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THE ALL-IN-ONE SOLUTION Is responsive design the answer to the multi-screen challenge? E-commerce strategies for b2b merchants Online video takes center stage FEBRUARY 2013 www.internetretailer.com

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Page 1: Internet Retailer 201302

THE ALL-IN-ONE SOLUTIONIs responsive design the answer to the multi-screen challenge?

E-commerce strategies for b2b merchants

Online video takes center stage

FEBRUARY 2013www.internetretailer.com

multi-screen challenge?

Page 2: Internet Retailer 201302

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Page 3: Internet Retailer 201302

There’s nothing like that “just right” feeling when the design fits the device. For Eataly.com, WebLinc’s

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Page 4: Internet Retailer 201302

2 Internet Retailer February 2013 www.internetretailer.com

newsline 6Mobile and social drive e-commerce growth in India;

Target rolls out a price-match policy; Amazon takes on iTunes; U.S. m-commerce sales hit a new high; more.

didyouknow? 12U.S. mobile ad spending; how many consumers read e-books;

top e-shopping days of 2012; more.

m-commerce It’s a small world 14Designing sites for the smartphone screenrequires a rethinking from the ground up.

marketing&advertising Fast forward 18No longer a supporting actor, video stars

on some retailers’ e-commerce sites.

ops&tech Making conversation 22With more shoppers turning to live chat for answers,

these simple tips can help turn chats into sales.

corporatestrategies Beyond daily deals 52There are more ways for the store next doorto reach shoppers via the World Wide Web.

ops&tech All clear 55When it comes to getting packages through customs,

online retailers need to sweat the details.

websellingviews Up for grabs 58Nikki Baird of Retail Systems Research explains how

e-retailers can appeal to in-store shoppers.

websellingstats E-commerce’s market share is growing 64New data from Javelin Strategy & Research show that e-commerce

is taking a bigger slice of the overall spending pie.

The all-in-one solution 26Is responsive web design the answer

to the multiscreen challenge?

Unwrapping the holidays 34What holiday 2012 can teach e-retailers as they prepare

for a 2013 holiday shopping season with six fewer prime selling days.

A new way of doing business 40Procurement managers are consumers, too,

and they expect Amazon-like ease of use from b2b e-commerce sites.

FEBRUARY 2013 Volume 15 • Number 2

COVER

26

55

34

40

52

SPONSORED SUPPLEMENTHow to sell internationally . . . . . . . 45

Page 5: Internet Retailer 201302
Page 6: Internet Retailer 201302

4 Internet Retailer ● February 2013

edito

r’slet

ter

4

New thinking

E-commerce is inhospitable to laziness. The industry moves so quickly to adopt and adapt technologies that phrases like “it’s how we’ve always done it” don’t hold water. Reinvention is a key to relevance in

online retailing, and it is what ties together the stories in this issue. First, this issue’s cover story (page 26) tackles the issue of web design

and how e-retailers are trying to tailor their web sites to operate effectively on the devices consumers are using to access them today. Just think: Three years ago, Apple Inc.’s iPad was still a rumor, and the iPhone, which effectively made mobile commerce possible, is not yet six years old. In December, IBM Corp. says consumers using iPads accounted for more than 8% of traffic to its clients’ e-commerce sites. Other tablets and smartphones accounted for nearly 14%. It’s pretty wild to think that in less than six years more than a fifth of web traffic has shifted to mobile devices.

E-retailers have to be quick to rethink their design approaches to accommodate such dramatic shifts in consumer behavior, or lose ground to others who do. The trouble facing e-retailers today, and what requires new thinking, is that the path forward in some cases hasn’t been cleared. A lot of retailers hope someone else will do the trailblazing. The cover story introduces some retailers who are whacking at the weeds using a design approach called responsive design and finding solutions to the problems that inevitably come up with any new, untested approach.

Following that theme, another story shows how two e-retailers, Ice.com and e.l.f. cosmetics, designed their m-commerce sites (page 14). Each says it is important to first devise an m-commerce design philosophy to guide the decision-making process, even if there is no solid proof that the approach taken is the best. Start with a philosophy, they agree, but don’t get locked in, and leave room for change.

Switching gears from mobile, on page 18 you’ll read about a handful of e-retailers who’ve decided traditional web design—if there is any such thing as “traditional” in web design—isn’t the right path for them. They’ve designed their sites to merchandise primarily through video to give themselves a competitive edge.

And finally page 40 features a story about business-to-business commerce, another area of retailing where the Internet and e-commerce is forcing the development of new approaches. These days it’s increasingly common for buyers working for corporations and government agencies, who buy everything from machine tools to office supplies, to discover b2b sellers of those goods first online, rather than by answering a phone call from lead-nurturing sales reps. They’re placing their own orders online through e-commerce platforms adapted to allow for the intricate pricing and often-customized requests of b2b buyers.

Internet Retailer mostly covers business-to-consumer e-commerce, and reading this b2b-focused feature sparks a lot of questions about how advances in b2b may inform b2c. For example, b2b sales teams know all about wooing prospects and engaging customers. How they’re doing that in an online environment may provide lessons to retailers. If you are a b2b e-retailer or are thinking about getting into b2b and have questions you’d like answered, please e-mail me at [email protected] and let me know what’s on your mind. That will help us provide better coverage about this important and growing area of e-commerce.

Allison Enright, Editor

Publisher: Jack Love [email protected] Publisher: Molly Love Rogers [email protected] 312-572-6254 (phone) 847-543-1570 (fax)Executive Editor: Kurt T. Peters [email protected] in Chief: Don [email protected]: Allison [email protected] Editor: Zak [email protected] Technology Editor: Paul [email protected] Editor, Mobile Commerce: Bill Siwicki [email protected] Editor, Conferences: Mary Wagner [email protected] Editors: Bill Briggs, [email protected] Katie Deatsch, [email protected] Thad Rueter, [email protected] Kevin Woodward, [email protected] Editors: Amy Dusto, [email protected] Jonathan Love, [email protected] Director: Mark [email protected] Editor, Research: Stefany Moore [email protected] Analyst: Sylvia De Oliveira, [email protected] Director: Thomas Chambers [email protected] 312-362-9531Northeast Advertising Manager: Nancy Bernardini [email protected] 312-572-6276 (phone) 866-979-4389 (fax)West Region Advertising Manager: Dave Cappelli [email protected] 312-362-0063 (phone) 866-979-4392 (fax)Southeast Region Advertising Manager: Judy Dellert [email protected] 312-572-6279 (phone) 866-979-4394 (fax)Midwest Region Sales Manager: Cindy Wilkins [email protected] 312-572-6247 (phone) 866-979-4510 (fax)Classified Sales Manager: Oliver Love [email protected] 312-572-6251 (phone) 866-979-4504 (fax)Advertising Manager, Research: Elizabeth Riley-Green [email protected] of Marketing: Erin Dowd [email protected] 312-572-6280Web Production Editor: Farnia Ghavami [email protected] 312-362-0804Director of Administration: Sue Kroeger [email protected] 312-362-0076Circulation Manager: Chaz McCrobie-Quinn [email protected] 312-362-0107

Vertical Web MediaPresident: Jack Love Executive Vice President: Kurt T. Peters

Volume 15, Number 2Internet Retailer (ISSN 1527-7089) is published monthly by Vertical Web Media LLC, 125 S. Wacker Drive, Suite 2900, Chicago, IL 60606. Periodicals Postage Paid at Chicago, IL, and additional mailing offices. (USPS 019-477)POSTMASTER: Send address changes to Vertical Web Media, P.O. Box 29, Congers, NY 10920. For advertising information, call 631-329-7024. Mail subscription orders or changes to Vertical Web Media, PO Box 29, Congers, NY 10920. For subscription information, call 800-371-1777.For editorial reprints or web rights, call Ellen Gribbin 631-226-1404 or e-mail [email protected] views expressed herein may not be concurred in by editors or members of our editorial board. No part of this magazine may be reproduced in any form by microfilm, xerography, or otherwise, or incorporated into any information retrieval system, without the written permission of the copyright owner. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering financial, legal, accounting, tax or other professional service. Internet Retailer is a registered trademark used herein under license.Subscription prices: USA, U.S. possessions: $102.95 annually; Canada: $123.00 annually; Foreign: $148.00 annually. Direct any editorial inquiries, manuscripts, or correspondence to Internet Retailer, 125 South Wacker Drive, Suite 2900, Chicago, IL 60606. Phone: 312-362-0107.©Copyright 2013 Vertical Web Media LLC. All Rights Reserved.

Page 7: Internet Retailer 201302

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Page 8: Internet Retailer 201302

Internet Retailer February 2013 www.internetretailer.com

news

line

Nine thousand miles from the United States on the shores of the Arabian Sea and in

Mumbai, a city of 20 million people and home to Bollywood and the legacy of peace activist Mahatma Gandhi, e-commerce is alive and growing in India.

During the week of Jan. 8, Internet Retailer had an opportunity to assess the progress of Indian online retail by attending the eTailing India Expo e-commerce conference in Mumbai. Compared to the more mature and far bigger online retail markets in the United States, Europe and such Asian markets as China and Japan, India’s e-commerce sales are small. � ey are estimated at about $1.6 billion by market research fi rms such as Forrester Research Inc. and some Indian e-commerce venture capital fi rms.

But the Indian direct-to-consumer e-commerce market is likely to double in size to more than $3 billion within three years, and could grow to $15 billion by 2017, says Avnish Bajaj, co-founder and director of Matrix Partners India, one of India’s most established e-commerce venture capital fi rms.

Speaking to Internet Retailerat eTailing India Expo, Bajaj says India’s online customer base of around 20 million shoppers could increase as much as 1400% and reach 300 million shoppers within 10 years. “It’s an exciting time to be in e-commerce in India, because even though the market has been develop-ing since 2000 it’s still very early on in the development stage,” he says.

As a developing economy and early-stage e-commerce market, India faces several hurdles, Bajaj says. Retailing in India is fragmented and dominated by tens of thousands of mostly small proprietors.

Secure payments processing remains a challenge, order fulfi ll-ment is problematic when delivering packages to the 60% of the Indian population that lives outside of major cities and few carry credit or debit cards compared with North America and Europe. On the plus side, the number of Indian consumers with a smartphone connected to the mobile Internet could approach 220 million within 10 years, Bajaj says.

A new generationWith the market years away from maturity, there is also ample oppor-tunity for online retailers to build a lasting business, says Harish Bahl, an Indian e-commerce entrepreneur and founder of Fashion and You India Pvt. Ltd., one of India’s largest private-sale sites.

Within a decade India’s online retail market could increase by as much as 50% annually, Bahl told attendees in his eTailing India Expo keynote address. Driving that growth will be the swelling ranks of educated men and women under the age of 25 with growing disposable income and more web-enabled mobile devices.

Despite payments and logis-tics challenges, Fashion and You India has been able to build up FashionandYou.com, a three-year-old private-sale site, into a viable

e-commerce organization. Today, Fashion and You India says it has more than 3.6 million members, and FashionandYou.com generates monthly traffi c of about 2.8 million visits, according to web measure-ment fi rm comScore Inc.

Bahl didn’t disclose annual sales, but says Fashion and You is growing because the company is taking advantage of Facebook and other forms of social media to reach out to fashion-conscious online shoppers. Fashion and You, which has more than 1.1 million Facebook fans, also off ers Indian consumers a diverse shopping experience, Bahl says.

Fashion and You India has been able to add more inventory and grow to 1,200 the number cities across India where it makes deliver-ies in part because it has attracted more than $48 million in outside investment. “� ere are obstacles to overcome in Indian e-commerce,” Bahl says. “But retailers can over-come obstacles by earning trust from shoppers and that happens by giving very long-term value.”

[email protected]

Mobile shoppers and social media drive growthin India’s emerging e-commerce industry

6

Want to learn more?Internet Retailer’s Asia 500, out in March, is a research guide that ranks the largest e-retailers in the region according to sales. Visit www.internetretailer.com/guides for more information.

Page 9: Internet Retailer 201302

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Internet Retailer February 2013 www.internetretailer.com

news

line

Target hires an online chief, extends price matching and unveils web-only brands

W ith its same-store sales fl at in December after dipping 1% in November, Target

Corp. is sharpening its competitive edge by promising to match in its stores prices off ered online by its competitors as well as by Target’s own e-commerce site.

Target, making permanent a price-matching policy tested during the holidays, promises its stores will match prices on qualifying items sold on rival e-commerce sites Amazon.com, BestBuy.com, Walmart.com and ToysRUs.com as well as on Target.com. “We know that our guests often compare prices online,” chairman, president and CEO Greg Steinhafel says.

Sucharita Mulpuru, vice presi-dent and senior analyst at Forrester Research Inc., says price-matching is becoming a cost of doing business as retail chains fi ght “showrooming,” the trend of store shoppers checking for better deals online and buying on the web instead of in the store.

But retailers should be wary of price-matching policies, which can cause them to unnecessarily forfeit profi t margins, warns Susan Lee, partner with retail consultants Simon-Kucher. Price “is rarely the predominant factor when consumers make their decision to purchase online or in a physical store,” she says.

Six new web-only brandsAnother way Target hopes to infl uence shopping and purchasing decisions is through the launch last month of six brands exclusive to Target.com. “We’re excited about these new brands and how they’re helping us further diff erentiate Target.com from other online retailers,” divisional merchandise manager � eresa Schmidt says.

� e brands are: Labworks for women’s apparel; Zutano Blue for infant clothing; Room 365 for color-ful bedding products; Boho Boutique for table linens, bedroom and bath products; Too by Blu Dot for home décor products; and MudHut, which features bedding and other products.

� e web-only brand strategy is getting mixed reviews from industry analysts. “Target has always done well in telling a good brand story in its stores, and this is an extension of that strategy,” says Jim Okamura, managing partner of retail consul-tancy Okamura Consulting.

But Paula Rosenblum, manag-ing partner at research and advisory fi rm Retail Systems Research LLC, contends that selling online-only brands doesn’t make sense for a retailer that sells primarily through stores, and that web exclusives are better suited to testing new brands before off ering them in stores, or clearing out excess merchandise.

� e task of making these new policies work will fall to Jason Goldberger, hired last month as the new senior vice president of Target.com and mobile.

Goldberger most recently was executive vice president of home, kids, taste and business development at members-only e-retailer Gilt Groupe Inc. Before that he spent four years at e-retailer Hayneedle Inc. and eight years at No. 1 web retailer Amazon.com Inc.

[email protected]

@ZakStamborIR

Amazon.com Inc. debuted last month a service that could be said

to symbolize—and perhaps bridge—generational divides in music.

Amazon’s new Amazon AutoRip service lets consumers receive digital versions of CDs bought from the e-retailer. What’s more, the off er applies to CDs purchased from Amazon as long ago as 1998.

After a CD purchase, Amazon immediately loads the MP3 fi les in consumers’ Cloud Player libraries, part of the e-retailer’s Cloud Drive service. Music fans can listen to their Cloud Player songs on such devices as Kindle Fire tablets, Android phones or tablets, iPhones, iPod touches and Samsung

TVs, as well as via web browsers. � e e-retailer says more than 50,000 CDs are included in the AutoRip service.

� is move represents Amazon’s latest push to extend its infl uence in digital entertainment, and take on rivals like Apple Inc. and Google Inc. Amazon in January announced a deal with A+E Television Networks that brings the e-retailer’s total number of streaming videos off ered through the Amazon Prime ship-ping service to more than 33,000. For $79 a year, Amazon Prime members get free two-day shipping plus access to that entertainment.

[email protected]

@ThadRueterIR

With a free digital music archive, Amazon undercuts rivals, again

8

� e task of making these new

Page 11: Internet Retailer 201302

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line

Internet Retailer February 2013 www.internetretailer.com

Driving fans of the “Sons of Anarchy” to buy

show-related merchandise is one goal of the popular FX TV show’s new app.

� e show, which fol-lows the lives of an outlaw motorcycle club, launched an app in December that enables consumers to purchase gear they see on screen while watching the show. � ey can also take such other actions as sending a tweet or posting on Facebook, accessing new content as the season progresses, and viewing alternate scenes and mini-episodes. Consumers can also watch full episodes, read character bios, view storyboards, check out trivia questions from the upcoming board game and read facts about the series.

� e app uses the gyroscope functionality in Apple Inc.’s iPhone and iPad or devices using Google Inc.’s Android operating system to enable consumers to tilt their devices and get a virtual tour of the Sons of Anarchy clubhouse.

� e app was built by Magic Ruby, a technology company that builds entertainment apps, and enables fans to watch episodes by

The ‘Sons of Anarchy’ app drives sales by making its own mobile commerce rules

Shoppers using their smart-phones, tablets and other mobile devices to buy online

spent $24.66 billion in 2012, up 81% from $13.63 billion in 2011, research fi rm eMarketer says. � e estimate excludes travel and ticket sales.

Mobile commerce sales accounted for 11% of U.S. e-commerce sales in 2012, up four percentage points from a year earlier, eMarketer says.

