup. It may also mean that stores become places for quick exchange, returns, or resolution of online ordering difficulties.
There are a lot of opportunities here….
I agree there is a place for browsing in the world of e-retail. Many times, the browsing helps a consumer move through the exploring phase to the planning, or more active phase of the shopping journey. But just because they don’t buy on any particular site visit, doesn’t mean they don’t intend to buy later. Personally, I have at least six web sites bookmarked with items I like, and I will revisit each of them when I actually begin a redecorating project in the fall. With any luck, a few of those items may even be “on sale” by then!
One thing e-retailers might add to their sites is a more robust feedback capability, beyond product reviews. Consider some questions to help them do more sophisticated segmentation of shoppers usage patterns, needs and wants, as is being done in the bricks and mortar retail space. Integration of efforts is critical. As marketers, we need to remember that if we ask them, they WILL indeed tell us what we need to know to serve them better and make our relationship with them more productive (read profitable).
Today, search and navigation functionality are givens–they are the price of entry. What really drives significant value for retailers is cross-channel capabilities (e.g., online purchase with in-store pick up, “endless aisle” inventory in-store ready for immediate direct-to-home delivery) because these enable incremental sales amongst, typically, a retailer’s best and most profitable customer segments. This is e-tailing’s “holy grail.” For the next few years, retailers across almost every line of trade will be striving to achieve a near seamless brand and purchasing experience between their various channels.
A few months ago at the Retail Systems Conference, Google did a presentation on unifying the checkout processes into a single interface for multiple stores that I thought was great. To me, unification would be the greatest advantage. One password, one place to enter my name and information into, and only one time to verify my credit card.
The best e-upgrade would be a process in which my “check-out” information is done once, and saved for multiple transactions, and (gasp!) multiple retailers.