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| Anyone still unsure that e-business had come of age found the necessary proof during the Christmas season of 1999, when customers spent at least $7 billion on the Internet. And despite all the negative hoopla, according to a study by online research firm Jupiter Communications, 90 percent of buyers were largely satisfied
with the online holiday shopping experience.
In a recent press release, Jupiter analysts attributed the successful holiday season to several factors, including large marketing expenditures and a strong US economy. Their survey found that only 4 percent of the 810 customers interviewed said they would decrease their online spending in 2000 based on their current shopping experience, while 35 percent said they were encouraged enough to buy even more next time.
If anything, the main problem for online merchants was too much of a good thing: most customer complaints involved delayed orders and inventory shortfalls. Even some of the biggest companies were unprepared for the shopping boom that experts estimate at about four times that of Christmas ’98. Companies did their best to keep pace, though; anecdotal tales have business executives rolling up their sleeves in warehouses,
helping to get out the product.
Much of the success of online companies like Amazon.com and Hampsterdance.com stems from general good business practices: Give the customers what they want, then give them something extra. For example, Amazon.com routinely upgrades customers’ shipping preferences for free. And when Hampsterdance.com began offering merchandise, it warned prospective customers that merchandise was not in stock and would take several
weeks to arrive. When the merchandise took even longer, customers were emailed and offered the option of canceling orders or continuing to wait. Those who waited were rewarded with special, extra, free gifts -- not expensive, but a boon to the kitsch-conscious.
Nonetheless, online businesses have several e-specific challenges. Here is how some of the most successful turned them into opportunities:
- Infrastructure investments: Holiday traffic leader Amazon.com cited its $300 million warehouse infrastructure investment as the reason for success this holiday season. It met shipping schedules for its customers 99 percent of the time.
- Security: While computer-savvy shoppers buzz by companies’ reassurances, automatically offering up their credit card numbers without any more thought than they’d give a clerk at the corner store, first-time shoppers need the reassurance that their transactions are secure. And they want to know how and why it’s safe to shop online. When these hesitant customers remained unconvinced, companies
that wanted maximum sales offered other options; they let customers phone in credit card numbers, for example.
- Shipping cost reductions: The downside of any kind of at-home ordering, these costs often are a rude awakening when a customer’s order is completed. Companies with an eye on the largest possible order kept these costs as low as possible, and lowered them even more as the customer’s order grew -- making it more and more advantageous to keep shopping. Some even offered free shipping, if an order was big
enough. Some continue to offer free shipping sporadically throughout the year, as a "special" and/or as a reason to "hit" previous customers with occasional reminder email.
- Order guarantees: New customers are concerned that their orders won’t arrive in a timely fashion. The companies that cashed in at Christmas had proven themselves, either by giving prompt delivery or -- in the case of problems -- by making it up to customers in tangible ways. For example, ToysRUs.com offered $100 gift certificates to customers whose Christmas orders were held up through stock shortfalls and
computer glitches (subsequently ToysRUs is being sued in a class action case for failing to notify Internet customers their orders would not arrive by Christmas).
- Gift certificates: Always the "right size," they brought new customers to plenty of Web sites. Newcomers struggled to buy them when they were requested, and other newcomers learned to shop online to use them. The best sites offered high visibility, easy-to-follow instructions for buying and using them.
- APO/FPO Accommodation: Internet shopping is a boon to the hundreds of thousands of Americans stationed in Europe and the Pacific, who rely on the military postal system in conjunction with the US Postal Service. With a large amount of disposable income and limited purchasing opportunities, military members overseas are a boon to Internet merchants. Recently, the most successful e-companies expanded their
mailing options from standard UPS delivery, and a few have even started offering "APO/FPO" as an option in the pull-down "state" column.
- Speed: Web pages that take "forever" (more than a few seconds) to open are a definite customer turn-off. Uneven Internet recommends keeping pages under 50 Kbytes. Companies that kept pages small kept their customers turned on.
- Ease of use: Web pages that kept shoppers tuned in featured simple instructions, comprehensive search engines, and a "real person" as a backup, when all else failed.
- Looks: They’re not everything, but sites with professional-looking pages instilled confidence in their customers.
- Privacy: According to Forrester Research, Inc., fear of how their personal information will be used was a major reason cited by those who didn’t shop online. Some worried that their names, email addresses and other data would be sold -- making them vulnerable to spammers and telemarketers. Scrupulous merchants didn’t invade the privacy of their customers any more
than the average store does.
What does all this mean for the smaller e-merchants? The challenge for smaller Web sites is to emulate the best of the biggest sites, while beating them at the personal level. They should:
- Get the word out: Marketing is essential, as is keeping customers online with professional, fast loading, easy-to-use pages.
- Get the blessing of the watchdogs: Consumer watchdog organizations from BBBOnLine (Better Business Bureau) to eTrust offer their seals of approval to online companies that meet their requirements for reliability and/or privacy. Their symbols on a Web site calms nervous first-time browsers, and they offer guidelines for new and small
e-businesses in the form of codes of conduct. The codes are usually pretty basic: provide full disclosure of information about your site’s intentions, be honest in your business practices, offer protection for children, and respect your customers’ privacy.
- Get personal: While customers love the convenience and choice of online shopping, they are always pleasantly surprised to be treated as if they are in a conventional store. Most would rather deal with a person than with a company. It is the surest route to repeat sales and that all-important, inexpensive word-of-mouth advertising.
Ken Cassar, an analyst with Jupiter’s Digital Commerce Strategies group, is particularly encouraging about the possibilities for success by means of these approaches. He stated, "The goal of this holiday season was not about generating impressive sales numbers, but rather developing relationships with new customers and ensuring long-term relations. While it’s true that name recognition played a big part in
shoppers’ choices, and the rich definitely got richer, there is good news for smaller Web sites: companies still small enough to offer a personal [enhancement] make a customer want to continue dealing with them. Merchants get extra points for sending prompt, personalized responses to emails and for offering "real people."
So it remains true offline and on: relationship marketing and customer service really are the bottom line. |
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