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Saturday, November 25, 2006

 

Most Web Users Buying Gifts Online

Some 80 percent of American Internet users say they'll be buying gifts online this holiday season, according to an AOL Shopping/Zogby poll released Tuesday. The same percentage of Web users, the surveyors found, say they will spend the same amount or more than last year on online gifts. What's more, 24 percent of netizens expect to spend most of their gift budgets online, the poll revealed. "These findings clearly show that US Internet users are shopping online more during the holiday season because of convenience, selection and price," AOL Vice President Robert Hayes said in a statement. "The average consumer is starting to see the advantages of online shopping over the traditional brick and mortar store."

When asked why they shop on the Internet, more than half (58 percent) said it saves them time, nearly a third (32 percent) cited the ease of comparison shopping
, 29 percent responded they found things online that they couldn't find in stores and 24 percent touted the value of free shipping.
Low on the list of attractions were sales
promotions and ease of last minute shopping (17 percent) and gas prices (9 percent).

On average, surveyors discovered that Web users expect to spend US$504.52 online on gifts, or about 40 percent of their holiday spend of $1,282.13. Those numbers, though, vary significantly by city. Data from the survey from 20 cities show average New Yorkers spending more ($1,483.36) of their total gift budget ($2,137.26) online than residents of any other American burg. "I think that's quite surprising, not only because of the size of their budgets, but the amount they were spending online," AOL spokesperson Laura Goldberg said. "People come from all over the country to shop in New York. "When you think about the New York life style, you understand why," she added. "A lot of it has to do with how busy New Yorkers are. The ease of being able to shop online is highly appealing."

Some Gothamites, though, still prefer bricks and mortar to electrons. "I like the hubbub of real stores," New Yorker Elizabeth Kaeser, 22, said. "I do like comparison shopping online for stores that I know and I can be sure about size and quality," she noted. If I'm thinking last minute," she added, "I'm thinking about going to the store. Overnight shipping is always too much." Orlando, Fla., and Cleveland finished second and third among cities with a large Web spend. An average Orlando gift buyer expects to spend $1,991.41 this holiday season, $645.24 of it online; an average Cleveland shopper, $1,238.14, with $577.31 of it online. Low municipalities on the list were Atlanta, where the average budget was high, $1,996.72, but online spending was low, $397.82, and Sacramento, Calif., where budgets, $821.33, and online spending, $322.32, were both low.

Although online sales represents only a small portion of total retail sale in the nation -- about 2.6 percent of some $250 billion -- it is the fastest growing segment in the retail industry, according to William Wetreich, a credit analyst with Standard & Poor's. "It has been increasing at a mid-20 percent rate since 2001, outpacing the seven percent rate of the overall retail industry," he said. Online sales during the holiday season and for 2006 should increase 15 to 17 percent, he added. 'Tis a jolly season for retailers. "All indications are that online shopping this holiday season will be vigorous," Patty Freeman Evans, an analyst with JupiterResearch said. Jupiter is predicting an 18 percent year-over-year increase in online shopping. Evans noted that online retail has become very competitive, so much so that even established players such as Amazon.com are resorting to "door busters" to drum up site traffic. "Amazon has never done deep discount promotions before," Evans observed, "but his year they're letting their users vote on a giant discount a week. That's an exciting thing because we've never seen anyone use their customer base to vote on what promotion they'll go forward with."

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Captitalizing on 'Spontaneous Buying' This Holiday Season

By all accounts, the e-commerce sector is poised for another blockbuster holiday season, with forecasters calling for another year of double-digit growth and sales of about US$27 billion for the fourth quarter. Most retailers are already well underway with plans to capitalize on that growth, putting in motion plans crafted throughout the year to maximize sales. New research, however, may offer some additional insight into where some of that growth is occurring and how e-commerce companies can best capture it.

A recent survey conducted by Harris Research found that a sizeable number of consumers are making so-called "spontaneous," or unplanned, purchases. These shoppers set out on their Web journeys without intending to become buyers, but before they can close their browser windows, they've made at least one purchase. The research is an effort to better understand where the billions of dollars in online spending is coming from, said economist Jim Glassman, a fellow at the American Enterprise Institute who worked with Harris on the survey, which was commissioned by eBay's PayPal online payment system. The survey found that 46 percent of the people who bought online recently made at least one unplanned purchase -- in other words, they went online to do something else and ended up buying something. "The numbers jumped out at us because this represents a lot of potential and there are clearly ways that Web sites can make sure they're capturing some of these sales," Glassman said.

The notion of unplanned buying comes as more attention is being lavished on the Web's increasing role in offline retail purchases, with a growing number of consumers using the Internet
to research purchases but still finalizing their buys -- particularly of big ticket and consumer electronics items -- at offline stores.

