Posts tagged: Internet Retailer

You ARE a technology company

In this day and age, pretty much every company is heavily dependent on technology to operate. But if you have an e-commerce operation (or really any sort of transaction website), you are a consumer technology company. The sooner we recognize and accept this fact, the sooner we can get on with leveraging it to our competitive advantage.

We often talk about focusing on our “core businesses” at the expense of everything else. At a conference I attended last week, I heard a number of speakers and attendees reference Amazon as a “technology company” as sort of a dismissal. They were basically saying, “Yes, Amazon has lots of great features and functionality and people rate their experience highly, but they’re a technology company. We’re retailers. We can’t compete on that level with them.” This type of statement draws the obvious retort: “So, then, on what level do you plan to compete?”

While Amazon does generate some revenue from selling technology services, the vast majority of their revenue comes from retailing products. Their financial statements look pretty much the same as most retailers (except they have much bigger numbers and growth rates). But Amazon and other pure play online retailers are not burdened with the type of legacy thinking that exists in a lot of multichannel retailers. They understand full well the value of creating a quality online experience, and they understand that technology is part of their core business.

Competing with Amazon is clearly very difficult for a variety of reasons (price being high on the list), but how many business elements can we abdicate to them before our very survival is at stake? Shifting our mindsets regarding our sites is one key way to claw back into the game.

Our websites are consumer software applications, in many ways like Microsoft Word or Quicken. And this means that online our business is technology.

People use our website applications to accomplish tasks like buying our products, learning more about our products or getting inspiration. Their perceptions about the quality of our applications can absolutely make the difference in whether or not they complete their tasks and whether or not they return to use our applications again.

And their perceptions of our brand can also be influenced by the quality of our site experiences. A study by ForeSee Results on the Internet Retailer Top 100 sites found that people who were satisfied with the online experience of a retailer were 44% more likely to purchase offline. That indicates significant value in making sure the website is a quality software experience.

Our websites are also an opportunity to differentiate from our competitors, particularly if we’re not selling proprietary products. If consumers can buy the same North Face jacket or Nikon camera from a variety of different retailers online, the quality of the online experience will be a contributing factor in the decision.

Let’s do what it takes to include the quality of our site experience in our value proposition.

Here are 3 ways to get started towards becoming a consumer technology company:

  1. Organization
    We will likely need to make organizational structure changes to support a consumer technology focus. I previously made a case for changes in E-commerce IT organization that goes into more detail, but suffice to say the technology strategy and the business strategy need to be not only aligned, but integrated.

    Furthermore, we need think about different types of roles. Software companies have product — not project — managers and product teams who are dedicated to building customer focused product strategies and life cycles. A quick check on the Amazon careers page reveals many product management positions. Do you have product management positions in your organization?

    Check out a typical set of responsibilities from Amazon’s Baby Registry product management gig and note the mix of business and technology functions and responsibilities:

    • Research and identify opportunities for Amazon to further distinguish our Baby Registry offering.
    • Define a long-term product roadmap, including technical, business development and marketing initiatives.
    • Develop new strategic partnerships ad drive day-to-day partner relationships.
    • Conduct business and financial analysis, including forecasting, monitoring, and reporting.
    • Define requirements, and drive customer experience projects and work with all relevant cross-functional areas and our technology teams to guarantee smooth, efficient implementation.
    • Manage bottlenecks, provide escalation management, anticipate and make trade-offs, balance the business needs versus technical constraints, and maximize business benefit while building great customer experiences
    • Work cross-functionally with designers, software development engineers, salespeople, product managers, and other internal partners.
  2. Budget/Investment
    How might our current budgets change if we considered ourselvesĀ  technology companies? Maybe not at all, but we should nonetheless re-examine our customer investment strategy in such a light. At the very least, we might consider revamping our budget processes to accommodate a fast moving, highly innovative competitive marketplace where the features and functionality of our website “product” are key parts of our business strategy and our ability to differentiate from our competitors.
  3. In house or outsource?
    Often we decide to outsource technology (and other elements of our businesses) because they are not “core” to our business and other people can do a better and more cost effective job. How does our thinking on outsourcing change if we consider ourselves technology companies? We might still legitimately consider outsourcing or licensing third party software, as many software companies do. However, we might also consider building up true competencies in at least some areas of software design and development because of the need to differentiate and deliver quality branded experiences for our customers.

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Recognizing and accepting the fact that developing an e-commerce operation puts us in the consumer technology business is an important first step to successfully competing in the online marketplace. Once we’ve achieved the consumer technology mindset, we’ve got to take steps to create an organizational structure that executes like a consumer technology company. Without such steps, we will fall further and further behind the companies who are leveraging their technology focus to create the positive customer engagement cycles I discussed in my previous post.

