I wanted to summarize some of the key strategies an e-commerce merchant can do to survive in today’s economy . The changes in consumer and business online spending, new learning technologies and the rise of social media all means you have to embrace the changes or consider the alternative. I recently attended Internet Retailer 2009 in Boston and recommend the show to retailers, merchants, internet marketers and e-commerce service providers. With 5,000 attendees, 91 sessions and 178 speakers it’s worth attending. Before I jump in, I wanted to give credit to the speakers on the excellent information and appreciate the sharing of knowledge as we all need to work together to survive!
HOW TO: Survive in this Economy as an Online Merchant
- Invest in Technology (improve navigation, enhance search, testing, add learning technologies)
- Invest in Marketing (maximize customer acquisition & retention, what works and what isn’t)
- Understand that easy growth is over (the days of automatic sales revenue with little advertising is over)
- Recognize new market trends (mobile, social media, retargeting, segmentation)
- Increase Budgets – Bigger online retailers are investing so smaller guys will loose ground unless they invest. Invest today and win when market changes for the better
- Play on strengths to increase market share (what makes your store unique, ask customers)
- Niche marketing – Big players are utilizing brand recognition, deeper pockets and economies of scale. Small merchants need to go after niches, have excellent customer service, test and invest!
Keynote Speaker – Patrick Boyle – CEO of Overstock.com
Patrick had an interesting keynote that stemmed from his earlier years working for Warren Buffet to the founding of Overstock.com in 1999. Apparently, he was turned down 85 times by venture capitalists when seeking initial funding and later during the dot.com bust he was able to purchase some failed companies which helped build Overstock.com
- $1.8 million in sales in 1999, $760 million in 2007
- 85% of all products are drop shipped (lowers costs for them)
- Patrick sees companies merging online vs….. raising additional investment capital infusions
- Gave a quote from Warren Buffet
- “If you’re not going to going to kick a man when he is down, when are you?”
Patrick’s Advice to Companies
Some great advice that looks at measurement, outsourcing, reporting and the future.
- Measure Everything (use analytics, split testing, marketing, etc,)
- Outsource Anything you are not great at (Outsourcing is a way of life for large retailers)
- Control Expenses (payroll, those tied to balance sheets)
- New Business Combinations (companies will merge in industries)
Gian Fulgoni – Comscore
Some interesting figures from Comscore that were released show a consumer pattern that is evident in our economy. Gian was an excellent speaker and stresses that you need to understand the consumers behaviors to succeed and segment your efforts.
- 70% of Internet Users are using the Internet to research products and services
- 74% likely to shop online before purchasing
- Conversions are lower since many visitors are waiting longer to purchase
- Coupons and Promotions are in demand and consumers use them
- Sunday newspaper coupons only reaching 50% of people and loosing ground to online
- Sports & Fitness, Books & Magazines, Music, Videos up 8%
- Competitive Intelligence is key
Ask yourself these Questions:
- How is my search and display strategy, is it effective? Can I achieve a better ROI?
- What media is most effective in today’s economy?
- Am I trending in my industry in terms of ecommerce buying metrics, market share?
- Do I have a clear understanding of competitive customer acquisition strategies?
- Is my website providing my customers and prospects what they are looking for?
- In light of differences in demographics and economic factors are your promotions targeted to capture the highest revenue.
- To what extent should be relying on video advertising to reach my target?
My take on this is to look at who is buying from you, who isn’t and why. That simple!
Zazzle.com – Bobby Beaver & Jeff Beaver – Co-Founders
I was really impressed with what these two have created at Zazzle.com as they are paving the way for the future of e-commerce. Started in 2005, these Stanford graduates utilized advanced computational imagery tools and open API’s to create an online store that uses base products, shirts, hats, shoes, stamps, etc. which can be color changed instantly and styled with personal branded logos, etc. This concept allows the visitor to shop how they want to and eliminates the need for excess inventory and photography. They have embraced social media strategy and allow users to create a brand and and sell online easily. With the introduction of licensed brands from Walt Disney and more companies it allows visitors to create custom products with logos.
They allow visitors to:
- Create a Custom product from scratch with full personalization
- Buy a product that is already designed in the Marketplace
- Create a brand that they can sell to others
MarketLive – Ken Burke CEO
Ken is an energetic speaker and stressed the importance of personalization, unique content and segmentation.
