Given projected web sales of $990 billion in the near term and as much as $2 trillion in a few years, there is little doubt in the minds of movers and shakers that e-tailing (distinct from retailing) is the place to be.
A. What must we bone up on relative to e-tail, the internet and the web?
1. One to One (1:1) Marketing is the catch phrase that describes the new web driven relationship between merchant and customer. Interactive business opens up a new set of marketing and customer involvement factors that dramatically affect the pick&pack opportunity. (See Enterprise One To One by Peppers and Rogers, Doubleday/Currency 1997)
2. Technology: The PC and WebTV provide the human interface. The web provides each web site and site visitor with unique, international identity. The web browser provides the ability to view and exchange web pages, email and multi media effects. The internet provides global connectivity via phone lines and satellite communications.
3. Bandwidth technology will provide relief from current limitations on the speed and quality of what can be communicated between web sites and web visitor PC’s. When broad band communications becomes available to the web visitor, e-com marketing will take on a new and more exciting face that is expected to drive home the really big e-com sales hit.
4. The foreground players are the web site owners and the web site visitors who are determined to communicate.
5. The background players are the movers and shakers (hi-technology and money people) and the existing infrastructure operators who are driven, for their own reasons, to keep the whole thing going.
6. The roles we are concerned with are visitor, manufacturer, merchant, marketer, order filler, customer service rep, shipper and customer
7. Action Areas such as portals, 1 to 1 marketing, new e-com software, internet access via broader bandwidth, e-tailing and
e-BTB (business to business.)
B. What do the leading portals, search engines & on-line malls tell us?
Putting up a page and offering something for sale is the easiest e-com thing to do. Getting the page noticed and getting visitors to buy are more difficult. Being one site among millions of sites requires a certain amount of differentiation. Differentiation begins at the moment a web visitor logs on to the web. The term “portal” has come about to express the value of being one of the first places a visitor stops when coming on-line. The original Compuserve, AOL and Prodigy were portals whether they knew it or not. The visitor came there for the personal services (bulletin boards, forums etc) and stayed. Web browsers also had a portal quality and then search engines became the first place to go when surfing or searching the net.
The point is that there is great movement to get control of the limited number of first level (entry level) portals to the web in general and to web shopping in particular.
The original idea of the portal was that it would be a site to pass through on the way to one’s real destination. But the “pass through” portal soon gave way to the “sticky portal”. The idea being to hold on to the visitor for as long as possible and if you let the visitor pass through to another site, make sure she and he can find their ways back. First level portals, by all practicality, must be heavily visited sites. Providing chat rooms, cyber communities, free email, free personal web pages and access to news services etc. are considered the keys to gaining and keeping a main portal status.
Portal status provides the basis for web advertising. Millions of people passing through a portal cannot help but see the banners and other ads flashing in the borders of their PC screens. If billboards on highways can produce customers, portal advertising could only be a refinement.
The movers and shakers are constantly coming up against the power of internet egalitarianism. Having things your own way is accepted by the main portals and encouraged via the well advertised ability to “personalize” you portal page. Every time you sign on, your personal portal page is waiting with your specific requirements for news, weather, horoscope, stock prices etc.and hopefully with you shopping profile for merchants to feed upon.
Search engines exist all over the web for very general and very specific purposes. The best known and most used search engines are Yahoo, Excite, Infoseek (now GoTo), Altavista, Snap etc. Though the keyword search engine continues to be the biggest show in town, most operators have also added hand compiled directories to specific products, services and information.
You would think that these “directories” would attempt to get the visitors more quickly to the end of their searches. This, however, is only partially true.(see gauntlets & advertising below) Directories vary from operator to operator, but, taxonomy of directory categories, sub categories, sub-sub categories and related site pages is becoming somewhat uniform. Of these directories, the “Shopping Directory” usually stands well out on the portal entry page (personalized or not).
C. What do online malls and catalogs offer?
1. An on-line mall is a shopping portal with direct link access to both large and small e-tail merchants. A mall usually presents it merchants to the public via a combined shopping search engine and shopping directory. Unlike the big portals, the search engines and directories are usually exclusive to the mall.
