The Red Queen of E-Commerce

The Red Queen in Lewis Carroll’s Through the Looking-Glass lives in a very curious world where, as she explains to Alice, “It takes all the running you can do, to keep in the same place.” I think that sentence sums up the world of e-commerce with uncanny accuracy: No matter how hard we work to knock items off the priority list, there are always new ones popping right up to take their place.

In the first generation of e-commerce, back in the mid-’90s when most of us were running on Perl scripts and a prayer, the priorities were at least easy to define: Build a site in which most customers can actually make purchases without things crashing more than once or twice a week.

The second generation, built out on commercially developed e-commerce platforms, evolved to meet this basic challenge, and their success at enabling solid dependable e-commerce operations has indeed fueled the tremendous growth over the past several years. Now, however, as we enter the third generation of e-commerce, we find that when it comes to meeting the expectations of our shoppers, we’re really no further ahead than when we started.

Must-Have Features

The fact that we have to run as fast as we can just to keep up only begs the question of which direction we should go. Now that our online stores stay up pretty much all the time and all the standard shopping functions, i.e. search, browse, product detail pages, cart and checkout, function reasonably well, what should be at the top of today’s list? To answer this, it helps to understand why, like the Red Queen, we run like mad but don’t seem to get ahead.

The reason is simple competition: While you’re racing away building newer and better features and generally improving your online shopping, so are your peers. As soon as someone manages to pull ahead with set of “killer features,” everyone else races to emulate the same functionality. The beneficiary of all this effort is, of course, the consumers, whose shopping experiences have been getting steadily better and better. However, consumers are nothing if not demanding, and their expectations keep rising as fast as we can possibly run.

So, to keep up or get ahead of the competition, here is what I see as the top five must-have features — features not standard in your e-commerce platform — as you plan for 2009.

1. Interactive Merchandising

How bizarre would it feel to go back to the same store month after month and find that absolutely nothing has changed? The same storefronts, the same mannequins, the same endcap displays, the same everything! However, that’s more or less what we do with our online stores. Sure, we manage to change the home page and key landing pages with a certain amount of regularity, but walk a step down our virtual aisles and we can find areas that literally haven’t been updated in years. Dig into the operations of virtually any major e-commerce site and you’ll find that the business tools and processes for online merchandising and marketing are unbelievably primitive.

The ability for nontechnical business managers to actively merchandise their Web sites, without requiring IT intervention and using high-level graphical tools has become one of the top competitive differentiators going into 2009. Eyes are following leaders such as Borders.com, which changes the features on its Magic Shelf on a daily basis.

When the director Sydney Pollack passed away, Borders had a Pollack retrospective shelf online by the next morning. By contrast, there are dozens of examples out there of fancy landing splash pages that are either not directly shop-able or, even worse, whose featured products are no longer available. When we see a mannequin in a department store, we don’t expect to discover that the dress on display was discontinued weeks ago!

2. Advanced Shopping Tools

Second on the top five list is what I would call “advanced shopping tools,” or in other words, friendlier and more pleasant user interfaces that speed up or eliminate some of the “chores” that customers have to endure when buying things online. First and foremost would be enhanced, “pageless” checkout of the type seen on Anthropologie.com, UrbanOutfitters.com, Nike.com and Gap.com.

Obviously, making the critical purchasing experience as smooth and seamless as possible without jarring page transitions and confusing error messages is a good idea, but even more importantly, it translates directly into greater revenue and profits. Anthropologie.com, for example, reports a 24 percent improvement in checkout conversion over its original HTML-based (HyperText Markup Language) checkout.

3. Rich Media

Improving your shoppers’ ability to more fully visualize and understand products through rich media is another critical focus area in the coming months and years. As with traditional catalogs, online shopping suffers from a fundamental disadvantage compared to physical stores: Our shoppers cannot actually touch, wear or use merchandise before purchasing. However, unlike print catalogs, we can do so much more than provide simple pictures.

Video has proved to be particularly effective by demonstrating how others experience products, enabling shoppers to imagine themselves in similar situations. Williams-Sonoma.com uses videos of expert chefs to demonstrate how cooking tools can be used to make some mouthwatering dishes. MartinAndOsa.com cleverly uses very short video segments, lasting just a second or two, to give its shop-by-outfit experience pleasing and eye-catching motion that gives a surprisingly deeper and more interesting perspective on its clothing compared to static images. Competitively speaking, the sites that incorporate engaging rich media will have a natural advantage over text-and-image only sites, which will look increasingly outdated as time goes on.

4. Advanced Search and Guided Navigation

Search and navigation are the two areas that e-commerce should have a gigantic advantage over physical stores and catalogs. How many wasted hours have each of us spent in a store digging through racks of clothes trying to find something in our own size? How much frustration have you endured searching for an item in a big-box store only to discover that it was shelved in some really odd place?

Online, it’s supposed to be a breeze — computers are supposed to be good at this sort of thing, right? Now go look at how few sites allow you to shop only by your size, or by a specific color or price range. Can you see only the rugs that are 9’x12′? Can you find black jeans in 24″x30″?

