AIAIO: Our Blog

Last week Walmart announced free shipping on walmart.com for the holiday season. The scope is staggering: the offer covers more than 60,000 products and comes with no purchase minimum.

The move is a maneuver in Walmart’s price war with Amazon and Target, coming just days after Walmart lowered prices to compete more fiercely with its competitors. In the level-playing-field world of ecommerce, Walmart is making a compelling case for many consumers not to shop anywhere else.

So what does this action mean for the rest of the industry, not just the billion-dollar behemoths at war? Several things.

1. Expect heavy price wars this season. Indeed, they’re already underway, what with campaigns and discounts starting in October this year, in part to offset the sluggish economy. (Then again, this happened in booming 2007, too.) Every store will be watching its competitors’ prices, and consumers will, too.

2. Look for the spread of no-limit free shipping. Already, some larger retailers (like LL Bean, whose promo is shown here) have chosen to match Walmart’s offer. Amazon hasn’t budged yet, in part because its $25 hurdle is fairly accessible. If Walmart chooses to extend its offer past the holidays, though, watch for shipping costs to rapidly become an albatross on mass-market sites.

3. The small-business end of the online CPG market may be in trouble. Walmart’s promotion allows consumers buying $9.88 toys to shop walmart.com for value–good for consumers, bad for small competitors, who may spend $7 on average on shipping. Expect startup retailers to shift focus away from small-ticket items unless they have access to favorable postal arrangements.

4. Don’t expect this to hurt the specialty stores. Bloomingdale’s has free shipping on $300-and-up purchases, Nordstrom $100: this isn’t about them. Nor is it about niche brands whose distribution relies on the digital channel. Those retailers can still charge fair shipping costs, because people are seeking out specific products. Walmart may encourage an expectations shift, but those expectations may or may not extend to every corner of the online retailing industry. (Yet.)

Check walmart.com in January to see if free shipping sticks around or if it’s just a market-share maneuver for the holiday season. That pending decision by Walmart may permanently alter the industry.

This morning I enjoyed re-reading Clifford Stoll’s 1995 Newsweek piece, Why Web Won’t Be Nirvana.  While 15 years later most of his observations on information overload and the lack of content curation abound, how delightfully wrong he was in predicting the failure of “cyberbusiness.”

Then there’s cyberbusiness. We’re promised instant catalog shopping—just point and click for great deals. We’ll order airline tickets over the network, make restaurant reservations and negotiate sales contracts. Stores will become obselete. So how come my local mall does more business in an afternoon than the entire Internet handles in a month? Even if there were a trustworthy way to send money over the Internet—which there isn’t—the network is missing a most essential ingredient of capitalism: salespeople.

It appears our industry has done a fine job addressing all of Stoll’s concerns, save for thankfully not making stores obsolete (and arguably positioning great multi-channel retailers even stronger because of their web businesses).  We certainly can point and click for great deals.  I don’t remember ordering an airline ticket in the last 10 years and not doing it online.  OpenTable can almost always snag a last minute reservation for me at the latest NYC hotspot.  While their usability leaves a great deal to be desired, web-based contract negotiation tools drive billions in global procurement.

And speaking of a “trustworthy way to send money over the Internet,” while we haven’t yet found nirvana, in 2009, $209.6 billion was spent by consumers typing credit card numbers into a white box on a website.  People trust sending their money over the Internet.

Sure, we lack nuanced salespeople in our digital world.  That saleswoman who tells me I look fabulous in that suit will never lose her job to ecommerce.  But we sure do come close to the same results.  On more than one occasion we’ve all experienced that bizarrely efficient and shockingly accurate “others who purchased” recommendation, and went for it.  Dynamic personalization is the salesperson of the future, and she’s being implemented today in almost all of our modern ecommerce work.

It sure is easy to criticize Stoll with the 20/20 vision of hindsight, and most unfair not to offer ecommerce predictions for 2011 and beyond of my own.  Stay tuned to this page in the coming weeks.

So you’re probably thinking to yourself right now, “Why Redesign?”

Gosh. Funny you should think that, because it just so happens I recently wrote a little piece on that exact subject, as a featured blogger on Building43.com.

