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Emarketer: Retail E-Commerce Resumes Double-Digit Growth.
This year, 162 million people in the US will research products online. Much of this research will lead to in-store purchases. Over 82% of online researchers, or 133 million people, will be online buyers. The percent of online buyers will rise as young Internet users, predisposed to e-commerce, replace older users.
Good news for our industry, and one we see in some of our trends, too.
The Internet Retailer Web Design 2010 conference confirmed one of my long-held assumptions about the online retail industry: most ecommerce sites underutilize their metrics.
This is actually an understatement. Most companies, particularly small businesses with less than $10 million in revenue, barely use metrics at all. And they’re missing out on huge business opportunities as a result.
By metrics, I refer to the page-level data about user behavior that can identify problems and unseen possibilities to improve an ecommerce (or any) website. This isn’t about sku-level data and revenue per order; on a base level, every seller knows how much he’s selling. This is about knowing how and why those items sell, and how a website is affecting performance.
Time after time at IRWD I asked a retailer about site performance, and each time I got blank stares or embarrassed grins. “We actually don’t have any analytics installed,” some people told me. Many others routinely gave a variation on, “Yeah, we have to take a look at it.” Of all the people I met, I only spoke with one business that was able to recite to me some of its important data points and the efforts being made to improve on them.
Data comprehension may be the single biggest factor in getting incremental growth out of a site. By looking at analytics, a retailer can know what pages are underperforming, where fallout occurs, and how processes and displays can be improved. Simple, free or inexpensive tools can report everything from visits before purchase to the location and timing of mouse clicks, all of which are part of the smart retailer’s arsenal.
But instead of building on these smarts, I got interactions like these:
“Hi, David, I was wondering if you could look at my website. I have two sites selling similar merchandise, and this one has only a third of the sales of the other one. This is the redesign I’m working on for the worse site. Do you think it will help?”
“Well, to start, have you looked at your analytics?”
“No, we have a Google account, but I just know that this site isn’t performing.”
“You have a site that’s up and running and doing well. If you crack open your Google Analytics you can compare the data side by side and see where the lesser site is underperforming. That way you’ll know what to attack. You’re actually in a great position to fix it if you do that.”
“But do you think this new layout is going to help?”
I don’t know if that redesign will work, but I do know that the owner of the site is ignoring his own benchmarks. If he looked, he’d be a lot closer to the answer.
Why dive into a redesign without identifying targets for improvement? “Fix my conversion” is not a useful goal. “Make changes to the product page, which has a high fallout rate, to improve adds to cart while encouraging further exploration” is an actionable one. That actionable goal can be identified quickly and easily, but so few businesses are doing it.
Many, many questions raised at IRWD can be answered in-house with a thorough study of site analytics. Companies that ignore it are almost literally leaving money on the table.
Duane Reade introduced a new rewards program today. I happened to be in a Duane Reade this afternoon, where the cashier swiftly upgraded me to the new system and gave me a thick coupon book for my loyalty.
The pharmacy and quick-shop chain is promoting its new program, Flex Rewards, as a consumer-friendly upgrade. They cite the new system’s non-expiring reward points and paperless redemption as the main improvements.
Which is great, until the consumer finds out the real meat behind the change:
What Rewards will I receive?
You will receive a $5 Reward for every 500 FlexRewards points earned.
The old Duane Reade Dollar Rewards Club offered a one-point-per-dollar system that was blissfully simple: spend $100, earn 100 points, get $5 in store credit. It was simple and useful enough that I actually kept my rewards card handy, and I earned a handful of redemptions.
The new program is more confusing and far less valuable. Consumers now get two points per dollar spent and the same $5 reward now comes at 500 points. Or, in layman’s terms, after $250 spent rather than $100. Earning the five bucks just became two and a half times as difficult.
Flex Rewards also has a couple of gimmicks in the system, such as SuperSaver, which encourages customers to not redeem their points in exchange for bonus points back when they finally spend the credit. It’s a cash-back system that feeds itself.
