eTail 2007 Wrapup: It is Time to Separate From the Herd
By Raghu Kakarala on Tuesday, February 20th, 2007Last week the top internet retailers in the country convened at eTail 2007 to learn what their peers are doing, listen to vendor’s pitches of new products and services, and to commiserate about the state of their industry. In my post from the conference last week I had commented on the recent lack of innovation in online shopping. Over the last three years merchants have moved progressively towards what has become a fairly homogenous online user experience that caters to the same mode of browsing and transacting as each other’s websites. Imitation may be a form of flattery, but if form follows function, then in the case of online shopping, banality follows form.
Online shopping has in reality been reduced to online transacting. Seek this one thing, find that one thing, maybe compare prices, then check out. 1 + 1 = 1.1 = something less than the whole. The building of desire? The premise that shopping should be engaging? Maybe at next year’s eTail. Or the year after that. Or never. Maybe it’s time to accept the fact that this is the business of ONLINE shopping, and not online SHOPPING. Maybe it’s about the medium and not the act?
That’s what it seems like today. The onerous burdens of the internet retailer to streamline technology and operations, to market the site in search engines, to keep their heads above the latest calendar-driven buying surge have driven innovation to the back of the “to-do queue”. Innovation - isn’t that the job of the next technology vendor? A slightly faster search tool, a multivariate test platform, a 0.05% improvement guaranteed or your money back technology elixir. All fine and well. But what if the industry could look out further than this month’s results? What if they could rise above the day to day grind? What is missing? I say at a high level it’s a sense of fun.
Fun? Yes, Fun! Not laugh out loud entertainment, at least not for most types of products. But how about at least a sense of discovery, of desire, of something a level above the pablum of the competition? If there are three basic pillars of online retailing, they would be operational efficiency, marketing efficiency, and conversions. A few retailers have achieved an operational advantage over their competitors via technology, fulfillment processes, and scale. Some have achieved an advantage of driving qualified traffic to their websites through search engines and affiliates. But who has led in conversions? Ask most industry experts and they will point to conversion ratios in order to rate the winners. Click to Product to Cart to Checkout. Mission accomplished in their book. They will pepper that user with some email campaigns, a discount here and there and wait for them to come back. Maybe they will type in the URL this time and save the retailer $1.50 charge from Google.
But what if shoppers came to your site because they really wanted to? What if they experienced something unique, engaging, even dare we say it: fun? There are several ways to express this concept in different terms. What if shopping online was more social, more collaborative, more educational, more engaging? What if ONLINE shopping became online SHOPPING. Or what if someone threw caution, and e.e. cummings, to the wind and capitalized both words, “ONLINE SHOPPING”, and created something worth seeing, doing, and doing again?
I think something is coming to help make online shopping fun. It just isn’t coming from retailers. It’s coming from outsiders like social networks where products can be promoted by buyers’ peers. Its coming from magazine publishers who are going to attack with a vengence. They will not bog themselves down with operational concerns, they will not seek to compete in the traditional online marketing channels as internet retailers, they already have traffic, and they will build more through word of mouth and the nework affect. The good ones will get stronger and more powerful at a very quick pace. These sites will not hold inventory, they will not plow money into google keywords, they will send their qualified, engaged traffic to the online shopping sites, for a fee. Their margins will be in the mid double digits rather than the high single digits of transactional websites.
So when People Magazine realizes that their InStyle website should not look like this but should look like this then users will flock to the site. The magazine will be useful online. It’s already engaging to users offline. Conde Nast is beginning to get it and they have a bevy of content to expand this vision. Scripps gets it and has a powerful stable of multimedia content plays to bring to bear.
These are the companies that help build desire, that help create buzz, that engage their customers through their multiple channels of content. While online retailers are homogenizing their shopping experiences the here-to-fore dormant giants that help build desire, and the new age social networks that have created communities that spread desire are preparing to close in and take the high ground. The high ground of traffic and lead generation. And retail shops will pay, a lot, for that traffic and for those leads, and thereby label themselves as low margin impediments to purchases rather than the high ground of creating desire and providing true value.
It might take a couple of years for this to play out. But I see this as something that will play out. And major retailers with a sense of initiative (and budgets) have a tight window to decide on whether they will invest in content, features and partnerships to bring the “fun” back to shopping. Or resign themselves to being transaction vehicles with an ongoing operational focus.
