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the e-tailing group 9th Annual Merchant Survey: eCommerce is Mission Critical for Retail Today with Investments and Strategies Aligned

April 20, 2010

An impressive 59% vs. 36% in 2009 are planning to invest somewhat more in e-commerce than they did in 2009 given its essential role for today’s retailers

With a recovering economy and shifting channel priorities, 92% anticipate 2010 Internet revenues to increase over ’09 with significant growth in the 6-15% range; just 8% report a flat or downward trend in their e-commerce business vs. 34% last year.

Merchants are mastering the ropes
In early 2010 e-commerce dynamics put forth a favorable climate for cross-channel optimization. Marketing plans are performing at or above plan for 47% of merchants up from 37% in the prior year while merchandising is moving beyond redesigns towards industry standards and category-centric differentiators.

“Seasoned sellers, emerging retailers and manufacturers are all positioning themselves for growth as the economy rebounds,” observes Lauren Freedman, President of the e-tailing group. “Results of our 9th Annual Merchant Survey find retailers taking a laser-like focus on performance where results dictate category-centric demands and solid execution sets the tone for incremental revenue.”

The Internet is a proven channel
Merchants must now step up to the plate given the anticipated growth of e-commerce, coupled with retail economic forecasts. Keeping ROI top-of-mind, merchandising and marketing that embraces existing customers while simultaneously wooing prospects will be a pre-requisite for success.

However, conversion remains a proverbial challenge as 56% of respondents report that the conversion rate sweet spot is still 3% or lower, even more than the 48% in that range last year although increased online researching and value pricing may be contributing factors.

Analytics dictate strategic direction
With an emphasis on margin and profitability, where both impact tactical feature selection, the top three impact points where analytics have successfully been leveraged are conversion (52%), search marketing (44%) and cart abandonment (38%) all providing ample opportunities for revenue generation.

Top initiatives for website improvement gain ground
To improve website performance 79% report planning more targeted email, 72% will refine onsite search and 70% will be enhancing onsite merchandising. Beyond these top initiatives the following will also be contributing factors:

  • Cross-sells/Up-sells rise 66% vs. 55% with AOV focus
  • Merchants move beyond redesign/upgrades (60% vs. 67%) to embrace strategic merchandising
  • More than one-half are planning to invest in usability or A/B testing (58%) and/or web analytics (53%) to better guide decision-making
  • Customer service (53%) remains an important initiative for over half of the merchants
  • Personalization/Customization sees long-awaited attention for 52% vs. 41%
  • Outreach efforts gain ground with social networking strategies being planned by 58% and blogs (32%)
  • 39% vs. 19% last year are planning expenditures on mobile initiatives
  • Added to the list this year – videos (48%) see strong adoption

Retention tactics support key trends
Examining the “top-2” rankings of merchandising and navigational tactics for retaining customers, promotional strategies, site redesigns, onsite search, and email tactics show strong performance and head an expanded list with several new options added this year:

The right stock assortment 48%
A/B, multi-variate or other usability testing 40%
Elevated brand differentiation 36%
Personalized strategies 31%
Editorial content, expert reviews; user-generated content 26%
Rich media 21%

Nuts and bolts merchandising is in place with growth seen in richer tools and testing of social strategies
Ranking of features “very to somewhat valuable” ’10 vs. ’09 shows equal or higher value on most metrics benchmarked as merchants focus on driving conversion and improving their site experiences.

The most valuable features ranking 90%+ are: Keyword Search (98%), Cross-Sells (95%), Seasonal Promotions (95%), Sales or Specials (94%), and Email as a Merchandising Vehicle (94%).

This group of “rich” features in particular continues to gain substantially in value ranking and presence across the board as they truly bridge the virtual nature of online shopping.

  • Alternative Views both value ranking (83% vs. 73%) and presence (92% vs. 79%) take major strides supporting customer confidence building
  • Zoom also gains in value (74% vs. 69%) and presence (80% vs. 76%) as a universal selling tool
  • Video continues to rise in importance (68% vs. 58%) and presence (80% vs. 71%) enhancing experiential selling
  • Recently Viewed Personalization rises in value (64% vs. 57%) along with its site presence (74% vs. 61%) in response to consumer and merchant adoption
  • Both Color Change and 3D Visualization also show gains with category-centricity the biggest influencer

Although they have yet to significantly impact the bottom-line for e-commerce, social marketing tools are rapidly changing how we gather information, embrace brands and communicate online – and therefore merchants are testing how to utilize these tools for their brand’s best interest.

  • Sharing via Social Networking exploded this year with a presence on 87% of sites vs. 45% just one year ago and a value ranking leaping to 63% from 46%
  • Blogs and Community Features ride the wave with notable increases in value ranking and presence
  • Mobile Applications, a new metric in this year’s survey is already garnering a value rating of 41% with a 56% site presence and we foresee fast-track growth next year

Today or within the next 12 months 91% plan to employ Facebook fan pages, 85% customer reviews and 80% publishing via Twitter making social tools essential for online deployment. Despite early stages of social technology many of these penetration rates or plans to employ are relatively significant.

Merchants are in varied stages of involvement with “mobile” as 23% are evaluating use this year vs. 14% last year with market projections expecting escalated usage in the near term. Limited revenue success to date is reported by 15% vs. 8% last year as early adopter status is seen for mobile pioneers.

Preparing for future success
In conclusion Freedman states, “Merchants must ensure that their e-commerce roadmap is clearly defined yet fluid enough to embrace new opportunities throughout the year. All investments will need to pay off because being proactive in securing the necessary funds to fuel future demands, in hopes of exceeding customer expectations, keeps merchants on the fast track.”

Complete report available to purchase
A comprehensive report that summarizes aggregated findings from this survey is available for purchase.

It is $595 via PayPal or credit card. Those interested may contact Lauren Freedman, by clicking here, emailing or by phone 773-975-7280.

About the e-tailing group
the e-tailing group, inc. serves as the multi-channel merchant’s eye, bringing a merchant’s sensibility to evolving the multi-channel shopping experience. A Chicago-based consultancy, they provide practical strategic perspectives and actionable merchandising solutions to merchants selling online as well as to enabling technology firms.

Survey Methodology

In the first quarter of 2010, 152 merchants responded to 45 questions related to trends in strategy, merchandising and marketing online. For more background about this research study or for additional information on the e-tailing group, inc. please contact Lauren Freedman at or visit the e-tailing group website

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