The survey about spontaneous buying can't be compared to earlier times in the evolution of e-commerce, since the question wasn't asked of shoppers in the past, Glassman noted. Still, it makes sense that people would be more likely to buy on the spur of the moment today, when consumers are more likely to trust a variety of Web sites and more comfortable buying on the Web in general. E-commerce firms can take three steps to ensure they capture as much of the spontaneous buying market as possible this holiday season, according to Glassman. Seasonal sales and special promotions are probably the most powerful tool for leveraging unplanned purchases, he said. "You may go online to buy a book and a merchant might be suggesting that maybe you'll like this book as well," Glassman explained, noting that Amazon has long been considered the class of the industry when it comes to suggesting purchases. "People need some kind of an incentive to make that unplanned purchase," he noted. Strong offers can even bring additional sales because of the ease of having shoppers share them with friends, he added.

Another suggestion is to offer more tie-ins and related purchase deals, something Glassman said even smaller e-commerce companies can do well. For instance, offering to sell someone buying shoes a spare set of laces, or ensuring that upgraded headphones are available to shoppers looking at iPods. "In the bricks-and-mortar world, this is something that happens all the time if you've got a good salesperson, but in the online world in some ways it's even easier," with several popular software programs available to help suggest purchases.

Finally, Glassman said, all sites need to ensure they are up to date with their site security, including seamless and secure payment systems. "There have been studies that show that more than half of purchases abandoned halfway through were left unfinished because of security concerns," he noted. Indeed, in some ways a spontaneous purchase may be more easily abandoned than one that's been long-planned and researched. Some have expressed concern that the rise in identity theft
connected to the Web -- and a list of database breaches that is now approaching 100 million individual record exposures in the past two years due to hacking and human and technical errors -- has the potential to slow the growth of e-commerce. "Consumers have shown they're willing to accept some risk because of the convenience of online shopping," said Forrester Research analyst Carrie Johnson. "The risk remains over time, but so far, e-commerce growth of all sorts has powered past any concerns about the risks."

The rise of spontaneous buying also raises the stakes for e-tailers to have products in stock, Glassman declared. "It's critical to have inventory and to make it clear up front that's the case," he said. "Shoppers can become very frustrated with retailers when they start down the buying path only to find they can't get what they set out to buy."

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Thursday, November 16, 2006

 

Google Checkout Waives Merchant Fees for Holidays

Online search leader Google said Wednesday it is waiving the merchant processing fees for its 4-month-old payment service through Dec. 31, hoping the offer will spur more retailers to check it out.
Merchants already could avoid the processing fees, depending on how much they spend on Internet advertisements distributed by Google. The promotion is also available to merchants who don't advertise through the Mountain View, Calif.-based company. The payment service, called "Checkout," is designed to serve as an electronic wallet that enables consumers to buy products and services from a bazaar of merchants without repeatedly entering the same personal and financial information at each store. Google's push into electronic payments looms as a potential threat to one of its biggest advertisers
-- Internet auctioneer eBay, which owns the leading online payment service, PayPal.

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Why E-Business Is Now Everyone's Business

The Internet has completely reshaped customer relationships. The transformation began with the dot-com boom, which spawned a new type of company whose entire business model was predicated on Web acceptance and usage. These companies -- Yahoo, Amazon, eBay and Google -- took advantage of the Web in all aspects of their business. Soon, traditional "brick-and-mortar" enterprises realized that to survive, they too had to satisfy customer expectations to procure goods and services over the Internet. Out of this, the traditional differentiation between B2C and B2B emerged. B2B sales models were complex. They needed to incorporate negotiated contracts, special pricing and distribution or channel partners and typically involved multiple buyers from the same company. B2C companies, on the other hand, were more consumer or end-user focused. They had to offer features such as ratings, reviews, communities of interest and promotions.

For some time, the differentiation existed. Today, however, in this new Internet world, the line between B2C and B2B e-Business is blurring. Influenced by the emergence of Web 2.0, where people collaborate and share information online in ways previously unavailable, B2B buyers increasingly expect B2C-like personalized experiences, creating a whole new challenge for B2B providers. Faced with the demand for greater personalization, B2B e-Business initiatives must now offer features in their customer and partner transactions that were once the domain of B2C offerings. At the same time B2B buyers want a new, more personal experience, B2C companies are looking to extend their sales models to new as well as existing markets. Like their B2B counterparts, they need to involve multiple suppliers. The net effect is that B2C initiatives require the complex guided selling, configuration and order management capabilities traditionally found in B2B business.

The convergence of B2C and B2B has created a new "Business-to-Everyone" or B2E paradigm where providing consumers with a unique and personalized experience with quick and easy access to the right products and services is the rule, not the exception. B2E recognizes that in an increasingly commoditized product world, more and more customers
make buying choices based on a company's ability to satisfy their particular needs; provide complete solutions, which sometimes include multiple parties; and offer the right pricing.