2. The Visitor Search Gauntlet. In all cases, the mall visitor must find his or her own way .The mall search engine gives the visitor a box in which to enter a merchant name, product category, product name and, in some cases, a related keyword. The search process takes the visitor through at least 3 distinct pages that narrow down the search but also allow for 3 presentations of paid advertising.
A “directory” is a list of shopping categories. Click a top page category name and the directory will come back with a sub category page and, in some cases, a sub-sub category page, before it presents a page of appropriate merchants to click upon. Malls will also present the option of viewing a complete list of all merchants on the mall along with a short shop description.
3. Advertising. The visitor search gauntlet is the mall’s opportunity for advertising. Each web page traversed by visitors on the way to shopping is populated by the advertising of mall and non mall merchants or service providers. If a shoppers goes through 3 mall pages before getting to a shop of choice, they will have passed by anywhere from 3 to 20 ads. The ad spaces change content throughout the day. Ad space charges are based upon whether the ad is on the 1st, 2nd,3rd, etc. page passed through by a shopper. Each directory category page provides advertising opportunity. The mall, like any magazine, can offer 100’s of choice and not so choice on-line spaces in which to advertise. Unlike, the printed magazine, however, the on-line advertising is scheduled to automatically change sponsors throughout the day. Portal operators see queuing up the e-advertisers for each page ad space as pure gold.
4. On-line Shopping Malls are sprouting up all over and they vary in how they serve the merchant and the customer. Yahoo is a major portal that operates its own shopping mall. Mall operators such as Yahoo make being a mall merchant quite easy. Yahoo, for a reasonable price, will:
q Help design and host the merchants’ pages.
q Arrange for on-line advertising.
q Supply order taking software (shopping cart)
q Process the credit card
q Electronically supply the merchant sales orders.
q Supply order analysis reports
5. Each merchant must have some way to accept and process orders. The many forms of e-tail software, however are not uniform or fully developed. Most malls let the merchant site supply its own e-tail software. This means that for an outside fulfillment service, to pickup sales orders electronically is generally not as simple as the Yahoo model might suggest.
6. Direct mail catalogers are finding a natural course to the web. Using their existing snail mail materials to advertise their web sites, a visitor finding them in the ever-growing web world is easy. Some catalogues are found on shopping malls. Catalogs like Eddie Bauer also use banner advertising to good advantage. Lower costs of order entry are said to be significant. Their current fulfillment methods suffice and shipping methods remain unchanged for the time being. Some believe every catalog will have to go on-line in order to survive the next 3 years.
D. Catalog Merchants And Store Merchants
1. Are advertising their e-com offering both on and off the web. Local merchants have the hardest time and can have a very disappointing e-commerce experience until they realize that the web is primarily just another order taking location You build an e-tail site over time and do not only depend upon portal links for all your sales.
2. Merchants may provide the web shopper with a complete list of all their goods for purchase or they may promote only lead items.
3. Currently, most take their own orders, process their own credit cards and fulfill via their own operations.
E. Visitors, Merchants & The Web
1. The web is a communications device, just coming into its own. There is a large and growing populace of web visitors and web sites. Both merchants and visitors are just now getting use to the idea of buying and selling on the web. The mental continuity necessary for the public’s jump from old biz to web biz is just now materializing. However, all the necessary business mechanisms have not yet been invented
2. Books, recorded music, computer software & hardware, drugs and groceries are the first product hopefuls on the web, but as vendor costs demonstrate, they have not yet been thoroughly reengineered for e-com profitability. The Amazon’s of the web are using ipo money to secure a high level shopping position. Most of the big players are not expecting short term profits but longer term marketing recognition as top portals.
3. Other industries are finding some sales success, especially those that are not picking and packing a physical product. Travel and investment are web active. Web banking is coming out and many on-line news services see insurance companies hurrying to catch up.
4. News services are popular. Magazines are doing especially imaginative marketing. Newspapers have well developed sites, but the full switch to e-com is not evident.
