Top 1 thing you can do to thrive in today’s economy
Lots of people are blogging about what to do in this sluggish economy to keep ecommerce sales up. Frequently, advice comes packaged in seemingly simple lists—17 search friendly tips, 4 quick fixes, 10 ways to boost sales. It’s not the abundance of these opinions that really strikes me, but that much of the advice feels like yesterday’s news. Offer free shipping? Buy up lots of keywords? Offer coupons and discounts?
The inclination for everyone in these difficult times is to hunker down and find security in tactics that are “tried and true.” Fair enough. Surely it can’t hurt to improve on search engine optimization or offer free shipping. But will these tactics alone keep ecommerce sales up for your site? And further, how do they differentiate you from other retailers?
Upwards of 85% of online retailers already offer free shipping promotions (Forrester Research, 2008). The next most popular promotional methods are all variations on price—discounts, added value, and cash rewards. According to Performics, in a study released mid-December, retail sales generated by search engine marketing were up 43% on Black Friday, year on year. That’s a lot of spending to get people to spend—particularly in light of the fact that the cost effectiveness of these tactics is slipping. The ROI associated with free shipping is decreasing as costs are going up (FedEx announced in November that it is increasing overnight shipping rates by 6.9%). And, as retailers push more advertising/marketing dollars to SEM programs, they can expect increased competition for key words.
What to do?
Sarah Lacy’s BusinessWeek article last week, aptly titled “Time for E-Commerce 2.0”, provides a glimpse at the answer. She believes that online consumers have grown bored with today’s marketing tactics and online shopping experience, which have remained relatively unchanged in the last ten years: “More than a decade after the Internet revolutionized how we shop, innovation in e-commerce has hit a wall.” Though she offers up 5 ways online retailers could make it better, I believe they can be summed up as one core idea: improving the shopping experience to increase conversion.
The hyper focus on driving traffic to a site and then applying promotional tactics during checkout is symptomatic of a chronic problem that has long stymied ecommerce—low conversion. The average conversion rate continues to hover around 3%, which means that 97% of visitors leave sites empty-handed. Instead of innovating to capture these lost sales, retailers have become satisfied with merely compensating for this low rate of conversion. To date, ecommerce has successfully solved for the beginning (driving more traffic to their sites) and the end of the shopping cycle (incentivizing the customer at the checkout line). It’s time for retailers to focus on evolving and enhancing what I’d like to term “the 97% middle” of the buying process: the shopping experience. To break into specifics:
Navigation. Unfortunately, for today’s online shopper, browsing through online “store aisles” is often analogous to bumbling around a store with blinders on, without the help of a store clerk. Site search and browse can be optimized, but discovery tools like personalized product recommendations can help shoppers find what they’re looking for, faster. Even simpler tools such as “breadcrumbs” and other general site layout improvements can materially improve navigation.
Overall experience. Online and off-line, it’s often intangible aspects that attract people to a store, and then back again for a second purchase: the ease of well organized aisles, a welcoming look & feel or “vibe,” great customer service, and so on. Improve these aspects of the shopping experience, and you’ll improve conversion.
Content. Everyone knows that Amazon.com is nearly as popular for their customer reviews as they are for the products they sell. Content, be it editorial or user generated, helps shoppers engage your site and decide what to buy.
Merchandising. Every site page—not just the homepage or the checkout pages—should be viewed opportunity to implement enhancements that illuminate your inventory, guide your customers, and then propel them to a purchase. This could range from displaying best sellers to complimentary items to simply recently viewed items.
Transparency. Is it easy to find your return policy? What about your shipping rates? How about deep product information, including multiple product views? Can customers easily contact you? The answer to all these questions should be yes. For online shoppers, transparency leads to trust –which leads to buying.
As Lacy contends, “E-commerce is at a crossroads. The industry can delude itself that growth will pick up once the economy rebounds, or innovate its way to higher sales.”
Ultimately, no matter how many top 10 lists you implement that drive expensive traffic or cut into your margins, the single best thing you can do to help you survive and thrive in this economy is focus on that 97%, and make shopping easy and enjoyable on your site. That will build your brand and deepen relationships with your customers—so next time they’ll skip the search engine and come straight to you. “Really?” you might ask? It worked for Zappos.