� e research fi rm projects that retail sales on smartphones and tablets will continue to represent a larger slice of e-commerce over the next few years. EMarketer expects m-commerce sales to rise 55.7% to $38.40 billion this year, which it projects will be 15% of total e-commerce. Next year sales will jump another 35.8% to $52.17 billion, accounting for 18% of total e-com-merce sales. Its m-commerce sales estimates for 2015 and 2016 are $68.29 billion and $86.86 billion, which it predicts will be 21% and 24% of e-commerce spending, respectively.

“EMarketer’s m-commerce forecast refl ects a confl uence of three trends,” the research fi rm says. “First, the expanding number of smart-phone shoppers whose behavior aff ects commerce in all channels; sec-ond, the growing number of smart-phone buyers who enjoy the imme-diacy of purchasing through their phone and are expected to generate just over one-third of m-commerce sales this year; and third, the rapid rise in tablet shopping, which will produce the bulk of m-commerce sales over the next four years.”

Of the $24.66 billion in mobile sales in 2012, $13.86 billion, or 56.2%, came from tablets; $9.86 billion, or 40.0%, came from smartphones; and $0.94 billion, or 3.8%, came from other mobile devices, eMarketer says.

Of the $38.40 billion in mobile sales predicted for 2013, $24.00 billion, or 62.5%, will come from tablets; $13.44 billion, or 35.0%, will come from smartphones; and $0.96 billion, or 2.5%, will come from other mobile devices, eMarketer forecasts.

EMarketer analyzed more than 120 data sets from dozens of

research sources that track com-merce sales and consumer behavior to form its forecast, the research fi rm says.

EMarketer’s 2012 estimate is in line with projections in the Internet Retailer Mobile 400, which found that the worldwide mobile sales of 400 leading mobile retailers, travel companies and ticket sellers totaled $12.14 billion in 2012. Combined with $13 billion in mobile com-merce sales on eBay Inc., which isn’t included the 400 because it is an online marketplace, Internet Retailer estimates that mobile commerce sales last year totaled $25.14 billion, not far from eMarketer’s estimate of $24.66 billion.

[email protected]

@IRmcommerce

U.S. m-commerce sales hit $24.7 billion in 2012,accounting for 11% of total e-commerce sales

10

� e app uses the gyroscope

See Anarchy on page 11

Page 13: Internet Retailer 201302

Even though iPhones only account for 34.3% of the smart-phone market, according to

mobile and web measurement fi rm comScore Inc., most smartphone-based purchases come from shop-pers using an iPhone. And Apple Inc. mobile devices also account for more than half of mobile traffi c.

68.0% of December 2012 smartphone-based sales at more than 300 retailers using the web-hosted m-commerce platform from Unbound Commerce were made on an iPhone or iPod Touch, the vendor says. 31.4% were made on Android smartphones, 0.3% on BlackBerrys, 0.2% on smart-phones running Microsoft Corp.’s Windows Phone, and 0.1% on other smartphones, Unbound Commerce reports. And the December 2012 average order value for iPhone users was 20% higher than that for Android smartphone users, Unbound Commerce says.

Moreover, 60.4% of December 2012 smartphone traffi c stemmed from an iPhone or iPod Touch,

the vendor says. 37.7% came from Android smartphones, 1.0% from BlackBerrys, 0.7% from Windows Phone devices, and 0.2% from other smartphones, the m-commerce vendor reports.

So how is it that there are far more Androids than Apples, yet Apple accounts for so much more revenue and traffi c? � e answer lies with the Apple user, who is more affl uent and more inclined toward to access the web from his phone, says Keith Lietzke, co-founder and marketing vice president at Unbound Commerce. “Consumers

with money to spend are more likely to spend it on an iPhone,” he says.

Regardless of the device a consumer is using, more consumers are using mobile devices to browse the web. 23.14% of web site visits in December 2012 came from mobile devices, an 84% rise compared to December 2011 and a 283% surge over January 2011, fi nds a study of 2 million unique web visits across various industries by marketing and public relations fi rm Walker Sands Communications.

“Mobile is no longer an option, but a necessity,” says John Fairley, director of web services and social media at Walker Sands. “Companies must develop a user-friendly mobile site to keep pace with traffi c that consistently doubles year over year.”

[email protected]

@IRmcommerce

Consumers wielding iPhones buy more,surf the web more than other smartphone owners

www.internetretailer.com

syncing their smartphones or tablets with the show when it airs on TV or with the season four Blu-ray disc. Delivery Agent Inc. provides the shopping feature as part of its new technology that enables commerce to be added to mobile, social and web applications tied to television.

Magic Ruby works with such entertainment companies as Fox Home Entertainment and fi lm studio � e Weinstein Company. Delivery Agent’s clients include CBS, NBC Universal, HBO and Showtime.

[email protected]

the vendor says. 37.7% came from

ANARCHYContinued from page 10

Page 14: Internet Retailer 201302

$4.06$7.19

$11.14

$15.82

$20.89

didyo

ukno

w?

Internet Retailer February 2013 www.internetretailer.com

DIDYOU KNOW?Key e-commerce data

from InternetRetailer.com

““” ”

We saw brick-and-mortar stores offering to price

match online competitor prices for the fi rst time.

These retailers recognized that consumers are clearly moving towards preferring

to purchase products online, and this was

an effort to combat the showrooming effect.

SOREN MILLS, CHIEF MARKETING OFFICER,

E-RETAILER NEWEGG INC.

There is no evidence that a consumer who accesses the Amazon Appstore would expect that it would be identical to the Apple App Store.PHYLLIS HAMILTON, U.S. DISTRICT COURT JUDGE in dismissing an Apple claim against Amazon

TOP HOLIDAY 2012 E-SHOPPING DAYS

201223%201267%

201116%201172%

246million

105million

web domains

worldwide

are .com addresses

There are

12

Source: VeriSign Inc., Q3 2012 data

Source:StellaService, 2012 data

Source: Pew Research Center’s Internet & American Life Project

Mobile ad spending increased 180% in 2012, based largely

on the success of ad formats such as Facebook’s mobile

news feed ads and Twitter’s promoted products, research

fi rm eMarketer fi nds. Facebook will earn

$339.3 million in mobile ad revenue in 2012;

Google will earn $2.2 billion; Twitter, $134.9 billion.

Source: eMarketer Inc., December 2012

U.S. mobile ad spending, in billions of dollars, with percent change

2012 2013 2014 2015 2016

180%

77%

55%

42%

32%

Mon., Nov. 26

Tues., Dec. 4

Mon., Dec. 10

Tues., Nov. 27

Tues., Dec. 11

Friday, Dec. 14

Thurs., Dec. 13

Mon., Dec. 3

Wed., Nov. 28

Wed., Dec. 5

Mon., Mon., Tues., Tues., Friday, Friday, Mon., Mon., Tues., Tues., Thurs., Thurs., Mon., Mon., Wed., Wed., Tues., Tues., Wed., Wed., $1.465 $1.220 $1.275 $1.135 $1.110 $1.362 $1.219 $1.263 $1.117 $1.051 Sales in billions of dollars

Source: comScore Inc.

Percentage of U.S. consumers who read e-books in

vs.

vs.

Percentage of U.S. consumers who read printed books in

44%Percent of customer service-

related Twitter posts that 25 top online retailers responded to

within 24 hours. Zappos and L.L. Bean responded

to 100%.

Page 15: Internet Retailer 201302

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Internet Retailer February 2013 www.internetretailer.com

says Tom Nawara, vice president of digital strategy and design at e-commerce and m-commerce consulting fi rm Acquity Group LLC. “You have to think of it from the ground up. It’s not just about making larger buttons, it’s about thinking of the context of why a user is using a mobile site versus a desktop site, thinking through where and when the users are and the interactions they will have, thinking through all this as part of the ground-up design you need.”

Culling what worksWhen it designed its m-commerce site that launched in November,

e.l.f. cosmetics, operated by JA Cosmetics Corp., used a design approach that cobbled together what it believed worked best on its e-commerce site and on the m-commerce sites and apps of other retailers.

� e m-commerce site, built in

collaboration with the retailer’s e-commerce platform provider BlueSwitch, features a large banner of rotating hero shots on the home page that highlight current promotions (see image). Atop the rotating banner is a site search box. Below the banner is a grid with nine icons for Shop, Best Sellers, New, Videos, Tools, Gifts, Purchases, My Account and Stores.

design, mobile merchants say. Retailers must make a host of design choices, small and large, always bearing in mind the mindset and capabilities of the mobile consumer. Among these choices is how to

handle images, which merchants in m-commerce are fi nding hold more weight than text in the highly visual mobile realm. To guide the way, retailers need a coherent philosophy.

“Users expect and demand a mobile-specifi c experience,”

Mobile commerce site designers don’t play by the rules. � at’s not because

they’re design anarchists, there just aren’t any rules to follow because m-commerce is still so new. Crafting an m-commerce site requires a retailer to fi nd a design philosophy.

Ice.com Inc. CEO Shmuel Gniwisch had a clear philosophy in mind for the web-only jeweler’s m-commerce site, which launched in November. He didn’t have to look far. Gut instinct told him it should look and func-tion as much as possible like Ice.com’s successful smartphone app, which launched in 2011 and generated more than $300,000 in sales for the e-retailer in 2012.

“� ere is no standard mobile guideline that says this is the right or wrong way to design,” Gniwisch says. “We’re still in the very early stages of what mobile commerce should look like.” Ice.com’s m-commerce site today is rooted in the look and feel of the app, but can be easily changed to fi t what Ice learns along the way, he says.

Mobile commerce is an open frontier with few design “best practices” or established rules. M-commerce is not e-commerce and the constraints of small–sized screens demand a rethinking of

By Bill Siwicki

It’s a Small World

Designing sites for the smartphone screenrequires a rethinking from the ground up

14

The e.l.f. cosmetics mobile home page features rotating hero shots to advance promotions and a grid of nine buttons for quick navigation. Product detail pages include a bar with a ticker (circled at right) that keeps promotions alive throughout the site.

ticker (circled at right) that

Page 17: Internet Retailer 201302

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Internet Retailer February 2013 www.internetretailer.com

the Home button,” he says. “Home is No. 1, then Shop, More and Bag. I’m very pleased customers are using the bottom navigation bar.” Shoppers are using buttons in the bottom bar four times more often than buttons in the top bar, he adds.

Design choicesBoth Ice and e.l.f. cosmetics had many choices to make as they designed their

m-commerce sites. � ey both stress that deci-sions must be made through the eyes of a smartphone user—what will work best for a consumer given a smartphone’s size constraints?

Ice made all of its buttons bigger on the m-commerce site compared with their coun-terparts on the e-commerce site so there is plenty of room for a

fi nger to touch. It also made win-dows bigger, so, for example, when a customer enters an e-mail address into a window she can clearly read it. Ice also cut images from the mobile checkout page to speed page loads.

“It’s not like shrinking some-thing. It doesn’t work that way. � e objective is about simplicity,” Ice’s Gniwisch says. “What do we want to highlight when the customer arrives; then deeper into the site, how do we want them to check out? All of these things have to be thought of from the ground up.”

Ice designed the mobile home page to include four boxes stacked

“� e bar is an easy way for people to navigate through the site and the functionality that is most used on our e-commerce site,” Gniwisch says. “You can’t do pull-down menus, so we did a Shop button to get a customer to categories. � e Bag you want to

make as accessible as possible. I put Wish List there to test it. All the other things on the top navigation bar like Featured, New and Gifts are nice things but they are not the biggest drivers on the e-commerce site.”

A look at web analytics for the site’s fi rst two months of operation shows the bottom navigation bar is a success, Gniwisch says.

“� e Shop button is the highest visited button on the site besides

“We studied a lot of mobile sites out there in our category and other iconic brands we wanted to emulate,” says Cory Pulice, vice president of e-commerce at e.l.f. cosmetics. “We took the best of what is working on our e-commerce site; sections like Best Sellers and What’s New are where people go most and convert most. It is a blend between everything we had seen, and the non-commerce aspects such as making sure people could check on orders, contact cus-tomer service and access their accounts.” Pulice cites beauty products chain retailer Sephora USA Inc.’s mobile eff orts as a particular inspiration.

30% to 40% of all web traffi c today at e.l.f. cosmetics stems from smart-phones, Pulice reports.

At Ice.com’s mobile site, perhaps the most noticeable app-like design element is the navigation bar that anchors the bottom of every page (see image). It mirrors the app’s navigation bar; similar navigation bars are commonly found in retail smartphone apps. Ice’s version contains fi ve buttons: Home, Shop, Bag, Wish and More. A narrower navigation bar appears at the top of the screen.

16

The Ice mobile home page was designed to mirror the home screen of the Ice app. Ice went with large images on the product details pages because it believes pictures communicate much more than text.

The Ice mobile home page was designed to

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www.internetretailer.com February 2013 l Internet Retailer

throughout their mobile sites. Large images have the biggest impact on shoppers because they showcase a product within the constraints of the small screen of a smartphone, the retailers say.

“A lot of consumers want to see the details of the earrings or necklaces before they purchase,” Ice’s Gniwisch says. “Nine times out of 10 when they are purchasing something on the e-commerce site they zoom in on the image. The picture, the Add to Bag, and the Ice price—those are the three things we want to see pop when you hit that mobile product details page. If the image was much smaller it would be a tougher sell for the customer.”

Plain and simple, images trump text, says e.l.f.’s Pulice. “Web com-merce is evolving to a more visual world so we wanted to make sure the product image was big enough that it made enough of an impact,” he says, adding that incorporating video to tell product stories is next on his m-commerce to-do list. “We’re moving toward the image and video world, which we think translates better than trying to read a bunch of copy.”

E.l.f.’s mobile design choices are paying off. “In the first 20 days we have taken 3,300 orders for $100,000,” Pulice says. “We know the site and the design are working, people are transacting on it.”

Mobile commerce site design is all about meeting the unique needs of the smartphone user who is shopping on a very small screen. And that means keeping things simple, clear and usable. Mobile designers who look through the eyes of a smartphone shopper can build successful sites that please mobile consumers and sell. l

[email protected]

@IRmcommerce

this week,” Klein says. “The ban-ners allow us to easily manage marketing. They’re like the front window of a store.”

A ubiquitous tickerPromotions affected another design element: a thin bar with a running ticker that describes current promo-tions. This ticker appears near the top of every page but the home page.

“Whatever our big promotion is for a period, it will follow you throughout the mobile experience,” Pulice says. “No matter where you are or where you enter the site from, you will know we have this promo-tion running.”

Another deviation from the e-commerce to the m-commerce site appears on the home page. Unlike the e.l.f. e-commerce site home page, the m-commerce site home page features the aforemen-tioned nine-icon grid of buttons (see image, page 14). This design choice was made to keep things simple.

“In a mobile setting you only have so much space you can fit into the screen, so things have to be easy and quick,” Klein says.

In addition to the buttons, a site search box appears at the top of the page, just under the company logo.

“We know that people want to move quickly in the mobile world and searching is the quickest and easiest way to find what you are looking for,” Pulice says. “Our visits with a search convert two-and-a-half times better than without a search. We want it to be easy when they know what they want to buy.”

Picture thisLike site search, imagery is very important in the mobile world, which relies more on visuals than text. Both Ice and e.l.f. cosmetics feature large product images

vertically, filled with content that changes on a regular basis.

“The home page is clean and simple and follows the content we have on the e-commerce site,” Gniwisch explains. “When you see a marketing campaign from us you will typically see a campaign that includes a web push and a mobile push.”

Hero saves the dayLike Ice, e.l.f. cosmetics wants its promotions pushed out on both the web and mobile simultaneously, and it also is using the home page of its m-commerce site to highlight special deals. But rather than have a vertical stack of boxes like Ice, e.l.f. uses rotating hero shots at the top of the page. This enables every promotion to get the top spot on the home page and doesn’t require a consumer to swipe down to see more, e.l.f.’s Pulice says. Web and mobile promotions are handled in an integrated fashion using a single content management system.

“We are for the most part a value brand and we run a lot of promotions,” Pulice says. “That hero banner is there to let custom-ers know what promotions we are doing this week, anything new and relevant. We feel like it is a big part of our strategy and success on our main site so we wanted that to translate to the mobile site.”

Many beauty brands come out with new products on a seasonal schedule, but e.l.f. cosmetics rou-tinely has new products—which it manufactures—and offers. That requires a design approach that prominently features new prod-ucts, says Lesley Klein, director of e-commerce at e.l.f.

“These rotating banners give us space to show the exciting, new items, what’s special for us

17

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Internet Retailer l February 2013 www.internetretailer.com18

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added to PulseTV.com now have an original video featuring a PulseTV employee talking it up.

PulseTV is part of a vanguard of online merchants that eschew rou-tine merchandising tactics in favor of inviting consumers in with video. Th ese merchants say video makes the products they sell, and the retail-ers themselves, come to life online, creating a welcoming, diff erentiated environment that encourages con-

sumers to buy. And some merchants are fi nding these storytelling videos gain them wider exposure that draws more traffi c. Th ey also say the details they can show in videos prompts fewer returns and service inquiries because consumers have a better understanding of what to expect, which serves to drive down overall opera-tional costs.