Redesigning a website is a daunting task.  Budget, deadlines, resources, features, content, platform changes, brand perception, SEO implications – the list of challenges is a long one.  The potential impact website redesign has on your organization is as enormous and critical as the process.  Will conversion go up or down?  Will your new site attract more visitors or will traffic drop off?

If you want more detail on the topic, take a look at a deck from one of my presentations at Internet Retailer’s Web Design 2009 conference, “Charting the Successful Redesign — A True Story About an Agency and Client Partnership”. It gives a detailed account on the site redesign, specifically what led to the decision and the steps we took to execute it. It does NOT go into pancakes and the secrets behind achieving a remarkable fluffiness. Lets just make that clear from the outset.

Ah, internet shopping. Nothing like browsing products and comparing pricing without ever having to leave your chair.

For many years I almost completely abandoned visiting good old fashioned brick and mortar stores. I hopped on the internet shopping bandwagon really early. I used to buy CDs from cdnow (RIP) over their telnet service before the much maligned Internet Explorer even existed. When I discovered eCommerce, I never looked back.

Well, I didn’t look back until this past December, when I had a falling out with one of my favorite vendors, Newegg. Much to my surprise, I now go to Best Buy for many of my computer needs.

I used to think of Best Buy as a place that I would go when I needed something badly enough to pay a 10-20% premium. Much to my surprise, many of their products are now competitive with online stores like Newegg. Frequently, I can get products a little bit cheaper since there is no shipping charge. Add to that the instant gratification of getting the product exactly when I want it, and I’ve actually started to prefer brick and mortar shopping again.

Oh, there will always be plenty of stuff I’ll be able to find online cheaper. But for right now, I’m finding a return to brick and mortar shopping to be not only enjoyable, but also a fiscally sound decision.

Just to be clear, I am not abandoning eCommerce. After all, I do help make eCommerce sites for a living :) I’m just reintegrating brick and mortar shopping into my purchase/shopping habits. In fact, over the past 2 months, I’ve spent close to $2500 at amazon.com. I’ve built 2 new computers for my home, and preordered that snazzy new graphite Kindle.

It’s also worth mentioning that I actually spend a lot of time at bestbuy.com. Even though it’s very close, I still don’t want to make the trip unless I know that they have the product in stock. There’s no quicker way to do that than to go to their website.

Not only does their site save me time in the store, but they also frequently have sales online that don’t have in the store. So you could end up spending more money than you have to if you don’t know their online price. They will price match their own online store right at the cash register.

G’day mate! I am pleased (and a wee bit freaked out) to be flying to Sydney tonight to participate in Online Retailer, Australia’s leading ecommerce conference. With more than 4000 confirmed attendees, Online Retailer looks to be compelling and exciting.

I hope to be part of that excitement, as I am presenting at the conference on the ROI of user experience. It’s a frequent topic at Ai and one I’m looking forward to sharing. I am also doing live site critiques, my stock in trade at the Internet Retailer conferences, and joining in several other discussions and events.

If you’re in Australia, drop me a line, or swing by the conference and see for yourself.

Many sites have been doing some form of personalization for years. This often includes relatively “wide” customer segments like new vs repeat visitors, and relatively static discount or product promotions. Now imagine doing promotions that are customized with every page view, to the specifics of each individual visitor. That’s dynamic personalization. It’s the next killer app in ecommerce.

Dynamic Personalization

In a blog post a few weeks back, I wrote about dynamic personalization as one of the top strategies for next-generation ecommerce. Dynamic personalization is a hot topic at Ai, and our clients are leveraging it with great results.

Many sites have been doing some form of personalization for years. This often includes relatively “wide” customer segments like new vs repeat visitors, and relatively static discount or product promotions. Now imagine doing promotions that are customized with every page view, to the specifics of each individual visitor. That’s dynamic personalization.

What It Is

Have you ever been on Amazon and seen “customers who bought X also bought Y” after you added an item to your shopping cart?

That’s dynamic personalization. Specific product (or content) recommendations based on your unique behaviors. These behaviors include what you have browsed and searched for, the products you’ve viewed, your ratings and reviews (if any), and your purchase history.