F. Visitor Statistics
Article #2: Visitor Stats
Books
Amazon.com 9,497,000
Bn.com 3,954,000
Borders.com 441,000
Booksonline.com 292,000
QPB.com 251,000
Amazon.com is closing in on the 10-million mark-while Borders.com (with 9 million fewer visitors than Amazon) is running a very distant third.
Greeting Cards
Bluemountainarts.com 11,507,000
Egreetings.com 1,656,000
123greetings.com 1,576,000
Hallmarkconnections.com 696,000
Hallmark.com 690,000
Americangreetings.com 495,000
3Dgreetings.com 317,000
Nicecards.com 276,000
Greeting-cards.com 256,000
E-cards.com 250,000
Bluemountainart.com is king of the mountain, with the most visitors of any retail site tracked by Media Metrix. Real-world rivals Hallmark and American Greetings are playing catch-up.
Drugstores
Drugstore.com 562,000
Mothernature.com 277,000
PlanetRx.com 235,000
Vitaminshoppe.com 224,000
Healthshop.com 215,000
New kid on the block drugstore.com jumps to the front of this emerging category (having Amazon.com as an investor doesn’t hurt, either).
Flowers
1800flowers.com 390,000
Virtualflorest.com 381,000
Ftd.com 304,000
PCflowers.com 259,000
Virtualflowers.com 234,000
It’s a virtual run for the roses in this category. The virtual leaders (1800flowers.com and Virtualflorist.com) have a slight edge over ftd.com, but it’s a growing market.
Music/Movies
CDnow.com 2,348,000
BMGmusicservice.com 2,314,000
Columbiahouse.com 2,131,000
Musicblvd.com 1,783,000
Buy.com 1,410,000
Reel.com 785,000
Bigstar.com 725,000
The pre-merger CDnow/Music Boulevard tandem drew 4.1 million visitors, only slightly less than the two biggest mail-order music clubs, BMG and Columbia House, attracted online combined.
Computers/Software
Beyond.com 2,141,000
Egghead.com 2,003,000
Dell.com 1,795,000
Warehouse.com 658,000
Outpost.com 545,000
PCconnection.com 288,000
Computersbynet.com 224,000
Zones.com 222,000
With its offbeat TV campaign, Beyond.com edges out Egghead.com for bragging rights, with Dell.com not far behind.
Unique visitors are the actual number of total users who visited the Web site once in the given month. All unique visitors are unduplicated (counted only once).
Source: Media Metrix. Lists were categorized by Internet Retailer and do not necessarily represent all sites in a given category. All figures are for April 1999. Visitor projections are based on a sampling of more than 40,000 individuals throughout the United States.
Copyright © 1999. This content is the property of Faulkner & Gray.
http://www.internetretailer.com/html/stats/stats.htm
G. Web Visitors As “Lookers and Bookers”
1. Every visitor click is not a sale. The majority of people “look”. More and more people are “booking their orders online”. However, all the tricks of on-line merchandising have not yet been learned and the art of making a sale is still in its infancy.
H. What is the traditional pick&pack community is doing?
A review of the traditional pick&pack companies shows interest but no landslide of activity on the web. They all have web sites, but other than discussing EDI and saying e-commerce is important, most do not appear poised for on-line action; at least according to their current web sites.
One vendor has decided to create its own e-mall and provide all relevant site services (hosting, e-com software etc) as well as fulfillment services. Arnold Logistics presents its program as follows:
Our e-business Philosophy
e-business is much more than just simply placing a web page on the Internet and taking an order. At UDS, it is a philosophy of giving a complete solution to both our Clients and their customers by making the entire electronic shopping experience “seamless”.
We host and develop the web site. We charge the credit cards and process the orders. We pick pack and ship the orders. We accept the returns and issue the refunds. Through this entire process we are providing customer service and customer communication.
Our Client’s benefit from our complete solution by getting satisfied customers, single point of contact, and a complete on-line reporting solution of entire process
Arnold Logistics Web Site ARLO.com