If any of this has heads spinning, I suspect it’s by design. Duane Reade has devalued its loyalty program by a minimum of 60 percent. It cloaked the bad news in technical upgrades and new schemes that try to divert attention away from the devaluing.
With Flex Rewards, Duane Reade stands to give away a lot less value in 2010 than it did in 2009. If I had a stake in the company, I’d be pleased with the new program. As a regular Duane Reade customer, though, I’m probably just going to stop using my card.
The public release of Google’s phone was news but not an event yesterday. (The New York Times used “some polite applause” and “shakes but doesn’t upend” in its coverage headlines.)
Why? Because Google didn’t physically make the phone.
In partnering with HTC, a company that produces cell phones for every US carrier and two different operating systems, Google ceded control of the overall experience. Never mind that the handset is slim and fairly attractive. It’s also generic, and apparently imperfect. When David Pogue pushes your phone’s home button, you really don’t want it to fail.
There’s a huge difference between designing and engineering a device, as Apple did with the iPhone and Palm with the Pre, and a company having a device “built to its specifications”. Google was telling HTC, “We want our phone to do this,” and HTC was putting the requisite componentry in place. This tends to minimize holistic product definition and by its very nature waters down the innovation. In contrast, Palm and Apple (and Motorola and Nokia, for that matter) manage the entire process, and their software is designed to complement the hardware, maximizing user experience. Google, a company that is strictly virtual, doesn’t know how to do this.
Software companies that venture into hardware have to embrace the role of hardware manufacturer. This is true beyond smartphones: consider how Microsoft, which built an empire on software, hit a home run with its Xbox by controlling the end-to-end product creation. (Microsoft makes great computer accessories, too; I’m using a Microsoft keyboard and mouse right now.) But we never saw a Microsoft-branded PC produced by Compaq in the 1990s. All or nothing.
Google is a formidable company with incredible technological prowess. I’m not placing bets against Android just yet. The relative mediocrity of the Nexus One, though, is exactly what we should have expected.
With sources as authoritative as the Wall Street Journal confirming the pending introduction of a tablet computer from Apple, one can assume the cat’s out of the bag for the big Apple news on January 27. But what does it mean?
I’m throwing my hat in the kill-the-small-laptop camp. The iPhone proved that people will use computing power in a portable manner and without a physical keyboard. Despite the name, the iPhone is indeed a computer, with a clever 3.5″ form factor. And people use it as such. Indeed, Ai has ecommerce clients generating sales from iPhone browsers on non-mobile-optimized websites.
Given that, why not continue to redefine the portable computing space? Steve Jobs must scoff at netbooks, with their minuscule keyboards and compromised feature sets. Better to redefine the experience with a new kind of device. Just like the iPhone has redefined pocket-sized power, so too can the tablet redefine the small-laptop market.
Apple is shooting for the personal, casual computing market, folks like me who like to get online sitting on the couch and folks like Nathan who want a three-pound computer to travel with. It will be big enough to type on and clear enough for reading, gaming and web browsing.
I bet the tablet’s pixels per inch will be impressively high, like the 160 ppi of the iPhone. Most Mac desktop and laptop displays hover around 110 ppi. An 11″ screen at 160 ppi will provide almost the same amount of pixel real estate as a 13.3″ MacBook screen does now. This will help minimize people’s perception that they’re giving up detail for size.
Yesterday I postulated to my coworkers that the 13″ MacBook is going to disappear. But now I suspect it will turn Pro a few months after the tablet comes out. Portable computing power is important, and with a tricked-out technology package, the MacBook will differentiate itself. Expect MacBooks to shift in price from $1199 and up to $1499 or higher, with the tablet coming in around the thousand-dollar mark.
Whatever it turns out to be, expect irrational and unrivaled consumer desire and interest for it, on a scale that only Apple creates. Google’s phone news is a business story: “Look at Google aiming for the smartphone market.” But Apple’s news is cultural. Which is why they may succeed in their latest attempt to change the game.