How it Works

All these behaviors are compared in real-time with the behaviors of other shoppers.  The result is a match between things you’ve implicitly expressed an interest in, and the interests others have expressed. This type of dynamic personalization uses collaborative filtering, a fancy way of saying that it uses the wisdom of the crowd, and represents the most common method by which dynamic personalization works.

The D in Dynamic

As customers continue to visit a web site, browse and search, view products, and purchase, this data is fed into the personalization database. As the site owner adds products, content, and promotion, this information is fed in as well. In this way, the dynamic personalization system continues to evolve as it learns more about what is popular and relevant right now.

If a hot new toy is released, this product will come to the fore in recommendations as a result of customer interest. As it fades in popularity, it will be replaced by something more popular.

This adaptive learning and re-adjustment happens thousands of times per day without any explicit setup or maintenance. Additionally, the type of recommendation presented can be dynamically customized to the type of product displayed. Quantity discounts might be appropriate for cleaning supplies, but not for dvd players. Feature-based upsells and accessory cross-sells might work for a TV, but not for a book.

Why It Matters

A very small percentage of what you have available on your site is relevant to any one customer at any one time. Getting users to view what is relevant to them–making them aware that you have what they need, that they are in the right place and (by the way) there are other options they may not have thought of that are also relevant to them–is a sure way to greater sales and customer retention. Traditional methods of updating and optimizing your site through analytics and testing are great, but rely to a certain extent on guesswork and can be too slow to react to a trend.

Dynamic personalization relies on what your customers are actually telling you about what they prefer. If you don’t have the time to update your site thousands of times per day and provide live customer service chat to every customer, you should probably look into it.

Does this sound like you? Two or three generations into your ecommerce site, your business is decent but flatlining. You’re on top of your metrics; you know your RPV, conversion, AOV, and dropoff at each step in your funnel. But conversion and average order have stopped growing, and you’re ready to evolve.

Ecommerce is changing rapidly. Consumers are expecting more of your site, and embracing modern techniques can invigorate your business. We’ve outlined ten strategies you can use to supercharging your ecommerce efforts below. Be sure to come back in the coming weeks, when we’ll describing methods of implementing each of these concepts.

1. Dynamic Personalization / Collective Intelligence – Your site is collecting analytics data from thousands of visitors every day, and has been for years. How much of this data are you utilizing? Dynamic personalization puts it to use, immediately and with surgical precision. When a customer visits your site, even without logging in, within a few interactions a shopper’s persona is defined and business rules are applied to surface relevant content and functionality. Dynamic personalization providers include Baynote and RichRelevance.
2. Social Network Integration – Social networking isn’t exactly new, but social shopping imperatives are constantly evolving, as we described in our posts detailing luxury brands and iPad usage and possibilities for the new Facebook API. At the most basic level, integrating a “Share” button that allows users to share your content to their favorite social networking destinations is a good first step, as is integrating Facebook “Like” button functionality. At a slightly higher level of customization and effort, there are login integration and review/ratings integration tools such as Facebook Connect. Sites like Social Commerce Today stay on top of social shopping trends and provide more robust examples of retailers leveraging social shopping integrations.

   

3. Mobile Sites – Over the past year, Ai has seen massive increases in traffic and transactions completed at client mobile sites. The age of the mobile site is truly upon us. Mobile consumers have different needs than users browsing on the desktop, and mobile devices have their own set of capabilities and limitations. A dedicated, designed mobile site experience is a must for progressive ecommerce retailers.

4. Location-Based Tie-Ins -The GPS capabilities of mobile devices usher in a new era of exciting location-based cross-channel promotion capabilities. Examples include promoting products that were shopped-for online when the shopper is in proximity to a physical store, pushing promotions available at nearby physical locations, and providing interactive directions and pickup/availability notifications for shopped for items.

   Apps like FourSquare allow you to extend your reach by pushing promotions and specials and rewarding repeat shopping, all while extending your reach to a new customer base.

5. Experiential UI – Beyond simply being easy-to-use, modern ecommerce sites for innovative brands can be experiential and immersive, transforming shoppers into brand loyalists by evoking an emotional reaction.

   The Wrangler Blue Bell Spring/Summer 2010 site (warning: music/audio) is a great example of an immersive/experiential UI where the interactions are fun and reinforce the brand message. Lowe’s Sunnyville (warning: music/audio) provides a game-based metaphor for shopping for lawn and garden products and project planning.

