E-BUSINESS SPECIAL REPORT
Kings of Repeat E-Business

Indeed, the majority of early online vendors fell victim to the massive e-tail shakeout that witnessed the crash and burn of some promising upstarts.

Today, e-commerce sites looking to turn browsing visitors into repeat buyers must move well beyond the basics of design, pricing and good salesmanship. In a competitive environment, companies must also go the extra mile to make the purchase experience convenient and stress-free for their time-strapped customers.

"Satisfied shoppers spend more, they tell their friends, and they are more likely to return," GartnerG2 research director Brian Smith told the E-Commerce Times.

And according to Steve Telleen, vice president of the ScoreCard service at Giga Information Group, the best sites use a mix of crucial ingredients to generate repeat business. They provide tools and personalization features that are easy to find and use, they speed the purchase process by not making customers enter information multiple times, and they offer a sense of community.

Cultivating Loyalty

Companies that offer highly personalized services, incentive-based programs and multichannel options -- all designed to make the purchase experience easier and more valuable for consumers -- are proving that first-time buyers can be converted to frequent purchasers.

A good example is clothing retailer Lands' End (NYSE: LE) , whose site offers a feature called "My Virtual Model," a mannequin that users can set to their own measurements to see how clothing items fit. Visitors can store their virtual model on the site and then access it during future visits.

Telleen said that the more a company works to give customers exactly what suits them, the higher the chance that they will return to buy again. "You can find what you're looking for very easily on [the Lands' End] site," he told the E-Commerce Times.

Lands' End also creates a sense of community that keeps customers coming back. For instance, the company regularly puts out an e-mail newsletter geared toward rural lifestyle issues. The newsletter -- unlike the majority of mailing list publications produced by online retailers -- is strikingly free of sales pitches.

Doing well in e-commerce requires a combination of information gathering and technology -- both of which are crucial to effective personalization -- that leads to repeat purchases. But not all sites can afford the personalization technologies that have helped propel companies like Lands' End, eBay (Nasdaq: EBAY) and Amazon.com (Nasdaq: AMZN) to the top.

Color Me Personal

Experts agreed that Amazon has long been a leader in terms of features that encourage repeat business . For example, the company not only introduced one-click shopping, but also lets customers choose among multiple credit card numbers that can be stored for various purchases.

"Amazon.com is the king of understanding what it takes to get customers to come back and buy again," Giga Information Group analyst Rob Enderle told the E-Commerce Times. Many other companies have adopted strategies first refined by Amazon, such as "smart" recommendation engines and communities of reviewers focused on specific books or products. However, while Barnes & Noble (NYSE: BKS) and Buy.com have attempted to mimic the Amazon model, Enderle said, they do not perform at the same level.

1-800-Flowers.com is another example of a company whose personalization options stand above the usual fare. The site lets customers store not only credit card data, but also multiple names and addresses of frequent recipients -- which can be a big time-saver for special occasions. After buyers log in and purchase flowers, they also can choose who on their preset list will receive them.

Other firms mastering the art of personalized repeat business include those offering products that customers must buy frequently. Forrester research director Kate Delhagen said these companies include office supply vendors like Staples (Nasdaq: SPLS) and Office Depot (NYSE: ODP) , both of which have site features that get buyers though the checkout process in minimal time.

Breadth and Depth

According to GartnerG2's Smith, eBay also belongs among the top ranks of repeat business generators because it combines a breadth of different products with a wide selection within each category, and it does an excellent job of building and maintaining a community.

Financially, the auction site is among the Web's biggest success stories, and it is no coincidence that eBay also has a high level of repeat visitors who spend a lot of time on the site. For example, Smith said, 55 percent of eBay's 19 million unique visitors in June were repeat visitors. The average visitor stops by the site 7.5 times per month and spends nearly two hours on eBay each time.

Another way to enhance breadth and depth is the multichannel approach, which typically entails providing offline services in addition to a commerce-enabled site. E-tailers with brick-and-mortar strategies -- or even catalog outlets -- are gaining customer loyalty more quickly than Web-only retailers, according to analysts.

"Having that connection in the offline world can be a forum for bringing customers to the online site and converting those offline viewers into online purchasers," said Dawn Brozek, an analyst at Nielsen//NetRatings (Nasdaq: NTRT).

First Impressions

While most companies closely guard figures that document how many of their site visitors actually become buyers, Smith said, a company that keeps buyers coming back will increase its chances of making sales over the long term.

This is true, of course, only if a user's experience has been positive, so first impressions are crucial. Smith said a company cuts its chances of winning repeat business if a first-time visitor finds a site too slow to use or too hard to navigate.

Forrester's Delhagen noted that various industries must use different barometers to gauge the effectiveness of their repeat business initiatives.

For example, an online grocer needs to draw about 26 annual purchase visits from the average customer to be successful, while an online clothing seller needs only two or three paying visits per year.