Each year for the last eight years, the E-Tailing Group has conducted a "mystery shopping" survey. The Chicago-based firm shops at 100 e-commerce stores — anonymously — and rates each online store on various factors: customer service, shipping practices, site features, merchandising tactics, and more.
The group's goal is to take a snapshot of the overall online shopping industry: What's trending up and what's falling from favor? What's working for today's e-tailers?
In general, the energy and excitement around e-commerce "has returned to the days back before '99," says Lauren Freedman, the E-tailing Group's president. As even the most staid traditional retailers realize that e-commerce is a driving force, the biggest of the big players are pouring money into it.
Still, the industry is in its infancy, as best practices keep rapidly evolving. Freedman talked about the most recent trends from the front lines of e-commerce, based on the results of her recent "Mystery Shopping" survey, conducted in Q4 of 2005.
Shipping: They Ain't Giving it Away
Surprisingly, only 33 percent of merchants offer conditional free shipping (free shipping over a certain dollar amount, or with various purchase options). This is down sharply from the 48 percent of merchants who offered conditional free shipping a year ago. In fact, "in many instances, it seemed that shipping was more expensive," than a year ago, Freedman says.
She notes that for certain merchants, offering free shipping is truly necessary; it's the cost of doing business. Her survey found that six percent of sites offered free shipping all the time.
However, free shipping "is kind of a split personality" issue, she says. "All the customers say they want it," but the prevalence of it might be hyped by the media.
Certainly the biggest players — Amazon, Best Buy, Circuit City — offer it, "but when you get into the specialty players, I just don't see the free shipping as much."
On the other hand, she notes, many merchants may be sending e-mail offers to established customers that include free shipping offers — the Mystery Shopping survey wouldn't pick this up.
Must Register to Shop: Just Say No
To the great joy of shoppers, the merchant practice of requiring shoppers to register prior to purchase is declining. From last year's figure of 42 percent of sites requiring registration, this year it fell to 31 percent.
"It's declining — and that's good," Freedman says. Merchants give up this option reluctantly, thinking that requiring registration enables them to better customize the shopping experience, or simply because they want the data. But, she says, "Our attitude is, if the customer wants that, let them give it to you."
Check-out, in fact, is getting faster: The number of merchants offering one-click shopping has risen from last year, 38 percent to 43 percent. The average number of clicks from product selection through checkout was 5.2 — though the top performing sites kept it to 5 (with one, J. Crew, requiring just 4 clicks for check-out).
Customer Service: Fair to Partly Cloudy
Looking at the data, Freedman concluded that customer service has actually declined from last year.
Oddly, improving technology is part of the problem. Freedman notes that while "automation of service functions may help to reduce operating costs," she cautions merchants "these tools, if not accurate and customer-friendly, can hinder the shopping experience."
As an example, many sites now more frequently send an auto-response e-mail. "So they can quickly send you an unsatisfactory answer," she says. Or, a site has an improved credit card checking method — but it falsely rejects a user credit card. "Those kind of glitches seem to be happening more now," she says.
Furthermore, "there are still sites that don't use an 800 number, and still sites where the on-site search doesn't work," she says. In addition, "It takes longer for people to respond to e-mail queries."
The survey compares the customer service of top performing sites to service from average performers. In terms of hours it took to answer an e-mail, some sites were getting answers out in the two-to-six hour range (and some even within the hour), while the average response time was 29 hours.
"Obviously the customer is happy, they're shopping online, they're buying more, but our point is, we don't want sites to offer bad customer service like people get at retail."
The average number of business days to deliver an item was 4.5. Perhaps to cut ever-rising shipping costs, more companies are using the US Postal service rather than UPS or FedEx. But she notes that in many instances this is a far slower option (sometimes much slower). The number of online merchants using the US Postal service jumped from 30 percent to 43 percent year over year, the survey indicates.
Certainly, Freedman understands that merchants feel that every dollar counts, and so are always working to shave costs; yet she notes that slower service can have repercussions long term.