Out of the ordinaryAnother e-commerce com-pany with a focus on video is DailyGrommet.com, whose 10-per-son production staff records fi ve to 10 videos every Wednesday morning in its offi ces outside Boston. Daily Grommet, an online marketplace that specializes in marketing stylish products from small manufacturers, features one new video each day on its home page.

On a day in December, for example, the home page video—which is hosted on and streamed from Google Inc.’s YouTube—fea-tured several kitchen tools from manufacturer Prepara, including

says PulseTV co-founder Anisa Ali. “We’re not afraid to point out problems with a product.”

Ali says that a mix of personality and honesty is helping set PulseTV apart from the competition, com-municating to consumers that PulseTV is made up of real people with a real customer-service focus. “We are a smaller company try-ing to compete with Amazon,” Ali says. “We do it by our service, but

it is still not always easy. Th e videos make us real people to our custom-ers, people they are comfortable associating with.”

For PulseTV, that comfort level is helping drive sales. Ali says customers today who press Play on a product convert at a rate four times greater than those who do not. Sales overall in 2012—the fi rst full year the e-retailer had video as its merchandising focus—were up 70% in dollars. “Video was not the only improvement we made, but it has been a huge part of it,” Ali says. And PulseTV projects sales will increase more than 50% in 2013. Approximately 70% of products

By Allison Enright

Fast Forward

No longer a supporting actor, video starson the e-commerce sites of some retailers

Coming across video on an e-commerce site these days is fairly routine. Of the 100 mid-

and larger-sized e-retailers tracked by retail consultancy Th e E-Tailing Group Inc., 85% used video in 2012 to merchandise in some way, most commonly on product pages. But a sprinkling of e-retailers are going much further, making video their primary sales tool.

Take specialty discount e-retailer PulseTV.com, for example. Th e e-retailer—whose name refers to its roots as a seller of video anthologies through direct-response TV advertising, not its focus today on merchandis-ing with online video content—began creating original video content in mid-2011 after it saw consumers clicking to view manufacturer videos PulseTV talked up in its daily-deal promotional e-mails.

When its early tests showed that video viewers converted into buyers at a higher rate than non-viewers, the e-retailer decided to transform the look of its site and put video front and center. Visit PulseTV.com today and where consumers might see a hero shot photograph on most e-commerce home pages, they instead see a freeze frame from a video superimposed with a Play button. Pressing Play launches a clip featuring PulseTV staff ers point-ing out a product’s merits or uses, and, sometimes, its failings. “We like to tell a story, and get down and dirty about what it is about,”

PulseTV.com leads with a product video on its home page.

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www.internetretailer.com February 2013 l Internet Retailer 19

sales, Aksas says. “We realized that the views the videos were getting were valuable for the brands we were promoting and we started thinking more about the value proposition we were bringing,” he

says. “We could have a mix of advertising and commerce. Usually you are one or the other.”

He says the new busi-ness model is proving more profi table than the fl ash-sale model. Consumers who view a video on Sharpmen.com as it operates today convert approximately 3.75% of the time, greater than the 2.99% average of North America’s top online retailers as ranked in the Internet Retailer Top 500 and Second 500 guides.

Th e top videos featured on Sharpmen.com’s home

page—there are nine that cycle through at any given time—usu-ally run about two to fi ve minutes each and tell the stories behind the brands. Th ese longer, more story-like videos comprise about 30% of the videos on the site. Th e videos com-prising the remainder are generally about a minute long and are more straightforward, with a host talking up product features and benefi ts.

Sharpmen.com shoots seven to 10 videos a week, usually all on one day, using freelance videog-raphers and editors. Aksas says Sharpmen.com spent about $15,000 to buy cameras, lighting equipment and set up the studio space.

Th e storytelling approach prompted several online media out-lets to reach out to Sharpmen.com to ask if they could use the longer, featured videos on their own sites, Aksas says. “Everyone is looking for content,” he says. Sharpmen.com now syndicates some of these videos

the shop owner and the consumer online.”

As a marketplace, Daily Grommet takes a cut of each sale sold through the site; Domeniconi declined to say how much.

Sellers are asked to share in Daily Grommet video production costs, although Domeniconi declined to say to what extent or what an aver-age video costs to produce. After a video is produced sellers can use the video on their own web sites.

A promotional toolE-retailer and marketing platform Sharpmen.com takes a similar storytelling approach with video. Th e site, which sells apparel, acces-sories and gadgets aimed at men, works with a collection of brands and manufacturers to showcase their products in exchange for about a 40% cut in any sale, says CEO Yazid Aksas. Th at cut includes video production costs.

Th e site, which launched as a video-driven fl ash-sale retailer less than a year ago, quickly morphed into a hybrid e-retailer and advertis-ing platform when it realized it was getting more video views than direct

a fl exible silicone roasting laurel designed to elevate a chicken or other food item off the bottom of a roasting pan. Clicking Play on the home page took shoppers to the product detail page, where the video appeared at the top, followed by text that details its creation story and a product detail tab that lists product specifi ca-tions. Th e page also incorpo-rated social network modules and has the manufacturer answering questions from Daily Grommet shoppers.

Two Daily Grommet staff ers narrate and appear in the two-minute video. One talks about how she tried the laurel during a cook-ing class and how it worked out, noting, for example, how she tossed it in the dishwasher afterward and it came out squeaky clean. Th e video also features one of the product’s inventors talking about his design approach and the product’s useful-ness. Th e video further incorporates some manufacturer-supplied media assets, commonly called B-roll, like product photos and videos of its creators.

Telling a good story Th e approach is designed to tell a layered, deep story, rather than simply show the product like a lot of product videos on other e-commerce sites do, says Joanne Domeniconi, co-founder and chief discovery offi cer of Daily Grommet. She says that helps forge a connec-tion between product creators and consumers. “Building rich media around commerce, and personalizing and humanizing this experience is the future,” she says. “Video can bring products to life. It helps to replicate the interaction between

Consumers who view a video on Sharpmen.com convert roughly 3.75% of the time.

Page 22: Internet Retailer 201302

Internet Retailer l February 2013 www.internetretailer.com20

ing video with a smartphone, then, as it saw results, invested in a better camera. An unused offi ce became a studio. It added acoustical tiles to help audio come through more clearly, then painted

the offi ce to convey a more professional studio look. “We were really hesitant to spend any money at fi rst, but now we are spending more and budgeting for more,” Ali says. She declined to say how much.

Between setup, fi lm-ing, editing and uploading, Ali says each video takes an average of four and a half hours of staff time to produce. Th at excludes the time it takes to write

original web copy for each product, which the PulseTV team does fi rst to familiarize themselves with the product.

Although the videos are largely unscripted, the team uses the infor-mation it learns from writing the product description to help it know what to talk about in the video. “We always do the web copy fi rst so we understand the features, and playing with the product sometimes makes us think of diff erent ways the product can be used, and then we use that when go and fi lm,” Ali says. “I feel better prepared to do the video after I’ve written the deal copy or read somebody else’s.”

Changing channelsJoyus.com, a year-and-a-half-old specialty e-retailer backed by nearly $8 million in venture funding, also makes video its primary selling point. Th e tagline on its home page reads: “Joyus is shopping that really speaks to you.” And it does. A video automatically starts rolling when

customer service agents regularly received calls from consumers say-ing their fl ashlights didn’t work.

Once PulseTV added a video to the product pages showing consum-ers that they had to remove the

insert, calls about the issue became nearly non-existent. “People just don’t like to read,” Ali reasons. “I think it’s the MTV mentality.”

Like any operational area, web merchants at the forefront of video commerce work to contain costs. PulseTV, Daily Grommet and Sharpmen.com all host and stream video via YouTube. PulseTV and Daily Grommet both initially worked with online video hosting vendors and say they were pleased with their services, but they decided to move to YouTube because it pro-vided enough of what they needed and was free to use.

PulseTV, which gradually increased its investment in video, has 22 employees in its offi ces, including one multimedia person in charge of video and graphics, one full-time editor and a video editor who works part-time. But even non-media people pitch in. “Everybody who is not camera shy goes on,” Ali says.

Th e retailer fi rst started record-

to about a dozen news and lifestyle sites, including EliteDaily.com, which targets Gen Y-aged consumers and MadeMan.com, a site for guys.

Aksas says sharing the content free of charge with these sites has helped increase brand exposure and draw traffi c to Sharpmen.com. Th e brands featured in the syndicated videos also pay an additional fee, which Aksas says is low, on a cost-per-thousand basis for Sharpmen.com to syndicate their brand video in these channels.

Operational effi ciencyDaily Grommet handles customer service inquiries and returns on behalf of its sellers. Although she declined to reveal Daily Grommet’s return rate, Domeniconi says video has brought it down. “Our credit card processor was absolutely blown away by how low our return rate is, and we credit video with that because consumers are getting a more layered view of the product,” she says.

Ali at PulseTV also credits that retailer’s video eff orts for help-ing keep returns low. “Our return rates have always been very low, under 2%,” she says. “We credit our customer service and how, when we have a more complex product, we try to show all aspects of it.”

She says video has had a greater eff ect on the number of calls made to PulseTV’s customer service line. She describes how, before the video push, the e-retailer sold several fl ashlight models that required con-sumers to remove the top and pull out a plastic insert before install-ing the batteries. It included this information on product detail pages, and with the shipped product. Still,

Internet Retailer Rich Media Product Showcase

Products ShowcasesFocus on a particular e-retailing solutions category.Position adjacent to targeted editorial.Graphic Impact in a “mini-display” format that provides more than standard classified at a great rate.

Internet Retailer Product & Showcases cover a wide variety of topics, from Analytics to Search, from Affiliate Marketing to Rich Media. And ask about the combination print and e-mail guides. Zero in on your targeted audience with high impact and great value.

Contact: Oliver Love [email protected] 312-572-6251

Joyus videos feature hosts so return customers see the same personalities over and over.

Page 23: Internet Retailer 201302

www.internetretailer.com February 2013 l Internet Retailer 21

the company maintains individual studios by product category. For example, there’s a kitchen studio for food and kitchen product demos. Gish says Joyus.com wants each video to have the “Joyus touch” that helps convey its brand, and so it rarely uses manufacturer stock B-roll in its videos.

Gish admits it’s rare for a young e-retailer to be able to invest heavily in this level of video production, and that it is probably out of reach for a lot of retailers. “But folks can produce pretty good video these days with a simple set-up too,” he says.

After starting with such a set-up, PulseTV’s Ali says she’s planning to expand the office space dedicated to filming video to include space to record more instructional-type videos rather the single-camera, people-focused vid-eos it typically produces. The videos will still maintain the personable elements consumers have come to expect, she says. “We’re expanding videos because they work.”

[email protected]

@AEnrightIR

by video platform BrightCove Inc. Gish declined to reveal what it pays BrightCove, but the vendor says it structures fees according to the number of videos hosted and the bandwidth required to stream them. It charges $499 per month for 500 videos and 250 gigabytes of band-width to stream them, for example. Custom pricing is also available.

A magazine tie-in The high production values of Joyus videos last year helped spur a 16-week co-branded promotion with Time Inc.’s People magazine web feature PeopleStyleWatch.com. In those videos, a People StyleWatch editor showed off fashionable products that consumers could click to buy on Joyus.com. Joyus and Time shared the resulting sales revenue.

Without disclosing details, Gish says the promotion, which at times included video placement on People.com’s home page, drove a lot of traffic to Joyus.com. He says it was Joyus’ video quality that helped make that promotion happen.

Studios take up about 40% of the e-retailer’s office space, and

consumers arrive at Joyus.com, and when they navigate to any category page—or “channel” in Joyus lingo—such as beauty, home and lifestyle. Joyus videos feature hosts, marketed as experts in their category, so return customers see the same personalities over and over.

“We believe having a trusted personality helps the level of experi-ence customers have online, and better customer experiences turn into better conversion rates,” says Surj Gish, Joyus director of market-ing. He says consumers who view an entire video buy more than three times more often than those who do not.

Joyus, which produces up to 20 videos per week, records videos daily. 90% of all its video produc-tion work is done by in-house staff, most of whom came from the TV industry, Gish says. Videos, aver-aging around two minutes each, have slick production values akin to what consumers see on TV, and largely are recorded in Joyus’ in-house studios, or on the streets of San Francisco.

Videos are hosted and streamed

Internet Retailer Rich Media Product Showcase

Products ShowcasesFocus on a particular e-retailing solutions category.Position adjacent to targeted editorial.Graphic Impact in a “mini-display” format that provides more than standard classified at a great rate.

Internet Retailer Product & Showcases cover a wide variety of topics, from Analytics to Search, from Affiliate Marketing to Rich Media. And ask about the combination print and e-mail guides. Zero in on your targeted audience with high impact and great value.

Contact: Oliver Love [email protected] 312-572-6251

Page 24: Internet Retailer 201302

Internet Retailer l February 2013 www.internetretailer.com22

ops&

tech

abandoning her shopping cart and making a purchase.

She should know. Th e retailer last year added a bright orange Live Chat button on the left side of every page on Whitefl ash.com. When a consumer scrolls down a page, the button remains locked in place to keep it visible at all times. Since doing this Whitefl ash has increased the number of chat sessions nearly 45%, making live chat the retailer’s

most popular customer service format.

Getting shoppers to chat pays off , too: 65% of custom-ers who seek assistance via chat complete a purchase, Bailey says.

Moreover, adding the Live Chat button to its checkout pages has helped

the retailer decrease its cart aban-donment rate 35%. In part, that’s because nearly 70% of its orders come from international shoppers who often have questions about the retailer’s shipment and delivery processes, she says.

“Having live chat there to capture customers and give them guidance, answer their questions and provide anything they need to complete the shopping experience makes a huge diff erence,” she says.

Looking beyond volume, some retailers report live chat produces robust results. Web-only diving gear retailer LeisurePro Ltd. says shoppers who use live chat spend on average nearly 65% more than other shoppers.

But just adding a life chat module doesn’t generate this kind of result. Retailers have to make strategic decisions about how they present chat to web site visitors

and train their agents to maximize results. Here are six tips for improv-ing results from a range of retailers that have generated solid returns from live chat.

1. Highlight the live chat option Let’s start with the obvious. If shoppers can’t fi nd a Live Chat button, they won’t be chatting, says Ashley Bailey, e-commerce direc-tor at diamond jewelry retailer Whitefl ash.com. Th at may be the diff erence between a shopper

By Zak Stambor

Making Conversation

As more shoppers turn to live chat for answers,these simple tips can help turn chats into sales

No matter how much informa-tion retailers include on their web sites, shoppers will have

questions. And, increasingly, where they’re turning for those answers is live chat. 67% of U.S. and U.K. online shoppers used live chat last year and 21% of U.S. online shop-pers say live chat is their preferred way to reach retailers, according to a recent survey by retail consultancy Th e E-tailing Group Inc.

Th e rea-son is simple, says Lauren Freedman, president of Th e E-tailing Group. She says live chat is effi cient, easy to use and saves time. It’s the customer service method that works best for busy shop-pers looking to quickly get an answer to their question or a customer service issue resolved, Freedman says. “You can multitask throughout the process—and even do it while you’re working,” she says.

Th at helps explain why on Monday, Nov. 26, the biggest online shopping day of 2012 according to comScore Inc., live chat technol-ogy and customer service vendor LivePerson Inc. hosted 860,000 chats on behalf of its more than 8,500 retail clients. Th at’s a 30% jump from the comparable day in 2011.

Why shoppers prefer live chat (Consumers could select more than one response)

It enables me to get questions answered immediately 79%

It enables me to multitask 51%

It’s the most effi cient communication method 46%

Once I used live chat I realized how well it works 38%

I receive better information than if I used e-mail 29%

It puts me in control of the conversation 29%

I don’t like talking on the phone 22%

I can do it while I’m at work 21%

I receive better information than if I called 15%

Source: The E-tailing Group Inc.’s Live Chat Effectiveness report

Page 25: Internet Retailer 201302

CODE: UPS-12-7 PUB/POST: Stores, CRM, Internet Retailer, PRODUCTION: J. Shelton LIVE: 7 in x 10 in

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Download the comScore study and learn more about UPS at thenewlogistics.com/retail or snap the QR code.

* comScore State of the U.S. Online Retail Economy in Q4 2011, February 2012

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3 WAYS LOGISTICS CAN HELP YOU SATISFY ONLINE SHOPPERS.

Copyright © 2012 U

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shop more often and even recommend

retailers to friends if return options

were easier. And UPS offers plenty of

flexible return options.

Last year alone, e-commerce grew 14% as more and more people shopped online.* According to comScore’s Online Shopping Customer Experience Study commissioned by UPS, you can generate loyalty by implementing simple practices.

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Internet Retailer l February 2013 www.internetretailer.com24

The agents, who are employed by Needle and who can work from anywhere with a web con-nection and receive an hourly wage, are trained on the retailer’s products and internal policies. But often the shoppers chatting on LeisurePro.com are looking for more general information, such as when is the best time to dive, and that’s where agents’ knowledge about diving and diving equip-ment shines, says Bill Parnes, LeisurePro’s general manager.

“They know what they’re talk-ing about, and that comes across in the chat,” he says. “That helps make the customer feel comfortable about taking their recommenda-tions and completing an order with us.”

