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Preparing Retailers for Economic Downturn: An Interview With eCommerce Analyst Linda Bustos

Posted on November 13, 2008 by Vanessa

We were lucky enough to catch up with Linda Bustos of Elastic Path Software and ask her a few questions that are likely on many retailers minds.  Both multi-channel and web only retailers face difficult challenges ahead, the holidays that are right around the corner, and the global economic downturn that has brought spending to a drastic halt.  The insight she provides may help many overcome this uphill battle.

Tell us a little about your blog, company, and your role at Get Elastic:

My official title is Ecommerce Analyst at Elastic Path Software, a role that involves keeping on top of all the trends in Internet marketing and retail, and translating them into actionable tips for online retailers on the Get Elastic blog in addition to ecommerce consulting for Elastic Path customers.  Get Elastic’s primary purpose is thought leadership rather than talking about our ecommerce software.  Get Elastic exists to communicate with retailers, ecommerce vendors, consultants, analysts and anyone interested in Internet marketing.

 

What is your approach to evaluating and prioritizing opportunities and aligning resources with these opportunities?

I’d divide “opportunities” into site features/functionality, marketing activities and customer service.  (Fulfillment is impacted by marketing and customer service initiatives).

For site features, first you must determine whether what you want to do is feasible with your current ecommerce platform.  Your hands may be tied until the next upgrade on certain bells and whistles.

Then you need to make sure you’re already doing the basics well.  I consider the basics to be product information, product images, intuitive navigation and good search functionality.  You have no business asking for a virtual fitting room when a customer can’t enlarge images and see multiple views.  Personalization takes a backseat to usability.

After all that, if you’re in a position to add functionality, a good idea is to find out what customers prefer on ecommerce sites.  If you can’t collect enough info surveying your own customers, subscribing to Shop.org’s Smart Brief newsletter and Internet Retailer will alert you to the latest consumer studies.  Bookmark them as you go, so when it comes time to make decisions, you can refer to them.  You may discover customers consistenly cite ratings and reviews as valuable, but they don’t care about wish lists or reading retail blogs.  Use this data to invest in what will delight your customers.

As we head into a holiday season that is projected to be the slowest in our near history what advice would you give online retailers and multi-channel retailers?  Which do you think will be impacted by the economy more (Online only or Multi-Channel retailers), why?

Rather than increasing spending on PPC or shopping engines (buying traffic), work on optimizing landing pages to squeeze more profit out of the traffic you’re already getting (including “free” customers like repeat, type-in visitors and organic search referrals).  Not to mention your email campaigns would also be more profitable, which is a nice segue into…

Market to your existing customers (provided they have granted you permission) and those who have subscribed to your email list and segment, segment, segment.  It’s still true that it costs much more to attract new customers than keep existing ones, and segmentation is key to effectively delivering relevant offers.  If you throw random offers at your entire list, you’ll likely lose subscribers.

Jeanne Jennings’ Really Simple Segmentation Framework is a great resource for segmenting by behavior, but you should also allow customers to self-segment by indicating their preferences.  Disney Shopping and GAP are examples of retailers who do this really well. 

So change your email signup form to allow self-selection of what kind of offers or products the customer wants to receive, and how often they want to hear from you and ask existing subscribers to update their preferences.

It’s also important to have a strong value proposition that is clearly communicated on your site.  Not a slogan, not a tagline, but a clear statement that answers the question: “why should I buy from you and not your competitor.”  If you don’t have a clear value proposition (most retailers don’t) make sure you read up on value propositions at Marketing Experiments’ blog.

To answer the second part of your question, I don’t think one or the other will be better or worse off.  Because we know many people will use the Internet only to research purchases they prefer to make offline, the online retailer with a local store can offer free ship-to-store, inventory lookup and free returns to store – multi-channel retailers have an advantage -- while the pure-play has a small chance of converting that customer, and may even be paying high CPCs to provide the research service to a non-buyer.

But retail stores carry overhead that pure plays don’t have.  Also, multi-channel retailers may treat ecommerce as a separate operation, and the online channel may have to fight to prove itself and win human and financial resources.  Pure plays give their all to their online business and may be more advanced in efficiency and effectiveness.

What are some of your best and worst marketing channels?  What are the best ways you have found to increase performance for a given channel?

In terms of ecommerce marketing channels, it really depends on your market, your strategy, your investment and your execution which channel is going to perform the best for you.  Email might be the top channel for a retailer, but is that because they are sloppy with PPC and have an ecommerce platform that prevents them from maximizing their SEO?  Do they have an outsourced affiliate manager that’s doing a poor job? 

Also, there may be channels that perform better for one category vs another.  If there is much competition in PPC and shopping engines, click costs inflate and it’s harder to remain visible. 

You can even get more granular and say that some products will do better through PPC and others through email.  Again, when you focus on improving landing pages, your performance goes up across all channels.

If retailers are cutting back on spend where do you think costs can be cut or dollars can be saved? Is there any “must have” that retailers should only cut back on if it’s a last resort?

The first area I’d look at is your fulfillment – shipping costs, damage in transit, returns management, where can you improve?  Have a read through every blog post on ecommerce fulfillment, by expert Maxim Mironov on his blog Optimalogica.  Then I would suggest landing page optimization rather than “buying traffic.” 

An interesting thing that may happen is, as advertising spend is expected to go down, it will result in lower prices and less competition.  Since consumers are not flocking away from the internet, you may find PPC and shopping engine marketing is less expensive than it was in healthy economic times.

As we enter into 2009 what do you think will be the next big change in eCommerce (similar to the affects of “web 2.0”, social networking…)

I think video will be important from here on out.  It’s not cheap, so you might not want to offer it on every product you sell, but video can really ease a customer’s fears, uncertainties and doubts about a product when they can see a 360 degree view or see it in use.  Retailers that embrace it early will have an advantage over those who don’t.

Again, first things first.  Product copy and images are more important, get those right, then explore video.

What are some of your favorite online stores, and why?

This is the number one question I get asked Smile I can’t say one store does everything perfectly.  I like bits and pieces of stores like AE.com’s navigation and product pages, Endless.com’s filtering options and Crutchfield’s product finders and informative content.  But if I had to pick an overall favorite online retailer – I’d choose Threadless because of its unique business model, it’s fresh design and it’s active, passionate community.  It’s just all-around fun.

Special thanks Linda!

 



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