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2005 Trends, Tactics and Tools that Deliver

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Title: 2005 Trends, Tactics and Tools that Deliver


1
  • 2005 Trends, Tactics and Tools that Deliver
  • Presented by Lauren Freedman
  • January 19th, 2006

2
About the e-tailing group
  • 13 years e-commerce consulting
  • Author, Its Just Shopping
  • 50 years traditional retail and catalog
    experience
  • Fortune 500 client projects ranging from
    strategic planning, merchandising, marketing, to
    technology development and messaging
  • Proprietary research studies on mystery shopping
    and merchandising, marketing and EMC (Evolving
    Multi-Channel Consumer), In-Store Pickup and Gift
    Registry
  • E-commerce expert and frequent speaker at
    industry events, trade associations

3
Todays Agenda
  • Holiday 2005 Recap
  • E-tailing Innovation and Best Practices
  • Sending Key Performance Indicators in the Right
    Direction
  • Whats Next
  • e-tailing group Site Audit Promotion

4
The State of the Industry
  • The Numbers
  • 2005 Non-travel Holiday sales reached 18.11B
    vs.14.5B in 2004 up 25 and 82B annually 1
  • 12/12 saw consumer spending of 556 million
    followed closely by 12/13, 12/2 and 12/14 with
    CyberMonday hitting 10M 1
  • 33 of American households made an online
    purchase up 10 from 2004 1
  • 27.5 of holiday budgets were spent online 2
  • 20 million packages were delivered on UPS peak
    day 12/20-230 packages every second 3
  • The Categories/Players 1
  • Top three categories for holiday sales included
    computer hardware (4.1B), apparel (3.0B) and
    consumer electronics (1.3B)
  • Fastest growing categories included
    sports/fitness (49), apparel/accessories (37),
    computer software (35) and furniture/appliance/eq
    uipment (34) and videgames(34)
  • 7 out of top 10 trafficked sites were
    multi-channel and often tied to hot product where
    ebay, amazon, wal-mart, apple, target, dell,
    toysrus, overstock, bestbuy and circuit city
    topped the list
  • Neiman Marcus and LLBean recorded more orders
    from web sites than telephone
  • The Trends
  • MVPs are essential to e-commerce success -less
    than 1/5 of online buyers account for almost 1/2
    of spending where traits include comparison
    shopping, higher income and broadband 4
  • The webs ability to locate products especially
    niche trumped price as a reason for shopping
    online 5
  • Shopper satisfaction slipped during the latter
    stages of the holiday season 6

1) comScore Networks 2006 2) eSpending report
2006 3) UPS press release 4)-Nielsen/Net Ratings
5) MIT Sloan School of Management 2006 6) ForeSee
Results 2005
5
e-tailing group Mystery Shopping
  • Annually the e-tailing group mystery shops 100
    e-commerce websites representing a cross-section
    of merchants selling leading consumer product
    categories online
  • Each of the sites is scanned to locate over 150
    features and functions within merchandising and
    customer service tool sets
  • Percentages are calculated off a subset of
    relevant merchants based on existing metric,
    channel presence or prior penetration of related
    feature (see )
  • The following slides summarize key learning from
    our 4Q 2005 Mystery Shopping