What do you think? Do you think being in e-commerce means you’re in the in consumer technology business? How is your company organized?

Photo credit: Sebastian Bergmann


Conversion tip: Don’t block the product with window signs

My friend Bryan Eisenberg is always telling retailers, “You don’t have traffic problems. You have conversion problems.” When 95+% of the people who come to a site don’t purchase, it’s a hard point to deny. Could giving customers quicker and better access to the product be one way to start to solve the conversion problem? My experience says Yes.

A quick story

Imagine walking into a store and smacking into a giant promotional banner that stretches from the ceiling to chest level. Below it and to its right hang a series of smaller promotional banners. A few feet behind the banners, you see a series of doors with signs above them that appear to represent different product categories. You push through the banners and open the door under the “Dresses” sign. There you step into a room where a flashy video projected on a large wall highlights stylish dresses and beautiful models and also runs copy about the same promotion you saw on the banner at the front of the store. The wall to the right features several smaller signs for various promotions. The wall to the left is littered with 20 or 30 doors, each with a sign above it for what appears to be a type of dress.

Nowhere in the room are there any dresses.

You pass through the door labeled “Casual dresses” and finally see actual merchandise.

Does that story seem ludicrous? Then why is that basically the experience on so many retail websites?

In brick and mortar retail, we use promotional signs in our windows to draw people into the store, where we expertly display lots and lots of product to customers the moment they walk in the door. We certainly reinforce our promotional messages with signage throughout the store, but we never block the product with the signs. On our sites, our promotions seem to be more important than our products. What message are we sending to our customers about the value of our products when promotions get more prominence than the merchandise?

When customers arrive at our home page, they’ve already effectively entered the store. So, why are our “window signs” blocking the product?

Apparel and department store sites seem to have almost uniformly adopted the experience described above, but most other retail sites that I’ve seen don’t stray too far from “the window sign” experience. Consumer electronics and computer sites often feature a few specific deals or featured products, but otherwise they generally follow a similar approach. In fact, about half of the Internet Retailer Top 25 sites on my recent viewing didn’t show any products on their home pages, and the remainder only displayed a very few select products.

Are we missing conversion opportunities by taking too many pages to get to the products?

Certain retail categories, like apparel, books, jewelry and flowers/gifts to name a few, seem to have large customer contingencies who are prone to browsing to see what’s new. Physical stores in those categories absolutely cater to the desire of customers to check out the latest stuff, but the web sites seem to assume customers are only interested in promotions. Or are the promotions simply the result of our own self-interest? What percentage of customers click on the promo spots versus hitting the search box or clicking into a department or sub-department? If it’s a fairly small percentage, perhaps a different approach might pay off.

A case study

When we launched the new Borders.com last year, we knew that about half our customers came to the store looking for something new to read without a specific book in mind. As a result, we created the Magic Shelf, a virtual and interactive book shelf that housed up to 120 books in an easily browsed application.
And we placed the Magic Shelf in the most prominent position on our home page — front and center. The decision to offer such valuable real estate to this new feature was hardly unanimous, but those of us who supported it won at least enough support to give it a try.

The result? Not only did customers say they loved it, those who interacted with the Magic Shelf converted at a rate 62% higher than those who didn’t. As we dug deeper, we discovered that the reason they converted more was that they viewed about 41% more products than those who didn’t interact with the Magic Shelf. (If you’re interested in more detail, you can download the case study we did with Allurent, the vendor we used to develop the Magic Shelf).

How might the shopping experience change on an apparel site if there was prominently placed virtual rack of some sort that allowed customers to easily browse, on one page, a wide selection of the latest styles? How about virtual jewelry cases or flower bins?

Ann Taylor trendsetting

The new Ann Taylor site design has made some strong strides towards a nice product browsing experience. While they still seem to feature window signs on the home page, their landing pages provide a very nice browsing experience where customers can easily peruse lots of merchandise. The product images are very clean and easy to see, and the page layout lends itself to the ability to occasionally replace one of the product spots with a visible but unobtrusive promo spot. Bravo to Matthew Seigel and the team at AnnTaylor.com!

I’m not sure it’s necessary to replicate a physical fixture to achieve the benefits of great product browsing. To me, the key is giving customers easy access to our merchandise and letting them very easily view lots of different items. That basic concept is something we discovered long ago in the physical retail world. How did we lose sight of it online?

What do you think? What is the thinking at your company? What sites have you seen that do a good job giving access to the product? Or, are the current methods working for you?


Retail: Shaken Not Stirred by Kevin Ertell


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