- Identify Top performing categories and sub-categories
- Concentrate on Product Page conversions
- Personalizing the e-commerce experience
- Segmenting your marketing to target
- Related Items and Search Functionality that learns from the users behaviors
- Importance of video
Gaiam (MarketLive Customer)
- $300 million company growing at 20% each year
- When integrating videos into the website saw 20% conversion uplift (Are you doing videos on your site?)
RSResearch (Market Research Facts)
- Opportunity now is to adapt to changing social media world
- Customer Service needs to be excellent
- Importance of PayPal as purchasing selection (now #4 most popular payment over Discover Card)
Internet Retailer 2009 Highlights – Boston – Day 2
- Total Retail up 3.8% (2007) vs….. 1.4% (2008)
- Retail Stores 3.5% (2007) vs….. 1.2% (2008)
- E-retailing 22% (2007) vs….. 4.6% in (2008) U.S. Retail Markets (excludes auto, petroleum)
- Top 500 Retailers grew at $116B in (2008) 11.7% rise
- Under 500 Retailers at $41B (2008) -6% decline
- Large Retailers are investing in technology to embrace the consumers
Fastest Growing Retail Channels in 2008 Sales
- Retail Chain $43.5B – Top 500 overall share 38.9% – Web Growth 8%
- Web only $36.8B – Top 500 overall share 31.8% – Web Growth 21%
- Catalog / call center $21.5B – Top 500 overall share 17.2% – Web Growth 5%
- Manufacturers $14B – Top 500 overall share 12.1% – Web Growth 15%
- Total top 500 sales $116B – 11.7% overall growth
Top 10 E-Retailers
- Amazon.com $19.2B – 30% growth – #1 last year
- Staples.com $7.7B – 38% growth – #2 last year
- Dell.com $4.8B – 15% growth – #4 last year
- OfficeDepot.com $4.8B – (-2%) growth – #3 last year
- Apple.com $3.6B – 35% growth – #7 last year
Note – OfficeMax.com #6 had $3.1B with (-3%) growth and Amazon has been #1 consistently!
- You need to be #1 in your category over your competitor. See the Office Depot sales figure vs….. Staples and you will see how a well run business can grow while others fail.
- Dell added more personalization and learning technologies
- Apple’s growth came from 35,000 iPod apps and music. Apple is now starting to sell the phone online. Phone stores that are independent will die
- Mass Merchant / Dept stores $35b, 20% growth vs….. 31% in 2007
- Toys & Hobbies $1.2b, 19% growth vs….. 15% in 2007
- Health & Beauty $1.2b
Lower Performing Categories hit by Economic Factors
- Flowers & Gifts (1% online growth vs….. -9% in physical retail stores)
- Jewelry (1% online growth vs….. -67% in physical retail stores)
- Office supplies
- Houseware / Home Furnishings
- Hardware / Home Improvement
Online Retailers Quick Fact
Only 32 companies in top 500 have mobile applications
Customer Satisfaction Scores – ForSee Results
Purchase Intent leaders – Amazon, Walmart, Kohl’s, Costco all up
Bad Intent Scores below 70
They use 70 as a baseline and if under or near means your customers are not satisfied
Declines in Customer Satisfaction
- CVS – 71 points down 8%
- Williams-Sonoma 73 points down 6%
- Apple.com 75 points, down 6%
- 1800Flowers 69 points, down 6%
- 35 other sites fell 3% or more
Note – Apple is lower since they have more iTunes customers so harder to please everyone. Otherwise they are doing very well.
- Measure effectiveness of your site
- Gain intelligence about your visitors
- Indentify site improvements
- Benchmark your performance
- Satisfaction drives conversion, loyalty, retention and word of mouth
- Consumer is in Charge – low switching cost, high competition
- You cannot manage what you can’t measure
- Measurement is hard – don’t fall for gimmicks
- Integration of web metrics magnifies the value
- Only takes 2 to remember to survive (satisfy your customers and be physically responsible)
Overall, an excellent show and encourage you to consider testing and investing to succeed in today’s economy. If you liked the post please comment below on your thoughts and subscribe to the RSS or email feed or Twitter. If you would like help with consulting on your online business please let me know!