That may be why 25% of shoppers who chat with one of the retailer’s roughly 20 agents com-plete a purchase on the site. That’s much higher than the site’s conver-sion rate, which Parnes declined to share but said is typical of other web-only retailers. Web-only retail-ers in the Internet Retailer Top 500 and Second 500 guides had an

be asking about. For instance, if a live chat agent knows a customer previously asked about diamond engagement rings, the agent can be ready to answer questions about wedding bands.

3. Agents must know their stuff79% of shoppers who said live chat is their preferred customer service method in The E-tailing Group survey said they turn to chat because it enables them to get their questions answered quickly. That’s why well-informed agents who know the retailer’s products are essential, Freedman says.

LeisurePro, which sells diving products, only hires chat agents who are experienced divers so that they’re able to answer questions about specialized products such as hookah rigs and scuba octopuses.

The retailer works with live chat provider Needle Inc. to find prospective agents from among LeisurePro’s more than 44,000 Facebook fans and other diving enthusiasts who have noted that interest on Facebook and other social networks.

2. Know who you’re talking to When a shopper clicks to chat on Whiteflash.com, he’s required to enter his name and e-mail. The retailer’s LogMeIn Inc. BoldChat live chat technology is tied into the retailer’s customer history database, and that enables a chat agent to quickly see whether the shopper is a repeat customer. If he is, the agent sees the customer’s past purchases, previous chat sessions and other informa-tion about his interactions with the retailer. Even if the shopper has never been to the site before, the chat session enables the retailer to establish an account for the customer so that if he returns with more questions, the agent who chats with him can view past interactions.

That makes for more personal—and often quicker—chat sessions, Bailey says. By arming agents with a shopper’s history with the retailer, the shopper doesn’t have to go back and forth about her purchases or concerns that she expressed in previous chats. It also prepares agents for what the customer might

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www.internetretailer.com February 2013 l Internet Retailer 25

would like to share their browser.” After the consumer clicks an Accept button, the agent can direct him to other pages to help the shopper find the right product or site information, Bailey says.

“If we just sent a link they might not click, or it might open in a new window on some mobile phones,” she says. “This eliminates any ambiguity about what the customer is seeing.”

It also makes for a better, simpler experience for the shopper. “We can guide them where they want to go,” she says.

6. Faster is betterRetailers should make chat as simple as possible, says The E-tailing Group’s Freedman. The consultancy’s survey found that 46% of shoppers who said their preferred way to reach customer service is via live chat said they found it to be the most efficient communication method.

Efficiency is also the reason the jewelry retailer began using BoldChat’s software to quickly reply to questions that are asked time and again, such as how long it takes for an item to ship.

The technology examines the consumer’s message as he types to find the most suitable responses from the retailer’s library of canned replies. After an agent clicks on a reply he can edit the message so that it flows with the conversation. That ensures that all of the retailer’s agents communicate the same information, while also shaving seconds off agents’ response times, Bailey says.

With busy consumers looking to get answers in the most efficient and effective way possible, every second counts.

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in the final stage of his decision-making process, Weissblatt says.

The retailer last year deployed LivePerson Inc.’s live chat program, which uses an algorithm to dig into the site’s Google Analytics and Omniture SiteCatalyst analyt-ics programs to determine which shoppers might benefit from an invitation to chat. The algorithm uses data, such as how many pages a consumer has viewed, his naviga-tion path and how he arrived at the site, to develop rules about when to invite a visitor to chat. Since it began working with LivePerson about half of the retailer’s chats stem from such proactive chat invitations.

The retailer’s online chat ses-sions contribute about $50,000 in sales each month from shoppers chatting online, then completing a purchase in one of the retailer’s two stores. Weissblatt tracks by manu-ally matching the chat logs, which include the name of the customer on the chat, to his sales orders.

5. Make it easyHelping a shopper find a particular setting or product can be difficult at Whiteflash.com because the retailer offers more than 100,000 diamonds on its site, each with its own product page that features details like the diamond’s shape and size, as well as color, cut and clarity ratings. The retailer offers assistance by using LogMeIn Inc.’s BoldChat technology that enables a chat agent to take over a consumer’s computer to show her particular pages on the site. The feature comes standard with all levels of the vendor’s offerings.

When an agent wants to take over a consumer’s computer, he sends a message to the consumer, “A Whiteflash Sales Associate

average conversion rate of 2.99% in 2011.

Similarly, jewelry e-retailer Whiteflash ensures shoppers get the answers they need by having seven accredited gemologists on site to staff chats, many of whom have worked for Whiteflash for years and know the jewelry e-retailer’s products like the backs of their hands. Given the retailer’s high average order value, $5,500, and the complex product it sells—diamonds—that type of expertise is essential, Bailey says.

“Our customers are extremely educated and so we need to provide them with a high level of service,” she says. “That requires our agents to be able to answer any type of question.”

4. Look for signalsBecause SamsFurniture.com sells furniture and appliances, the types of products that consumers think carefully about before buying, shoppers often browse the site without any intention of complet-ing a purchase online, says Seth Weissblatt, owner of the Texas-based multichannel retailer.

“The furniture industry is different than a lot of other forms of e-commerce,” he says. “When you buy a shirt online, it’s easy to return. But that isn’t the case when you’re buying a sofa that is 300 pounds and 10 feet long.” When buying something so large and expensive, consumers are going to think about it, he says.

But shoppers still provide clues that they have questions, and recognizing those clues can be extremely valuable, he says. For instance, when a shopper clicks to the site’s “Lease to Own” page after spending several minutes compar-ing two sectional sofas, he is likely

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26 Internet Retailer February 2013 www.internetretailer.com

Responsive web design is a method of crafting a single web site so that it will render properly no matter the device a

consumer uses, a desktop or laptop PC, a smartphone, a tablet, a web-enabled TV, or whatever gadget comes along next.

It’s a new approach to web design; in fact, the term “responsive web design” fi rst appeared in 2010. � e technology is not fully mature, concedes the Hertz Corp. chief information offi cer Joe Eckroth, but that didn’t stop the U.S. car rental company from redesigning its two consumer-facing web sites—Hertz.com and car-sharing site HertzOnDemand.com—using responsive techniques. � e new sites went live in November.

Like many retailers turning to responsive design, Hertz was reacting to the rapid growth in the use of mobile devices by Hertz customers. 12% of Hertz traffi c came from mobile devices in 2012, compared with 4% the prior year. “In 24 months it will be rivaling every other channel we’ve got,” Eckroth says.

� e advantage of responsive design, he says, is that Hertz can deploy new features and promotions

BY DON DAVIS

Is responsive web design the answer to the multiscreen challenge?

THE ALL-IN-ONE SOLUTION

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one time to Hertz.com and know that they’ll display equally well whether the customer is sitting in front of a desktop PC, lying in bed with an iPad or on the road with any of the many types of smart-phones Hertz customers use.

“However they come to us, we want to make sure they feel it’s a great experience,” he says. “When you think about speed to market, this technology allows us to develop once and deploy across all devices. � at’s a powerful thing.”

Hertz claims to be the fi rst travel company to implement responsive design, and among online retailers the method is more often discussed than implemented. Bazaarvoice, the leading provider of customer ratings and reviews tech-nology to e-retailers, sees perhaps 10% to 15% of its clients imple-menting responsive techniques, says Neville Letzerich, executive vice president of product. “But then you’ve got a lot of people looking to go after it in the coming 12 to 18 months,” he adds.

Recognizing that trend, many providers of e-commerce technol-ogy are revising their products to accommodate responsive design. For example, the way Bazaarvoice displays customer reviews can change as the size of the user’s browser window changes, at points switching from two columns to one column to make them look better on small screens, in the latest version of the vendor’s software released in November.

Retailers and their design agen-cies that have deployed responsive e-commerce sites have learned les-sons that will make future deploy-ments easier. � ey’re also fi nding, however, that it takes more time to design and operate a retail site using responsive techniques than a single desktop site.

Some remain skeptical that responsive design is the best

solution, especially for sites that rely on captivating imagery to sell high-end items. But others argue that it’s the way to go in a world of rapidly proliferating device sizes and types. “In the long run it’s way easier to

build a responsive site and not have to worry about all the separate ways you interact with your customers,” says Chris O’Connell, director of engineering at e-commerce design agency Gorilla Group.

If he’s right, it will have a big impact on retailers’ mobile and e-commerce operations. Retailers

that have created separate teams for smartphones or tablets will want to go back to a single team, Forrester Research Inc. analyst Peter Sheldon says. At the same time more personnel may be needed to keep up the pace of adding new products or deals.

Some envision broader implica-tions. � at includes web sites not

only changing based on the device the customer is using, but where the customer is and what she is doing. A diff erent web site for a customer in a store versus one at home? � at, some say, could be the future of responsive design.

It works, but…For now, however, retailers deploy-ing responsive sites mainly aim to satisfy customers using all kinds of devices, without having to maintain several versions of their e-commerce sites. For the most part, they say, responsive design fi lls the bill, though it also presents new challenges.

King Arthur Flour Co. Inc., a manufacturer and e-retailer of fl our and baking products, was among the earliest online retail-ers to move to responsive design. � e motivation was simple. More of its traffi c was coming from mobile devices—22% by early 2012, up from 6% a year earlier—and managing separate mobile and conventional sites seemed unmanageable, says Halley Silver, director of online services for the company that generated Internet Retailer-estimated online sales of $17.4 million in 2011.

King Arthur Flour gradually has been, Silver says, “responsifying” sections of its web site for two years. A fi ve-month project in early 2011 led to the launch of the recipes section using responsive techniques; the e-commerce section followed in August 2012, after six months of work.

Having a site that adapts automatically to consumers’ mobile phones and tablets has dramatically increased the e-retailer’s mobile sales and traffi c. Mobile traffi c quadrupled from November/December 2011 to the same period in 2012, and sales doubled. Overall sales for the site were up, Silver says, without providing details, but there

RESPONSIVEDESIGNPRO

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Build once: A single site serves

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Internet Retailer Web Design Product Showcase

was a clear shift to more purchases through mobile devices.

Advocates say responsive design also will boost a retailer’s natural search rankings, and King Arthur Flour has seen that impact, espe-cially on mobile devices. Visits to KingArthurFlour.com from natural search results were up over 60% overall for the fi rst 11 months of 2012 compared to the prior year, and 267% higher from mobile devices, Silver says.

� e reason that natural search results improve for responsive

sites is that a single URL—KingArthurFlour.com, for exam-ple—gets credit from Google and Bing for all the links, customer reviews, social sharing and other consumer-generated activity that

occurs, regardless of the device consumers use, says Randy Kohl, senior content strategist at Gorilla Group. � at would not be the case if some comments were made on a mobile phone-specifi c site, such as

‘[With a responsive site], it’s a lot trickier to do our day-to-day

site updates and maintenance.’

‘This technology allows us to develop once and deploy across all devices. That’s a powerful thing.’

JOE ECKROTH CHIEF INFORMATION OFFICER

HERTZ INC.

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30 Internet Retailer February 2013 www.internetretailer.com

m.Retailer.com, others on a tablet site, t.Retailer.com, and the rest on the PC site, Retailer.com.

Responsive design also means retailers won’t post duplicate content on multiple URLs, a practice that can lead search engines to penalize sites, Kohl says. And there are fewer redirects, which must be maintained and can impact site performance. For example, Kohl says, if a consumer on a mobile site shares a link to a retailer’s page on Twitter.com, the retailer must create a redirect so that another shop-per viewing that tweet on a PC will click to a page designed for the larger screen of a personal computer.

It’s such advantages that led Google Inc.’s Webmaster blog to endorse responsive design last year as the best way to present a web site to consumers on multiple devices. While Google did not promise to favor responsive sites in search results one post noted it’s easier for Google to crawl a responsive site and that “can indirectly help Google index more of the site’s contents.”

Operational issuesSearch engine optimization considerations played a role in Australian retailer Kitchenware

Direct employing responsive design last year when it launched a new higher-end e-commerce site, Avago.com.au. � e e-retailer saw the negative impact having separate mobile and web sites for its main site, KitchenwareDirect.com.au, had on search results. “Often we would see our mobile site rank higher than our desktop site, which was not ideal,” says Peter Macauley, director of the e-retailer.

But the bigger problem is the complexity of maintaining separate product databases for the desktop and mobile sites. Even understand-ing analytics data is diffi cult with separate sites, he says.

“As far as we could see respon-sive design would solve those problems operationally and lead to cost savings in the long run,” Macauley says. As Avago.com.au only launched late in 2012, he says it is too early to say if the e-retailer is realizing those savings. However, he’s suffi ciently convinced that the retailer plans to redesign its Kitchenware Direct site using responsive techniques this year.

How the e-commerce site of Little Black Dress displays differently on a smartphone, tablet and PC. Resource LLC designed the responsive site.

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Operational effi ciency: It’s easier to update a single site

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Updates take time: Retailers must test and debug across many

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However, he can also see that his design team has to be more aware when it creates a web page of how it will look on screens of diff erent sizes. He says they try to use standard proportions so that, for instance, an image and block of text that appear side by side on a PC site can slide one under the other without resizing on a mobile phone screen.

“It’s a lot trickier to do our day-to-day site updates and main-tenance,” agrees Silver of King Arthur Flour. She says develop-ment time increases about 25% with the responsive site, and testing and debugging time doubles. King Arthur Flour added a developer to its e-commerce team to help with the added work, she says.

Still, added costs are off set by not having to maintain a separate mobile commerce site. Many retail-ers that have m-commerce sites have turned to vendors to create and maintain those sites. A report by Forrester analyst Sheldon in 2011 estimated the cost of hiring an outside company to build an m-commerce site at $25,000 to $200,000, with similar annual maintenance fees.

Vendors respondSheldon also noted in a July 2012 report called “Understanding Responsive Design” that the default templates vendors provide with their e-commerce software may predate responsive techniques and require some work-arounds. Both Silver and Macauley had that experience.

In the case of Avago.com.au, a plug-in that shows what terms are trending on social media did not fully adapt to the site’s responsive approach. Silver says King Arthur Flour’s site search vendor, SLI Systems, had to rework its software to vary how results display depend-ing on the device. “Subsequent implementations after King Arthur

How responsive design worksIn simple terms, responsive design enables a web site to recognize the device the consumer is using and present a version tailored to that screen size. But understanding the technology behind it can help retailers deploy responsive sites most effectively.

A key component of responsive design are media queries, a feature of CSS3, the latest version of the Cascading Style Sheets software that dictates where elements appear on a web page. A responsive site uses a single set of HTML code for all versions, and employs CSS to deter-mine which features will display, and at what size, depending on the size of the browser window, or viewport, the consumer is using. Some retailers, for instance, may hide the About Us link to save space on a mobile screen; Hertz Inc. makes sure that the option to view, modify or cancel a reservation is easily visible on a smartphone because that’s important for travelers.

Retailers typically create breakpoints, showing a limited version of the site to consumers on the smallest screens, and expanded versions to bigger screens. For example, e-retailer King Arthur Flour serves different versions for � ve resolutions. One is for screens up to 320 pixels wide and another for 480 pixels wide; both are designed for smartphones, with the wider version for when the phone is held horizontally, or in landscape mode. For tablets, the retailer provides versions for 600 and 768 pixels, and for PCs at 1024 pixels.

While the CSS � le contains instructions for all versions, it does not download the images for all versions, just pointers to the images stored on servers, says Mariano Ferrario, director of e-commerce solutions at e-commerce software provider NetSuite Inc. Even though the CSS � le is slightly larger, the difference in download time from server to the user’s device is imperceptible, Ferrario says.

Once the media query establishes how big the viewport is, the software only downloads images suited to that screen. That way, a large image for a desktop PC does not slow the loading of a page on a smartphone. “The crux of responsive design is making sure you’re downloading the right amount of information at the right time,” Ferrario says.

Also important, he says, is to de� ne image size by the percentage of a display it will occupy, such as 50% of the browser window, rather than specifying, for example, that it be 200 pixels wide. That way an image can appear slightly larger on the screen of a Samsung Galaxy smart-phone than on a smaller iPhone 4, even though they both use the same CSS instructions.

To avoid impaired performance retailers should bundle dozens of com-monly used elements into a single server request called a sprite, says Chris O’Connell, director of engineering at design agency Gorilla Group. With steps like that, a responsive design should take just a few millisec-onds more than a standard site to load, just long enough for the soft-ware to recognize the device size and request the data it needs. “Is that signi� cant to an end user?” O’Connell asks. “Maybe. Probably not.”

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32 Internet Retailer February 2013 www.internetretailer.com

were much simpler, smoother and quicker,” says Ed Hoff man, vice president of SLI.

Indeed, many e-commerce vendors are updating their software to accommodate responsive design. Demandware Inc. introduced a new version of its e-commerce platform in November with responsive ele-ments built in; that will also be the case for the next version of NetSuite Inc.’s SuiteCommerce Enterprise Edition due out in March.

Another e-commerce software provider, eBay Inc.’s Magento, says its software is well suited for respon-sive design, and that it’s working on a visual design editor that will let a designer drag and drop components into a page to see how they would look at diff erent sizes. A new ver-sion of Adobe Systems Inc.’s CQ5 content management system this year will provide a drop-down menu allowing designers to preview images on screens of varying resolution.

