Patti Freeman Evans2008-05-22T22:28:32Ztag:weblogs.jupiterresearch.com,2008:/analysts/freemanevans//39Movable TypeCopyright (c) 2008, Patti Freeman EvansUpdate on Online Retail in Light of the Current Economic Situation2008-05-22T22:28:32Z2008-05-22T22:28:01Ztag:weblogs.jupiterresearch.com,2008:/analysts/freemanevans//39.98622008-05-22T22:28:01ZWe continue to hear from economists that the rise in prices for gas and food-staple prices here in the US is driven by largely global demand. Coupled with that is a softening US job market and sagging home prices. Customers...Pfreemanevans
We continue to hear from economists that the rise in prices for gas and food-staple prices here in the US is driven by largely global demand. Coupled with that is a softening US job market and sagging home prices. Customers will continue to feel a squeeze in their pocketbooks.
Conflicting reports about the prospect or fact of a recession in the United States abound. Either way, the above factors will likely continue to pressure the American consumer for some time. And the media continues to emphasize the extremes of the situation, ratcheting up negative consumer perception.
In fact, according to a recent JupiterResearch consumer survey 36 percent of online users plan to reduce their spending online this year. On average they plan to reduce their spending by 5 percent. Though these figures show the impact of the overall economic situation on the consumer perception, we have not seen reduced online spending behavior materialize in aggregate, to date. Jupiter firmly believes that the overall online retail arena will remain health, growing 15 percent over last year.
Recent retailer earnings reports bear this out. A few examples of online only company that have reported first quarter results are: Amazon (net sales up 37%), eBay (24% increase in net revenue, 12% increase in GMV), Bluefly (14% increase in revenue with a 2% increase in AOV and 12% increase in the number of transactions). Overstock (25% increase in GMV). Furthermore, anecdotal evidence from retailers and vendors serving online retailers shows that across the board retailers are not experiencing overall softness in their online sales. .
Not all retailer news is rosy. An exception to this sustained performance arises in a category that is perhaps particularly sensitive to challenging economic conditions: fine jewelry. Bluenile, generally a retail website that exhibits best practices, has seen increased sales this year, but not at the same pace as in years past. Bluenile reports 5% increase in Q1 net sales, vs. 34% and 30% Q1 increases in 2007 and 2006 respectively. But, the overall picture remains positive as evidenced by the US census bureau Estat (www.census.gov) numbers show a 14% increase in year over year sales for first quarter 2008.
By Patti Freeman Evans, Vikram Sehgal
Parental Supervision at eBay2008-05-21T21:56:04Z2008-05-21T19:34:08Ztag:weblogs.jupiterresearch.com,2008:/analysts/freemanevans//39.98562008-05-21T19:34:08ZThis week eBay rolled out their new rules for the feedback and seller ranking systems. On the one had it is sad because the community is no longer able to police itself. Competition is growing, sellers are getting really savvy....PfreemanevansCommerce
This week eBay rolled out their new rules for the feedback and seller ranking systems. On the one had it is sad because the community is no longer able to police itself. Competition is growing, sellers are getting really savvy. And, some sellers are aggressively working to improve their rankings via bullying tactics like withholding feedback until a buyer gives them positive feedback. Tsk, tsk. This tactic along with other developments on both sides (buyer and seller) just show that eBay as a market place is maturing and needs new controls in order to keep it a fair and safe place to transact.
Some might say that these new rules will squeeze out little sellers. Sadly, small sellers get squeezed no matter what. But I don't think that eBay's small seller base is inherently being victimized here. A small seller does not build a business by providing feedback to buyers, they build business by meeting or exceeding buyer expectations and providing unique products. These rules don't hinder that ability. Further, getting exposure has always been a bit of a numbers game, with bigger sellers able to get more eyeballs. The changes do up the thresholds for power seller status, but that should not affect the smaller sellers either. The challenge is for small sellers to be visible in a more controlled environment. Again, they can do this by excelling in their product presentation, service and delivery execution. These actions will result in higher feedback scores and thus more visibility. It is tough, but when you want to compete with bigger sellers, you need to differentiate to stand out. And sadly, we can’t cry to our parents about the big kids getting too much attention when we are out of high-school.
