Press Releases

8th Annual Merchant Survey, 1st Quarter 2009

Proprietary Study Conducted by the e-tailing group, inc.

For Immediate Release
April 14, 2009

the e-tailing group 8th Annual Merchant Survey

To Profit in Turbulent Times Merchants are Optimizing eCommerce by Tweaking, Testing and Targeting the Channel

Despite the lagging economy 70% plan to invest the same or somewhat more in e-commerce then they did last year because it is the fastest growing part of their business

“Optimization” was the buzzword from the 190 senior level merchants with e-commerce responsibility who completed the e-tailing group’s 8th Annual Merchant Survey in 1Q 2009.

“Looking to the Internet for elusive sales, these merchants recognize that the online channel is core to multi-channel success,” explains Lauren Freedman, President of the e-tailing group. “However, 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.”

Downward revenue trend for the first time

Over one-third (34%) of surveyed merchants anticipate that their Internet revenues will be down or flat in 2009 versus 2008 which is a trend to monitor as in the past this channel has consistently delivered year-over-year growth. The balance of respondents continue to see growth but most (39%) project revenues up in just the 1%-15% range.

Profitability is the #1 strategic goal

Management dissatisfaction with ROI and dropping conversion rates has resulted in shifting strategic goals with merchants placing greater emphasis on profitability. Cost-effective customer acquisition and retention along with the customer experience play critical supporting roles.

Versus prior years more merchants also report improving KPIs (key performance indicators) and resources (the time, people and funding to get things done) as very important to their strategic goals.

Investment in e-commerce is critical for growth

Profitability means scrutinizing achievement of 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. Yet 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.

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Multi-channel changes the meaning of conversion

Challenged to get customers to convert, merchants are changing how they view success metrics with conversion numbers trending down and other benchmarks being considered in the broader context of multi-channel shopping. In this model researching, comparison shopping, and seeking store information may be as prevalent as purchasing online and while they add appreciably to the customer/merchant relationship their impact in not factored into conversion numbers.

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Decision-making requires analytics and testing to understand customer behavior

More so than in prior years, customer behavior may significantly impact performance as shoppers are slower to purchase, limit purchases, as well as research both product and price before making commitments. Testing is central to understanding what works in this climate where analytics and performance data substantiate decision-making.

Sources of information to make merchandising decisions now universally rely on analytics (92%) followed by sales history (73%). There is also a growing dependency on conversion data for 68 percent of surveyed merchants this year versus 53 percent last year along with customer ratings/reviews cited by 39 percent versus 28 percent in ’08. Competitive benchmarking, a new metric in this survey, is being used as an information source by one-half of the respondents.

Initiatives planned for website improvement as merchants tweak for results

As merchants tweak their sites for optimal performance and return there is continued emphasis on targeted email, refining onsite search and upgrading site design including enhancing onsite merchandising.

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Two other areas showed substantial change in focus 2009 vs. 2008: enhancing customer service gained ground (43% vs. 32%) while increased personnel declined (15% vs. 26%) as doing more with less is apparent.

Tangentially, the following diverse initiatives, added to the survey this year, reflect the current merchants’ mindset as they look in every direction for site improvement:

51%         A/B Testing

44%         Social Networking

39%         Content Management

39%         Alternative Payments

Retention tactics are on par with improvement initiatives

When it comes to customer retention, site redesign/enhancements (58%) is the top ranking merchandising and navigational tactic along with pricing/promotional strategies (50%).

Beyond exemplary customer service (47%), top ranking customer service tactics include targeted and/or segmented email campaigns (41%) along with and streamlined checkout (31%). It is clear that merchants are aligned in their thinking regarding success in 2009.

Relevant merchandising features gain endorsement

As in past years, in this survey merchants were asked to rate the value of over fifty merchandising features and functionality. Versus 2008 little change was seen in the order of ranking but the most relevant metrics did receive greater endorsement. The top five ranking features as “very to somewhat valuable” are charted here.

Ranking of Features Very to Somewhat Valuable
2009 2008
Keyword Search 94% 94%
Sales or Specials 93% 90%
Cross-sells 92% 89%
Email as a Merchandising Vehicle 90% 86%
Seasonal Promotions 88% 88%

Targeting via email for engagement

Targeting and segmentation are the order of the day onsite and particularly via email as merchants ratchet up efforts from personalized to triggered email including abandonment efforts.

Looking at the steps merchants are taking to improve email performance, better segmentation is noted by 76 percent versus 59 percent in 2008. Compelling messaging (80%) and improved creative (73%) are also at the forefront as they seek further engagement with customers. Here too we see the increased focus on analytics with A/B testing a factor for 64 percent versus 49 percent last year.

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Cross-channel is top-of-mind for retailers

Multi-channel engagement models support a multitude of elevated merchant opportunities. As new KPIs embrace customer demand for a seamless shopping experience, 67 percent of surveyed merchants already have coordinated marketing programs across channels in place.

Along with incremental sales, most multi/cross-channel initiatives focus on delivering greater customer service, meeting expectations and ideally result in more long-term loyalty.

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Optimization reigns

Forty-four percent of these merchants anticipate changing e-commerce platforms within three years; conversely 42 percent report that they have no plans to make such a change. However, given current resource constraints and economic instability, we realistically foresee that here tweaking will be the order of the day.

“Platform upgrades may be on many wish lists but 2009 will be remembered for refinement of navigation, onsite search and website tweaks,” summarizes 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.”

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 emailing LF@e-tailing.com or by phone 773-975-7280.

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 2009, 190 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 LF@e-tailing.com or visit the e-tailing group website www.e-tailing.com.

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