   

6. Contextual Visualization – Shoppers increasingly expect to visualize how a product will fit into their life and style. Retailers who allow shoppers to visualize how products look on them and match with other products they are shopping for and already own will have a significant leg up in the ecommerce marketplace. The aforementioned Lowe’s Sunnyville site (warning: music/audio) allows you to “create your own yard” and see how various products will match your custom needs. The Laudi Vidni website allows to shopper to see their products on a virtual model, and takes the concept one step further by allowing robust product customization to suit a product exactly to your lifestyle and needs.

   

7. Dynamic Grid Expansion / Liquid Layouts -Ecommerce sites are typically designed to work in 1024 x 768 resolution in order to support users with older technology. Trapping your product display in this “fixed width” doesn’t cater well to the increasingly larger percentage of users browser your site at resolutions of 1280, 1440, 1600, yet most current e-commerce sites employ fixed width layouts. Utilize liquid layouts to dynamically size your product display based on the shoppers’ resolution. Alternatives include showing more images/product at once, and dynamically scaling to larger images on both category listing and product detail pages.As a corollary, Ai has found that the “view all” link is the most clicked link on the most ecommerce category listing pages. Shoppers don’t want to page through screens of products – they want to see all of it at once. Consider an infinite scroll metaphor in order to display large sets of products in a scrollable list, rather than asking shoppers to jump page-to-page. Ai implemented an infinite scroll on the PexSupply.com category listing pages. As you scroll down, you’ll notice the number of products on the page automatically increases, with no performance penalty.
8. Minimize UI Cruft – Shoppers come to your site to see your products, not your fancy navigation systems. Yet most ecommerce sites spend a majority of screen real estate dedicated to navigation and ancillary functionality, and a minority of real estate dedicated to product. Modern ecommerce websites will reverse the trend and dedicate 75% of screen real estate to show product, with 25% for supporting navigation, not the other way around.
9. Rich DHTML and AJAX - Dynamic HTML and AJAX technologies have been a boon to shoppers the world over. Instead of having to reload a page every time the shopper clicks, these technologies enable a world of rich interactions that are nearly instantaneous. While not new, most sites are still just scratching the surface of how to use these technologies in a robust manner. Here are some examples of how to take your DHTML into the modern era:
   • Mega Drop Downs – Mega dropdowns offer large panels that are easy to access, break navigation choices into logical groupings, and can feature dynamic or interactive content. Check out the Jakob Nielsen mega drop down article, featuring Ai-designed mega-drop pioneer Action Envelope. Also check out Ai-designed PexSupply.com and BizFilings websites.
   • Robust Wizards & Comparison Tools – Guiding shoppers to products that are relevant to them based on their needs and providing detailed, interactive comparisons between products can be taken to the next level using DHTML and AJAX. Check out Ai-designed Bizfilings Incorporation Wizard and Comparison Guide.
   • One Page Checkout – Why make your shopper click through multiple page reloads, when you can let them complete their purchase all on one page? Ai-designed Steiner Sports and Cache.com websites feature one page checkout.
   • Product Option Selection – Showing product availability in different option combinations (for example colors and sizes) is a common UI problem. Check out how Ai used DHTML and imagery on the Chelsea Clock website to display options availability by clicking change product options from the page linked above.
   • DHTML Kung Fu – Individually, DHTML techniques like promo carousels, tabs, scrollers, and other DHTML widgets can be powerful merchandising tools individually. Combined, they can allow you to take your site to new heights. Check out the Action Envelope home page
10. Get Textual - Designers have been limited to a handful of “web-safe” fonts since the dawn of the web, and have had to hardcode anything else into images, slowing downloads and making custom messaging and personalization difficult and time-consuming. Not any more. With the advent of HTML 5 and font serving technologies such as TypeKit, the web designers’ typographic palette has been opened up as never before. This isn’t just a design nicety, but rather a critical innovation that will allow savvy companies to deliver targeted, personalized message in brand-consistent ways for the first time. The impact doesn’t stop there – not having to use images for any custom fonts leads to faster page downloads and great accessibility of type to search engines and disabled users. Ai has used these technologies on sites such as General Atlantic and Internet Retailer (not yet launched). Alternatives include sifr, cufon, and TypeKit

Our focus thus far has been on strategies that are modern, or next generation. These assume you are building on a solid foundation of ecommerce best practices and test-based user interfaces. Consider the two “bonus” strategies below as necessary pre-cursors to the items listed above.

