System iNetwork

December 4, 2007

Walking in an Online Wonderland

With the holiday season upon us once again, retail-market System i users, along with many others, are casting eager glances at their websites in hopes those outlets will add a solid contribution to the bottom line this year. While it's getting to seem as traditional as candy canes for marketers to proclaim that this will be the year Internet shopping will really break through, one thing that is different this year is availability of a wider variety of sources providing more concrete information about Internet shoppers and their habits. Because this information applies to websites on any platform and good ideas can come from anywhere, let's take a quick tour of some highlights.

Whether or not 2007 proves to be a "breakthrough" year, consumer confidence in buying over the Internet is growing, despite all the horror stories of identity theft and misappropriation of credit card numbers due to inept security at some retail sites. In a survey released just yesterday, Safe Home Products, an online retailer of safety and health products, found that 95 percent of people who have previously shopped online during the holiday said they plan to again, 85 percent said they'd visit old and new sites as part of their shopping regimen, and 65 percent of them said they plan to do more than half of all their holiday shopping online. (And contrary to the mass media's hyping of Cyber Monday last week, 74 percent said they would not be shopping from work.)

Trend Micro, a network antivirus solution vendor, recently announced the results of its third annual Internet Confidence and Safety Survey, which it conducts twice a year of 1,500 international users. Among U.S. respondents, the percentage of shoppers who view the Internet as "very safe" increased from 45 percent last February to 53 percent this past August, and those who believe the Internet will become even safer in the next six months rose from 26 percent to 32 percent over the same time period. The survey also reports an increase in what it calls "riskier behavior," showing a 9 percent increase in shoppers who do banking online and an increase from 12 to 16 percent who say they use WiFi in public locations for online transactions.

The question of what makes a website attractive to shoppers has been a perennial source of speculation and research. One new source of information on that score is Internet Retailer magazine, which in its December issue begins a new tradition of selecting a list of "Hot 100 Retail Web Sites," pointing out some strengths in sites it singles out for kudos. "Market leaders . . .stand out [because] they create striking and effective site designs, do something critical such as site search better than the rest, take risks on new concepts and technologies such as social networking and Ajax, set trends such as m-commerce [buying and selling via mobile electronic devices] rather than wait and see, and know their customers extraordinarily well, exceeding their desires and needs," summarizes Bill Siwicki in the cover article. Examples cited include 20,000 pages of content from experts and an online forum at Bodybuilding.com, information and repair how-to's on major appliances at RepairClinic.com, downloadable widgets that link directly to their website for J.C. Penney's JCPToday site, product and instructional online videos at BestKiteboarding.com, and a product-sorting algorithm at AbtElectronics.com that helps buyers quickly find what they need among 10,000 different offerings.

Customer reviews can also play a big role in attracting buyers. Although Amazon.com was a pioneer in this area, PowerReviews, a site that specializes in customer reviews and social merchandizing solutions for online retailers, has examined this more closely and unveiled some specific findings. "Social Shopping Study 2007" studied 1,200 people who shop online at least four times, and spend at least $500, each year. The study identifies 65 percent of those customers as "Social Researchers," a label it assigns to shoppers who actively seek out and read reviews by other customers before making purchase decisions, either always or "most of the time." 78 percent of them spend at least 10 minutes reading reviews, 76 percent feel "top-rated product" lists to be extremely or very important to their decisionmaking, 64 percent research products this way no matter where they end up buying them, and perhaps most surprising, 82 percent felt reading reviews was a better method of researching purchases than in-store sessions with a knowledgeable sales associate. The process of making purchase decisions based on cues from other users, whether in person or electronically, is called "social navigation," and 76 percent of the Social Researchers said they were more likely to shop at the sites of retailers who offer it as opposed to those who don't.

Yet another survey points to e-mail enticements, providing immediate access to information throughout the entire purchase process, and prompt after-sale followups as critical in building online buyer loyalty. The Online Retail Report, released last May by RightNow Technologies, a company that specializes in helping companies develop frontline sales services, surveyed 2,873 adult U.S. online shoppers. Of those, 68 percent said they were prompted to browse a web site after receiving an e-mail message from a retailer, 73 percent said they would appreciate post-purchase followup communications, and 42 percent said they would prefer to be able to find information they need online by themselves during an online shopping experience.

Maybe this seems like a lot of advice to follow, but follow it you should, as Yoda might say. Or, maybe not . . .

To bring this discussion back to at least an IBM-specific context, I'll close with pointers from a book, Do It Wrong Quickly: How the Web Changes the Old Marketing Rules, published in October by IBM Press. Written by Mike Moran, one of the builders of the ibm.com website, this book advocates not even worrying about whether or not you're actually following the right advice on your website. Instead, you should simply keep trying new techniques and methods one after the other until you find something that works. According to Moran, it's cheaper to try something, study the effects, and be prepared to try something else immediately if that doesn't pan out, than to develop and execute a cautious online marketing plan. Studying the metrics of how users behave on your site and watching how they "vote with their mice" is the fastest and most reliable way to figure out what the people who actually make it to your site like and don't like. In this, he seems to echo Internet Retailer's counsel to "take risks on new concepts and technologies."

It's a reindeer-eat-reindeer world out there. Happy hunting . . . and happy holidays.

Posted by at December 4, 2007 1:52 PM