-MEMBERSHIP -INVENTORY -SHOPPING
CART -SHIPPING -ORDER CONFIRMATION -UP-SELLS/CROSS
-SELLS -EMAIL -LIVE HELP -RETURNS -MEASUREMENT
-SEARCH -SEASONAL MARKETING -ESTABLISHED
MERCHANDISING -PROMOTIONAL MERCHANDISING -CUSTOM
CONTENT -MULTI-CHANNEL TOOLS -GIFTING -PROFILING -
PRODUCT ENHANCEMENT -CUSTOMER SERVICE INFORMATION
6
the e-tailing group 100 4Q 05
1-800-flowers Crate Barrel Lego Saks Fifth
Avenue Abe Books CRUTCHFIELD Levenger Sears
amazon.com CVS/Pharmacy Lillian Vernon
Sephora American Eagle DELL Linens N
Things Sharper Image American Girl Design Within
Reach Lowes Shop NBC Ann Taylor Discovery
Channel Macys Smartbargains.com Anthropologie D
rs. Foster Smith Musicians Friend Solutions Ap
ple Drugstore.com Neiman Marcus Staples Avon eB
ags New Egg Talbots Babystyle eToys.com Nine
West Target Ballard Design Famous
Footwear Nordstrom The Body Shop Barnes
Noble Finish Line Office Depot The Home
Depot Bath Body Works Gap Omaha Steaks The
Sharper Image BED BATH BEYOND Gardeners
Supply Oriental Trading The Sports
Authority BEST BUY Gloss ORVIS Tower
Records Blue Nile Godiva Overstock.com Toys R
Us bluefly Harry David Palmone
Urban Outfitters Brookstone hpshopping.com Pat
agonia VICTORIAS SECRET Brylane
Home HSN Payless Vitamin Shoppe Buy.com jcrew
PETCO Walgreens Cabelas J.
Jill Polo Wal-Mart CDW JCPenney QVC WILLIA
MS-SONOMA Circuit City L.L. Bean redENVELOPE wi
ne.com Coach Lands End REI ZALES Cooking.com
Lane Bryant Ritz Camera Zappos.com
7
The Power of Brands
Consistent deployment of brands onsite, via email
and across channels is ideal
  • Based on the top 20 websites during the
    holiday season, the of customers who came by
    inputting the url into their browsers ranges from
    Amazons (86) to Home Depot (70) and Lowes
    (60)

Majestic Research 2006
8
Classic Tactics
Merchants are employing an array of traditional
means to inspire shoppers
Based on a relevant subset of e-tailing 100
9
Creative Promotional Arsenal
Consumers respond to innovative short and long
term liquidation strategies
Based on a relevant subset of e-tailing 100
10
Outlets Outperform
The growth of onsite outlets from 27 in 2004
coupled with enhanced merchandising makes them
standalone destinations for bargain hunters
11
Free Shipping Starts with Conditions
Merchants creatively seek to satisfy shoppers
with their favored online shipping incentive
  • Based on a relevant subset
  • of e-tailing 100

12
Evolved Search
Search performance continues to improve year over
year where evolved merchants begin to merchandise
these heavily trafficked pages as a point of
differentiation in hopes of driving higher
conversion
13
Growing Gifting Tactics
From services to suggestions, merchants deliver
robust gift centers to grow year-round gifting
14
Gift Certificates Cross-channel Tools
Heightened consumer interest pushed merchants to
enable purchase and redemption across channels
  • Holiday gift card sales were 18.48 B, a
    6.6 increase over 2004 1
  • Online sales of gift certificates were up 19
    over 2004 2
  • 19 of online buyers bought gift certificates up
    from 11 in 2005 3

Based on a relevant subset of e-tailing 100
Source 1) NRF 2006 2) comScore Networks 2006
3)Jupiter 2006
15
Wishlists Work
Convenienceoriented tactics distributed through
viral means are showing growing interest among
consumers and merchants alike
  • Amazons customers ordered 108 million items
    shipped to 200 countries
  • The Delight-O-Meter recorded 3.6 million items
  • 12/12 was the biggest day where 41 items per
    second were ordered
  • 600,000 gift certificates sold over the holidays

16
Seasonal Selling Expands
Merchants significantly delivered robust seasonal
shops where delivery information was core to the
value proposition
17
Last Minute Tactics
Merchants made significant efforts to take
advantage of harried customers
Last minute sales in the 2 weeks before X-mas
grew 31 over 2004--Jupiter
18
Product Pages Become Sophisticated Selling Tools
Increasing utilization of external search leads
shoppers to product landing pages where optimally
comprehensive tools and information are the order
of the day
Based on a relevant subset of e-tailing 100
19
Ratings/Reviews Officially a Trend
Continued interest in customer-generated content
suggests greater emphasis on integrated
information
Note 1 in 9 consumers has rated a product online
20
Rich Media Effectively Serves Category Challenges
  • Top Seller 25 Analysis
  • -For those who reached a product page half
    of those visitors used the larger view feature,
    while just over 1/3 had tried the 360 degree view
  • -Only 3 of the folks looking at that
    alternative angle did not also look at zoom as a
    means to understand more about the product
  • -The more the better when it comes to
    imaging and certainly on higher price points they
    will continue to make increased investments in
    this area
  • Lego Spokesperson

