Online Retailing: The Monetization of Customer Experience

A recent national survey found that an overwhelming 83 percent of consumers would purchase more online if retailers provided more interactive and interesting sites. Consumers surveyed expressed interest in a wide variety of features that would improve their shopping experience, but what does creating “more interactive and interesting sites” really mean for retailers?

It is clear that providing more engaging shopping experiences creates a huge opportunity for retailers to gain a competitive edge. Winning the business of even a fraction of that 83 percent would increase online revenues by millions.

Retailers are starting to hear that message and are updating their sites in response. American Eagle incorporated streaming music with the addition of AE Radio to their site. Gap introduced their QuickLook feature, which provides product details directly from the category page.

Similar functionality to quickly provide product details was then provided by GSI Commerce for its customers and appeared on other sites such asPatagonia.com andWalmart.com. In yet another step forward on the rich shopping experience path,Nike.com rolled out a completely Flash-based site that incorporates guided navigation.

A Map to Success

As consumers increasingly use these richer online experiences that leverage new technology to remove barriers traditionally associated with Web sites, the richer experiences will become the expectation rather than the exception. The retailers that lead this charge will gain a powerful advantage over their competitors.

Online mapping is a perfect example that illustrates this process. For years, Mapquest was the standard for online mapping. ThenGoogle Maps introduced a rich experience for viewing maps, allowing users to interact in a very intuitive way. Users drag, zoom and pan the maps to focus on the area of interest without having to wait for new pages to load.

The new experience resulted in seamless interaction and improved user functionality. Since the introduction of Google Maps, other online mapping sites have followed suit. Now Microsoft’slocal.live.com,Mapquest, andYahoo all have similar mapping features to Google’s, but Google still garners the recognition. The new standard Google set is now the price of entry for online mapping, rather than a competitive advantage for those who followed rather than led.

A similar revolution is starting in e-commerce, but we have only seen the leading edge. Many of the technology limitations that have existed for the Web are disappearing as technological advances are opening the way for creative online shopping.

The leaders in this revolution stand to benefit in the same way that Google raced to the front by taking a different approach in its markets. Who will be viewed as the visionary “Google of online retail” remains to be seen, but the race has begun.

Turning Browsers Into Buyers

As retailers increasingly adopt next-generation e-commerce functionality, what are the keys to success? It is becoming increasingly important for online retailers to merchandise their products in more compelling ways, as there is a clear shift in consumer shopping behavior: Sixty-eight percent of consumers reported to browse online stores more now than in the past, even if they aren’t intending to buy anything.

This presents an enormous opportunity for retailers to turn browsers into buyers, so finding new solutions that create more emotional responses in consumers is critical for successful online merchandising.

While much of the current wave of merchandising is focused on Ajax-based product detail panes and interactive imagery, rest assured that there is another wave just over the horizon that will bring new changes. Future functionality waves may drive different retailers towards different solutions. The key to navigating the changing waters of e-commerce is developing a sustainable ecosystem of rich shopping experiences.

So what is a sustainable ecosystem for rich e-commerce? A sustainable ecosystem considers how rich features hang together to create a great experience as a collective whole. It is not a single feature or set of features; rather, it incorporates the whole site design with excellent usability and a targeted set of features appropriate for your customers.

Planning the development of an ecosystem allows for easier evolution over time without having to update technology and infrastructure every time new features become available. The ecosystem empowers business users to address key trends and customer feedback, and designers to leverage their creative talent.

Bear in mind that even coalescing the current wave of merchandising features into a coherent whole is not a trivial task. It involves careful attention to usability, design and implementation. To be successful in the long run, however, requires a broader view composed of three main cornerstones.

Know Your Customers

The first cornerstone is a fundamental tenet of retail: Know your customers. At its core, retail is about delivering to the customer a compelling assortment of merchandise in an appealing fashion.

Offline retailers focus on every aspect of the merchandise, the store and the overall shopping experience. Online retailing should be no different. The online experience needs to optimize the experience for target customers, building solutions that solve their problems and address their needs.

Not all consumers will respond to the same merchandise or merchandising. Understanding your customers and refining their experience over time, based on purchasing behavior, site feedback and direct interactions is critical to succeeding in next-generation e-commerce.

Being successful with rich online merchandising requires being nimble with merchandise, merchandising and site design. The online channel allows retailers to interact with customers to an extent that is not possible in other channels. You can follow their behavior in ways that are difficult, if not impossible, to track in stores or with catalogs, and you can use the new technology to customize their shopping experiences accordingly.

The more they like their experience and feel it’s tailored to them, the more likely they will become repeat customers.

Know Your Brand

Second, know your brand. A brand’s image is a powerful tool for connecting with consumers. Brands are ill-served by not aligning their online presence with their image. Every brand’s Web site should not evoke an electronic catalog, though most sites have taken this approach since the beginnings of e-commerce.

While an online catalog metaphor may be appropriate for some brands, it does not align with all brand images. Brands need to find appropriate Web presences that provide great experiences regardless of the technological sophistication of their target customer segments.

Finding the right mix of functionality that is consistent with your brand and provides outstanding usability is key to differentiating in the new e-commerce revolution. For some brands, a particular cutting-edge experience will be a fit; for others, it will feel foreign. However, creating a great online experience offers all brands a chance to differentiate on factors other than the depth of product assortment or price — two factors that have often driven online competition since the beginning.

Not every retailer will be successful applying Amazon’s model. In all cases, the right image for the brand should be presented to the public — be it in storefronts, in call center interactions, or on e-commerce sites.

The next wave of compelling experiences and features is just over the horizon, but being able to quickly adopt these features is what will drive higher conversions, fun shopping experiences for consumers, and better brand loyalty.

Plan for Change

Third, plan for change. Here is where the sustainable element comes in. Between your creativity and that of your competitors, new merchandising approaches will spring forth rapidly as retailers and consumers become more accustomed to the possibilities of richer online interactions.

Laying a foundation that allows for nimble responses to customer feedback, merchandise performance, and business trends, as well as what competitors feature, will become the new baseline for e-commerce. Online shopping experiences should be easier and faster to change than physical stores.

Online, there are no real estate locations or physical fixtures to modify or replace. Every customer visit online can and should be like visiting a flagship store. Eliminating the technology hurdles that have created limitations in the past is critical to sustainable success with online merchandising.

Having more functionality and more flexibility at the core allows online retailers to be proactive and make timely updates.

The prospect of creating richer shopping experiences represents an exciting time in e-commerce. The shopping paradigm created in the mid-1990s is quickly being redefined. The parts of the older paradigm that no longer make sense will be left behind, while new online shopping standards will develop that leverage 10-plus years of technological improvements, such as broadband adoption, computer processing speeds, and more tech-savvy consumers.

Creating the appropriate set of innovations for your customers is the key for staying ahead of the competition.