Consider a leading wireless service provider. They recently launched an e-Business solution with enhanced guided selling and configuration based on business rules that drive product and service options. In an environment characteristic of the B2B world, both business and consumer customers can select equipment from a huge catalog of options and compare as many as five different packages that include phones, service agreements, pricing and the cost to add more lines. The "experience" also includes guidance on which plans best suit customers' needs and suggestions about accessories to buy immediately, at a later visit to the site or by contacting the call center . Integration between call center reps and the Web site visit provides a unified experience throughout the customer relationship.

In the B2E world of Web sales, self-service needs to enable potential buyers to quickly and easily find, configure and purchase the right products and services at the right price and be easily searchable and intuitive. It must be transactional, capturing, distributing and fulfilling orders promptly and accurately and providing status and details on demand as needed during the fulfillment process. B2E initiatives also must integrate with traditional selling processes in order to fully satisfy customers' needs. Customers need to be confident that a Web self-service interaction will allow them to call the sales representative for help if necessary to complete the transaction and then check the status of an order any way they choose -- over the phone, via a call center or in person. Equally important, if channel partners, distributors and resellers are part of the sales model, the automated sales experience must synchronize with them. In order to accomplish this, some companies establish personalized storefronts and catalogs with specific pricing for their partners to ensure their participation as the sales process becomes automated.

Furthermore, when a company has multiple products and services, they need a flexible platform that enables them to offer multi-divisional products/solutions. As such, the platform also must be able to integrate into multiple back-end systems.

A leading systems integrator that provides innovative technology and supply chain solutions to the commercial, government and telecom sectors needed an e-Business solution to provide major accounts with their own storefronts, where they purchase pre-approved, standardized products.
Customers find the products they need from the integrator's 600,000-item catalog and also generate quotes, place and change orders, and view their business transaction with the company. Also, because of its e-Business solution, the integrator has been able to expand its offering beyond IT products into selling office supplies and business equipment. Characteristic of the B2C world, the new e-Business solution enables customers to get rich product information, including reviews and comparisons, through an online interface. While the merger of B2C and B2B will have a powerful impact on business, it will not erase the differences that exist among different markets. Consumer product companies, by their very nature, must be able to market to large audiences and have simplicity in their B2C offerings.

Manufacturers typically need to support customer-specific purchasing processes and negotiated pricing agreements, and manufacturers and high technology companies have complex sales processes. They not only offer configure-to-order products and services as well as replacement parts, they often sell to both business and consumer users.

Still, the key is that sameness exists in the need for companies to provide their customers with product and service catalogs and offerings, pricing, promotions, order management, fulfillment and service. A B2E e-Business solution must support all these capabilities. The Internet has raised the bar on consumer expectations. Companies who understand this will succeed, and in turn, provide a Web experience that meets the unique preferences of each of their customers whether they are B2C or B2B.

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Sunday, November 05, 2006

 

Marketers: Where's the Proof of Online Ad Audience?

Internet companies have had great success selling advertising space, in part because the effectiveness of those ads is supposedly so easily measured. However, marketers, even as they continue to push more of their ad budgets online, are starting to ask for better proof. A group of large U.S. companies, including Kimberly-Clark, Colgate-Palmolive and Ford Motor have said that by the middle of 2007, they will demand that online publishers hire auditors to check their ad and viewer counts. Analysts say they believe that online ad growth over the long haul will depend on the eagerness of large advertisers like these to shift more dollars online. Meanwhile, reacting to advertiser questions, online companies like Google, Yahoo and LookSmart have begun to meet with industry groups to answer basic questions on how click-based advertising works. Other companies are concerned that so-called click fraud may be driving up their ad bills, so they are sharing their proprietary ad data with click-trackers, who try to figure out how prevalent such devious clicks are. There are a variety of motivations behind click fraud. Sometimes, rings of click-fraud participants click on ads on affiliate ad networks like Google AdSense so that those sites' hosts will make more money (which is sometimes shared with the ring members). Another motivation is to knock a competitor's ad off a site early; many ads are posted with an agreement that they will stay up only until they have attracted a certain number of clicks. Even online measurement companies with solid reputations like Nielsen//NetRatings are undergoing new certifications to prove their counts are accurate. Concerns about click fraud and viewer statistics do not appear to be affecting online advertising revenue, but ad agency executives said the issues must be resolved before large advertisers would want to pour much more money online. The Internet draws only a sliver of the total spent on advertisements. Last year, Internet ads accounted for just 4.7 percent, or US$12.5 billion, of the $267 billion spent on advertising, according to the Interactive Advertising Bureau, a trade association of online publishers. The top 50 advertisers spent just 3.8 percent of their budgets in the first half of this year on online ads, excluding search, TNS Media Intelligence data shows. For all other advertisers, the average spent online was 6.8 percent of the budget. Procter & Gamble, the biggest advertiser in the United States last year, spent $33.5 million -- less than 1 percent of its $4.6 billion ad budget -- on online ads in 2005. General Motors, the second biggest advertiser, spent $110.5 million online, or 2.5 percent of its $4.35 billion total, according to TNS, which does not include search ads in its figures.

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