Practical Ecommerce

JupiterResearch’s Patti Freeman Evans

Patti Freeman Evans has been in the ecommerce industry before the beginning. For the past 19 years she has been creating customer-centric ecommerce sites, integrating channels effectively, developing innovative marketing initiatives and ensuring high-standard customer service and order-fulfillment operations. If her name rings a bell you have probably read her quotes in The Wall Street Journal or The New York Times or seen her on MSNBC. She serves on the Shop.Org board of directors where she runs in some pretty fast company — Lorna Borenstein, vice president of Yahoo!; Matt Corey, vice president of marketing at Golfsmith; Seth Greenberg, chief executive officer at eHobbies; Steve Kahn, vice president of Internet marketing at Victoria’s Secret Direct–– you get the idea.

When it comes to understanding what makes ecommerce tick and why it is a force to be reckoned with in the future of retail, few people have the experience, facts, figures and deep understanding that she possesses.While she travels in a retail realm where clients and peers measure their success in tens of millions of dollars in sales each year, what she has learned and what she sees as the future of Internet sales relates to everyone who would sell anything on the World Wide Web.

A lead analyst with the New York-based JupiterResearch ), she specializes in online and multichannel retailing and the ecommerce components of consumer spending. Multichannel retailing is not a new concept, but it is one that major retailers have taken more notice of since the Internet became one of those channels.

ALTFREEMAN EVANS: Multichannel retail is a method where the retailer sells to consumers through multiple touch points. There have been multichannel retailers for a long time, for example, Bloomingdale’s. Bloomingdale’s has retail stores, but they also have a catalog, so they were selling through two separate channels. Now the Internet adds a third channel. So what has been happening, because the Internet is so ubiquitous, and it is so easy to access and easy to use for research, is that consumers are beginning to use all three channels at once when they shop with a company like Bloomingdale’s. Now customers expect to see the same branding, the same service, the same merchandise and the same pricing through all three channels. That makes it necessary for the retailer to make sure those channels all operate in unison and be sure that the consumer expectation is met across all channels no matter which the consumer chooses to work with.

PeC: That begs the question raised by some consumers who complain that pricing, for example, is different on the Internet than it is in the store and vice versa.

FREEMAN EVANS: That is an issue the multichannel retailer faces; consumers have said they want to see consistency in price and other areas across the channels. While there are exceptions, for the most part we’re hearing that consumers are finding that kind of consistency. There may be the occasional promotion or price difference between channels, but the successful retailers do have it because their customers demand it. When we find that people expect to find a lower price online, that’s really because there is access to a much broader range of retailers than there is in the local market.

PeC: There seem to be a number of the major retailers, Golfsmith comes to mind, that are urging customers to order online and then pick up the purchase at a nearby store. Why not just get them into the store?

FREEMAN EVANS: A lot of it comes down to convenience or what is more convenient for the customer. Is it more convenient for me to just get into my car and go and spend some time in the store? Or maybe it is easier for me go online and research it and make my purchase. Then they decide, is it easier or more efficient to have the merchant ship it or for me to run by and pick it up. The Internet offers the flexibility of meeting my needs. In-store pickup benefits consumers in that they don’t have to pay for shipping, they can get the item they want right away, ensuring they get what they want when it is available. From the retailer’s perspective, those who shop online and use store pickup tend to be the very good, very loyal customers, who actually spend more than those customers who haven’t shopped online. There are case studies that indicate, for example, REI customers who come into pick up online orders end up making more purchases as well in the store.

PeC: We still have a lot of people, both retailers and consumers, who don’t really believe that the Internet is a viable merchant tool or that there really is a future in ecommerce. What’s your response to that kind of thinking?

