Another day in Cyberworld – State of Retailing Online 2007

eTailers are continuing to improve online marketing and offerings for sophisticated and consistently positive customer interaction. This responds to ever-increasing web-savvy and expectations of online shoppers. – Such is the conclusion of a survey of 150 retails by and Forrester Research called ‘State of Retailing Online 2007′, which report was published this September.

The survey scores the following initiatives of top priority: “fixing Web site design and performance issues, improving the efficiency of online marketing, and enhancing cross-channel integration.”

Focus On The Basics

It is amazing how incredibly unsophisticated retailers still are, if you look at their plans: “Fixing product detail pages will top retailers’ Web site to-do lists for the next 12 months. According to the survey, 88 % of retailers plan to focus on improving content presented on product detail pages, with 80 % adding alternative images, 72 % incorporating lifestyle photography, and 63 % integrating customer ratings and reviews.”

So, online retailers are merely realistic about the web being a shop front that has to look as great and be as convenient as any shop window and front door. “Retailers are also focusing on their home pages, integrating top sellers and “what’s new” sections, and making their Web sites more sophisticated, with drop-down menus and rollover lists in navigational areas.” states the report.

Finally, we’re going to see some real customer interaction online, or so it seems. “To differentiate themselves from competitors, online retailers are also making customer service a priority. 33 % of companies planning to invest more in live chat and 53% planning to enhance their guest checkout process within the next year.”

I completely agree with S. Mulpuru, the Forrester Researcher and lead author of the report that “It’s encouraging to see more retailers planning to integrate customer feedback loops into their sales processes.” As we know, “many retailers have been relying on site analytics data, which is strong at reflecting paths-to-purchase but typically weak at highlighting vulnerabilities or opportunities for improvement.”

Budget Allocations for Customer Acquisition vs. Customer Retention

The study reports that “online retailers continued to allocate the majority (51 %) of their marketing dollars toward online customer acquisition tactics and an additional 24% to online customer retention programs.”

“Paid search continued to be the most effective marketing tactic for customer acquisition, and email marketing retained its position as the most effective — and budget-friendly — tool for customer retention.”

According to the survey, retailers find that emails about new products are more successful than simple transactional and sale messages. 73% of retailers email customers about new products, and 51% rated the method as ‘very effective’.

While Web 2.0 and Social Computing continue to receive a great deal of attention among senior marketing executives, the survey results indicated that these tools are very much in their infancy as marketing tools for retailers.

Integrating Channels, Finally

Retailers understand the value of operating in multiple channels. Survey respondents said that 43% of catalog customers have also purchased from their online store and that 35 % of online customers have also purchased from their bricks-and-mortar store.

Online retailers reported that in 2006, they dedicated on average 18 percent of their marketing spend to cross-channel sales, up from 13 percent in 2005. Typically, such tactics included direct mail initiatives such as catalogs and email programs to drive customers to local stores. However, more retailers are also leveraging direct print mail as a way to increase online sales. According to the study, 66% of retailers measure the success of a catalog by how it increases Web sales.

“The perception that catalogs are a dying breed could not be further from the truth,” said Scott Silverman, executive director of “For online retailers, catalogs are an incredibly important tool for acquiring new customers and providing current customers with their first look at new products. Retailers understand that many consumers get a catalog in the mail, then buy the item online.”