Picture problemsFor all the advances, responsive sites still face some challenges.

Resizing prominent fashion-shoot images has proven diffi cult for OriginalPenguin.com, the e-commerce site for designer Perry Ellis’ Original Penguin brand. � e site was redesigned using responsive techniques in 2010. Just making an image smaller doesn’t work, says Raul Justiniano, the designer of OriginalPenguin.com.

“Our images are selling the brand,” he says. “It’s very important how models are cropped, and how images are displayed.” He frequently has to create diff erent marketing

images for smaller screens, add-ing to the work of creating each new campaign. Nonetheless, the retailer will again employ responsive techniques this year as it redesigns OriginalPenguin.com with a focus on tailoring it to tablet users.

Some customization will be inevitable on responsive sites, and images are a good example, says Ethan Smith, creative direc-tor at Gorilla Group. He advises retailers to consider whether all elements displayed on a PC site are needed on smaller screens, and to eliminate superfl uous elements whenever possible.

What’s aheadEven as pioneers work out the kinks in early responsive sites, others are looking at adapting what

a web page looks like not just to the user’s screen but to his context. For instance, a retailer might show one home page to a consumer in the company’s store and another

to someone elsewhere or vary the presentation based on the Likes of his Facebook friends, says Dennis Bajec, chief creative offi cer at digital marketing agency Resource LLC, which calls that approach Responsive Experience Design. He

says his agency is working with clients on that approach, but declines to name them.

Hertz is already con-sidering how to employ responsive design to deliver context-relevant information to

customers, says CIO Eckroth. Hertz recently introduced a service called Carfi rmations that lets a customer about to pick up a car choose a diff erent vehicle or add options, and presents special off ers with mobile check-in service Foursquare for customers near an airport.

“We’re always thinking about how do we make a more intimate, personalized event-based experi-ence,” Eckroth says. “� is technol-ogy allows us to do that.”

If responsive design can help a consumer-oriented fi rm like Hertz

personalize its service, retailers will want to know more about how they can do the same.

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‘We’re always thinking about how do

we make a more intimate,

personalized event-based experience.

This technology allows us to do that.’

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UNW

RAPP

ING THE HOLIDAYS

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2012 season reveals a blockbuster start around the � anksgiving weekend, and some retailers pushing back shipping deadlines closer to Christmas to capture last-minute purchases. Mobile shopping—both consumers purchasing and researching through smartphones and tablets—was strong throughout.

But there was also a lull in the middle of the 2012 holiday season that likely will have online retailers casting about for ways to keep up the pace of sales in the shorter 2013 season.

Dreary store salesAs online retailers prep for a shorter holiday sales season, at least they can look ahead to 2013 knowing that the 13.7% increase in e-commerce sales in November and December 2012 represented a substantial gain in market share from store-based rivals.

Total retail sales, excluding automotive sales, increased 4.1% on a seasonally adjusted basis for November and December 2012 over the same months a year earlier, to $738.7 billion from $709.7 billion, according to estimates released in January by the U.S. Commerce Department. Taking out pur-chases at restaurants and bars, the National Retail Federation esti-mates holiday season sales increased 3.0%, including the web and stores, falling short of its prediction of 4.1%. � e retailer trade association blamed consumers’ uncertainty over the “fi scal cliff ” policy haggling in Washington, D.C., for the shortfall.

Non-store retail sales—mainly sales by online retailers but also merchants that sell through catalogs and TV infomercials—increased 11.9% to $77.2 billion

Mike Schwarz, founder and CEO of online retailer RibbedTee Designs LLC, didn’t wait for � anksgiving

week to launch a big holiday sale last November. Instead, he promoted a 96-hour sale starting Nov. 7, off ering 20% to 40% off all items on his site.

“� is was a winning strategy for us because it kept us from having to compete for e-mail inbox space with other holiday off ers,” Schwarz says. RibbedTee’s sales for November and December increased 22% compared to 2011, he says.

Schwarz plans to repeat the limited-time sale early in November when the 2013 holiday season rolls around. And other retailers, too, likely will be looking to get an early start on the holiday season, given that this year there will be only 26 days between the day after � anksgiving, routinely referred to as Black Friday, and Christmas Eve, 19% less than the 32 days in 2012.

� at means retailers will have to fi nd ways to increase their daily sales by 23% every shopping day of the 2013 season to match their 2012 sales, says Fiona Dias, chief strategy offi cer for ShopRunner, a two-day shipping and loyalty program that retailers can off er customers. “� at is not a trivial increase in sales,” Dias says.

If they’re going to increase sales in a shorter season, online retailers will have to closely evaluate the strategies that helped generate a 13.7% year-over-year increase in e-retail sales in November and December 2012 to $42.3 billion, according to web measurement fi rm comScore Inc. A review of the

What holiday 2012 can teach e-retailers as they prepare for a 2013 holiday shopping season withsix fewer prime selling days BY KATIE DEATSCH

Page 38: Internet Retailer 201302

Internet Retailer February 2013 www.internetretailer.com36

� anksgiving and the next day together, store sales actually declined 0.18% compared with the same two days in 2011, says payment proces-sor Chase Paymentech, basing the estimate on its retailer clients’ sales. While total transactions increased 0.15% in stores, the average ticket declined 0.33%, Chase reports, likely a sign of bargain hunting.

But it was a diff erent story online. For � anksgiving and Black Friday online retail sales increased 29.3% to $1.675 billion from $1.295 billion in 2011, according to comScore, which makes its esti-mates by tracking the online activity of a panel of some 1 million U.S. consumers who agree to be tracked.

Online sales for 2012 hit their peak on the Monday after � anksgiving, or Cyber Monday as it’s often called because of the welter of web retailers’ promotions. E-retailers pulled in $1.465 billion in sales, making it the biggest online sales day in history, comScore says, and a 17.1% increase from the Monday after � anksgiving in 2011. Overall, the fi ve-day period from the holiday through the following Monday produced a 21.0% year-over-year increase in online sales, comScore says.

December slump� e strong early promotions had shoppers polishing off their shop-ping earlier in the season than in previous years, but that had detrimental eff ects on December sales. A poll of 8,333 U.S. consum-ers conducted Dec. 4-10 by the National Retail Federation found consumers had fi nished 56.5% of their holiday shopping, up from 46.5% at the same time in 2011. 11.3% of consumers in the survey said they were done with their holiday shopping.

have been down nearly 1% at stores open for at least one year.

December web sales for clothing retailer American Apparel Inc. meanwhile increased 59% year over year, while total comparable-store growth for the chain’s bricks-and-mortar stores only rose 9%. While the apparel retailer, which oper-ates 251 stores, did not provide dollar sales fi gures for December, based on previously released American Apparel fi nancial data Internet Retailer estimates the web accounted for 48% of same-store sales growth in December, even though it accounted for only about 17% of total retail sales.

Thanksgiving weekend� e e-commerce advantage showed up in results for � anksgiving week-end. Many retail chains—including

Wal-Mart Stores Inc., Target Corp.

and Toys ‘R’ Us Inc.—decided not to wait until Black Friday to kick off their big promo-tions, instead opening stores on � anksgiving night. At the same time, several of them, including Wal-Mart and Macy’s, off ered shoppers their Black Friday deals online early on � anksgiving, undercutting their store sales.

� e strategy seemed to move more sales to the web than to physi-cal stores. Taking

from $69.0 billion, the Commerce Department says. (� e Commerce Department reports online retail sales in mid-February.) � at made the season bleaker for stores. “I’d estimate that the growth in online sales is taking about one percentage point off store sales growth,” says Frank Badillo, senior economist at Kantar Retail, which publishes data on retail traffi c and spending.

� e disparity in web-versus-store growth showed up in reports from some retail chains. Best Buy Co. Inc., for example, says the web grew 10% over the holidays while comparable-store sales, which include web sales, were fl at year over year for the nine-week period ended Jan. 5. Web sales rose to $1.1 billion and comparable-store sales stayed even at $12.8 billion. � at means without e-commerce, sales would

RibbedTee.com announced a holiday sale Nov. 7 via e-mail. The retailer says that launching a sale early kept it from having to compete with other retailers for shoppers’ attention.

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www.internetretailer.com February 2013 Internet Retailer 37

of the season all occurred before Dec. 15, comScore reports.

While early deals may have led more shoppers than usual to wrap up their shopping early, e-retailers also developed and promoted ship-ping strategies meant to convince late-season shoppers that they could still count on e-retailers to deliver in time for Christmas. Retailers that use eBay Inc.’s GSI Commerce for fulfi llment, for example, were able to push their fi nal shipping cutoff for Christmas Eve delivery to 11 p.m. Dec. 22, one hour later than in 2011 thanks to improvements GSI made to its operations during the year.

Saks Fifth Avenue, meanwhile, off ered free shipping and guaranteed delivery before Christmas on orders placed before 4 p.m. on Dec. 22, com-plete with a free gift box and decora-tive bow. American Eagle Outfi tters Inc. shipped all items for free through Dec. 20. Sears Holdings Corp. shipped items free until midnight on Dec. 20, and Macy’s promised free shipping through Dec. 20 and

Peter Cobb, co-founder and executive vice president of bag retailer eBags.com also says sales fell off in early December after the strong spurt around � anksgiving—which he calls Cyber Week—and were a bit softer than he expected, though he did not provide details. “People defi nitely shopped during Cyber Week but it tailed off after that and then picked up the last week as the procrastinators kicked into gear,” Cobb says.

Late shippingOnline sales did pick back up again, with procrastinating shop-pers spending $3.686 billion online in the fi ve days from Dec. 17-21, compared with $2.412 billion during the same period in 2011—although part of the increase stemmed from the Free Shipping Day promotion that more than 1,000 e-retailers participated in moving to Monday, Dec. 17, from the previous week in 2011. Still, the heaviest online shopping days

“Sales for a lot of retailers were soft in December 2012 and that’s because companies pushed so many promos in November,” says Sucharita Mulpuru, vice president and principal analyst at Forrester Research Inc. “All they did was push up transactions earlier in the season that were going to happen anyway, and they cut into their margins as well.”

Indeed, e-commerce growth rates growth fell to 9% the week of Dec. 3, according to comScore, well off the � anksgiving week growth of 21.0%.

Among the e-retailers that saw sales fall off before the end of the holiday season was � omas Nakios, owner of apparel e-retailer Lilla P LLC. Nakios says sales started off very strong. LillaP.com’s Black Friday traffi c more than doubled, helping to drive a 119% increase in revenue compared to the same day in 2011. Traffi c on the Monday after � anksgiving rose 215% and sales increased 136% year over year.

� at infl ux in traffi c and sales at least partly stemmed from deal-minded consumers responding to a 25% site-wide discount plus free shipping promotion that Lilla P ran Black Friday through Cyber Monday—an increase from 2011’s discount of 20% with free shipping over the same time period.

Sales from mid-December through the end of the month, how-ever, slowed after the web retailer ended the site-wide sale, and from Dec. 15 through Dec. 31 fell nearly 30% year over year, Nakios says. It may be that more consumers were done with their shopping by that time, but Nakios believes economic fears over the deadlock between lawmakers in Washington, D.C., unnerved consumers and the lack of a discount prompted the drop.

Mobile growth from December 2011 to December 2012

2011 2012Source: IBM Corp.

11.0%

14.6%

Percent of consumers who used a mobile device to visit an e-commerce siteMobile’s share of total e-commerce sales

Growth: 55%

Growth: 44%

22.7%

15.8%

Page 40: Internet Retailer 201302

38 Internet Retailer February 2013 www.internetretailer.com

customers shopping the Wine.com e-commerce site on a tablet, CEO Rich Bergsund says. He says Wine.com’s mobile conversion rate also increased 15% year over year for the weekend. Tablet sales made up about 90% of mobile sales, with two-thirds of tablet sales coming through the browser and one-third stemming from the retailer’s tablet app.

Such strong results reinforced Bergsund’s plans to focus more on mobile this year. � e retailer has new mobile products in the works under the Wine.com and WineShopper brands, and it is now working with wine-related apps, such as Hello Vino, paying them affi liate fees for directing traffi c to Wine.com’s mobile site.

Stronger mobile marketing likely will be on the to-do lists of other online retailers, along with fi nding creative ways to keep shoppers engaged beyond just the peak days of November and December 2013, and coming up with a strategy to deal with a shorter holiday season. But they better get to work. � e clock is ticking.

[email protected]

the retailer from three screens and says three-screen customers are more than 500% more valuable than one-screen customers.

� at’s encouraging Rue La La to raise its investment in mobile this year, he says. “� e success we experienced this holiday season and throughout all of 2012 has proven to us that this is an important channel for 2013. We will be expanding the team and aggressively testing and releasing enhancements to ensure we are delivering the ultimate shop-ping environment.”

Shoppers started consulting these mobile devices early in the season, several retailers report. For eBay’s marketplace, U.S. mobile sales volume rose 133% year over year on � anksgiving and 153% on the day after the holiday. On Cyber Monday, eBay’s U.S. mobile sales volume more than doubled.

Mobile commerce sales doubled year over year over for the long � anksgiving week-end at Wine.com Inc. 22% of total sales for the period from � anksgiving Day through Cyber Monday came through Wine.com’s m-commerce site, its iPad app and

delivery before Christmas on pur-chases of $99 or more.

“Shipping strategies have been trending in the same direction for the past few years—‘free-er’ and faster,” says Dias of ShopRunner.

Mobile mattersIf there was one feature of the season that was not up and down, it was the growing tendency of consumers to shop with their smart-phones and tablet computers. Many retailers reported strong growth in mobile sales and traffi c this holiday season compared to 2011.

IBM Corp. says mobile devices accounted for 15.8% of e-commerce sales in December 2012, up from 11.0% in the same month a year earlier. 22.7% of consumers used a mobile device to reach a retail site, IBM says, with 8.8% coming from Apple iPads, much of it at night and on weekends. Shoppers on the iPad converted at a rate of 4.8%, com-pared to 3.0% for mobile shoppers overall, says IBM, based on data from 500 e-retailer clients.

Flash-sale retailer Rue La La says four of every 10 orders it received over the holidays came from a smartphone or tablet and that mobile sales accounted for 40% of holiday revenue. “Two seasons ago, mobile accounted for only about 5% of our sales,” Steve Davis, president of Rue La La, says. “Our mobile growth has been astronomical.”

� e average order value stem-ming from smartphones was a little lower than orders coming from computers, Davis says, and the average order value from tablets a little higher. And many Rue La La customers used all three types of devices to complete their holiday shopping. Rue La La registered a 70.1% year-over-year increase in December in shoppers accessing

November and December online sales

2011 2012Source: comScore Inc.

online sales

$37.17 billion Percent change: 13.7%

$42.28 billion

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Internet Retailer February 2013 www.internetretailer.com

Capitol Scientifi c Inc., as its name suggests, focuses mostly on selling things like hydrom-

eters, optical coatings and other laboratory equipment and supplies to universities, government research agencies and manufacturers. But nowadays it’s also becoming common for the company to get orders from a new breed of business-to-business customers who fi nd its e-commerce site during a web search.

“With our new web site, we reach people we’ve never targeted before,” says Tylee Van Waes, Capitol Scientifi c’s senior e-commerce marketing manager. She adds that optimizing her site for natural search,

using paid search marketing and off ering promotional information via social media have helped extend Capitol’s market reach.

Among the 70,000 product SKUs on its web site, for example, are cotton-tipped wooden applica-tors that a doctor or scientist might use to gather and test bacteria. But recently an association of model builders placed a large online order for the applicators to give to its members, and has since put a link on its members’ web site to CapitolScientifi c.com. “� ese people are great customers, but they probably would’ve never found us if not for our e-commerce site,” Van

40

Waes says. “It probably never would have crossed their minds that a scientifi c supplies provider would be a source for them.”

A brave new b2b world� at’s an example of how busi-ness is changing in the business-to-business world. � e spread of user-friendly e-commerce sites that have enveloped the consumer-facing retail world is spilling over into b2b markets, as more companies rec-ognize they must provide web sites where customers can easily research and buy, both to keep existing busi-ness and win new clients. It’s not all businesses, to be sure, and it’s not

Procurement managers are consumers, too, and they expect

Amazon-like ease of use from b2b e-commerce sites

BY PAUL DEMERY

Page 43: Internet Retailer 201302

www.internetretailer.com February 2013 Internet Retailer

$1.27 trillion in 2009. (Separate direct b2b e-commerce transactions by manufacturers accounted for another $2.28 billion in 2010, up 21% from $1.89 billion in 2009.)

b2b’s big promiseNon-EDI e-commerce sales—those transacted over web sites equipped with online shopping carts for processing payments—accounted for just less than 30% of the total wholesale e-commerce totals, rising to $402.56 billion in 2010, up nearly 14% from $354.74 in 2009, the Commerce Department reported. By comparison, it noted that total retail e-commerce sales in 2010 were $168.97 billion, up 16% from $145.26 billion in 2009. Forrester Research Inc. “conservatively” proj-ects that U.S. b2b e-commerce sales will reach $559 billion this year.