The big news in ecommerce this week is consumers’ growing expectation of free shipping from online retail sites. It’s no longer seen as a perk; people are instead planning their shopping around free-shipping promos.
This, of course, is leading to a big game of cat and mouse. Ecommerce sites are setting hurdles for purchases to get free shipping, hoping to make up the $7 or so in costs with increased sales. This in turn frustrates consumers, who look for ways to stock up on items, leading to lower purchase frequency, or who become frustrated and abandon their carts. (I watched my wife fall $0.04 short on free shipping last week and yell at the retailer’s website.)
I’m curious to see where this goes in 2010. Does free shipping become de rigueur among mainstream ecommerce sites instead of promotional? Will hurdle levels shift? Or will discount programs alter to accommodate shifting margins?
Newegg has long been my favorite online retailer. As a computer hardware geek, and the Director of IT here at AI, they’ve always sold stuff that I’m frequently purchasing. Whether I was looking for a new motherboard for a system build for a friend, or even something as simple as buying some Ethernet cable for the office, Newegg has always been the site I go to first.
Newegg sucked me in as a customer really early with spectacular customer support. Two specific instances stick in my mind. I believe these both happened back in 2001. The first was replacing a motherboard after it stopped working after just a week. It was a super smooth process; they replaced it quickly without a ridiculous RMA process.
The second incident was a broken front panel on a computer case I bought. They didn’t even make me return the original broken case. They simply grabbed a replacement part from a case at their warehouse, and shipped me just the broken part. I was able to get on with my system build without any delays due to the damaged part.
People always ask me where to buy computer stuff. Countless times, I have said, “Buy it from Newegg. They may not always have the lowest price, but their prices are always very competitive and you can’t beat their service.” Regrettably, I no longer feel this way.
Once again, it comes down to 2 incidents. The first one was a 3 years ago. I was trying to get some extra remotes for my Nintendo Wii, and I found some for sale at Newegg. I bought 2, thinking I was all set. A few hours later I got an email from them saying that they didn’t actually have any in stock and that they were cancelling my order.
I was pretty annoyed, so I emailed them a complaint. They said they would give me a few dollars off of my next order. I can’t recall the exact amount but it was at most 20 dollars. I think it was 10, but I want to give Newegg the benefit of the doubt here. I was not happy so I emailed them back. I never received another response from them, and I certainly didn’t get that discount.
I wrote this incident off as an oddity in my years of positive service with Newegg, and I ignored it. But then, this past Friday, the same thing happened. For the second time, I had completed checkout at Newegg, and I was sent an email after the fact that my item was out of stock and my order was being canceled.
In the interest of full disclosure, this new incident involved a black Friday special. But honestly, in the 3 years since this last happened to me, I would have expected that they invested time and money into their system to prevent this type of thing from happening again. After all, according to their Facebook page, they are the 2nd largest online only retailer. They can afford to fix these problems.
In any case, I emailed them 3 times and haven’t heard back from them yet. From my perspective, this is now enough to form a pattern of a website that breaks down during the holidays, and a pattern of a poor customer service response to the people who are affected. Patterns I intend to avoid by giving other vendors my business from now on.
Between my business and personal accounts, I spent around 10 grand there last year. Sure, those numbers aren’t huge, but they aren’t insignificant either. And if they lose other long time customers from incidents like this, those numbers can add up. In addition to the fact that they risk losing the excellent word of mouth that made them so big to begin with.
Where will I shop now? Well, I’ve already got a couple of vendors that I consider reliable. I’ve got account managers at CDW, Dell, and Apple. They aren’t the cheapest vendors, but I like having a direct line to somebody who values my business, and there are situations where that is worth spending the extra money. I buy my memory direct from Crucial these days. There’s plenty of stuff I can get at Amazon, a vendor that has never failed me. For more urgent purchases, I can walk 3 blocks from my office to the local Best Buy.
For the items that I traditionally have purchased from Newegg, I’m going to give zipzoomfly.com a try. They have been recommended by a fellow hardware geek a few times. They don’t seem to have the vast selection that Newegg has, but their prices seem fair, so it’s time to give their service a try.