Amazon Brings Text to Buy2008-04-02T21:39:50Z2008-04-02T21:26:37Ztag:weblogs.jupiterresearch.com,2008:/analysts/freemanevans//39.96742008-04-02T21:26:37ZTuesday Amazon launched their TextBuyIt service that allows Amazon members to use their mobile phone (even very basic ones like I have) to text Amazon, find products and buy them through a few step process. Seems like it could serve...PfreemanevansCommerce
Tuesday Amazon launched their TextBuyIt service that allows Amazon members to use their mobile phone (even very basic ones like I have) to text Amazon, find products and buy them through a few step process. Seems like it could serve an impulse buying circumstance. This does expand the option of buying from a website via your mobile phone to a group of customers who are not early adopters of internet enabled phones. On the other hand one could argue that they will be less likely to use this service because all they do with their phones is talk. The bigger issue is that this service might raise awareness of a broader base of customers to use their phone as a purchasing device, not that customers will aggressively use it, but raising awareness is a first step.
Google's Search within Search Tool Painful, but Perhaps Inevitable2008-03-25T15:39:49Z2008-03-24T21:05:47Ztag:weblogs.jupiterresearch.com,2008:/analysts/freemanevans//39.96482008-03-24T21:05:47ZRetailers have been mad at Google before: Gmail ads, competitive bidding on branded terms. And yet, retailers still cite search (organic and paid) as the top revenue driver among all sources. I do totally get their anger. What company would...PfreemanevansCommerce
Retailers have been mad at Google before: Gmail ads, competitive bidding on branded terms. And yet, retailers still cite search (organic and paid) as the top revenue driver among all sources. I do totally get their anger. What company would be happy to see competitive ads presented when a customer specifically asks for info about your own brand.
But there is a bigger picture issue here, even beyond the state of retail site search experiences. And that issue is that retailers will continue to face an arena that is increasingly diffused. Meaning that customers will have more and more easy-to-access avenues to discover, learn about, price compare and buy products. See our report about this issue: em>Multichannel Retail: Understanding an Increasingly Complex and Competitive Market Google's new search feature is just another step along that path. As customers become more accustomed to non-traditional interactions as they shop, retailers will have to adjust. So, improving their own site search is a start. Also, optimizing their search terms, especially in organic search is critical. But, also, retailers should realize that this secondary search experience might send a more qualified customer and thus have a positive impact on conversion. So, retailers should watch how customers are interacting with this secondary search to understand how to better serve them when they do actually get on to their site. Because, after all, even though many shoppers use Google as part of their process, the most common reason they buy from any site is previous experience with that site. So take what ever you and learn from this Google tool and apply it to your site to reinforce customer loyalty and mitigate the impact of competitive ads.
February Retail Sales2008-03-13T17:52:51Z2008-03-13T17:40:26Ztag:weblogs.jupiterresearch.com,2008:/analysts/freemanevans//39.96042008-03-13T17:40:26ZThe commerce department reported a .2% decline in retail sales today which was below what economic analysts were projecting (.2% increase). Disappointing to be sure, but not entirely unexpected due to the hammering consumers have taken over the last few...PfreemanevansCommerce
The commerce department reported a .2% decline in retail sales today which was below what economic analysts were projecting (.2% increase). Disappointing to be sure, but not entirely unexpected due to the hammering consumers have taken over the last few quarters and the addition of disappointing employment numbers. We are seeing a continuing trend of consumers shifting their purchases from discretionary items like consumer electronics and home products over to more necessary items like food, apparel and HBA. Consumers have finally started decreasing their spending on gas as well. So overall consumers are reacting to the dismal news they hear on a daily basis.
Some bright spots are likely due to this shift in spending. Wal-Mart increased, as did Costco and Target. JC Penny and Nordstrom were down even though they said apparel categories were relatively strong. And we are hearing conflicting reports about the upscale and luxury markets. Saks did well, increasing by 3.4% across same stores, but Burt Tansky from Neiman Marcus said he was seeing softening from his top customers.
Still online fares pretty well, with many retailers reporting very strong growth. We don't expect online growth will be too severely impacted by this difficult market unless a recession becomes very deep and very long. Newness and high end customers will bolster online sales through a slow down most likely.