Even with b2b’s big sales num-bers, however, industry experts say the b2b e-commerce market is still in its infancy. For the sake of compari-son, total wholesale sales compiled by the Commerce Department were $5.77 trillion in 2010.

� e question isn’t whether online b2b sales will keep growing; it’s which sellers will reap those sales. � e answer, says Forrester analyst Andy Hoar, lies within the

equipment and metal materials to power tools, janitorial products and offi ce supplies. � at alone should serve as a wake-up call to b2b sellers still selling only offl ine, technology research and advisory fi rm Gartner Inc. says. “Like Amazon’s business-to-consumer site, Amazon.com, AmazonSupply provides a com-plete e-commerce merchant site, including product catalogs, search and merchandising, shopping cart, payment processing and shipping,” Gartner e-commerce analysts Chris Fletcher and Gene Alvarez say in the June 2012 report, “Prepare Now for the Impact of AmazonSupply on the B2B E-Commerce Market.”

At Capitol Scientifi c, Van Waes says she’s wary of Amazon but also encouraged by its entry into the b2b market as a healthy source of competition. “While having such stiff competition is a threat, it also forces us to step up our game,” she says. “To eff ectively compete with an e-com-merce powerhouse such as Amazon, we need to have a solid, user-friendly e-commerce site that truly provides something of value to the customer.”

It’s not that b2b e-commerce is something completely new. B2b companies have been engaged in electronic transactions for decades through electronic data interchange, or EDI, providing companies with a system of electronically transmitting business documents like purchase orders and invoices and sending payments and confi rmations. In a May 2012 E-Stats report, the U.S. Commerce Department noted that U.S. wholesale e-commerce sales, including manufacturers’ wholesale sales through branch offi ces and including EDI, totaled $1.42 trillion in 2010, up about 12% from

always easy to connect user-friendly web sites to existing business software and policies. But some companies are fi nding a way.

Avoiding the web, many b2b experts like Van Waes say, just isn’t an option for companies that want to grow instead of fall behind.

“It’s a diff erent game now,” says Greg Baldwin, director of e-commerce at Noble Supply & Logistics, which sells to government agencies more than 1 million product SKUs ranging from nuts and bolts to power generators costing thousands of dollars. “� ese customers today require and look for companies that have a strong e-commerce presence, and we see that as an opportunity to stand out among a lot of our competi-tors who are still focused on catalogs.”

But while companies like Noble and Capitol Scientifi c are making aggressive moves into b2b e-commerce, many others are lagging behind. According to a study released last year by business software pro-vider Oracle Corp., which surveyed 120 business and technology execu-tives, only 25% of b2b companies had an e-commerce site.

And just as retailers must look over their shoulders at Amazon.com Inc. and other innovative merchants, b2b players are threatened by compet-itors aggressively moving to the web. One of the biggest competitors in the b2b space, W.W. Grainger Inc., a pro-vider of industrial and offi ce supplies, is investing $40 million over the next few years to upgrade its e-commerce technology and operations.

Amazon’s roleAmazon.com last year launched its own b2b site, AmazonSupply.com, where it sells everything from lab

41

‘While having AmazonSupply.com is stiff competition, it also forces us

to step up our game,’ says Tylee Van Waes, senior e-commerce marketing

manager, Capitol Scientifi c

Page 44: Internet Retailer 201302

Internet Retailer February 2013 www.internetretailer.com

allows it to provide contract pricing for individual customer groups. Working with CorraTech, Noble automated the process of placing new buyers into their proper contract group based on their e-mail address. New buyers from government agen-cies with “.gov” and other letters in their e-mail address identifying their agency, for example, can automatically see products and pricing approved for their buying group.

Magento also provides an exten-sion from technology developer Cart2Quote that lets a buyer on a b2b site request a pricing quote for a particular product order not already covered under a contract, negotiate a fi nal price, then click to buy if buyer and seller agree on terms. � e Cart2Quote pricing quote module runs from $399 to $799; installing the Magento Enterprise platform starts at just over $14,000.

Capitol Scientifi c, which runs its e-commerce site on a technology platform hosted on the web by NetSuite Inc., worked with web development fi rm 360 Cloud Solutions LLC, a certifi ed NetSuite technology partner, to build a custom pricing application that lets each cus-tomer log on to see product pricing based on its contract terms, saving

customized to route such requests to the most qualifi ed person on Noble’s procurement staff , who searches for a supplier. � e inquiring customer gets an e-mail confi rmation of her request from the procurement staff er, followed by an alert within days detailing the item’s availability, price and expected delivery date. � e mostly automated process, which was developed with Noble’s Magento systems integrator CorraTech, expedites what would be a much longer process if the customer had to fi rst request the item through a sales representative. “It allows us to meet the needs of customers more quickly, and retain more sales from customers who instead might go to another web site,” Baldwin says.

CorraTech specializes in devel-oping e-commerce sites using technology from either Magento for mid-size clients or hybris Software for larger ones. Although Magento comes with some b2b e-commerce functionality like contract pricing built into its technology, it also lets companies customize their web sites with technology extensions devel-oped by outside developers to meet additional needs, Michael Harvey, CorraTech CEO, says. Noble uses tiered pricing within Magento that

ability of b2b companies to follow the lead of retail e-commerce sites to provide customer-friendly shop-ping experiences.

“B2b e-commerce is now being judged against a largely superior b2c buying experience,” Hoar writes in the November 2012 report, “� rive By Adopting Proven B2C Principles.” To succeed, he says, b2b sellers need to build sophisticated and compelling online merchandis-ing techniques along with a strong breadth and depth of available products, while also making it easy to fi nd products and check out.

At the same time, of course, b2b online sellers also need to provide fea-tures that go beyond the typical online b2c experience. Many b2b buyers negotiate contracts that provide them with a tailored set of pricing terms, for instance, and they may need to fi rst request a price quote and route the quotation to several managers, before placing an order. A b2b e-commerce site also needs to mesh with custom-ers’ order-approval workfl ow.

Special requestsB2b buyers also may want to place sizable orders for items not readily available on a supplier’s site. While Noble provides about 1.4 million SKUs from more than 1,000 sup-pliers on NobleGov.com, its site for the U.S. Defense Department and other government agencies, there are still times when a customer needs something the site doesn’t carry. In response, Noble designed on its checkout page a “Request an Item” window that prompts a shopper to enter information about the product he seeks, including a description, product number and name of manufacturer.

� e web site, which is built on eBay Inc.’s Magento Enterprise e-commerce platform, was

42

B2b web sales on the rise(In billions)

2000

$25.00

$354.74$402.56

$559.00*

2009 2010 2013

*Estimate Source: Reports on U.S. wholesale b2b sales, U.S. Commerce Department, Forrester Research Inc.

Page 45: Internet Retailer 201302

www.internetretailer.com February 2013 Internet Retailer

address a customer uses when signing up for an account. Reps then learn more about a customer’s interests as well as if and when she needs assistance in placing orders; reps’ commission models take into account all of a customer’s purchases.

Freed from handling all the details of each order that custom-ers can process themselves online, reps can focus more on fi nding new customers and building customer relationships, building on their base of sales and commissions, Van Waes says. Other b2b sellers follow a similar strategy.

“� at’s one of our goals,” Baldwin of Noble Supply & Logistics, says. “To free up sales reps to look for new customers.”

[email protected]

make sure it had both a b2c look and feel while also integrating well with SAP software. Galloup chose Insite Software, whose e-commerce technology clients include manufac-turers, distributors and retailers.

� e new b2b site, which launched last year, avoids the problem of slowly loading pages and off ers a user-friendly interface, including large images of products, site search and images of related items in the shopping cart, Merritt says. It also connects with the SAP software in ways that provide important purchasing features that many customers want, he adds.

A Galloup customer creating a new purchase order in his own company’s software system, for example, can electronically send the purchase order to the Galloup b2b site’s shopping cart, then receive the purchase order back with pricing and shipping details to route through his company’s approval pro-cess. “� at’s part of what prompted us to work with Insite,” Merritt says. “Our former e-commerce software couldn’t pull that off .” He adds that e-commerce accounts for a small percentage of total sales, but that Galloup expects that percentage to grow as more customers get accus-tomed to using the new site.

Freeing up sales repsAmong all the advantages of work-ing with b2b e-commerce technol-ogy, none is more important than the support it provides to teams of sales reps, b2b companies say. Most contract customers continue to work with an assigned rep, who routinely check to see that clients’ online orders are shipped properly, Van Waes of Capitol Scientifi c says.

Capitol Scientifi c immediately assigns a rep to contact each new online customer, using the e-mail

the time of sorting through products marked at general list prices.

For customers who request new price quotes on carted products but then abandon Capitol’s web site before receiving a price quote, Capitol is working with NetSuite technology partner Audaxium Inc. to develop an application integrated with NetSuite’s customer relationship management system that will automatically send repeated e-mails as necessary after the fi rst hour, after three days, then after a week. Each e-mail will be personal-ized based on the product a customer had placed in the cart, with the fi nal message typically off ering a special promotion, Van Waes says.

User-friendly—and fastAs b2b companies seek out tech-nology vendors to support their e-commerce strategies, they face the challenge of getting new applica-tions to work with their existing technologies. � at was the case at J.O. Galloup Co., a Battle Creek, Mich.-based unit of Kendall Electric Inc. that sells industrial pipes, valves and related fi ttings to utility compa-nies and automakers in the Midwest.

Several years ago Galloup launched a b2c site on the free Magento Community e-commerce platform, selling

small items like thermometers and gauges to learn the basics of operat-

ing a shopper-friendly site. It then tested a b2b site, but among other problems, found it couldn’t integrate well with Galloup’s back-end SAP fi nancial and inventory management software, says Gary Merritt, director of marketing for Galloup. As a result, as the site tried to pull up specifi c pricing fi gures according to each customer’s contract terms, pages loaded painfully slowly, taking up to 15 seconds.

So when Galloup decided to build a new b2b site, it wanted to

43

Tips for b2b e-commerce

growth Test the water with a consumer-facing site to learn how to make a site user-friendly with site search and navigation, images and fast-loading pages Let new customers order in small quantities before committing to bulk orders Optimize a site for natural search, while also using marketing via paid search and social media Support customized pricing based on customers’ contracts Provide good integration with back-end fi nancial and in-ventory management software

Page 46: Internet Retailer 201302

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Page 47: Internet Retailer 201302

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Page 48: Internet Retailer 201302

answer most international shoppers’ ques-tions.

“There are a lot of things a retailer can do to address many of the local nuances of selling to international shoppers without having to create a country-specific site,” says Max Niclas Bense, international business development manager for Hermes Europe, a provider of supply chain, sourcing, transport logistics, e-commerce, fulfillment and consumer goods distribu-tion services. “The key is to make sure the customer feels confident they are getting exactly what they want so they are not disappointed when the item arrives.”

Address formatsOne aspect of localization retailers

tend to overlook is delivery. The formats used to address packages vary by coun-try—addresses for packages sent to Brazil require six lines versus three in the United States, for instance—and getting those formats wrong can prevent packages from reaching customers.

“A lot of retailers shipping to custom-ers in Brazil will compress an address into three lines just as they do in the U.S., which can lead the shipping carrier to deem the address to be incorrect,” says Charles Gaddy, business development manager, global solutions, for Melissa Data Corp., a provider of data quality and address management solutions.

Germany is another country where retailers often make mistakes format-ting the address, Gaddy says. German addresses require the street name to be in front of the house or building number, and

areas, and same-day delivery—a must in many large Asian cities—as deterrents rather than solvable problems.

“There is a myth among many retailers that international sales are too complicated, but that is far from the case,” says Jaime Basagoitia, vice president and general man-ager for TransExpress, a provider of interna-tional transportation and logistics services to Latin America and the Caribbean. “What retailers need are partners that can help them understand that overcoming the hurdles to selling internationally is easier than they think.”

Localized web sitesBest practices for retailers selling

internationally start with localizing their web sites. While many retailers interpret this to mean designing a site specific to

each country, all it really requires is making sure they answer questions international shop-pers might have about products before they click the Buy button.

Setting up a customer service center staffed with agents who speak the local language, translat-ing frequently asked questions, offering international size charts for apparel, and using high-resolution images and displaying multiple views of products will

It’s a big world for e-retailers, what with 90% of the world’s population living outside North America, and those that

are not yet making the most of reach-ing consumers beyond U.S. borders are missing out on a huge opportunity. Global business-to-consumer e-commerce sales are projected to top $1.25 trillion in 2013, according to the Interactive Media in Retail Group, a U.K.-based online retail trade organization. Consumers outside of the United States and Canada will account for roughly 80% of those purchases.

Some of the booming overseas markets include Europe, where e-commerce sales in Southern and Eastern Europe are growing rapidly; Asia, where e-commerce sales in China alone could surpass those of the United States this year; and Latin America, which many e-commerce experts feel is a hidden gem.

So what’s hold-ing back many U.S. e-retailers from cashing in big on international markets? Many believe that selling internation-ally is harder and more complicated than it is. Many retailers look at shipping to countries with no postal codes, of which there are about 70, over-coming the language, cultural and consumer behavior differences, facilitating convenient returns, especially for customers living in rural

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Consumers outside North America will buy $1 trillion worth of goods this year

online, and there are a growing number of services that can help e-retailers

reach those shoppers

Max Niclas Bense, international business development manager for Hermes Europe.

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using TransExpress’ service include the Walt Disney Co. and Universal Studios.

The company also markets its services directly to consumers. The shipping process is the same, only the customer provides the retailer with the address for TransExpress’ warehouse at the time of order, result-ing in a charge for domestic shipping. Consumers provide TransExpress with the address they want their packages sent to and TransExpress completes the order once the package is received. The company has signed up more than 600,000 consumers for its service.

“A lot of consumers in Latin America prefer to purchase from U.S. retailers because the prices they offer are often much less than what they can purchase the same item for locally, even after shipping and duty costs are added,” Basagoitia says. “One customer saved 50% off the price of a game available locally, even after shipping, by ordering it from the U.S.”

Convenient pickupAnother way retailers can lower their

international delivery costs is to work with companies that operate consolidation shops where packages can be delivered; consumers then stop by to pick them up. The service is convenient for customers who are not typically home during the day,

as local consolidation centers are often located in businesses that are open in the evening along common commuter routes, such as gas stations and train stations.

Hermes, for example, operates 14,000 Hermes ParcelShops across Germany and 4,000 more in other countries, such as Austria, the United Kingdom and Russia. A European shopper can choose to have her package shipped to one of these facili-ties to avoid multiple delivery attempts. Consumers can also initiate returns via a Hermes ParcelShop.

“In countries where there can be long lines to pick up a package at the local post office, such as Russia, consolidation centers are a major convenience, because people can wait in line at the post office for as much as two hours on a given day,” says Hermes’ Bense. “Consumers can contact Hermes and arrange to have the package sent to the consolidation shop of their choice. This is especially advantageous in peak times like Christmas with record sending volumes having to be delivered successfully on time.”

Emerging marketsBeing a true global retailer, however,

means shipping to emerging markets where the delivery infrastructure is often underdeveloped. In these instances, access to third-party data can help verify an address and a local courier networks can complete delivery.

“Address verification and geolocation data from reliable third parties are impor-tant capabilities to have when shipping to consumers in less-developed economies, because retailers can’t always rely on the local postal service to offer address verification applications,” Melissa Data’s Gaddy says. “Some emerging markets don’t even have postal codes.”

Melissa Data provides retailers with geoc-oding tools that assign a latitude and longitude to international addresses to help identify the final destination where the package is being shipped. The information helps determine if the package is being shipped to a rural area where a delivery agent may be needed to complete the final leg of delivery.

the postal code in front of the town. For example: Herr Karl Schultz, Strassa 123, D-66123 Munich.

Many U.S. retailers will invert the address data to fit the U.S. address format, which can confuse German postal carriers.

“Getting the address right is critical to delivery and if an address is formatted wrong the item may not get delivered or the retailer may have to pay to get the address corrected,” Gaddy says. “Retailers not only need to step out of their domestic practices when shipping internationally to make sure they have the right address formats, but include the right shipping informa-tion, because the cost of an incorrectly addressed package can be a returned item and the loss of that customer’s business.”

Minimize shipping costsAs is the case when shipping domesti-

cally, retailers want to keep the delivery costs down when shipping internationally. One solution is to partner with an interna-tional shipping company that operates a warehouse where international packages can initially be shipped in the United States, resorted, and then shipped to the customer using the destination country’s local postal service.

The process can save consumers as much as 70% off the cost of inter-national shipping through a third-party carrier such as DHL or FedEx, according to TransExpress’ Basagoitia. “That’s a substantial savings,” he says.

Retailers utilizing TransExpress ship packages destined for Latin America and the Caribbean to the vendor’s Miami warehouse. From there, the documenta-tion needed to clear the package through customs is completed, duty is calculated and the consumer informed of the tax due and the final shipping cost. The package is then shipped to the customer using either TransExpress’ own distribution network or the local postal service. TransExpress provides e-commerce support for a number of postal services in the region as well. Consumers are billed by TransExpress for the final shipping leg and pay any duty and tax upon receipt of the package. Retailers

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Charles Gaddy, business development manager, global solutions, Melissa Data Corp.