Merchandising: Features and Functionality
Online merchandising, the techniques and strategies of presenting goods in the most tempting way, is in "an evolutionary period," Freedman notes. "There's not going to be a lot of drastic changes," rather small steps forward.
Overall, there's more suggestive selling, and more sites using techniques like "What's New" and "Top Sellers." Also, "there's a lot of emphasis on gifting, because the Web has really been an amazing gifting vehicle — it's perfect for that."
The use of the What's New feature jumped from 64 percent last year to 82 percent this year. The Top Sellers feature (not measured last year) was used by 66 percent of merchants.
Experiencing stepwise growth were use of up-sells and cross-sells in the product page (up from 80 percent to 88 percent) and the use of up-sells and cross-sells in the shopping cart (up from 56 percent to 62 percent).
The use of a gift-oriented information rose modestly, from 75 percent to 77 percent, but the use of the Wish List tool leapt dramatically, from 20 percent to 42 percent.
The number of sites offering a list of Recently Viewed Items — surely a sales booster, because it helps shoppers navigate - increased from 8 percent to 16 percent.
Product Enhancement Rises — Especially Audio and Video
Though most of the forward steps this past year were not huge, certain product enhancement techniques made big strides.
On the rise was the Zoom option, allowing users to see a bigger or different photo aspect; usage bumped up from 70 percent to 79 percent.
Increasing more was the Color Change tool, moving up from 24 percent to 34 percent, and the Alternate View tool, which vaulted from 21 percent to 45 percent (the Alternate View tool was used by just 12 percent of sites in 2003).
These tools, "give the customer a greater sense of confidence in the product they're purchasing," Freedman says.
Once shoppers put an item in the cart, merchants don't want them to take it out: The use of photos of products in shopping carts increased by a healthy margin, 45 percent to 57 percent.
Also on the rise are broadband features — "there's more audience and video in support," Freedman notes. Use of streaming video jumped from 8 percent to 20 percent, and use of streaming audio rose from 8 percent to 20 percent.
This greater use of broadband may be driving greater use of creative e-mail presentation. Virtually all merchants already send post-sale confirmation (96 percent) but more are now using the HTML format (up from 26 percent to 33 percent), while use of text e-mail is falling, (down to 67 percent from 74 percent).
Whether they use HTML or text, more merchants are sending targeted e-mail, up from 80 percent to 85 percent. (Use of targeted newsletters is up from 28 percent to 32 percent).
Useful Tools: Limited Time Offers and Content
One sales tool that e-tailers are growing fonder of is "controlled promotional offerings." These are sale offers that are good only for a certain time of the day, or during a limited time block. The number of merchants using limited-hour sales offers zoomed from 9 percent to 22 percent. (Of course, the use of traditional "sale events" is all but universal, at 91 percent.)
Offering content is a great way to attract eyeballs, and more merchants are adding informational guides to their site. "So many people research online — the whole use of ratings, reviews and guides, all that keeps increasing," Freedman says.
The percentage of sites offering product comparisons rose from 21 percent to 27 percent, and use of ratings/review features increased from 24 percent to 32 percent.
The biggest gainer in this category was the use of tips/glossaries. The number of sites using this feature rocketed from 15 percent to 46 percent. Clearly, merchants feel that a knowledgeable customer is more likely to make a purchase.
Seeking a larger audience, more sites are now selling internationally — up from 13 percent to 18 percent. The sites themselves are more international, offering foreign language features — up from 17 percent to 21 percent.
Advice to Merchants
Based on her eight years of conducting Mystery Shopping surveys, Freedman makes a few recommendations to boost the bottom line of online retailers.
First, understand your customer and your category, "and ensure that you're competitive within your category from a merchandising perspective, and that you have a best-in-class functionality that the customer has come to expect in your category."
Then, "Make sure you can deliver a best-in-class customer service experience as well…if you disappoint the customer in this regard, you're likely to pay a price, unless you have something that they can't live without."
James Maguire is a contributor to ECommerce-Guide.com. His column appears every Monday.
IE 7
Firefox 2.0