21
Rich Media Reaches New Levels
Engaging enthusiasts enjoy audio and video which
can serve as excellent conversion tools
22
Category-centric Customization
From design technology and build your own to
category supporting content delivered through how
to guides, glossary and tips, merchants are
investing in information
The Internet was the primary source of shopping
information for 62.8 consumers-Burst Media
23
Comprehensive Customer Service
Complete information delivered via efficient
links is a differentiator
24
Alternative Payments Accelerate
Testing of alternative payments grows with
significant increase and positive response from
merchants and consumers
25
Shopping Cart Efficiency
Take advantage of universal checkout to promote
frequent shopper programs, site-wide promotions
and customer service details
Based on a relevant subset of e-tailing 100
26
Shopping Cart Success
Merchandising opportunities abound at the
shopping cart level where category issues,
relevancy and placement increase average order
sizes
Based on a relevant subset of e-tailing 100
27
Retail-based Tools Support Store Initiatives
Comprehensive store locators serve as a
destination for cross-channel shoppers with
significant consumer visibility
Based on a relevant subset of e-tailing 100
28
Cross Channel Conveniences
Driving customers to the stores makes online
shopping even more convenient while
simultaneously exposing shoppers to your instore
world often resulting in additional purchases
Based on a relevant subset of e-tailing 100
12/22/05 email
29
Cross Channel Conveniences
The catalog can serve as your strongest
promotional advocate where website url, quickshop
links, onsite promotions and shelf extenders
serve as possibilities
Based on a relevant subset of e-tailing 100
30
International Expansion
Opportunity to extend business to global markets
has grown with further growth expected though
operational and logistical challenges must be
conquered
31
Communication Tactics Count
Post-order communication is ideally suited for
branding and merchandising alike
Based on a relevant subset of e-tailing 100
32
Merchant Communication
Timely and appropriate responses to customer
inquiries must be forthcoming
Based on a relevant subset of e-tailing 100
33
Newsletter
Development of broad yet targeted communication
is growing where resources should be evaluated
prior to deployment
Based on a relevant subset of e-tailing 100
34
Returns
Defining customer-centric return policies can
impact revenue growth serving as an excellent
customer acquisition tool
35
Sending Key Performance Indicators in the Right
Direction
36
Merchant Secrets for Driving Conversion Up
  • Objective To share the industrys perspective
    and our viewpoint regarding conversion and
    merchandising
  • Sources
  • Topical interviews with over 30 merchants and
    e-commerce executives
  • the e-tailing group 4th Annual Merchant Survey
    (250 merchants 1Q05)
  • the e-tailing group Annual Mystery Shopping Study
    (100 sites 4Q04)
  • Statistical findings from leading industry
    research and marketing firms
  • Its not just about conversion, its about
    profitable conversion.

37
Conversion, Why Bother
  • It depends upon your objectives.
  • Theres no silver bullet when it comes to
    conversion.
  • Dont live and die by conversion take it
    directionally.
  • Conversion is certainly one of the most
    important things we do its more important than
    driving traffic.
  • You cant take conversion to the bank. These
    numbers must be looked at holistically, factoring
    in your business goals and objectives.
  • Dont look at a generic number, ask yourself
    what do you want the customer to do and see if
    your tactic works.
  • Conversion rates always sound like theyre
    higher than they are as they are not measured
    apples for apples.
  • I like to think about the old statistics saying
    when I see people throwing out conversion rates
    Statistics are like bikinis what they show is
    revealing, what they hide is vital.