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riers to monetize the extra space taken up by large, lightweight boxes.

“Dimensional weight is definitely an issue and we talk to retailers about it,” Basagoitia says. “For our consumer cus-tomers we do have to pass along the higher costs for when dimensional weight exceeds actual weight, but we work to negotiate the best possible rates with the airlines to keep shipping costs down.”

Make it easy to payFinally, retailers should localize

payment options to meet consumers’ preferences in each country. Many cross-border shoppers prefer to pay with alternative payment solutions native to their country.

In Russia, for example, cash on delivery is a popular payment method. In China, Alipay is widely used. Alipay is an online payment platform created by online marketplace operator Alibaba Group, China’s dominant e-commerce company. Consumers fund their accounts using a debit or credit card, a money wire transfer or online transfer from their bank account.

“Retailers should offer the top two local payment options and two to three more internationally recognized options to meet consumer payment preferences, such as Visa and MasterCard or PayPal,” Bense says.

With more consumers growing accustomed to shopping internationally online, retailers who make the effort to understand the unique challenges of each country, localize their web sites and delivery options, offer competitive pricing and cater to consumers’ product preferences in each country stand to reap a windfall of new sales.

“Consumer behavior and cultural practices differ in every international market, even between the U.S. and Canada, and retailers need to take this into account from a marketing, merchan-dising and delivery perspective,” Gaddy says. “The retailers that drop their U.S. mindset are the ones that will get the best results selling internationally.” l

services to enable same-day delivery. “Same-day delivery is a must-have in

Asian cities with populations of 10 million or more,” Bense says. “Retailers focusing on China need to set up a local warehous-

ing system for China separate from the rest of Asia to meet the delivery expec-tations there.”

Local warehouses can also help lower the cost of returns, which can be very expensive for international orders. Returned items can be shipped to the warehouse and stored until another order for the item is placed. The order can then be filled

locally, reducing the retailer’s shipping costs on that order, Bense says.

Latin American preferencesOne region where the risk of returns is

lower is Latin America. The reason, according to TransExpress’ Basagoitia, is that many con-sumers in this part of the world are inclined to keep an item that does not fit, such as apparel or shoes, and resell it on their own or give it to a friend or relative who needs it.

“Retailers need to keep in mind that returns for orders from Latin America are much lower than elsewhere because of cultural issues,” he says.

Shoppers who want to return an item can ship it back to TransExpress’ warehouse, which then forwards it to the retailer.

One aspect of international shipping that retailers often overlook is surcharges for dimensional weight exceeding that of the package’s gross weight. Dimensional weight is an unfavorable calculation for retailers that ship lightweight items in large boxes because low-density items take up a lot of space, which makes them less profitable for carriers to ship. Subsequently, the carrier is unable to maximize the payload of its vehicles. Charging by dimensional weight allows car-

Packages sent to an emerging market such as India, for example, may only have the customer’s name and the address of the local post office because his residence may not have an actual address. Nevertheless, the customer expects the package to be delivered to her.

“That’s where geolocating comes in to play, because it zeros in on the address and helps the retailer deter-mine whether a courier with local knowledge of the residents and where they live is needed,” Gaddy says.

Melissa Data’s geocoding tools incorporate spatial data from multiple data sources to deter-mine the most accurate delivery point. The interactive service is available via the web for real-time data, or clients can submit data requests in batches. The company’s address verification service uses data from international postal services, as well as marketing companies and other third parties. “Delivering into emerging markets is a challenge, and the better the data retail-ers have when it comes to validating and locating addresses the better they will be able to serve their customers and reduce costly returns and address corrections after a package ships,” Gaddy says.

Delivery in AsiaFor many retailers looking to sell in

Asia, hiring local couriers to complete the final leg of delivery is a necessity. Many Asian consumers living in large cities in Taiwan and China, for example, expect same-day delivery for orders placed by mid-afternoon and, in some cases, as late as 5 p.m. local time.

To help retailers achieve this goal, Hermes stocks and manages local fulfillment warehouses for retailers. The company then contracts with local delivery

SponSored Supplement

Jaime Basagoitia, vice president and general manager, TransExpress.

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showing signs of maturity,” says Peter Krasilovsky, the company’s vice presi-dent and program director. “� ere has been consolidation in the space, deal conversion rates may be suff ering due to overfamiliarity and the market may

be near saturation.”Some national chains

already use the power of the web to reach consumers near their stores, including Wal-Mart, Sears Holdings Corp. and Walgreen Co. Wal-Mart and Sears both run online localized advertising—Wal-Mart’s is through Facebook and Sears’ is through digital circulars—and pharmacy chain Walgreens lets consumers check Walgreens.com to see what products are in stock at local stores. � e drug store chain says roughly 50% of consumers who shop Walgreens.com say their next action is to visit a Walgreens store location.

� at’s just one example of how online infl uences local shopping. Indeed, while local online marketing

remains in its infancy, among the main demands from local shoppers is accessing inventory and store-location information for nearby merchants, says Steven Roth, vice president of digital strategy for e-commerce marketing fi rm Channel Intelligence Inc.

Wal-Mart stands out for its eff ort to use Facebook to strengthen the bonds between consumers and their local Wal-Mart stores. Summer 2012 brought a marketing push

To reach such consumers, many local retailers are looking beyond the daily-deal programs that in recent years have inspired consum-ers to buy their wares but which also produced complaints from local

merchants about high costs and scant repeat business. A report late last year suggests growth rates for daily-deal programs are cooling off . While the amount consumers spent in 2012 on daily deals, fl ash sales and other online discounts was set to increase nearly 87% compared with 2011, consultancy BIA/Kelsey says, the year-over-year growth rate will start to slow after this year.

“After astronomical growth in 2012, the online deals marketplace is

V isitors to MyRecipes.com, a site for cooking enthusiasts operated by magazine pub-

lisher Time Inc., can look up recipes that range from “low country shrimp pilaf ” to “beef tagine with butternut squash.” Red dollar signs appear before ingredients that are avail-able from local grocers, as determined by the com-puter’s location.

A recent search from Chicago for the ingredients needed to make the latter recipe, for instance, showed that Garden Fresh Market, a regional chain with fi ve locations in the Chicago area, carried Kitchen Basics chicken stock, priced at $2.50 a carton until Jan. 22. Visitors can then add the items to their shopping lists before visiting the store.

� e service, powered by Grocery Server, shows how online retailers are using the web to reach nearby shoppers and consumers interested in regional and local goods. With more than 20% of searches on Google relating to location, according to the search engine, local retailers striving to compete with behe-moths like Wal-Mart Stores Inc. and Amazon.com Inc. can hardly ignore the power of the web to make their sales pitches to shop-pers who are inclined to shop near home. “Internet marketing is a great equalizer for retailers,” says Candace Corlett, president of WSL Strategic Retail, a marketing consultancy.

By Thad Rueter

Beyond Daily Deals

There are more ways for the store next doorto reach shoppers via the World Wide Web

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failings of small, local retailers when they market online, experts say. � at means a chain could show a paid search ad with the address and phone number of one store for a shopper in a particular ZIP code and information about another store to a consumer who lives a couple of ZIP codes away.

“Location targeting within AdWords helped us double our lead volume and cut the cost to acquire new customers in half,” says Lois Erbay, marketing director for California Closet Co., a storage-products merchant that operates an e-commerce site and 77 stores. “We plan on building on that success by using ZIP code targeting to create even more locally relevant cam-paigns for our customers.”

he says. “National shoppers tend to be more specifi cally price-oriented, and are more diffi cult to convert to long-term customers.”

Local technology� e image of the independent mer-chant anchored to the neighborhood may pull at the heartstrings of some consumers, but retailers need more than sentiment to attract shoppers to their stores. Among the most recent tools for local online marketing is a feature released last year by Google for its AdWords paid search program. � e feature enables marketers to customize their paid search ads by ZIP code and insert locations and phone numbers into ad text—leaving out such infor-mation is among the most common

that enabled teachers to digitally submit classroom supply lists, and online shoppers to buy those items via the classrooms.walmart.com site. Around the same time, the chain gave consumers who Like local stores’ Facebook pages early access to the chain’s holiday-only layaway program.

Social jewelerLocal retailers also are using social media in similar ways. Take Calvin’s Fine Jewelry, a 15-year-old store and web retailer with one location in the Northwest Hills section of Austin, Texas. Owner Calvin Smith says that even with the spread of online jewelry retailing, many consumers prefer to visit local stores to see rings, bracelets and necklaces close up, and to develop a personal relationship with a jeweler.

� at’s one reason behind the retailer’s “Bling Blog,” which off ers information on diamonds, colored gems, jewelry designers, current jewelry styles and related topics. � e blog takes advantage of what Smith considers the nimbleness of small local retailers. “National chain com-petitors are not currently able to track quick changes in customer preferences and trends, and lack the fl exibility to quickly reach out to customers in a non-commercial way,” Smith says.

He adds that engaging consum-ers with content other consumers create—Calvin’s e-commerce site highlights the stories and videos of local consumers who have purchased its jewelry—helps him reach younger consumers. � at can be especially useful for those Austin shoppers who, holding true to the city’s “Keep Austin Weird” values, would rather support neighborhood businesses than larger out-of-towners.

“Once local leads are converted to customers they are extremely loyal, and often consider more than just price when making a purchase,”

In late 2012, a consumer in Australia ordered a campfi re poker from a local merchant that sells via ShopMyNorth.com. The Michigan-based e-commerce operation, located along the shores of Lake Michigan, southwest of where it seems to kiss Lake Huron at the Straits of Mackinac, uses emotive photography and other branding tactics to appeal to the tourists who fl ock to an area that boasts natural beauty, art shows, recreation and quaint towns.

The purchase stands as an example of how local merchants, some of whom don’t have their own e-commerce sites, can band together to sell their wares to consumers who are from out-of-town but who feel a connection to a specifi c region.

The 15 or so small local retailers that sell their wares via ShopMyNorth.com were enjoying a strong end to 2012, bringing in at least 134% more revenue in November than in November 2011.

The e-commerce site, operated by MyNorth Media—which publishes local tourism guides and operates a web site—generally charges retailer clients 25% of a product’s sale price. In exchange, MyNorth handles order processing and payment and promotes retailers’ products on the web site, which is built with technology from eBay Inc.-owned Magento, says Deborah Fellows, MyNorth president.

MyNorth also helps to market those retailers via Facebook, Twitter and Pinterest; an e-mail newsletter with about 50,000 subscribers; and a small paid search drive via Google Inc.’s AdWords program. Spending on paid search likely doesn’t exceed $7 per day, or just more than $2,500 per year, she says, which means the site must focus on terms specifi c to Northern Michigan. Such terms include “michigan store” and “northern michigan shopping,” Fellow says.

“We’re never going to win on consumers searching for fl eece jackets,” Fellows says. ShopMyNorth.com’s online marketing effort is aimed at a very specifi c kind of con-

sumer. “You can buy a candle anywhere, you can buy a cutting board anywhere,” Fellows says. “Our shoppers are buying those products because they feel like they are buying a piece of Northern Michigan.”

Selling a local connection on the web

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and what we do,” Hamilton says. ZoeOrganics.com mainly relies on word of mouth and product reviews in magazines, not paid search, to attract customers. Hamilton hopes the video will catch the eye of more shoppers and press reviewers—and help to produce enough business to one day justify a local store in California.

Another exam-ple of a national e-commerce player helping to match local retail-ers with potential customers—in this case, online shoppers looking for groceries—is Grocery Server. For about a year and a half, its technol-ogy has enabled grocers that range

in size from local mom-and-pops to national chains to embed off ers within online recipes available on MyRecipes.com, Recipe.com, DashRecipes.com and elsewhere.

Grocery Server CEO Corbin de Rubertis says the off ers reach about 1 million consumers per day. Retailers pay $1 to advertise one item per day. A further cost-per-click model applies to grocers that sell products online, with costs ranging from about 25 cents to 50 cents per item. Grocery Server aims to sign up more local farmers’ markets in 2013, de Rubertis says. � at would give, for instance, the maker of organic honey or spinach produced on a farm just outside a spe-cifi c city a broader potential audience for its goods, he says.

Local still matters to consumers, and the web is helping to make neighborhood merchants more neighborly.

[email protected]

@ThadRueterIR

Services. Based in Aliso Viejo, CA, BuyTV Services operates a recording studio where video professionals pro-duce promotional messages. BuyTV Services employees also can travel throughout North America to record on location, says Sheree Martin, BuyTV’s executive producer. “BuyTV Services is available to any businesses that are looking to improve their online presence, as well as existing Rakuten Buy.com merchants,” Martin says. A spokeswoman for the company says some 5,500 merchants sell on the e-commerce site, which recently changed its name to Rakuten Shopping.

She says BuyTV works with clients to determine pricing, with costs depending on such variables as length, location and general com-plexity. “On average, a 30-second to 1-minute video can cost approxi-mately $1,500 and a 3- to 5-minute video shoot can cost approximately $5,500,” she says. Merchants that make videos through BuyTV can link to those presentations via the production arm’s platform on video-sharing site Vimeo, embed videos on their own web sites, or receive videos on CDs or USB drives.

Web-only retailer ZoeOrganics.com, a high-end beauty and health products founded in 2010, is among the initial merchants to post on its site a video produced by BuyTV. In the video, Heather Hamilton, the retailer’s founder and CEO, explains why the company was founded and its mission, comple-menting the written “Our Story” feature on the site. “We wanted to give people a peek of what we are

E-commerce technology providers are also off ering new tools for localized online marketing, including software that helps mer-chants without experience marketing on the web. For instance, about a quarter of the 1,300 gyms that oper-ate under the Snap Fitness banner use software from Balihoo Inc. to manage online marketing, says Brant Schmitz, the chain’s online marketing manager.

� e service costs each location about $200 per month—franchise owners decide how much of their marketing budgets to allocate to the program—and the technology enables them to set up pay-per-click search campaigns with minimal fuss. Schmitz says the national chain pro-vides some guidance, for instance, highlighting about 700 keywords that gym owners can profi tably bid on. Local managers, however, can come up with other search terms that refl ect their areas, such as “3rd street gym” or “gym and uptown.”

For chains, says Balihoo chief marketing offi cer Shane Vaughan, the ideal mix of content on web sites is 60% national and 40% local. Some of that local content can come from blogs on the e-commerce site or via social networks; in the case of a gym, that might include putting a call out for a local run on a sunny day, he says. In fact, the local Snap Fitness managers set their social media strategies. But, Schmitz says, that’s less important than Google, which accounts for 85% of the chain’s overall site traffi c.

New toolsLocal and small retailers seeking to reach more online consumers and strengthen their brands also can take advantage of new online marketing services. At the end of 2012 the mass merchant e-retailer and marketplace Rakuten Buy.com launched BuyTV

‘Once local leads are converted to customers, they are extremely loyal.’ Calvin Smith, owner, Calvin’s Fine Jewelry.

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ops&tech

according to eMarketer Inc.Shipping internationally isn’t

as easy as shipping to Dallas, but e-retailers willing to invest time in fi guring out the intricacies say it isn’t too hard. Some bootstrap it, using online resources available from the government and major shippers to cobble together the required documentation, while

others implement services from online marketplaces and shipping services vendors to handle it on their behalf.

Going it aloneE-retailer PriveCo Inc. has sold and shipped products internationally since its 1998 launch. Th e e-retailer sells a range of products many consumers tend to keep pri-vate, from vibrators to Rogaine. CEO Tom Nardone says the company never specifi cally pursued international sales,

but they came anyway. Over the years, PriveCo has

shipped products to consumers in 74 countries, and Nardone says today 14% of company revenue and 13% of orders shipped come from international customers. Th ere have been some bumps along the way, but between working with shipping carriers DHL and the U.S. Postal Service, PriveCo has been able to

that experience that what may seem harmless can get a package caught in a cross-border customs maze that can postpone delivery and upset customers.

Finding ways to simplify international shipments is increas-ingly important as e-commerce sales outside the United States are booming. Despite a recession

in Europe, online retail sales in the European Union rose 18.2% in 2011, from $219.96 billion to around $260 billion, according to the Centre for Retail Research. Th at’s faster than U.S. e-commerce sales growth of 16.2% over the same period. And e-commerce sales in Latin America grew around 33.6% to $29.70 billion from $22.23 billion from 2010 to 2011,

Greg Griffi th’s motives were good. As an employee at a retailer that sells Jeep parts, he

wanted to thank a repeat shopper for his business. So he threw a couple promotional hats, a T-shirt and a mug into the customer’s order.

Had the customer lived in the United States the goodies would likely have been a welcome ges-ture. But the shopper lived in the United Kingdom. And because he lived overseas an act designed to build cus-tomer loyalty morphed into a customer service nightmare.

Griffi th didn’t want the shopper to pay taxes or duties for the free merchandise and so he left those items off his invoice for U.K. customs offi cials. But customs noticed the oversight and held the package.