Amazon the Egalitarian...2008-02-14T19:21:55Z2008-02-14T18:30:25Ztag:weblogs.jupiterresearch.com,2008:/analysts/freemanevans//39.95112008-02-14T18:30:25ZI just saw Amazon's new program where on some Amazon product detail pages, competing or complementary items and their prices now appear in a list of text-link ads under headings such as "Available at these other websites." It is an...Pfreemanevans
I just saw Amazon's new program where on some Amazon product detail pages, competing or complementary items and their prices now appear in a list of text-link ads under headings such as "Available at these other websites." It is an interesting endeavor, perhaps moving Amazon even further along to being a ubiquitous marketplace. The links are clearly for other retailers but they do look like they belong on Amazon, rather than like paid affiliate placements. At the bottom of the list are options to buy used items and a link to sell your own item. Although there are only three listings of other retailers on the pages I viewed, this feature seems like a possible win-win. Though other retailers have tried ad placements before to little success, in this case the information provides just what the customer is looking for. In fact, as customers shop online, they go to two sites on average as they research a purchase. The most frequently cited reason for using multiple sites is to find more prices. Amazon allows customers to satisfy that need while remaining on their site. this may create even greater value to Amazon customers, as well as a new revenue stream for Amazon. I like a win-win when I see it.
NRF Views: Paco Underhill Has Been Cloned2008-01-17T21:21:53Z2008-01-17T21:13:45Ztag:weblogs.jupiterresearch.com,2008:/analysts/freemanevans//39.94132008-01-17T21:13:45ZAt the NRF Big show this week I saw some new technologies that take a page right out of Paco Underhill's wildly successful consulting book. One company is called VideoMining. They use simple security cameras in retail stores and their...PfreemanevansCommerce
At the NRF Big show this week I saw some new technologies that take a page right out of Paco Underhill's wildly successful consulting book. One company is called VideoMining. They use simple security cameras in retail stores and their technology creates metrics from the actual video footage. Figures like how many people go to the left when entering the store, how many items do people pick up, how long are they in the store, etc. VideoMining creates reports and dashboards for the retailers to assess and act upon (perhaps this is really where no one can be like Paco). But, this technology is both exciting and a little scary. It's exciting because it gives store retailers a way to track instore behavior in a similar manner to website tracking and can provide a rich trove of data. The key will be knowing what to do with the data, which is not small task as we have seen in the online space. On the downside, there could be privacy issues afoot. Since the video is no longer just used for security purposes, consumers might take offense. We'll be watching...or at least someone will be.
Back Surgeons Beware2007-12-18T15:47:11Z2007-12-18T15:36:09Ztag:weblogs.jupiterresearch.com,2007:/analysts/freemanevans//39.92932007-12-18T15:36:09ZI've been playing with an Amazon Kindle over the last few days. Few things in this world are more intuitive to use than a book, and the good news is the Kindle is pretty easy to use and very comfortable...PfreemanevansCommerce
I've been playing with an Amazon Kindle over the last few days. Few things in this world are more intuitive to use than a book, and the good news is the Kindle is pretty easy to use and very comfortable to read at long stretches. I know they are sold out now, Amazon is taking orders and should have more soon, too bad for some holiday gifts. But, I think the real life of this product is longer than a gimmick for the holiday season.
Around my neighborhood I see kids walking to school laden with backpacks as big as they are and that sag under the weight of all the books they carry. In fact one kid was struggling so badly that her dad, in exasperation, finally just grabbed her backpack from her and heaved it over his own shoulder. I wonder if the Kindle, or perhaps Sony's version, aren't the type of tool that will alleviate this extreme burden from school kids and save their backs from certain lumbago.
Apple Store Focuses on Training as well as Product2007-12-10T20:36:22Z2007-12-10T19:32:38Ztag:weblogs.jupiterresearch.com,2007:/analysts/freemanevans//39.92602007-12-10T19:32:38ZI went to the opening of the new Apple store on 14th St. and 9th Avenue here in NYC last week and was once again impressed. The location is very hip, in the meatpacking district where all the cool people...PfreemanevansCommerce
I went to the opening of the new Apple store on 14th St. and 9th Avenue here in NYC last week and was once again impressed. The location is very hip, in the meatpacking district where all the cool people - and presumably Apple customers - hang out. But it's not that convenient to get to. I guess they chose hip over convenience which is probably okay since Apple stores are destinations.
