Lately, I've been doing a study of online retailers who sell "gift items", looking for interesting and innovative sales practices. Specifically, as the field of E-commerce matures and Web 2.0 technology becomes more pervasive, what features are typical E-tailers in this category using to attract users and boost sales? What innovative features are some of the major retailers - such as Amazon and Target - using that are not yet mainstream?
My two biggest impressions after looking at 20-odd sites:
- Many of the promotional features used for increasing online sales mirror corresponding marketing ideas from the offline world. In other words, there is not yet a big push to leverage the power of the web in an innovative way, to introduce new marketing and sales models that can only be implemented online.
- In online retail, Google is everything! That may be a slight exaggeration, but most of these online retailers seem to be focusing on Google as their primary driver of traffic - both organic through SEO practices and PPC (pay-per-click).
First, here is a set of common features, available from most of the retailers in this space:
- AdWords/PPC: the long tail of advertising
- Product Catalog: an obvious requirement for an online store
- Product Search: still seen as optional, but increasingly becoming a necessity to keep people on the site - otherwise users will simply go back to Google
- Email Signup (newsletter, specials): very commonly available on E-tailer sites
- Specialized Lists (organized by event, season or customer type): this is essentially a set of specialized catalogs targeted for specific audiences
- Ultra-Niche: creating mini-sites or a laser-like focus for a very specialized offering or interest group
- Gift Certificates: allows existing customers to purchase for others who are potentially outside the network
- Wish List: allows customers to defer the buying decision, yet make an initial commitment
- Product Categories: allows users to navigate to a product through a directory structure; this approach is rapidly getting overtaken by the search paradigm
Second, there is a host of uncommon features, implemented by only a small percentage of online retailers. I wonder if this is because these features are new and innovative, hard to implement or simply not effective.
- Company Blog: enables the company to truly connect with customers and engage in a dialog; it also helps SEO
- Reminders: a specialized form of permission marketing, it's surprising that more e-tailers don't do this
- Rewards Club: rewards for your most loyal customers
- Related News: providing a more complete service for your audience, market or niche
- Related Information: same as #4
- Related-Activity Coupons: same as #4
- Product Customization: this is a high-end feature, that can make the site very sticky
- Referral Rewards: this is an effective way to get your customers to market for you
- Repeat Orders: this surprisingly rare technique puts customer repeat orders on autopilot
- Gift Registry: tried-and-true idea from the offline retail world
- Related Items: a great way to increase sales through cross-selling
- Express Checkout: pioneered by Amazon (the "1-click checkout"), it's a convenience feature for purchasers
Online vs Offline
Most of these initiatives mirror the offline world - for example, email is the online version of the old-fashioned practice of mailing coupons to households, although the online versions can get far more sophisticated than their offline counterparts.
In the future, though, we may see retail innovations that are enabled by their online nature - i.e. those that are difficult or even impossible to implement in the physical world.
What would these online-only innovations look like? They are likely to depend on the dynamic nature of E-commerce, and the ease of online collaboration. Here are a few possibilities:
1. Customized Retail Experience:
The configuration for a physical retail store cannot be changed easily or cheaply, so the layout is always an optimized compromise among many competing needs. Online stores, on the other hand, face no such restrictions.
Imagine a customer visiting an online shoe store looking for red shoes (to match a red dress, say). You can easily present her with a red shoes-only store, by artificially constraining the display matches using that criterion. Similarly, the store could be dynamically reconfigured for users with different goals, e.g. research-oriented vs purchase-oriented. Even the prices could be continuously changed based on current demand and available inventory, through the judicious use of dynamic discounts.
The affiliate model works much better in the online world than offline. Although this is not yet very common, it should be a simple matter for online stores to send customers onward to related purchases at other sites and generate a revenue stream using an affiliate model. For example, is there much doubt that "better-canoeing" classes are likely to be of interest to someone who has just purchased a brand-new canoe?
Certainly with the continuing growth of Web 2.0, we shall continue to see many more new and interesting innovations in online retailing in the future. If you have seen any others, add a comment below and let me know!