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By |
Le Quan Truong |
April 24, 2008
The amount of money spent on online media sales is set to increase by 28.8% over the next four years. Traditional retailers are fast becoming the most dominant online retailers, "selling both necessities and discretionary items" to a broader consumer base. Below are questions CMA’s Digital Marketing Council posed to four leading-edge Canadian-based retailers who have successfully integrated their physical store and online website.
We spoke with:
Mike Duggan National Manager, eCommerce, Sears Canada Inc.
Simon Rodrigue Sr. Manager, eCommerce / Interactive Marketing, Home Depot of Canada Inc.
James Connell Sr. Director, eCommerce, Digital Marketing & New Media, Roots Canada Ltd.
Jeff Smith Director, Interactive Marketing & eBusiness, Hudson’s Bay Company
Is your retail website an extension of your physical store or a subset of the physical store?
A retailers' website is most effectively positioned as an extension of their bricks and mortar locations. Alignment of online and offline channel strategies relative to product mix, service offering and customer experience builds trust with customers and fosters increased cross-channel shopping purchase behaviour. This brand equity, both with existing and prospective customers, provides the opportunity to extend the traditional reach of your physical store through online expansion into new lines of business and across new target demographics.
The website needs to be an extension of the store and, more importantly, the brand. For your website to be a success, the consumer must be able to experience and enhance their online interaction with your brand. At a very basic level consumers feel that the product offering of the website should be a super-set of what exists in-store, so it is important that the long term strategy of your eCom / Interactive Marketing / Multi-Channel team is to have the plan and process in place to ensure that you can meet and exceed these expectations.
What are the biggest obstacles facing Canadian retailers once they go online?
It is critical in an Internet environment to continuously ensure that usability matches customer expectations, as well as their online capabilities. The behaviour profile and level of experience of the user base should dictate how sophisticated your website should be from a technology and functionality standpoint. If customers are not interested, or worse, unable to navigate through your site, conversion rates and repeat traffic will suffer. It is important to develop processes to regularly take the pulse of your customer base.
The largest obstacle is the scale of the business. Unlike in-store shopping, the online consumer can jump from site to site in their purchase decision process and experience brands from other retailers across the world. This puts a burden on a newer player that the level of experience that consumers expect online is very advanced. The best way to overcome these obstacles is to invest in a team that understands what your consumers are looking for and can deliver on the goals of the business. E-Commerce is not about technology. It is about people interacting with each other and your brand.
Canadians are more likely to browse and buy in stores. Canadian shoppers typically compare Canadian website functionality and catalog selection to much larger US competitors who have the access to a much larger domestic market that has adapted to e-commerce more quickly. With lower revenue there are fewer dollars to develop a sexy website.
Assortment strategy and delivery are two key business issues in running a successful online retail operation.
What do you consider the key performance indicators for measuring the success of an e-Commerce website?
When evaluating the success of e-commerce activities, it is important to monitor both financial and customer relationship measures. Financially, analysis and trending of measures such as net sales, profitability, average order size, and return rates are important. Equally important are customer relationship metrics such as conversion rates, site stickiness, email opt-in rates, and frequency of visits.
The base metrics are sales, conversion and profitability. As you evolve your business into an online engagement channel that has a purpose of serving the customer, regardless of the end channel, it is important to start to watch engagement stats – time on site, % of daily and weekly visitors, interaction with specific site sections, total subscribers etc. As you develop your business you will understand what metrics match up with what your goals are.
Conversion, traffic, dollars generated per visitor, average order size, average orders per customer, average visits per customer and growth year over year.
The key metrics for a transactional site are: visitors, conversion rate, average basket size (units and $), and abandonment rate.
What type of offline support do you believe should be in place to help companies succeed in online retailing?
Within a large scale multi-channel retail environment, online success is fostered when it is possible to leverage assets from other channels. These assets can be in the form of marketing and advertising initiatives that drive traffic across the enterprise, or they can be infrastructure assets that facilitate online product procurement, order fulfillment, and payments.
In the end you need to have an integrated business; it can’t be the website as an island by itself.
Ties in the physical retail store to the virtual store (signage, sharing of inventory, price matching, return in store) as well as cross channel knowledge sharing. The concept of success online should be determined from the onset. Is the website viewed as a marketing vehicle or a store or both? (If both how are each weighted?)
In a multi-channel organization, messages must be leveraged across different offline vehicles such as circular, POS, TV, print and radio.
Which marketing concepts make a difference for an online retailer’s success?
It is important that the online channel be strategically aligned with the marketing and promotional activities of the rest of the company, but have the flexibility to provide unique products and content. It is increasingly becoming a customer expectation that a company’s website is the source for the broadest and most up-to-date information.
Integration across channels and a focus on a conversation with the consumer. Look for ways to receive permission to start a conversation or provide information during the sales / product discovery process.
Every online retailer’s experience is going to be different based on your customers’ needs and demands as well as the store’s maturity level in the development cycle.
Search (organic and paid) is a key marketing concept to drive traffic. E-mail is also a sales driver.
What steps have you taken to facilitate the growth of e-Commerce in your company? And what are your recommendations to those just beginning to take their company online?
Ensure e-commerce is positioned as an integral part of the overall corporate multi-channel strategy. Prove that the Internet is a cost-effective and efficient testing ground for new product and service concepts to prove viability prior to rollout to other channels. If the correct cost measures are available, develop a model to demonstrate the overall increased profitability that results from the online business, compared to other selling channels.
Become a champion of the internet within your organization. It offers many points of leverage that people are not aware of so it is important to spend time educating and working with parts of your organization so they can see and experience the benefits for themselves.
We have tried to integrate the website in as many areas of the business as possible to allow the customer to have the most seamless experience between Roots.com and our stores as possible. We have invested where we have seen success as well as continuously testing new initiatives and ideas while building on our successes. Meeting the needs of your customer is of the utmost importance online. For example, customizing the user interface or the products available to be purchased are two simple concepts that can be overlooked when launching a website. Perhaps your customers aren’t looking for e-commerce capability but rather a simple way to research your products.
The key step is educating the organization about how your customers are using the web. As well, you must define the cross-channel influence that the web plays in delivering brand attributes and ultimately footsteps to the bricks locations. Being able to show some ‘wins’ will help to justify growing an online strategy. It is not about replacing current marketing efforts with online initiative, but it is about determining the optimum marketing mix. And while there are ‘cool’ opportunities online, understand your target and metrics and deliver against the objectives. Sometimes you need to say no.
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1 Canadian Marketing Association (2007). "Marketing's Contribution to the Canadian Economy.", p.121
2 Vargas, Melody. "Online Retailing in 2005." 14 Apr. 2008. http://retailindustry.about.com/od/seg_internet/a/aa010327.htm
1 Canadian Marketing Association (2007). "Marketing's Contribution to the Canadian Economy.", p.121
2 Vargas, Melody. "Online Retailing in 2005." 14 Apr. 2008. http://retailindustry.about.com/od/seg_internet/a/aa010327.htm
