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Analyst Corner
Web-savvy Shoppers Force Online Retailers To Raise Stakes
According to Shop.org and Forrester research, as shoppers become more web-savvy, online retailers gain more profits.
As today's shoppers become more discriminating about their interactions online, the stakes are being raised for retailers to provide a consistently positive, more sophisticated experience. According to the 150 online retailers surveyed for the second part of The State of Retailing Online 2007, the 10th annual Shop.org study conducted by Forrester Research, top priorities include fixing Web site design and performance issues, improving the efficiency of online marketing, and enhancing cross-channel integration.
Scott Silverman, executive director of Shop.org said, "Today's online shopper is extremely Web-savvy and expects more than ever, forcing retailers to raise the stakes. Companies are investing in new features that will keep customers coming back, and homepages everywhere are getting a major facelift."
Focusing On The Basics
The retailer’s Web site to-do lists will feature fixing product detail pages for the next 12 months. Further, the survey shows that 88 per cent of retailers plan to focus on improving content presented on product detail pages, with 80 per cent adding alternative images, 72 per cent incorporating lifestyle photography, and 63 per cent integrating customer ratings and reviews. Retailers also focus on their homepages, integrating top sellers and "what's new" sections thus making their Web sites more sophisticated, with dropdown menus and rollover lists in navigational areas. To distinguish themselves from competitors, online retailers are also making customer service a priority, with 33 per cent of companies planning to invest more in live chat and 53 per cent planning to enhance their guest checkout process within the next year.
Sucharita Mulpuru, Forrester Research senior analyst and lead author of the report said, "It's encouraging to see more retailers planning to integrate customer feedback loops into their sales processes. Many retailers have been relying on site analytics data, which is strong at reflecting paths-to-purchase but typically weak at highlighting vulnerabilities or opportunities for improvement.
Where Marketing Dollars Go
In 2006, online retailers allocated the majority (51 per cent) of their marketing dollars toward online customer acquisition tactics and an additional 24 per cent to online customer retention programs. Paid search remained the most effective marketing tactic for customer acquisition, and email marketing maintained its position as the most effective and budget-friendly tool for customer retention. According to the survey, retailers find that emails about new products are more successful than simple transactional and sale messages. Seventy-three per cent of retailers email customers about new products, and 51 per cent rated the method as very effective. While Web 2.0 and social computing attract senior marketing executives, the survey results indicated that these tools are just emerging as marketing tools for retailers.
Aligning Online And Offline Channels
Retailers value operations in multiple channels. Survey respondents said that 43 per cent of catalog customers have purchased from their online store while 35 per cent of online customers have also purchased from their bricks-and-mortar store. Online retailers reported that in 2006, they dedicated nearly 18 per cent of their marketing spend to cross-channel sales, up from 13 per cent in 2005. Such tactics included direct mail initiatives like catalogs and email programs to attract customers to local stores. However, more retailers are also leveraging direct print mail as a source to increase online sales. According to the study, 66 per cent of retailers measure the success of a catalog by how it increases Web sales.
Silverman further said, "The perception that catalogs are a dying breed could not be further from the truth. For online retailers, catalogs are an incredibly important tool to acquire new customers and provide current customers with their first look at new products. Retailers understand that many consumers get a catalog in the mail, then buy the item online."
As today's shoppers become more discriminating about their interactions online, the stakes are being raised for retailers to provide a consistently positive, more sophisticated experience. According to the 150 online retailers surveyed for the second part of The State of Retailing Online 2007, the 10th annual Shop.org study conducted by Forrester Research, top priorities include fixing Web site design and performance issues, improving the efficiency of online marketing, and enhancing cross-channel integration.
Scott Silverman, executive director of Shop.org said, "Today's online shopper is extremely Web-savvy and expects more than ever, forcing retailers to raise the stakes. Companies are investing in new features that will keep customers coming back, and homepages everywhere are getting a major facelift."
Focusing On The Basics
The retailer’s Web site to-do lists will feature fixing product detail pages for the next 12 months. Further, the survey shows that 88 per cent of retailers plan to focus on improving content presented on product detail pages, with 80 per cent adding alternative images, 72 per cent incorporating lifestyle photography, and 63 per cent integrating customer ratings and reviews. Retailers also focus on their homepages, integrating top sellers and "what's new" sections thus making their Web sites more sophisticated, with dropdown menus and rollover lists in navigational areas. To distinguish themselves from competitors, online retailers are also making customer service a priority, with 33 per cent of companies planning to invest more in live chat and 53 per cent planning to enhance their guest checkout process within the next year.
Sucharita Mulpuru, Forrester Research senior analyst and lead author of the report said, "It's encouraging to see more retailers planning to integrate customer feedback loops into their sales processes. Many retailers have been relying on site analytics data, which is strong at reflecting paths-to-purchase but typically weak at highlighting vulnerabilities or opportunities for improvement.
Where Marketing Dollars Go
In 2006, online retailers allocated the majority (51 per cent) of their marketing dollars toward online customer acquisition tactics and an additional 24 per cent to online customer retention programs. Paid search remained the most effective marketing tactic for customer acquisition, and email marketing maintained its position as the most effective and budget-friendly tool for customer retention. According to the survey, retailers find that emails about new products are more successful than simple transactional and sale messages. Seventy-three per cent of retailers email customers about new products, and 51 per cent rated the method as very effective. While Web 2.0 and social computing attract senior marketing executives, the survey results indicated that these tools are just emerging as marketing tools for retailers.
Aligning Online And Offline Channels
Retailers value operations in multiple channels. Survey respondents said that 43 per cent of catalog customers have purchased from their online store while 35 per cent of online customers have also purchased from their bricks-and-mortar store. Online retailers reported that in 2006, they dedicated nearly 18 per cent of their marketing spend to cross-channel sales, up from 13 per cent in 2005. Such tactics included direct mail initiatives like catalogs and email programs to attract customers to local stores. However, more retailers are also leveraging direct print mail as a source to increase online sales. According to the study, 66 per cent of retailers measure the success of a catalog by how it increases Web sales.
Silverman further said, "The perception that catalogs are a dying breed could not be further from the truth. For online retailers, catalogs are an incredibly important tool to acquire new customers and provide current customers with their first look at new products. Retailers understand that many consumers get a catalog in the mail, then buy the item online."
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