Optimization is the new buzzword according to the E-tailing Group's Eighth Annual Merchant Survey, which provides  responses from 190 merchants in the first quarter of 2009. The survey addresses trends in strategy, merchandising and marketing online.

The survey showed that all merchants with e-commerce responsibilities recognize that the online channel is a key element of multi-channel success. According to Lauren Freedman, president of the e-tailing group, “the pressure for performance is greater than it has ever been, as senior management seeks profits while customers demand more from every e-commerce experience."

Revenue Trends and Profitability Goals

This year, more than one-third (34 percent) of surveyed merchants anticipate that their Internet revenues will be down or flat in 2009 when compared to 2008. This, according to Freedman is a trend to monitor as in the past this channel has consistently delivered year-over-year growth. The balance of respondents continues to see growth but most project revenues up in just the one to 15 percent range.

While profitability remains merchants’ number one strategic goal, the report indicated some management dissatisfaction with ROI and dropping conversion rates.  Cost-effective customer acquisition and retention play key supporting roles, along with the customer experience.  

According to the e-tailing group, profitability means scrutinizing desired revenue goals and being diligent regarding cost savings. An ROI mentality prevails with resources stretched and budgets cut, forcing merchants to operate more efficiently. Still, 70 percent of those surveyed still intend to invest the same or somewhat more in e-commerce as they did last year, as it is the fastest-growing part of their business.

When asked how they thought e-commerce investments would be impacted in 2008, the merchants responded as follows:

• No change (8 percent)
• Investing somewhat more than 2008 (36 percent)
• Investing about the same as 2008 (26 percent)
• Investing somewhat less than 2008 (22 percent)
• Investing significantly less than 2008 (8 percent)

Understanding Customer Behavior

The report also discusses the tools and metrics merchants use to guide their decision-making.

More so than in prior years, customer behavior may significantly impact performance for several reasons: shoppers are slower to purchase or limit purchases, and they tend to research both product and price before making commitments. Testing helps merchants understand what works in this climate where analytics and performance data substantiate decision-making.

Analytics and sales history are the two sources of information that merchants rely on to make merchandising decisions. There is also a growing dependency on conversion data for 68 percent of surveyed merchants this year, versus 53 percent last year. Two other areas showed substantial change between 2009 and 2008. Enhancing customer service gained ground (43 vs. 32 percent) and increasing personnel declined (15 vs. 26 percent), showing that overall this year, merchants are doing more with less.

Web Site Tweaks

While merchants tweak their sites for optimal performance and ROI, there is also continued emphasis on targeted e-mail, refining on-site search, upgrading Web site designs and enhancing onsite merchandising.

More than three-quarters of the merchants responding indicated they plan to improve performance with more targeted e-mail programs.  Coming in a close second, 71 percent said they plan to improve their site search. More than half want to add customer-generated content, such as user reviews.

Forty-four percent of the participants anticipate changing e-commerce platforms within three years; however, given current resource constraints and economic instability, the e-tailing group realistically foresees that tweaking platforms instead of upgrading will be the focus.

"Platform upgrades may be on many wish lists, but 2009 will be remembered for refinement of navigation, onsite search and website tweaks," summarized Freedman. "Merchants who truly optimize e-commerce and multi-channel potential with relevant and profitable selling solutions will survive and thrive as the dominant players in their categories."

Vangie Beal is a seasoned online marketplace seller, frequent contributor to ECommerce-Guide.com and avid online bargain hunter. She is also managing editor of Webopedia.com.

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