NEW MEDIUM SAME MESSAGE.
IN THE NEW WORLD of Internet commerce, Portland-based 800.com has everything and nothing to fear from Amazon.com.* Amazon.com is unquestionably bigger. From its beginnings as an online book retailer, I spread its electronic reach into videos, auctions, toys and electrons - including many of the same products that 800.com sells * Greg Drew, CEO and founder of privately held 800.com, sees the folly of going head to head with a giant e-tailer known for price, selection and fast delivery. Instead, he's built a company that is known for price, selection, fast delivery, no sales tax, no shipping or handling charges and heavy customer support and education. * "We don't really compete with Amazon.com," says Drew. "We may carry some of the same products - Panasonic, Sharp, RCA, Aiwa - but we approach our markets differently. We have totally different business models. Our customer base is looking for completely different things."
Drew has managed to carve out a strong niche for his online business not through a marketing blitz or a price war, but by refining the company's sales strategy.
"There is a big difference between Amazon.com and specialty companies like us," he says. "They're doing a great job being the king of commodities, but high grade electronics aren't commodity products. Our business strategy is to offer something -- such as 100 people providing product knowledge and customer support -- that our bigger competitor can't. Our business strategy itself adds value to what is already a valuable product line."
Product differentiation. Consumer education. Determining the service versus cost tradeoffs. The list of sales challenges goes on and on. But the lesson that electronic entrepreneurs are learning is clear: While Internet technology is relatively new, sales problems online are the same ones that have baffled business people since the beginning.
Internet businesses -- if not "net" profits -- are booming. In 1998, online revenues totaled $14.9 billion, or about one-half of 1% of overall retailer revenue. In that year, Internet traffic increased by 300%, and online orders grew by 200%. Growth of almost 150% is expected in 1999, according to a report by the research website Shop.org.
Not surprisingly, the lion's share of the online sales belongs to a small group of companies. The top 50 Internet sites accounted for almost three-quarters of the market in 1998, with the top 10 sites logging 43% of online revenues. The buyer's field of vision may be equal relative to all proprietors and products, but a seller who has a strong reputation, Internet savvy, a well-designed site, a good product line and fair prices is still in an enviable field position. Small wonder that the online category killer is no less fearsome than its traditional brick-and-mortar equivalent.
Another thing that hasn't changed is the problem of tire kickers. Businesses always have lured customers with point of purchase promotions, demonstrations and gimmicks. Often customers came, but left without buying anything. The business people were left to wonder: How do we change tire kickers into tire buyers? How does a foot in the door become money in the pocket?
Fast forward to the online age. Now business people design snazzy websites, in-your-face ads and niched newsletters to attract Web suffers, but still suffers come, look and leave.
Companies can increase the chance of selling something off a website with quick-loading, well-designed displays. Recent studies published by Forrester Research indicates poorly designed websites may diminish expected sales by as much as 50%; slow website performance can deliver another 30% drop in a site's gross revenues.
Drew was as careful with his website design as he was building his business plan. While his site has the basic price data that tire kickers look for, its online sales presentation makes it clear that 800.com delivers a lot more.
Portland's WebCriteria, the first company to offer technology for measuring and objectively comparing the performance and usability of websites, is in the midst of helping 800.com turn its overall business strategy into a site-based success story.
"While there is always tremendous pressure to get a company's website up and running, there should be equal pressure to do it right," says Bruce Carocci, WebCriteria's vice president of marketing. "An e-tailer only gets one chance to make a good first impression; make a bad one and the next impression the customer is going to make is his finger on a key, moving to a competitor's competitor's better designed site.
"The top four criteria for a website are that it have good content, be fast, be fresh and be easy to use. What makes 800.com a winner is that the company systematically measures its website -- which, incidentally, requires a lot more than simply counting bits on a regular basis."
From the very beginning, Grace Grinnell, owner of Bend's Hot Couture.com, used her website to separate surfers into two categories: people who buy haute couture and people who don't.