I miss the Newegg of old. I congratulate them on their enormous success, but in my opinion, they’ve had to sacrifice a chunk of their brilliant customer service to get there. I, myself, am moving on for now.
So long, and thanks for all the fish.
UPDATE:
It seems Newegg’s big thank you to their customers is a $10 gift certificate. No thank you.
8:08:39 PM System says, Hello my name is Angelique. How may I help you today?
8:08:49 PM Joshua Rusch says, hi there
8:09:18 PM Joshua Rusch says, I had an order for a black friday deal canceled due to stock issues, even though I checked out on the site successfully
8:09:44 PM Joshua Rusch says, I’ve seen a few reports that you are honoring the deal on alternative colored laptops for people who checked out and had their order canceled
8:10:01 PM Joshua Rusch says, I’ll paste the exact message somebody sent me…
8:10:24 PM Joshua Rusch says, I was actually able to get a hold of an escalation rep @ 5pm, pacific standard time, via phone (800) 390-1119
Once talking to a live person, I insisted on being transferred to the escalation dept.
There, I spoke with a Becky and an Ivan. They gave me the blackfriday price on the exact same netbook in a different color. There are reports of other people doing the same as well online:
http://forum.notebookreview.com/showpost.php?p=5563846&postcount=15
Good luck!
8:11:29 PM Angelique says, I would be glad to assist you. We are offering $10.00 off your next order with Newegg for the inconvenience.
8:12:01 PM Joshua Rusch says, What about the people claiming they got the same deal on the same laptop in a different color?
8:12:08 PM Joshua Rusch says, are they lying?
8:12:43 PM Joshua Rusch says, do you have customer service reps named Ivan and Becky, if so I’ll try talking to them on the phone….when your phone lines actually start working again
8:14:50 PM Angelique says, There were many customers that were inconvenienced by the stock situation, as such we have decided to offer $10.00 off a future order with our company.
8:15:17 PM Angelique says, We are not able to honor the sale price for all customer’s that were inconvenienced.
8:15:38 PM Joshua Rusch says, I have given this company over 25 grand in business over the past 3 years
8:15:43 PM Joshua Rusch says, you really don’t want my business any more?
8:15:51 PM Joshua Rusch says, http://www.alexanderinteractive.com/blog/2009/11/dear-newegg-so-long-and-thanks-for-all-the-fish.html
8:16:09 PM Joshua Rusch says, I suggest you check with your boss, I’ll give you the other account number I buy under
8:17:39 PM Joshua Rusch says, Look at account #XXXXXX, also under my name
8:17:56 PM Joshua Rusch says, you REALLY want to lose all that business over 120$ or whatever it was?
8:19:28 PM Angelique says, We definitely value you as a customer, and that is why we are offering the 10.00 discount off your next order. There is nothing that can be done to honor the original price or else I would definitely take care of it for you.
8:20:32 PM Joshua Rusch says, hah, OK, well I’ll be adding this conversation to my blog post. 10 dollars does not say you value me as a customer.
8:21:43 PM Angelique says, I apologize that we were not able to offer you more in this situation.
8:22:23 PM Joshua Rusch says, It seems like a no brainer to me…give me the discount, and get another couple of years of business, but its your loss, I have other vendors.
8:22:27 PM Joshua Rusch says, Bye
UPDATE 2
I thought I’d include a link to the facebook posting in which newegg said it would be contacting the people that experienced the stock problem on their website. Click here. As you can see, there are many complaints there. Not all of them are about successful checkouts, but there are enough.
Also, here is the netbook that they sold me, before they canceled the order:
http://www.newegg.com/Product/Product.aspx?Item=N82E16834115576
Here are two of the exact same netbooks specwise, just in different colors. They refuse to substitute them in for the deal they originally sold me.
http://www.newegg.com/Product/Product.aspx?Item=N82E16834115573&cm_re=AOD250-1924-_-34-115-573-_-Product
http://www.newegg.com/Product/Product.aspx?Item=N82E16834115575&cm_re=AOD250-1924-_-34-115-575-_-Product
I have become something of a skeptic when it comes to polls and surveys. While they are the theoretical best way to get aggregate viewpoints of a consumer or user base, people’s inclinations toward self-perception make them inherently flawed.
