Tuesday, December 4, 2007

Catalog Lessons for E-commerce Sales

Is the Internet merely a distribution channel for catalogs? So many e-commerce sites are nothing more than line or alphabetical product listings on a page, but as we have seen here, that's not what constitutes a catalog. That's why the web, in order to gain parity with catalogs, needs to add sophistication in presentation and efficiency in delivery.

Today, customers are fluid. They will shop in a store, online, and through a catalog all in the same week. While they purchase `safe" products on the web—those that they are sure will materialize exactly as they envision them—such as books, CDs, and tickets—they are also somewhat willing to experiment as long as the result is in their favor.

Convenience is the major driver for web-based sales, but the desire to touch a real product is the main reason for shopping at a store. If convenience and simplicity are the catalysts for non-traditional sales, web resellers can emulate the catalog industry's success. But for home consumers, it's often easier and faster to pick up a phone and place an order than it is to log on to the Internet. The selling proposition must enhance the channel because the web, by itself, is no longer so compelling that customers will try it just for fun.

Shoppers love the web when they have a product in mind. They can run a search function for a specialized item and find a supplier. But the Internet is not conducive to browsing. Searching for common items will bring thousands of hits. This is like_ being confronted with an index for a catalog that is twice as large as the catalog itself. And it has no sorting capabilities, presents itself in random order, can be several years old, and may not even be functional.

But more than 30 percent of the U.S. population goes online every day, and well over half of all Americans have used the Internet during the year. There are nearly 130 million people in the U.S. connected to the Internet—representing a substantial pool of prospective buyers. The opportunity is huge for e-tailers who want to remove some obstacles for the common consumer.

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Identifying the Obstacles

Unless the customer has a relationship with an e-retailer, he has to search through a maze of providers to find someone to take his order. But ordering through a catalog is a fairly standard procedure. And if a cataloger can afford to produce a glossy mailing, the company is most likely not a fly-by-night operation. Not so on the web. Anyone can set up a site, and the company may or may not be reputable. Before sending someone money or sharing a credit card number, customers want to be sure they will get their order.

Customers believe quality of service is critical when selecting a catalog provider. Yet, they actually expect a higher level of service when shopping on the Internet than in traditional retail stores or through a catalog. Most e-merchants do not have a holistic e• service program that is integrated throughout their companies. The future will require a "live" person to help select merchandise and place orders 24 hours a day—as many catalogers now provide.

  1. Catalogs take advantage of imagery and have mastered the use of photographs. Photos are mandatory for selling products but often take too long to materialize on the web. They are usually too small to see a product in detail, but catalog photos are large enough to view and enjoy. If speed can be overcome, the opportunity for web resellers is to provide full-page photos with a click. Their progress will be hindered by inadequate consumer equipment, such as slow modems.
  2. Production diligence is the hallmark of catalog success, The intimacy of the printed page can be replicated on the web using the right techniques. Each web page requires micro-management to ensure that no detail is overlooked. The speed of the Internet should not translate to throwing a site together quickly.
  3. Cross-selling is a technique that catalogers adopted with relish. Web retailers can maximize sales by encouraging customers to add to their shopping carts. These sales cost lessand bring in more revenue than art original sale. Rather than enhancing sales with banner ads, try adding a valued service with recommended compatible products from a "personal shopper."
  4. Catalog companies have become proficient at managing their catalog businesses and unifying them with their e-businesses. E-commerce must also close the gap by creating seamless websites and smooth transactions. Integrating all aspects of the business and delivering dependable fulfillment will ensure that there are no inconsistencies in operations for the customer.
  5. Trust is a major factor in catalog sales. Catalog firms have already predisposed customers to watch for marketing tricks. For example, a well-known floral company sent out a catalog that proclaimed there would be no delivery fees through a set date for any item ordered out of that particular catalog. Unfortunately, the price of nearly every item in the catalog had been raised an average of $10. "Free delivery" wasn't exactly free, and customers are not fooled easily. This sort of deception is not as common in the catalog world as in the Internet arena. E-merchants have to work even harder to regain consumer trust.

