The pulse of Alexander Interactive

While I was sitting on the couch at my family’s house last Friday casually surfing the sales online via my iPad, I realized that I was having a lot of trouble processing what offers were “Black Friday” deals and what purchases I should wait on until the real sale kicks in. Should I buy it now and get free shipping, or wait until Cyber Monday to get it at a deeper discount? Would it be discounted? Would there be any left? After asking family members about their online holiday shopping strategies it became clear: nobody knew what to expect when it came to Cyber Monday sales.

It appears that it is intentional on the part of retailers. Rather than playing the “compete on price and discount” game with other retailers wherein they slash their margins just to steal eyeballs, they are choosing to encourage and reward their most loyal (and patient) customers with more specific offers in the days that preceded and followed Cyber Monday, as Alex highlighted this Daily Reflector article yesterday.

Even more, the walls between the physical store and the “cyber” store have evaporated for most retailers. No longer is it relevant to have separate sales in-store for “Black Friday” and online for “Cyber Monday” for the same products. Empowered with smartphones, the mobile price check has become the weapon of choice for price-conscious consumers who will often carry the Cyber Monday deals into the store to garner the same discounts on the same products by the method that’s most convenient for them. This realization Alex also discusses in AOL Daily Finance reinforces the idea that consumers see one brand across all shopping channels, forcing the physical/digital price parity that is apparent this year.

As for me, I’ll just wait and see what special tablet-only private deals I can get from my favorite stores through their iPad apps.

Now that we’re firmly in the age of mobility, buying online through a computer may appear obsolete  for some consumers. With a click of a button on your smartphone (which is always on) or your tablet (which is always on standby), you can access your favorite online merchant from anywhere.

It appears though that of our mobile devices, tablets are taking a lead when it comes to e-commerce. This comes in spite of their rather recent re-introduction, marked by the iPad’s 2010 launch (previous attempts to make tablet PCs didn’t survive long enough to be remembered).

According to the results of a Forrester report published on Forbes Blog, 9% of online shoppers have a tablet device, and while they already have other mobile devices, including smartphones, their preferred method of shopping is (you guessed it) their tablet. And while the iPad ruled the tablets’ market for a while now, the debut of Android’s Honeycomb this past February brought a strong contender to the market with a stable and attractive tablet-optimized OS that is now available for all manufacturers to use on their new tablets (look out for highly anticipated devices from Amazon and Sony coming soon).

With all this kind of momentum gathering, one thing is certain… “t-commerce” is the next big thing.

Ai’s clients have witnessed the evolution of tablet visits firsthand. Between May 2010 and 2011, the iPad visits grew by 782% for one of our clients and by 433% for another, while those clients’ iPhone visits only grew by 146% and 99%, respectively. The iPhone has been out since 2005 whereas the iPad came out in 2010, but such explosive growth for the iPad makes it clear that the tablet, as a traffic and revenue source, cannot be ignored.

As Bill Siwicki of Internet Retailer put it, “If you haven’t already created an m-commerce site or a mobile shopping app, now is the time. It’s not too late.”

For more insight on how to optimize for the tablet wielding consumer, see Alex Schmelkin’s post Make Way for T-Commerce.

The war on low-quality content and content farming kicked into high gear last February when Google released “Panda”, an update to its complex ranking algorithm. According to Google’s official blog post “the update was designed to reduce ranking for low quality sites – sites which are low-value add for users, copy content from other websites or sites that are just not very useful.” But as anyone in the field would expect, SEO pros and website owners immediately began debating the merits.

This change brought back memories of the uproar over the 2003 update “Florida” that took some of the highly ranked sites by storm. With “Panda” there were websites that were highly ranked before February 24 that became endangered overnight, some witnessing up to a 40% drop in traffic.

So is Panda fair?

Theoretically, yes. According to a May 6 post on Google’s Webmaster Central Blog, “More guidance on building high-quality sites,” the algorithm mirrors Google’s mantra that website owners should focus on building great sites, not trying to fool the search algorithm. The post includes some examples that seem easy to measure, like spelling errors or duplicate content. Other quality definers are being introduced periodically and in scattered places like the page loading speed, which wasn’t mentioned in the guide but available in a Google Analytics update post. Another clue is the author tag, which was posted on Google Webmaster Central. But other examples for defining a quality website appear dubious or highly subjective. How could an algorithm reasonably measure, for example, if an article includes “both sides of a story,” or if you’d “expect to see this article in a printed magazine or book”?

Putting theory aside, what really happened is that some of the sites that re-publish content outranked the original source of the content. Google responded to this issue with an update, Panda 2.2, that has been approved but not yet released.

With the stir the Panda algorithm update had caused, Google officials stated that this is just one out of 500 algorithm updates they are intending to roll out through 2011. Let’s hope the next update won’t be called “Dodo”.

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.

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.

Talk about a nail in the coffin: Comscore has declared an 80/20 rule on online ads, with an updated study reporting that only 16% of users click on ad banners. Worse, the study says half of that population accounts for a staggering 85% of ad clicks.

Study author Linda Anderson is right when she notes, “Marketers who attempt to optimize their advertising campaigns solely around the click are assigning no value to the 84% of Internet users who don’t click on an ad. …” Clickthroughs no longer reflect whether a run of ads is successful. Integrated campaigns are a must, and banners should be assumed as valueless in terms of driving traffic.