Take, for example, this Accountemps survey on online shopping for the 2009 holidays.
“Most workers,” the release says, “plan to browse on their own time, a new Accountemps survey shows. Nearly four out of five (77 percent) professionals surveyed said they are not planning to shop online while at work.”
Isn’t that a nice statistic for Accountemps to give back to its hiring firms? Staff are hard-working and focused!
Except it’s probably false. For the survey, Accountemps had a separate firm interview 455 employees–a number of whom were probably concerned that their employers might be listening or getting access to the data, so they lied about it to sound good.
Other respondents probably said to themselves, “Well, I’ll probably browse a bit here and there, but I won’t actually shop until I get home.” So they got to say no, which made them feel better about their dedication to their jobs. And some people just didn’t want to admit that they goof around at work, so they answered the same way.
It’s impossible to determine from my desk what those subsets do to the data, but at the least, they make the original results much more suspect.
The perpetuation of self-interest and positive self-perception is a common theme in polls. Ai recently received client research that said a celebrity spokesperson had only marginal effect on the opinions of the people polled. To which I thought: well, of course the respondents say this.
Few people want to admit to a curious stranger that Roger Federer’s mug on TV is the reason they considered Credit Suisse for their asset management. But that image certainly influences people, even those who won’t explicitly acknowledge it. (Nate Silver’s marvelous poll aggregation during the 2008 election cycle reinforces some of this.)
Polls and surveys aren’t going away, and the insights they contain are often valuable and impossible to otherwise discern. But the questions they seek to answer may not always be fully answerable by a conscious group of respondents.
PostClick Marketing Blog has an interesting post on agency cycles, and the way an agency spends too much time on tactics and not enough on concepts. The suggestion is to swap “how” and “what” and let 95% of a project be about idea generation.
Great sentiment, imperfect logic. Companies that focus too much on ideas get criticized for being too high-concept; they wind up perceived as unable to get things done. Conversely, of course, executional organizations have finite growth curves and not enough creativity.
The answer we’ve settled on is the continuous feedback loop. As PostClick notes, it is not enough to generate ideas up front, then move into implementation. Better to integrate idea generation into the entire process.
Here’s how Ai does it:
For us, it’s not just about what versus how–it’s about continuing to ask “what” during the “how,” and vice versa. Maintaining a healthy balance between the two ensures projects, and their teams, remain creative and forward-thinking.
In a presentation at Web 2.0 New York, Scott Porad of Pet Holdings talked about user-generated content (UGC) and how anybody creating content needs to be thinking about UGC’s impact.
Porad mentioned that filtering is the key to implementing successful user-generated content. Submissions on his sites are reviewed by a team of 15 or so initial “web-cultured” reviewers. Then they go into a secondary review area where site members then make the final call. One click by readers and the post goes back to the initial reviewers. Two percent of submissions are filtered out completely.
These voting mechanisms on content also act as a reward and encourage more participation when users know their submissions are appreciated.
Another notable point in Porad’s talk was the Amazon “did you find this review useful” feature. Amazon has this type of question on each review in their customer feedback section. I recently read a review on Amazon that stated:
This product will stop working after a year unless you pay them a $20 annual fee. Need more than 2GB of storage? Another 2GB costs you $10 a year. There are other products that record to your computer’s hard drive, and can even upload the captured images or video to the FTP site of your choice (most ISPs give you several GB for free). This product is just a bad idea, in my opinion.
Reading this and then seeing that 14 out of 16 people found it useful adds context to the products description and instills trust amongst customers.
This review stood out and helped me make a definite decision. User-generated content combined with good filtering adds an invaluable tool and resource to any site.