Can Fun Still Sell E-Commerce?

Online retailers have learned that buyers are much more serious about e-commerce these days and are less likely to be induced to purchase anything advertised online with gimmicks, trumped-up promises or wild graphics.

"People are looking more at what's the deal," Yankee Group analyst Rob Perry told the E-Commerce Times. The emphasis is "more on price and less about the experience."

Giant online retailers like Amazon.com (Nasdaq: AMZN) clearly have gotten that message from their customers. The online merchant, while offering extras like book reviews and sound samples, has dropped prices on its books four times in the past year.

Like Amazon.com, other online retailers are trying to find what Morningstar.com analyst David Kathman told the E-Commerce Times was a balance between attracting more customers and increasing profitability.

Fun and Games

In the early days, when profit was just a vague promise that no one seemed to care too much about, e-commerce companies tried nearly every trick in the book -- no matter how outrageous or costly -- to build their customer base. Pet socks and talking animals were all a fascinating part of the e-commerce landscape -- as were streaming sounds and flashy graphics.

"At the peak of the dot-com days, there was so much venture capital being thrown at entrepreneurs that they did goofy things with the money," Andrew Bartels, a Giga Information Group analyst, told the E-Commerce Times.

And that, said Bartels, was to be expected from "kids right out of high school or college [who were] given millions to start businesses." All that has changed, though. As the economy bottomed out and many of the early companies fell from grace -- and off the e-commerce radar screen -- online retailers and consumers have become much more serious about business.

As in the real world, said Bartels, there is less tolerance for funding fun and more emphasis on deploying a real business and earning profits.

Clean and Sober

Online retailers are channeling their efforts into differentiating themselves from competitors with pricing and improved customer service. And customers have responded with not a single mention of the "shopping experience" among the top three reasons they make purchases at a particular site.

"Service is the number three differentiator, behind quality and price," said Giga Information Group analyst John Ragsdale.

The strategy seemingly has worked for Amazon.com, which not only has aggressively dropped prices but also has introduced promotions for free shipping. The free-shipping option applied to orders totaling more than US$99 and later was broadened to cover orders totaling more than $49.

Company founder and CEO Jeff Bezos noted that for the second quarter of 2002, Amazon's U.S. books team posted "another quarter of 20 percent year-over-year book unit growth, up from 15 percent growth this past fourth quarter."

E-Commerce Diet

But the fact that Amazon.com is growing by addressing pricing and customer service does not mean that there is no place for fun in the e-commerce strategy plan.

Bartels said that while prospects have dimmed for pet socks and flying gators -- as have the prospects for other marketing gimmicks -- they have not completely disappeared. Rather, they have subsided for the time being.

Bartels maintained that there is still room "to engage, amuse and entertain the audience."

E-commerce might be more button-downed than it used to be, said Bartels, but "it's not all gray flannel suits."