What do ads do, then? Done well, they can create context, awareness and recall. See enough Sony Cyber-shot ads and consumers will remember that Cyber-shot is a brand name with immediacy and relevance.
But the users seeing them won’t be clicking on those ads, no matter how large they get. Nowadays, that’s what search and social media are for.

I received in email today an invitation to be in a research study tracking web searches. The teaser for the study says:

“In this study, we’re interested in learning more about how people use search engines to find information on the Web. … The duration of the study is 3 weeks. To participate you will need to … be willing to install a small piece of software on your home computer that will log your web browsing & searches [and] answer a few simple questions related to your searches on a daily basis (for a 3 week period).”

The research group is offering $200 for participation, which seems like a rather paltry total for the privacy invasion it invites. But the question is a good one for the masses: how do we use search engines to find information on the Web? So obvious yet so undefined.

I decided to peek at my own Google queries on my work computer to analyze themes and trends. I consider myself a pretty solid, if shallow web searcher: I can almost always find what I’m looking for, though I tend to rephrase searches to find better results than dig past the first 20 or 30 results.

Some of my own trends, exposed:

• I use quotes. A lot. Many of my searches force Boolean-style operations on Google, allowing me to pinpoint terms as written. I find a lot of proper nouns this way, such as “dan gingold” “mach five”, which helped me track down my former coworker’s band. (I have Pandora to thank for that one. And Dan is now my Facebook friend. Natch.)
• I do a lot of iterative searching, as noted above: “fountains of wayne” then “fountains of wayne store” then “fountains of wayne closed” and “fountains of wayne timely demise.”
• Maybe I shouldn’t admit this, but I have a whole bunch of mp3 searches in my results, for when I want to hear that one song one time at work.
• I use Google Maps a lot, and I apparently fine-tune my mappings a lot–I’ll do a town-to-town search, then I’ll put in the specific destination, and then tweak my settings somehow. (So restless.)
• I also use Google for a lot of searches that could take place on the site itself, because it’s easier just to do the google. I have dozens of people’s names with linkedin in the search, and many references to aiaio or Timely Demise from cross-referencing my own archives.

I’m sure there’s more insight to be had, but that’s quite an interesting start. How do you do the google?

The little coffee shop on West 21st Street has, dangling under its potato chip rack, a row of flip-flops.

I pointed to them today as I bought my pretzels. “Sell a lot of flip-flops?” I asked the owner, an affable woman who’s always manning the register.

“You know, we open sometimes on Saturday nights, when the weather’s cool,” she explained to me. “And all the clubs around here, they don’t let women in wearing flats. So all these girls come out after wearing their heels all night, and they say to me, ‘Do you have flip-flops? I’d pay anything for a pair of flip-flops!’

“So, we got some flip-flops. I know how they feel–I once spent $20 on flip-flops after a night like that. But they’re all college girls, you know? I don’t want to rip them off, so I just charge five dollars.”

Have your customers voiced unexpected needs to you? How are you solving their problems?

OK, Mr. or Mrs. Consumer, riddle me this.Which of the above buildings sells pizzas, and which sells radios?

I ask because of some aggressive and misguided rebranding efforts going on by major retail chains. In an effort to both be trendy and transcend an existing identity, they’re seizing the playful halves of their names and marketing around them.

Which sounds great, until you take them out of context.

Pizza Hut thinks its consumers already use “the Hut” as shorthand, so they’ve embraced it as a marketing initiative. That’s fine enough, but it doesn’t scale. The Hut doesn’t mean anything if it’s not related to mealtime and pizza, and it won’t catch the eye of someone looking for food.

Meanwhile, Radio Shack has decided to do the same thing. They, too, say their shortened “the Shack” is used by devoted fans, and that the name is more trustworthy than the official brand. Except, erm, it really isn’t.

When does a nickname imply trust? When it comes from a customer, it says, “I go here all the time,” which can be construed as, “I trust their products.” When it comes from the corporate mouth, the message is,

“You should be my friend,” not, “You can trust me.” It feels entirely different.

But my biggest complaint is with the brand identity these nicknames create. Not only are the messages missing their mark, but they’ve gone so far as to become more or less identical. What do they mean? Tell your coworker, “I’m going to the shack and the hut at lunch,” and see what happens.

I’m all for nicknames; my coworkers have several for me (and probably a few that I don’t know about). But the best ones are descriptive and add warmth and depth to the thing they describe. Shacks and huts, for all their marketing efforts, don’t really do that.

Ecommerce startup Alice got some nice business press last week around the launch of its site.
The concept, say the founders, is a novel one: they’re acting as a clearinghouse for CPG products, and compiling consumer data to share back with manufacturers. Rather than buy wholesale and sell at retail, Alice is only a platform, taking a fee for sales. Manufacturers control the pricing, and the fees pay for across-the-board free shipping.
On the surface, this sounds like an innovation. But is it really so different from what has come before? Amazon has a wealth of services designed to let companies sell direct to consumers, aggregate data, and defer shipping responsibilities–just like Alice.
Other not-quite-a-third-party structures have been attempted online, too, just not with exactly this structure. Consider Gloss, which was a “brand neutral” ecommerce site owned by three different cosmetics companies. Gloss.com operated as an independent entity, with the three owners paying relative shares of the operating costs (and the profit, theoretically). Sounds a lot like Alice, just with a different ownership structure.
Alice is a novel approach to retailing as an ecommerce site; the UI has lots of interesting details that will be reviewed here shortly. But the business model, while clever, is less than all-new.