Catalogers have learned how to present merchandise in the most effective ways. The interactive nature of the web lends itself to some unique capabilities that are under- used. For instance, clicking on an image could produce a video clip of the product in operation or a common application in use. One click could bring up an image of the packaging, another could show the product unwrapped, and still a third could picture the back of the product. Furniture could be presented in a mock room setting that the customer designs to replicate his own home. The possibilities are unlimited—but information, speed, and excitement must offer the customer more than a printed page, or there's little advantage to using the internet over a catalo. The web offers the possibility of movement and sound two sensory delights that catalogs will never be able to offer. Interactivity will drive websites in the future, and static environments will be passé.

Integrated Businesses

Because customers don't differentiate between separate divisions of a company, it's critical to integrate catalog, retail, e-commerce, and direct marketing functions. If these divisions are competing with each other, they are unlikely to share sales and customer information that will be essential to establishing a lasting relationship.

A customer may be acknowledged as a loyal customer on the web but may be ignored in a

store. In order to build a Ware relationship,every point of contact must be reinforced through con._

sistency. The customer should be "recognized" wherever she chooses to shop. Click-and-mortar companies have unique advantages. A customer's web history can be shared with the retail store nearest her home. Promotions and service should be the same, regardless of whether she conducts her business online or in the store.

Building Competency

Catalog companies have built competency over the years and have spent time perfecting their craft. They have a loyal following and offer consistency and compelling product presentation. When e-merchants fail to deliver basic services, confuse consumers with awkward ordering methods, or don't provide enough information to make a purchase decision, consumers walk away with their pocketbooks intact. Some not only stop shopping or purchasing at the website where they experienced problems, but they also will cease shopping online entirely. Building competency in the channel should be a concern for all online companies.

Many websites have been built in stages and lack the flow of a continuously designed site. Because they appear fractured, customers have difficulty following through the entire site with coherency. Designing and promoting are two different disciplines but must be. integrated on a website. Conducting online research will help build expertise and customer knowledge. Bench- marking other companies with expertise in critical competencies will give insight into best practices and highlight success factors as well. Reading and critiquing catalogs will help provide the focus for competency basics.

Prospecting and Promoting

E-mail is a form of direct marketing and also a technique used by catalogers to provide lead generation. Online merchants are using e-mail as a prospecting tool. In fact, direct marketers of all types are using the vehicle as well—and most expect to increase the practice. The majority of direct marketing efforts are targeted toward acquiring new customers. In addition to e-mail, they're using traditional direct mail, direct response promotions, and other aggressive methods to both build their markets and retain existing customers.

The list is key, and catalogers manage their own databases and purchase names from select lists. These are widely available, but in order to choose the appropriate list, catalog firms must be very familiar with their target and potential customers.

Special offers and coupon insertion in catalogs bring in additional orders. Internet coupon use has grown by a third, even though only half of all coupon redeemers have Internet access. E. customers go to the web expecting to find bargains. These tools and others help remind customers of the opportunities awaiting them on the web or through a catalog.

Retaining customers may take different tactics than acquiring new customers. Of course, it's less expensive to keep loyal customers, but it will be necessary to broaden the customer base if e-tailing is to grow. Keeping the ordering process simple will ensure repeat sales. Customers should be reassured at each ordering step and given final confirmation for their orders. Otherwise, customers wonder if their orders really did go through or wound up in a "black hole."

The online population is changing and becoming less technical. Early adopters loved the technology, but today's customers are more concerned with convenience and are less technically. sophisticated. The newest opportunity focuses on late Internet adopters. Techniques that e-merchants used two years ago may be outmoded today. Today's consumers have new needs and less patience for technological glitches. These customers want to emulate store shopping in the convenience of the home. They don't surf; they browse. That's why learning from catalogers, who have perfected selling to this same audience, is important.

Some Internet companies are promoting their websites through traditional methods such as FSIs, the freestanding inserts found in Sunday papers. With the website address printed for customers along with information and a coupon, new prospects are enticed to give the web a try.

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