Creating E-Tail Sales Out of Thin Air

Industry analysts say retailers can generate increased revenues from their Web operations without cannibalizing sales that would have been made in their offline stores and without having to make huge new investments.

To accomplish this goal, experts tell the E-Commerce Times, e-tailers must do a better job of integrating all of their sales channels. Moreover, they need to stop using sales and promotional strategies that make their sites their own worst enemies.

Looking at the Web site as an island unto itself is a common mistake, analysts say. If e-tailers think of their sites as isolated entities, said Giga Information Group analyst Steve Telleen, then theoretically, there are only two ways that the sites can capture new revenue. First, the isolated site can offer products to people who cannot come to a company's physical store -- either because there is no store in their community or due to other factors, such as disability or inconvenience.

And second, the isolated site can offer products that are not economical to sell in a physical store because a single location does not have sufficient demand, while the Web can serve an aggregate demand that exists across a wider geographic and demographic reach.

Two-Way Street

In reality, however, most successful retailers use multiple channels in an integrated way. And, analysts say, there is much evidence indicating that the company Web site does as much to drive traffic to physical stores as the other way around.

Because of that fact, companies need to make sure they are presenting their best face on the Web, since it impacts consumers' view of the whole company.

"The Web site needs to be considered as yet another way to interact with the customer," Telleen said.

At Your Service

A bad experience on a Web site can not only hurt overall profits, it can also cost sales at the same company's brick-and-mortar stores.

All retailers, including pure-play e-commerce companies, must approach Web customer service in the same way a physical store would, and not do things to annoy, scare or otherwise drive away potential buyers.

Experts said Web sites must provide help when the customer actually needs it -- and should not bombard visitors with pop-up ads and other come-ons that have no connection to the customer's specific reason for visiting the site.

"A good clerk in an offline store knows when to stand back and when to walk up and ask if you need help," Telleen said. "A Web site should be able to do the same thing."

Way Too Personal

GartnerG2 research director David Schehr said e-tailers need to be cautious about other practices that would turn customers off in a physical store, such as asking for personal information.

"If a store clerk came up to you and said, 'I need your e-mail address before you can shop here,' would you really be anxious to stick around and buy something?" Schehr told the E-Commerce Times.

Schehr said sites must do all they can to streamline sign-in processes, give customers options for the release of information, and make searches as easy as possible. All of these will make the buying atmosphere more friendly and keep surfers around long enough for purchases to be made.

Three Channels and a Purchase

In many cases, e-tailers can boost the bottom line by better integrating e-commerce sites with their other sales channels. Schehr pointed to research indicating that some of the most successful e-tailers got where they are in large part by having more than one channel.

Schehr said companies such as outdoor-supplies retailer REI, Eddie Bauer and J.C. Penney (NYSE: JCP) -- which all sell via the Web, catalogs and physical stores -- garner two or three times more online revenue than one-channel retailers.

"It's not purely substitutional," Schehr said. "A lot of studies show there is a synergistic effect when retailers have more than one channel."

He added that successful e-tailers are those that tear down barriers that separate channels and do a good job of presenting the same face to customers in all venues.

One way to do this is through channel-neutral policies -- for example, making it easy to return items to a physical store if it was bought from the same company's Web site.

Swimming the Channels

Giga's Telleen cited initiatives by REI -- which had US$55 million in online sales from January to July of 2001 -- as among the best examples of integrating all channels to boost sales in each of them.

REI makes its Web site accessible at computer kiosks inside its physical stores. Customers compare information on products that they often end up buying at the store. Items not in stock can be purchased online to be shipped either to the store or the customer's home.

One way or another, said Telleen, there is a very good chance that REI will make a sale before a customer walks out the door.