“Boring” Best Practices - Ecommerce best practices are a hot topic for a reason – they work. Ai has evolved a custom set of best practices for ecommerce over our past 8 years of experience, and applies these as the baseline of every site we work on. Yet some clients we’ve spoken to consider them “boring” and would rather skip right over to the sexier stuff. Our message is this: best practices work. We’ve seen far too many sites where the focus was too heavily on brand innovation or winning awards, and where conversion tanked. Make sure your design efforts are based off well-articulated and understood best practices for the site as a whole, and for each discrete stage in your funnel, from home page down to the checkout receipt.

A quick Google search will reveal an abundance of ecommerce best practices. Some good places to start looking are Jakob Nielsen’s Ecommerce User Experience book, and the Marketing Sherpa and Marketing Experiments web sites.

Test, test, test – Designing a best practices-based web site based on a deep knowledge of your customers and products is a great start. Integrating A/B and multivariate (MVT) testing into your process can take your site to the next level. At Ai, we have integrated testing into all of our design projects for the past few years, and have always seen measurable lifts in conversion and AOV. The kicker is that testing actually saves time and money by short-circuiting lengthy debate and review cycles.

If you are just starting out with testing, try Google Website Optimizer, which is a free tool with limited functionality. For the more ambitious, Omniture Test & Target provides a robust suite of MVT testing and reporting capabilities.

Integrating the ideas above into your ecommerce strategy will take your site to the next level. But how? Let Ai do it for you, or come back in the coming weeks as we delve into each topic above in more detail.

The news that Twitter is getting into the advertising business has exciting implications for companies ready to harness real-time conversations for ecommerce activity.

Companies with products and services to sell will be able to tap into the immediacy of conversations on Twitter and provide targeted offers in real time. Frustrated with a travel booking? Post a tweet and watch as a travel agent enters your tweet stream. Bouncing around ideas on which shoes to buy? Watch an ad for Zappo’s appear at the perfect moment.

If executed well, it’s the kind of advertising that consumers might admit to enjoying. More relevant than display ads and less intrusive than mobile, Promoted Tweets–once the kinks are smoothed out–could be downright useful.

Consider: C.C. Sabathia of the New York Yankees pitches another great game and completes his no-hitter. People (including, probably, this author) are tweeting rapidly about the feat, starting in the middle innings and hitting a crescendo around the end of the game. As the volume hits its max, Steiner Sports (an Ai client) inserts ads into the chatter: “Buy Sabathia’s game-worn jersey from his no-hitter! Get details now.” Instantly thousands of people are tuned into an item that might appeal to them at the moment of its maximum appeal. It’s search marketing for conversations.

Twitter’s conversations are essential, of course, and Promoted Tweets will have to be obvious without being intrusive. With the right execution, though, they will be huge.

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.

One of the most enlightening sessions I attended at SXSW this year was Andy Baio‘s Gaming the Crowd: Turning Work into Play. I went for fun and left full of insights and ideas.

Andy’s thesis (similarly referenced by some presenters at GDC 2010) is that creating game environments can positively impact human participation and performance. From the surprising “fun” angle cited by Amazon Mechanical Turk participants to Target’s cashier scoring system, game environments bring an element of entertainment to activities that could easily be seen as mundane. A hint of competition and achievement–communal or individual–triggers a desire to operate at peak performance, strongly improving results. (Beware the leaderboard, though! Create a top-ten-users list and prepare to battle folks that game the system.)

I’ve spent considerable time the past week thinking about the potential this has in the ecommerce arena, where Ai spends the bulk of its time. How can shopping elements be crafted to encourage people to think in terms of achievement? What are the potential implications for social media outreach? How can a site include top-tens without resorting to the absolutes that discourage some participants?

I’ll be looking for examples of gaming in ecommerce in the coming weeks. Feel free to post links in the comments.