"My website attracts and prequalifies buyers in a number of ways," says Grinnell. "First, using the word 'couture' helps separate the collectors from the curious. If they can't spell 'couture,' they aren't my target customer."
Grinnell is very upfront about prices. Her originals -- made from hand-dyed and painted wools, cottons, silks, leathers and mudcloth -- cost between $150 and $1,000. "My designs are a custom and not a commodity product," says Grinnell, who took her high-end apparel business from New York to the inspirational setting of Bend in 1994. "My customers are looking for one-of-a-kind garments. While I do work to educate consumers (e.g., where a particular cloth comes from and why it makes such a unique statement), I don't try to change their values."
Grinnell makes sure her message of differentiation is consistently communicated on her website, reinforcing her customers' desire to buy clothes not available off-the-rack. "When buying a custom item, people are making an investment in both the product and the producer," says Grinnell, who says her designs sometimes quadruple in value within a few years of their initial sale. "It is important that my website communicate exclusivity to those who crave it."
It's obvious from product descriptions that her materials are not mass produced ("Hot Couture's mudcloth is made from cotton grown, spun, woven and dyed by a single group of crafters in a tiny village in Mali"), but they are available at a few stores. "People want to know that my products are gallery quality," says Grinnell, "but they also want to know that my garments are not available on every street corner."
Although her business is primarily online, Grinnell doesn't force customers -- who include some celebrities-- to deal with her over the Internet if they don't want to. Some prefer to call rather than log on. "Making final arrangements over the phone makes me seem more 'real' to some potential buyers, who aren't completely comfortable buying online," says Grinnell.
"The web has been a real boon for my business," she adds, as she packages outfits on their way to a multi-continent wedding party. "Having a virtual presence in Asia, for example, has brought me almost more business than I can handle. Word of mouth referrals are nothing compared to word of Web. Once you identify and target your customers - which is the key to sales success - you've got it made."
The conclusion is obvious. "Simply adding '.com' to an address doesn't absolve a company from addressing basic sales issues," says Carocci. "In fact, going online can exacerbate - rather than alleviate - those challenges."
A high sales website isn't just about looking good. It's about identifying the sales challenges that affect your business, developing a business strategy that minimizes or eliminates them, and developing a website that furthers your strategy. It's about showing your customers why purchasing from you is a good decision.
Build It So They Will Come
Working to generate more traffic? Looking to increase website sales? Hoping to beat the competition? Make sure you have both the business strategy and design components, which work hand in hand.
Strategy tips from Shop.org's 1999 executive report:
* Help potential customers feel confident. Lack of trust and security issues (e.g. providing credit card numbers online, supplying personal information, etc.) are the leading inhibitors of Internet shopping.
* Develop a marketing strategy that makes your website the first point of reference for novice online shoppers. Customers don't tend to switch their online alliances without a compelling reason.
* Build value through customer education, interactive communications, end-to-end customer service, portal relationships and brand name products. Keep customers coming back: Return visitors outspend first-time visitors by 200% to 300%.
* Use both on- and offline methodologies of reach potential customers. It costs an average of $22 to acquire a "multi channel customer" -- a person reached via an online/offline hybrid marketing strategy -- but $42 to attract a pure-play person who was reached strictly via the internet.
Design tips from WebCriteria, www.webcriteria.com:
* Avoid overly flashy designs. Excessive graphics, animated GIFs and Java applets can erode a user's patience. Most home users connect with a 28.8K or 56K modem.
* The most important and frequented portions of a site should be no more than two to three clicks from the home page.
* Single screen websites speed the user's experience and appear to the consumer to be easier to navigate.
* Design from page to page should be consistent to ease navigation and build a sense of brand image.
* Organize the site by user goals, such as "products," "buy now," "jobs," etc. Avoid internal terms like "human resources" or the names of business units.
* Most users only scan text, so plan on only half as much writing as you'd use in a print medium.
* Don't forget your site once it's designed. Continuously solicit customer feedback. Measure your site's effectiveness on a regular basis. Check frequently for dead links, broken graphics and old or stale information.
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|Date:||Oct 15, 1999|
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