To resolve the issue, Griffi th had to send a new ship-ping invoice showing the items’ value. Th e process extended the time it took for the shopper to get his goods by several weeks. And the customer ended up having to pay customs and tariff s.

Th at scenario shows that when it comes to shipping goods over-seas, retailers can’t let any details slip. Griffi th, who is now general manager of auto parts e-retail sites PerformanceParts.com and PowerandPlay.com, learned through

By Katie Deatsch

All Clear

When it comes to getting packages throughcustoms, every last detail matters

services from online marketplaces and shipping services vendors to handle it on their behalf.

E-retailer PriveCo Inc. has sold and shipped products internationally since its 1998 launch. Th e e-retailer sells a range of products many consumers tend to keep pri-vate, from vibrators to Rogaine. CEO Tom Nardone says the company never specifi cally pursued

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example, allows kitchen knives but bans hunting knives, according to a restricted goods list maintained by mailing services firm Pitney Bowes Inc.

Navigating the mazeWhile the rules and regulations may seem tedious, retailers have to pay heed to them.

For instance, Nathan Hartnett, an Australia-based entrepreneur who ships glob-ally from retail sites includ-ing VurgeJewellery.com and FascinatorsAustralia.com.au, learned the hard way that retailers have to assign a value to all goods

shipped abroad. He shipped a replacement wedding band to a customer in Poland when the customer’s ring didn’t fit. The customer returned the ill-

fitting ring and Hartnett shipped a replacement for free putting a value of $0 on the invoice so that the shopper wouldn’t have to pay fees to receive the ring. Polish customs launched a lengthy investigation to see if both parties were trying to escape paying tax. Customs held the package for about a week before they accepted revised paperwork that contained values for all the items so that they could collect taxes.

For retailers like Hartnett, who don’t rely on help from a vendor, fees can be a major issue when shipping globally. “When we ship to a new country, we contact the customer and let them know that we have not shipped products to their country before,” he says. “We tell them it’s possible there will be

Department off ers guidance with its manual Preparing Your Business for Global E-Commerce available at http://export.gov/ecommerceguide/. Th e guide walks retailers through key points about merchandising, international product coding stan-dards, taxation and tariff s, shipping rules and payments. Major shippers, such as FedEx Corp. and UPS, also have guides that walk new interna-tional shippers through the docu-mentation they need to include. Th ey also off er free software that can help in document preparation.

A number of documents are required in every international shipment. Those include basic

forms like a packing list, complete with the details and value of everything in the box, and three copies of the commercial invoice complete with the Harmonized Commodity Description and Code.

The Harmonized Code is an international system for classify-ing traded products developed by the World Customs Organization. The first six digits describe the product, such as a shoe or a laptop. The last three describe the materials used. For example, a shoe might further be described as a pair of shoes with a leather upper and rubber sole.

The code is necessary because various countries place restric-tions on certain materials and items from overseas. Australia, for

learn the ways of international ship-ping. Th at includes knowing how to prepare packages for shipment, respecting individual countries’ import rules and being ready for customer service questions.

All orders that ship internation-ally go through several checks before leaving the retailer’s warehouse. After the international order is picked, the order routes through PriveCo’s one full-time customer service staff er who verifi es the desti-nation address is valid and formatted correctly. He also pulls together all the necessary documentation, such as the packing list and commercial invoice, which is prepared using either DHL’s free international shipping soft-ware or software from the USPS, and verifi es that the destina-tion country is one the State Department says is OK to do business with.

Th at’s not to say there aren’t hiccups. Some of PriveCo’s more risqué products sold on Bachelorette.com are prone to problems with customs. Orders to customers in India, for example, sometimes take 30 days to arrive. PriveCo’s customer service staff er routinely responds to e-mails about delays from international custom-ers. Customer service also has to respond to questions about taxes and duties, which PriveCo does not collect. Customers have to pay any applicable fees upon delivery.

Helpful resourcesTh ere are additional resources avail-able for e-retailers ready to take on international shipping.

Th e U.S. Commerce

Internet Retailer l February 2013 www.internetretailer.com

shipped abroad. He shipped a replacement wedding band to a customer in Poland when the customer’s ring didn’t fit. The customer returned the ill-

Tom Nardone, PriveCo CEO:“Our opinion was somebodyordered it. Let’s just ship it.”

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purchase the goods using PayPal.From the seller’s perspective

eBay Global Shipping aims to make selling internationally little different from selling to domestic shoppers. The seller pays the same fee to eBay he would for a domestic purchase and he ships the package—along with a form that contains a code, provided by eBay, that identifies the international shopper’s address—to Pitney Bowes’ warehouse in Kentucky. At the warehouse the vendor prepares the item for cus-toms, and then ships it out.

Most shoppers receive their purchase within a week after it arrived at Pitney Bowes’ warehouse, eBay says.

The program takes the guess-work out of selling internationally, says eBay seller Kevin Clounch, co-owner of Ken’s Sewing and Vacuum Center. When Clounch tried to sell to Canadian shoppers in 2005, about 75% of orders were refused by consumers because of duties and taxes they had to pay to receive the goods once they arrived in Canada. Clounch couldn’t account for those fees, he says, because eBay didn’t offer a way for him to calculate what the fees would be. And when a package got rejected, Clounch had to pay brokerage and tax fees to get it returned to him.

That led Clounch to stop ship-ping internationally—until last year. Since he began using eBay Global Shipping, the retailer has grown its sales by about 30%, and about 20% of the retailer’s orders now come from outside the United States, Clounch says.

Clounch’s experience shows that selling internationally offers a huge growth opportunity. But only if mer-chants have systems that ensure that packages reach shoppers’ doors. l

[email protected]

explain why he’s only had items held by customs a handful of times in the past 13 years.

Vendor valueAfter his customs debacle with U.K. customs officials, PerformanceParts.com’s Griffith decided to let a shipping service vendor do the work for him. Griffith is in the process of imple-menting a service from vendor BorderJump LLC that will handle services like duty calculation and shipping and logistics.

Soon, when foreign shoppers check out on PerformanceParts.com and PowerandPlay.com, they’ll be redirected to a site operated by BorderJump where they’ll see the sales total converted to their local currency and all fees so they’ll know the total cost to get the goods in hand. BorderJump negotiates fees differently for each client but, on average, charges 10% of the goods sold. When a foreign shopper completes her order, the retailer will ship the goods to BorderJump’s New Jersey warehouse and BorderJump ships the goods to the consumer. From the time the pack-age leaves New Jersey, BorderJump says it takes about three to 10 days to arrive at the customer’s door.

Last year online marketplace eBay and Pitney Bowes joined forces to launch a service for eBay sellers to help them more easily sell to consumers in 18 countries, including Australia and Finland.

The service, called eBay Global Shipping, is free for sellers. When a foreign shopper clicks to buy an item from a participating retailer, she’s asked to enter her postal code. Based on her location, the service calculates the final price, including the item’s list price, shipping fees and import charges. Shoppers must

additional fees charged by cus-toms, but we will help keep them informed.”

Selecting a shipperMichael Hess, founder and CEO of Skooba Design, which sells bags for holding laptops and tablets, says he initially worked with a vendor to help with inter-national shipping but has since dropped it in favor of handling global orders on his own. He says when consumers saw the shipping fees charged by the vendor nearly all of them abandoned their carts.

Skooba Design launched a new e-commerce site in 2011 using eBay Inc.’s Magento e-commerce platform. Now when a shopper selects a country other than the United States at checkout, the retailer automatically changes the shipping provider to the U.S. Postal Service, which Hess has found offers cheaper international rates than UPS, which he uses for all domestic orders. Hess also offers international shoppers a 25% discount to help cover Value Added Taxes, duties or other fees that the shopper may have to pay when an item hits his home country.

The site relaunch took around six months and setting up the international shipping module ate up around three weeks of that, Hess says. “It was a fairly substantial project,” he says. “We had to tell the site that a lot of the required fields for U.S. addresses were not required for international.”

When preparing an interna-tional shipment, Skooba accesses and prints out a customs document from USPS.gov that includes a description of the product, its value and its country of origin. Having a streamlined process helps him avoid potential pitfalls, which helps

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mobile inroads, and many store-based retailers are not sitting idle, either. To win at the shelf, web retailers need to hit a fairly high standard right out of the gate with competitive product research tools and steal-the-sale opportunities.

Product researchWhile most of the brouhaha in retail around mobile has focused on showrooming—the practice of using a retail store to look at an item that a consumer ulti-mately purchases online—in reality consumers conduct a lot of product research that does not focus on price. Retailers that choose to go after ownership of this contact point should keep in mind that there are strong contenders that many consum-ers use when researching at the shelf. Whether you choose to go it alone, or employ a strategy that takes advantage of aggrega-tors like ShopSavvy Inc. or eBay Inc.-owned RedLaser, you’ll need some basic capabilities:

Search and browse Bar code scanning is a necessity. It is available across most shopping aggregators, alongside keyword search. Beyond that, apps from Amazon.com Inc. and Google Inc. off er image search, which enables a consumer to run a search using a photograph taken with her smart-phone camera. But when it comes to products, that image search leaves a lot to be desired. On a recent store visit, pictures of toast-ers on the shelf yielded matches to things like blade servers, if the app

this is a problem for them. And that’s why many are rushing to put mobile technology into their employees’ hands so that they will be able to access the information available on the Internet as they engage shoppers.

As far as retail priorities go, the future of the store is among the top three for nearly every store-based retailer that I and my colleagues speak with. But oddly, even with this kind of priority, consumers’ use of mobile in stores seems to be a

strange blind spot at the executive level of store-based retailers. 40% of retailers in Retail Systems Research LLC’s last pricing survey reported that they had not seen any evidence of showrooming activity, such as consum-ers checking online prices from their smartphones, in their stores.

Th at blind spot off ers a huge opportunity for web retailers to steal away one of the biggest touch points in retail—the store. But it’s important to note that this is not a greenfi eld oppor-tunity. Several shopping comparison apps have already made signifi cant

By Nikki Baird

Up for Grabs

What Internet-only retailers need to knowto better compete for shoppers in store aisles

I once heard a retail executive say his mantra for customer engage-ment is that every touch point

with a customer is an opportunity for a competitor to st eal his cus-tomer away. In other words, if you don’t own every point of contact, someone else will. Nowhere is this more true than in the store.

For example, if you search for “vacuum cleaner” on Google today, you’ll fi nd about 49 millionresults. Included in those results are brands, prices, ratings, reviews, even inventory availability at store locations nearby. But if you walk into a store, you’ll be lucky to fi nd six or eight options that you can select from, assuming they’re all in stock. You may get a placard that has the price and a few lines of product descriptions that probably repeat infor-mation already printed on the box. You won’t fi nd ratings or reviews, guidelines on what to look for in a vacuum cleaner or a guide that can help you determine which vacuum is best for you. And please, don’t expect to fi nd a knowledge-able employee to help you.

Store-based retailers understand

Nikki Baird is managing partner at research and advisory fi rmRetail Systems Research LLC.

Page 61: Internet Retailer 201302

www.internetretailer.com February 2013 l Internet Retailer 59

of the three on display was out of stock.

A quick search on Amazon for “toaster” yielded more than 4,000 results. Narrowing my search to “4 slice toaster” still yielded 1,117 results. That’s versus the three that I could actually buy in the store.

Does Target only sell four toasters online? Actually, a search on Target.com shows they sell 141 toasters. But were any of those offered or communicated to me in store? No.

With the mobile web, there’s nothing preventing a customer from seeking alternatives. In focusing on in-store inventory the store retailer leaves the door open for another retailer to walk in, offer those alter-natives and steal the customer.

For web retailers, a word of caution: This is where search results and filtering capabilities become differentiators. It doesn’t do any good to overwhelm a shopper by offering 1,117 four-slice toasters if she can’t easily narrow down those choices to the one she wants to buy.

Bringing the A-gameStore-based retailers are rapidly building larger assortments online, with far more information about those products than will ever appear on store aisles. But that bias toward getting the consumer to buy the product that’s in stock and on the shelf is holding them back—and it poses a major opportunity for more enterprising retailers to come in and steal those shoppers away.

Store-based retailers won’t take this encroachment lying down for long. For e-retailers, all that means is if you want to take on retailers at the shelf and you bring your A-game, there’s a real opportunity today. l

For example, mobile shopping app provider ShopSavvy reports that only 30% of first-item scans lead to the shopper purchasing outside of the store she is standing in. Of that 30%, about half take place at another local store—not online. Where online retailers make the most competitive inroads is on the second item scanned. Half of those won’t typically convert in stores, and these have a much higher likelihood of con-verting online.

When you think about the type of behavior behind this result, it starts to make sense. Retailers understand which items are most important to them competitively and they stay very sharp on those prices. But they try to make up that margin with add-on items that surround that main purchase.

In the vacuum cleaner example, the store-based retailer might com-petitively price the vacuum cleaner, but lose out when the consumer compares prices on attachments or filters. For online retailers, these add-on sales may be more fertile ground for winning over the store-based shopper.

Steal the saleRetailers can win over shoppers at competitors’ stores by offering alternatives to a poor in-store selection. This is also the area where stores fail their customers. The point of view of store retail-ers is simple: I have the product. It’s right here, just buy it! But the reality of what shoppers want is different.

Let’s go back to the toaster example. On the day I shopped, my local Target store had four toasters for sale. Only three of them were on display, a fourth was stocked on the shelf but not displayed, and one

found anything at all. But once an item or category

is searched, how search results display on a smartphone screen can also differentiate one retailer or aggregator app from another. For example, an app like eBay’s Milo (in the process of rebranding to eBay Local) excels in displaying a concentrated amount of relevant information in a very small space. It conveys a lot of information to consumers without making them take extra steps.

Product detailsProduct detail pages are also an opportunity to provide a differenti-ated experience. In the grocery category, apps like Fooducate and ShopWell do a good job of provid-ing more information than con-sumers typically get from a product box, including nutritionist-driven health ratings, alerts against a list of allergies or specific requirements like “no more than 6g of sugars.” Nearly every app offers some kind of ratings and reviews functionality.

Product locatorFor retailers with web and store operations, a map-based display of store locations where the item in question can be found is a basic requirement for product research. To differentiate here, some kind of guidance on inventory availability would be needed, even if it’s as simple as “yes/maybe/no.”

Price comparisonOf course, price comparison can’t be ignored, especially when that is the place where online retailers tend to have an edge over store-based competitors. But shopping aggregators are learning that consumers aren’t using them how you’d expect.

Page 62: Internet Retailer 201302

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$20.3 billion$20.3 billion

Mobile online retail payments

Traditional online retail payments

$297.6 billion

5.7%

6.8%7.4%

8.5%

9.5%9.9%

5.0%

9.0%

8.0%

6.0%

Internet Retailer February 2013 www.internetretailer.com

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64

Source: Javelin Strategy & Research

E-commerce will account for 9.9% of retail purchases by 2017

E-commerce takes a bigger slice of the overall spending pie

Shoppers use their mobile devices to buy online

What’s keeping shoppers from buying online

U.S. consumers spent $317.9 billion on online retail and travel purchases last year, which was 7.4% of total retail spending, an increase from 6.8% in 2011, according to the “5th Annual Online Retail Payments Forecast 2012-2017,” by fi nancial services research and

consulting fi rm Javelin Strategy & Research. By 2017 that percentage will hit 9.9% as consumers spend $458.0 billion online, Javelin predicts. Despite the gains, 12% of shoppers still don’t shop online. The single biggest reason for not shopping online, cited by 32%

of those who don’t, is that they want to purchase in person so they can see merchandise and avoid returns. But many others are concerned about security. For instance, 26% said they are concerned that personal information will be used fraudulently.

(Online retail and travel payment volume in billions of dollars, and percentage of total sales)

(Respondents could select more than one response)

2012 U.S. online retail spending:

$317.9 billion

2008

$202

2009

$215

2010

$234

2011

$282

2012

$318

2013*

$352

2014*

$379

2015*

$407

2016*

$432

2017*

$458

*Forecast

billionThat’s 6.4%

of all online retail purchases

Prefer to see the merchandise and avoid returns 32%

Concerns that personal information will be sold to other merchants 18%

Concerns that credit or debit card data will be used fraudulently 21%

Don’t have a credit or debit card 13%

Concerns that personal information will be used fraudulently 26%

Can’t afford to make online purchases 15%

Shipping costs are too expensive 20%

Prefer to use a more anonymous payment method than is typically offered online11%

Other4%

Page 67: Internet Retailer 201302

At 208 pages, the Social Media 300 delivers never-before-published data, including the following:

Ranking of online retailers by 2012 traffi c percentages from the top three social media channels

2012 social commerce sales fi gures

Average conversion rates and order values for visits from social networks

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Detailed case studies on the leaders in social commerce

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So who are the pioneers in the quest to stake claims in this ever-growing e-retailing territory—the retailers who are Tweeting all the way to the bank? Internet Retailer delivers the fi rst publication of its kind with the debut of the 2013 Social Media 300, the new research guide that compre-hensively ranks and analyzes 300 North American e-retailers’ presences on the major social networks (Facebook, Twitter and Pinterest) based on percentage of site traffi c and sales from those social media channels.

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Page 68: Internet Retailer 201302