FREEMAN EVANS: Well it is here, and it is here to stay because there is benefit to the consumer. If the consumer wasn’t getting any benefit out of it, it wouldn’t be here to stay regardless of how great the technology was. It is convenient. Customers can shop where they want, when they want and how they want to. In some cases, they can save money. And they can research products in a way they couldn’t do in the store, or they would rely on the sales associate in the store, which may or may not be a good way to get information. It gives people the freedom to research a product — my husband, for example, will spend days researching a product no matter whether it is a $10 or a $100 purchase. But he feels so good about the purchases he makes, and that’s what we find: consumers feel better about the purchases they make because of the broad spectrum of information available online. Also, right now, about 65 percent of the total Internet user base in the U.S. shops online. That will grow to about 75 percent over the next five years and that’s where we think it tops out. We’ll never have 100 percent of users making purchases online for a whole variety of reasons — they just don’t want to, they don’t feel safe using credit cards online or they are too young. We have lots of little kids using the Internet who can’t make a purchase of their own. Having said that, we’ll hit $95 billion in online sales this year, which is 5 percent of the retail market. Now that sounds small, but we’re only into online sales industry 11 years. No other channel has had that kind of growth. Catalogs have been around for a long time, and they never approached a growth trajectory like this. Plus, a big share of the retail sales is for things you can never buy online, like gas for your car.

PeC: Given everything you’re telling us about multichannel sales, how important is it that the smaller, brick-and-mortar merchants make use of the Internet channel?

FREEMAN EVANS: It is coming to be very important, and there are a number of reasons why. The first one is the idea that people go online to research their offline purchases. In order to be considered in that set of options, you better have an online presence. We’re projecting that by 2010 nearly half of all retail sales will be influenced or transacted online. The “influenced-by” number comes from the people who will go online maybe to just find a store or maybe to do days and days of research on a product. Then they go offline and make the purchase — this is a huge, huge number, about 40 percent of total U.S. sales in 2010. Secondly, the small retailer who has one store or a small number of stores, can access a customer base online that is infinitely broader than what they could access in their own local market. There is a great example of a small Massachusetts company that sells foie gras. They sell far more product to customers in California in their online business than they do to their local customers.

PeC: If the smaller web seller is going to be part of that research equation, how important is deep content to attract the search engines and return visitors?

FREEMAN EVANS: First of all they need to think about their brand and how they are going to communicate that brand in this online environment. In doing this they need to think, long and hard, about what makes them different from anyone else. In the typical web design, you have a logo in the top left corner, a navigation bar across the top and down the left. And if you put your finger over the logo it might be hard to tell who that retailer is. It’s not a matter of the navigation being the same, but is the messaging and imagery and what you’re saying to the customer that differentiates you from competition. Smaller retailers really need to understand that and move forward with that in mind. The content they develop needs to lead towards that brand presence. It’s not that you need to change it all the time, just change it when it makes sense, and that content needs to be of value to the customer. This means retailers need to start thinking like consumers much more than they ever have in the past.

PeC: Do you have thoughts on how to make that content of more value?

FREEMAN EVANS: One of the ways is to solicit feedback from your customers. You can do it via your website or via email. Customers will tell you what they think and, more than likely, tell you about a good experience as opposed to a bad one. You won’t get just negative feedback, and it is a way to learn how consumers are interacting with your website and what they think of it.

PeC: Last year you wrote an analysis that indicated online retailers could help their customer-satisfaction level with better policy communication. Gives us a thumbnail of your point, if you would.

FREEMAN EVANS: Merchants have good policies,m but they are not getting credit for them because they hide them. They have good policies about returns and security and privacy and they adhere to them and use them, but a customer doesn’t know that when they go on the website. Merchants need to make it obvious and help the consumer get answers to questions about those issues before they make a purchase and then find a need for them — and still not be able to locate them on the site.

PeC: Are there any Freeman Evans’ rules for ecommerce beginners who want to hunt with the big dogs?

FREEMAN EVANS: The first one is, “Just because you can, doesn’t mean you should.” What that means is, there is a lot of technology out there that’s flashy and neat and exciting. A lot of retailers think they need to add that stuff to their presence in order to compete in the marketplace, and they don’t. What the merchant needs to do is make a clean, clear and understandable (from the customer perspective) website. It must have lots of product pictures and a good site-search device so that the customer can find relevant items or information. And, of course, a good checkout experience. If you can do those things, you should be in good shape to grow your business.

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