Personalization, integration and relevancy were the main buzzwords at the eTail 2005 conference and exhibition in Palm Springs, Calif., where top executives from hundreds of Web-based businesses and tech firms converged to discuss how best to profit from the ongoing e-tail boom.
According to shop.org, global online sales hit close to $150 billion in 2004, up 56 percent from 2003. But while online shopping is growing at an unprecedented rate, key speakers at the event said the future of the industry was based largely on being able to reach the right customers, at the right time, through the right medium.
Cliff Conneighton, senior vice president of marketing at ATG, a Cambridge, Mass.-based company that helps corporations integrate and refine their online and offline services, said online retail was still “totally random” and that a greater degree of personalization was called for.
“It’s like walking into a store and the clerk knows you, what you’re looking for, your spending limits, what you’ve bought before,” he said. “Irrelevancy drives customer defections.”
Conneighton suggested that content should be “targeted” — and that the best way to do that was to “walk in your customers’ shoes. The customer now expects you to know who they are and what they want.”
Many e-commerce sites are still not where they should be with regards to service: According to data compiled by ATG, 88 percent of customers who e-mail a site regarding a purchase expect an answer within 24 hours, but only 54 percent of companies respond in that time.
“One-third of the companies take at least three days or don’t respond at all,” said Conneighton. “Systems have to behave more like a person and less like a computer. The technology is there. We can do this.”
Service that is much more customer-oriented was one of the predominant talking points during the two-day event. Joan Broughton, vice president of multichannel programs at REI, a national retailer of outdoor gear and clothing with 77 stores across the U.S. and annual sales of around $1 billion, said e-commerce was “now all about the customer.
“Now the customer has the car keys in terms of who they want to shop with and where they want to shop. The customer is in charge because of the way the Web has allowed them to be empowered. The bar is being set by other retailers, and the customer is expecting more.”
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Integration — being able to unite online, in-store, mail-order and telephone sales — is the wave of the future, said Broughton. At REI, she implemented a service allowing customers to pick up merchandise at their local store that they had ordered online, which was especially beneficial in cases where certain sizes or assortments weren’t in stock at stores.
“That’s a bigger win than we could have imagined,” said Broughton, adding that in the past 18 months, some 30 percent of the company’s online sales have led to store pick-ups, leading to millions of dollars in increased sales as a result. Incentives have been provided to store staff who assist customers with pickups.
“It’s not just about the technology,” said Broughton. “The biggest change has to come in the minds of people.”
The future of e-commerce seems predicated on not just swaying shoppers to make purchases exclusively online, but in encouraging them to use a mix of channels. At Sephora.com, the beauty site, equal importance is placed on catalogue sales as well as on helping customers make phone purchases.
“Our goal is not to drive customers to one particular channel, but to whatever channel best satisfies their needs,” said Brett Miller, Sephora.com’s general manager. “Our online goal is to emulate the rich experience customers have in the store.”
The site features the 250 brands that the 90 Sephora stores carry, with a total of 11,000 stockkeeping units. Priorities include having higher in-stock levels, streamlined navigation of the site and personalized e-mails informing customers of new arrivals and gift ideas.
“We have the same team of beauty advisers answering the phones as handle the e-mails,” said Miller, referring to the 20,000 calls and e-mails fielded by the company every month.
As certain retailers are finding out, the kind of items that most consumers once never considered buying online are suddenly gaining popularity. At the $70 billion Home Depot, which has 1,800 stores nationwide, Shelley Nandkeolyar, vice president of interactive marketing and e-business, said items like refrigerators and even lawn mowers were increasingly being purchased online, once shoppers were confident about the product and had their questions answered.
“Large appliances have been our best-selling product week after week,” he said, adding that it was possible for e-commerce to be “fast, cheap and good” and among the most profitable of all channels for a retailer.
“It’s a question of tuning and tuning until you get it right. We have to nurture a culture that says: ‘I don’t know, but I can get you the answer,’” said Nandkeolyar, who agreed that a greater degree of personalization was one of the keys to successful online sales. Services introduced by the online segment of Home Depot include reminders about maintenance jobs that should be done around the house. Last year, the company also included a bridal and birthday registry — not the kind of service generally associated with Home Depot — and received 900 orders in 24 hours for Valentine’s Day. There are online tutorials for products that need more technical expertise, and the company is in the process of adding a live chat component. Trigger e-mails are also sent to potential customers if the site is browsed.
“We like to surprise the customer,” he said.
The rapid rise in online shopping also provides huge potential for advertisers, although some executives say that this is still an overlooked segment of the industry.
“Americans spend more time online than in any other medium, but marketers are spending less than 3 percent of their marketing budget online,” said Neil Clemmons, in charge of strategic practice at Critical Mass, a company that has worked with Dell, AT&T Wireless and Procter & Gamble.
“Seventy-five percent of American shoppers research a product online before purchasing offline, while 65 percent do the opposite. Multichannel shopping is increasingly becoming the norm,” he said, adding that sites like Yahoo, MSN and AOL reach more than 50 million people a day.