On the search side of things, how absurd is it that ordinary types of searches that a shopper might expect turn up completely useless results? As an experiment, go to your favorite apparel site (I won’t name names this time) and try searching for “red blouse.” If a shopper can walk into a store and expect a sales associate to help them find a size 8 green cotton dress, why is it virtually impossible to do so online where it should, in theory, be so much easier?

The answer is twofold. Firstly, it turns out that the technology behind doing these sorts of instant resorting of tens of thousands of products is actually harder than it looks, even for a modern computer. Shopping by an arbitrary product feature, such as size, color or fit requires specialized search engines (like that provided by Endeca) which do a ton of high-tech wizardry to pre-calculate all the ways a shopper might wish to search for products. HomeDepot.com, for example, now allows you to filter for items that are actually in stock at a particular store.

Secondly, and perhaps most importantly, advanced search and navigation technologies have to be presented in an intuitive and easy-to-use interface. Searching by keyword is only one way to look for items, and it tends to work very poorly in many circumstances. (Try typing “size 8” into a search box and see what you get.)

Like.com’s visual search and Etsy.com’s color search are great examples of highly effective, non-keyword searches. Look for continued innovation in user interfaces that unify search, guided navigation and product browsing into a seamless experience that maintains the shopper’s context at all times.

5. Social Commerce

The last of my top-five priorities recognizes that in most cases, shopping is an inherently social activity where shopping is taking place in reference to the ideas and opinions of friends, family and peers. The Web has proven to be an incredibly effective social medium, connecting countless millions of people in ways that were unimaginable two decades ago. Yet online, shopping remains almost entirely devoid of engaging social activity. That will surely change as the major social networks like Facebook and MySpace seek to expand their empires into e-commerce as they continue to aggressively monetize their gigantic customer bases. Online retailers are perhaps facing the biggest competitive challenge since Amazon came on the scene.

If, as the social networks would have it, shoppers spend more and more of the discovery and decision-making process on their sites instead of ours, we add less and less value to the equation. In the extreme case, we become nothing more than a fulfillment service invoked once a shopper has already made his purchasing decisions. If this scenario sounds scary — and it should — consider the fact that we’ve built the primary value of our sites around convenience and efficiency, ignoring all the other things the Internet has proven it is very, very good at. In addition to user contributed content like ratings and reviews, we should be facilitating any number of interactions with and between our customers.

It’s stunning how few retailers fully leverage their loyalty programs online or can even track purchases across all channels. Our customers have always been our best marketers and promoters. Right now, if they want to say something to us or about us, we are effectively throwing them out of the store before they have a chance to speak.

For an interesting example of a conventional retailer openly embracing the social dynamic around its products, check out HMV’s new GetCloser.com site. In recognizing that its customers are passionate collectors of media, it has gone out of its way to make those conversations happen in conjunction with the HMV brand through a full-fledged social network built around its shoppers’ favorite titles and artists.

Any purchases, online or off, are automatically collected into the network, and it’s extremely easy to “plug” titles with one-liner messages. GetCloser is also a key part of HMV’s strategy to revitalize its entire brand, and it will play a key role inside its redesigned stores, which feature Internet kiosks and downloading stations. HMV knows that these conversations are going to take place with or without it, but by investing in a great online environment for media enthusiasts, it is betting it will be able to keep them coming to its online and physical stores.

Winners and Losers

So, I’m sure by now you’re asking another obvious question: Even if I add all of the above to my industry standard e-commerce site, will that be enough? Won’t my competition be doing the same thing, and I’ll still be running as fast as I can just to stay in the same place? Much as I’d like to say that you only have to tick off a few more check boxes and then you can relax, I’m sure you’ve already guessed the truth.

Like it or not, we have to get used to a world where this year’s advanced and innovative feature becomes next year’s status quo. However, in that regard it’s no different than the marketing investments we’ve been making for decades. And clearly there are long-term winners and losers. Unsurprisingly, it’s been the bold brand innovators and investors who have been able to create commanding brand equity and market leadership.

The current economic recession is distressing, but it is also a perfect opportunity to seize the initiative and address the features and functionality that will define the third generation beyond the basic page-based shopping model that we’ve lived with for so long. As the Red Queen herself said, “If you want to get somewhere else, you must run at least twice as fast!”

Joe Chung is cofounder and CEO of Allurent, an e-commerce solutions provider.

1 Comment

  • Wonderful article on critical web features for e-tailers. I’d argue there is one feature missing on this list: real-time email address validation.

    Internet retailers risk losing millions of dollars by populating their email databases with bad data. I’m talking about wasted marketing dollars, missed revenue opportunities, and ISP blacklisting (should spamtraps or honeypots sneak through).

    Retailers also risk creating a negative experience for customers who sign up online for newsletters, promotional information, and customer service assistance and then never receive appropriate follow-up attention — just because the email address they entered was misspelled.

    Real-time email address validation technology is an effective and user-friendly way for retailers to keep their email database clean from the start by catching and correcting invalid and problematic entries in real-time at the point of registration on your website, your web-enabled POS, or your call center terminals.

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