Great way to put it: “the business of ONLINE shopping, and not online SHOPPING”. I agree completely that technology and eeking out fractions of percentage points of improved profitability and sales have been the focus of e-commerce in lieu of the overall experience. It’s because internet retailers are measured by their comparison to the offline brick-n-mortar counterparts. “Our site is the equivalent of 2 of our offline stores”. We hear that all the time.
So is it commerce or is it branding? Is it more important to tweak the ROI or to influence future, offline purchases?
Maybe we strike the term “internet retailer”. Maybe every company that has a website is selling something. Some are directly selling their products/services. Some are selling you on their brand. Coke surely doesn’t build their sites in order to have someone buy a Coke online. But they are selling you on the idea that when you have a choice, you should buy a Coke. And the companies like that, the ones that don’t expect to sell you directly on their site (automotive brands and beverages are good examples), seem to be the ones with the best user experience. Coincidence? I think not.
Is the world really searching for a new way to have more fun shopping online? Is passing qualified traffic from a content site to a retailer really a new frontier in the online shopping world? Or have I drastically missed the point?
I think the Internet is one of the channels a retailer has to offer to be as successful as possible. Each channels offers its own advantages, obviously. To me, the Internet as a channel offers the ability for the consumer to get as close as possible to ‘perfect information’ - the ability to make sure the product they are getting them offers the best price/value/solution to meet their needs.
It offers the retailer the opportunity to spread their value proposition (be it price, selection, customer service) to more eyeballs more cheaply than is possible with a catalog or a storefront or a TV or print marketing campaign.
I’ll go back to my reply from your previous post though - I still think the biggest gains for retailers will come from focusing on the nuts and bolts of their operation. Partnerships with content sites? Sure - let the content sites focus on that, as they have been since the beginning, and then let them pass that traffic through to the retailer to sell the goods/services.
What is “new frontier” about that? I must be missing the point.
I think maybe you’re getting hung up on the word “fun”, which I agree that might not be the best word. It’s the idea that you want the user experience to be great. What seems to happen on most e-commerce sites is that they look at the standard X’s and O’s of e-commerce/technology and all of their efforts go in to making sure those efforts are optimal. But they miss the “experience” part of the equation, which I think is big.
We are starting to see some e-commerce sites using new technology that lets you create a version of yourself (ok, I’ll say it, an avatar) and then put clothes on them, spin them around, see how the clothes look in combination with other items, etc. That’s a great experience, but sites that aren’t trying to directly sell (like the automotive companies) have been doing things like that for a long time now, b/c they are focused on the experience more so than the direct ROI.
And for the bigger retailers the website is a tiny blip on their revenue radar, so why not spend a little less time on tweaking the call out to say “Confirm Order” vs. “Buy Now” and a little more time on making the experience itself more enjoyable.
And that is part of the issue I have - it’s hard to decide to spend something on ‘more enjoyable’ because you can’t pinpoint that ‘more enjoyable’ equates to more $.
I still missed the connection between a good content provider and the ecom retailer that accepts the passthrough of traffic and ultimately sells the goods. I still don’t understand the position of that jump in logic and what difference it makes to the point of the article.
I’m just not aware of the public outcry for a better shopping experience on the Net. I have experience myself with companies that provide MISERABLE site functionality that make it difficult for me to browse what they have (regardless of it the site also contains the level of ‘good experience’ that you guys are talking about), can’t ship what I want in a timely manner, can’t tell me when it’s shipped or when it will arrive, and then can’t provide good customer service to post-sale.
And that doesn’t even begin to address the fact that large majority of products that are available for purchase in the world aren’t available for purchase online, so I don’t get the benefit or value out of inventory that a small merchant in the Northeast has sitting in his store, for example.
That should be one of the biggest values of the Net for me as a shopper and for the guy in the Northeast as a retailer - he can help me find and purchase something that I otherwise would not be able to consume.
Those are nuts and bolts. For the most part, the Internet is lacking in those aspects in my opinion - even without a fun site that provides good experience.
Just help me buy something I already want. That’s the core of what people really want, isn’t it?
[By the way, has this now set a record for most replies to a Spun blog post? I hope it has, so I can say I was a part of it. I love reading the posts here - I just wish you guys would take advantage of that fun experience and offer me some adidas soccer stuff for sale while I’m here.
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thanks for the GREAT post! Very useful…