The store itself is lovely and exhibits the same clean design as the other stores in Manhattan and the cool glass spiral staircase similar to the 5th Avenue location. One thing I found to be impressive was the third floor. It is totally devoted to training and service. So one third of the store's total floor space is devoted to non-selling (or at least not directly) activities. This approach is clearly about long-term customer care and loyalty driving tactics. Quite impressive when you think about sales per square foot calculations that store-based retailers rely on as a key metric. Kudos to Apple. I do think that getting people fully engaged and proficient (the ultimate sampling opportunity) with the product is the ultimate in customer engagement and retention. Plus, there is some element of acquisition opportunity too. Just think about trying to buy a computer and assume one needs help getting started or optimizing system use, a key consideration is how to find that type of service. Having a local store with a service like this Apple service might motivate your to buy there rather than from another seller.
Cyber Monday Drives 'Em In2007-11-30T15:00:07Z2007-11-29T15:39:59Ztag:weblogs.jupiterresearch.com,2007:/analysts/freemanevans//39.92252007-11-29T15:39:59ZFollowing on the heels of a strong Black Friday weekend, Cyber Monday seemed to keep up pace. We are hearing reports of 20%+ increases in sales overall. And some specific results are pretty impressive. eBags.com had their second biggest day...PfreemanevansCommerce
Following on the heels of a strong Black Friday weekend, Cyber Monday seemed to keep up pace. We are hearing reports of 20%+ increases in sales overall. And some specific results are pretty impressive. eBags.com had their second biggest day ever and saw sales increase 70%. Traffic to CyberMonday.com was three times heavier versus last year. And, according to Hitwise traffic numbers, the share of traffic to retail websites increased by 27% over previous year. But, Cyber Monday traffic was still not as heavy a traffic day as Thanksgiving Day and Black Friday. It just goes to show us that heavy promotions work - even at the expense of AOV (both online and offline). Let's hope it is all worth it at the end of the season.
Another Black Friday2007-11-26T22:43:59Z2007-11-26T22:04:01Ztag:weblogs.jupiterresearch.com,2007:/analysts/freemanevans//39.92112007-11-26T22:04:01ZIf you look at just the top line sales, Black Friday 2007 was a great success - increase of anywhere between 7 and 8.3% have been reported. This is much in excess of the overall holiday retail season increase of...PfreemanevansCommerce
If you look at just the top line sales, Black Friday 2007 was a great success - increase of anywhere between 7 and 8.3% have been reported. This is much in excess of the overall holiday retail season increase of 4% projected by the National Retail Federation. Good news. And, we are seeing reports that the increase was due to more people flocking to the stores. So the hype and advertising worked. Again great, also because the primary reason people choose a store to buy from is previous experience. So good.
But, on the other hand, the average order value has been reported to be less than last year. It looks like the $1000+ HDTV’s are not the hot item anymore, but rather $129 GPS and $150 digital picture frames are moving briskly, along with the traditional categories of apparel, books, cd's and dvd's. But also, if the offers were more aggressive than last year for the same merchandise, AOV goes down again.
Last year, we saw a strong Black Friday weekend but a bit of a soft December. Perhaps we have trained holiday customers more than we have the rest of the year to only buy during the big promotions.
Amazon’s Earnings2007-10-23T23:33:19Z2007-10-23T23:32:51Ztag:weblogs.jupiterresearch.com,2007:/analysts/freemanevans//39.90672007-10-23T23:32:51ZThird quarter revenue up 41%. Operating margin down 2 basis points. Hummm, could it be Harry Potter’s fault?...PfreemanevansCommerce
Third quarter revenue up 41%. Operating margin down 2 basis points. Hummm, could it be Harry Potter’s fault?