Merchant Secrets for Driving Conversion, a
Proprietary Study, September 2005
38
Top Line Questions Merchants Must Ask About
Conversion and Their Sites
  • How much of your traffic is truly qualified and
    likely to convert?
  • Are your browsers visiting today with an
    intention to buy?
  • How much information gathering is required to buy
    your specific category?
  • Are visitors willing to buy this product online
    or are they researching it on your site with
    intent to visit/buy at your store or via your
    catalog?
  • How well are you communicating your value
    proposition?
  • Does your brand proposition come across well on
    your website?
  • Does the user interface facilitate finding and
    quickly buying product?
  • How do you stack up vis-à-vis the competition?
  • Do you have strong and accessible policies for
    shoppers that support your Web initiative?
  • Are you often in an out-of-stock position that
    might deter conversion at the last minute?

Merchant Secrets for Driving Conversion, a
Proprietary Study, September 2005
39
Key Performance Indicators (KPIs)
  • Orders/visit or session was the key measure
    for most interviewed. Yet, no more than 23 of
    retailers measure overall site conversion in the
    same way.
  • Jupiter Research, 2004
  • Unique buyer/unique visitors over 30 days
  • Customers/visitors
  • Customers/visits
  • Orders/buyers
  • Buyer conversions over a period of time
  • New buyers/new visitors
  • Conversion by channel and advertising
    campaign
  • Dollars per page view
  • Dollars per product
  • Number of sessions to make a purchase

Merchant Secrets for Driving Conversion, a
Proprietary Study, September 2005
40
Smart Shopping Cart Tactics
  • Be aware of the length of your checkout
  • Inject key themes at critical checkpoints
    (i.e. guarantees or privacy
  • messaging
  • Offer repurposed billing or ship-to opt-in
    boxes to quickly populate
  • previously entered information
  • Incorporate things that take steps out
  • Buy button and next steps should always be
    above the fold
  • Ensure that shipping estimators are early in
    the process
  • Be tight with your layout, ensuring that
    excess white space is
  • appropriate

Merchant Secrets for Driving Conversion, a
Proprietary Study, September 2005
41
Merchant Words of Wisdom--Conversion
  • Know the needs and wants of your customers.
  • Shop other sites for inspiration and grade
    yourself to create a competitive advantage.
  • Shop your own site as customers and learn from
    this, tweaking your site accordingly.
  • Look at where visitors leave.
  • Monitor conversion, but dont live and die by it
    as customers will come to your site for reasons
    other than to purchase (find-a-store, store
    merchandise reservation, checking points/card
    balance/bill pay). These are still good reasons
    for coming to the site and in the long run they
    not only save on a phone call, but make it easy
    for customers to interact.
  • Remember to measure seasonality and various time
    frames to determine your true performance.
  • Look at behavior by source of origin, how
    customers got to the site. Determine if you
    should serve up different landing pages to engage
    the customer and get the first order.

Merchant Secrets for Driving Conversion, a
Proprietary Study, September 2005
42
Whats Next
  • Existing shoppers spending more will account for
    significant growth in 2006
  • Merchandising will take center stage as merchants
    zero in on conversion tactics evaluating all
    marketing spends to optimize results
  • The divide between the haves and have nots will
    continue to widen as best-in-class players up the
    ante in their cross-channel initiatives
  • Merchants will continue to make investments in
    rich media, category-centric tools and supporting
    content
  • Customer satisfaction levels will be more closely
    monitored to ensure exemplary execution

43
Site Audit, Persona Evaluation Basic
Benchmarking Exclusive for MOGA clients
  • the e-tailing group is extending an exclusive
    special offer for a jumpstart site audit
  • Sign up before February 28th to receive this
    package, valued at 7500, starting at 5500
    depending on your category
  • For more information on our services and to
    explore how we could best work with your team,
    please contact me directly

44
THANK YOU
  • Lauren Freedman
  • the e-tailing group, inc.
  • 1444 West Altgeld Street
  • Chicago, IL 60614
  • lf_at_e-tailing.com
  • p. 773-975-7280
  • f. 773-871-3528
  • www.e-tailing.com
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