Image Recognition Technology Emerging2007-09-13T20:29:26Z2007-09-13T20:26:52Ztag:weblogs.jupiterresearch.com,2007:/analysts/freemanevans//39.89242007-09-13T20:26:52ZToday, Yahoo! Shopping launched their shop by color feature. The tool makes use of image recognition technology to match the color of pixels in photos sent to Yahoo! Shopping by their retail partners to the 56 different color groupings they...PfreemanevansCommerce
Today, Yahoo! Shopping launched their shop by color feature. The tool makes use of image recognition technology to match the color of pixels in photos sent to Yahoo! Shopping by their retail partners to the 56 different color groupings they have outlined. Yahoo has applied this new software only to categories where color might be most relevant such as apparel. Some retailers have rudimentary sort by color features in their search tools, but not to this degree. And, since the ability to drill down on search results remains one of the most useful features to online shoppers, more robust attributes are a good thing. Yahoo’s tools isn’t perfect yet, a search for white women’s blouses showed a number of green and pink camisoles – most likely due to the color of the mannequin that dominates the skimpy piece of apparel and thus overweighs the color matching. Bugs not withstanding, this is a nice feature the builds on the image recognition developments that have recently arisen from companies such as Like.com.
Be a Parent to Your Customers2007-07-09T15:37:45Z2007-07-09T15:37:06Ztag:weblogs.jupiterresearch.com,2007:/analysts/freemanevans//39.86312007-07-09T15:37:06ZI have been on the ecommerce and direct marketing conference circuit over the last few months and have heard a lot about customers now being in control or “in the driver’s seat” and how this may change how we do...PfreemanevansCommerce
I have been on the ecommerce and direct marketing conference circuit over the last few months and have heard a lot about customers now being in control or “in the driver’s seat” and how this may change how we do business. While I agree that we are in an era of changing relationships between customers and brands, I don’t really believe that most customers what to be in the driver’s seat. What customers want is to be heard. Companies should put them in the passenger’s seat, and let them act as navigator while brands keep their hands firmly on the wheel and their foot on the gas, or brakes.
Also, there is a growing amount of customer chatter on sites external to a brand’s site that brands can’t control and that is scary. And to some degree, that fear is well-founded. But really, customers don’t just make stuff up about brands. Their comments are formed by their interactions with that brand and those of their peers. So, even though brands can’t control what customers say, there remains a degree of influence on the dialog. I think the best way to look at it is to use the analogy that the brand (or retailer) is the parent and the customers are teenagers. Parents can’t control what their teenagers do or say when they are not around. The only things parents can do is clearly and emphatically impart to their kids their beliefs and values, set clear boundaries, and be consistent, be consistent, be consistent. Then brands have to trust that their kids have been raised right and then they have to let them go. This practice is easy to say and hard to do, but in an increasingly competitive world it will help brands focus on doing business and learning from their customers, rather than on controlling them.
Be a Parent to Your Customers2007-07-09T15:38:00Z2007-07-09T15:37:06Ztag:weblogs.jupiterresearch.com,2007:/analysts/freemanevans//39.86322007-07-09T15:37:06ZI have been on the ecommerce and direct marketing conference circuit over the last few months and have heard a lot about customers now being in control or “in the driver’s seat” and how this may change how we do...PfreemanevansCommerce
I have been on the ecommerce and direct marketing conference circuit over the last few months and have heard a lot about customers now being in control or “in the driver’s seat” and how this may change how we do business. While I agree that we are in an era of changing relationships between customers and brands, I don’t really believe that most customers what to be in the driver’s seat. What customers want is to be heard. Companies should put them in the passenger’s seat, and let them act as navigator while brands keep their hands firmly on the wheel and their foot on the gas, or brakes.
Also, there is a growing amount of customer chatter on sites external to a brand’s site that brands can’t control and that is scary. And to some degree, that fear is well-founded. But really, customers don’t just make stuff up about brands. Their comments are formed by their interactions with that brand and those of their peers. So, even though brands can’t control what customers say, there remains a degree of influence on the dialog. I think the best way to look at it is to use the analogy that the brand (or retailer) is the parent and the customers are teenagers. Parents can’t control what their teenagers do or say when they are not around. The only things parents can do is clearly and emphatically impart to their kids their beliefs and values, set clear boundaries, and be consistent, be consistent, be consistent. Then brands have to trust that their kids have been raised right and then they have to let them go. This practice is easy to say and hard to do, but in an increasingly competitive world it will help brands focus on doing business and learning from their customers, rather than on controlling them.