What's in Store Online - Internet/Web/Online Service Information

EXPLAINER: The Web makes shopping simple. But the technology behind the scenes is complicated and ever-changing. A look at what's new.

PERSONALIZATION

SELL DIRT TO A FARMER

Most online stores greet you with personalized sales pitches. How does a site decide what you see? Two ways. Rules-based marketing says, "If a customer puts a razor in his shopping cart, show him an ad for razor blades." Collaborative filtering, on the other hand, says, "Statistically, customers who buy razors and cat food are also likely to buy ice cream, so show him an ad for Haagen Dazs."

But neither approach is perfect. Says Steve Van Tassel, senior VP of products at NetPerceptions, "Rules are a great way to express the merchant's agenda, collaborative filtering the consumer's. Lately, Internet marketers have started combining the two, using filtering to identify groups of buyers, then using rules to push the products they want pushed.

But all that fancy technology is wasted on many shoppers. A recent study published in the Harvard Business Review found that 42 percent of online shoppers saw no benefit to personalization. The alternative: Let customers do the customizing. One buyer at an online boutique might opt to view shoes by color; another buyer might browse by style; another by season.

SHOPPING

GETTING TO CHECKOUT

* E-commerce site design has one goal: getting shoppers to the checkout stand with lots of goodies in their shopping carts. But there are obstacles. Bad design chases away more e-shoppers than any other flaw, says Andy Cargile, director of customer experience architectures at e-commerce consultant Vividence. The worst part is that these design goofs are well-known and easily fixed.

The biggest mistake, according to Cargile: inscrutable search engine results. Roughly half of online shoppers are "search dominant," meaning they go to the search engine first to find what they want. But Cargile says search results pages on two-thirds of the shopping sites he surveyed are unsortable, unfilterable or simply unreadable.

The second big mistake: All too often shoppers can't find out shipping costs until they reach the checkout window. Buyers want to know up front how much an item really costs, including shipping. Smart sites offer links to shipping rates or show shipping costs as soon as an item hits the cart.

Finally, changing quantities can be unnecessarily tricky. If a shopper realizes she doesn't really need two red cashmere sweaters, she can't just change the "2" to a "1"; most sites require that she click an Update Quantities button, too. It might seem like a little thing, but customers who receive the wrong quantity are among the top sources of customer service calls and returns.

PAYMENTS

CASH NOT ACCEPTED

Credit cards are still used to pay for more than 98 percent of online retail transactions. But alternatives - particularly person-to-person systems and micropayments - are gaining traction.

One p-to-p option, PayPal, started on eBay but is now accepted at a number of online stores. Its main advantages: simplicity and security. Some buyers still get the willies when asked to type in their credit card numbers at an e-store. PayPal lets them avoid that anxiety. Once they set up a PayPal account, they just click the Pay button on a PayPal-enabled checkout page, enter a password, and they're done. PayPal handles the behind-the-scenes payment processing.

Micropayments - transactions too small for standard credit card systems to handle economically - make up a minute portion of online payments. But more and more merchants are experimenting with them. Amazon.com, for example, recently started letting buyers pay a couple of bucks to download individual songs. Micropayment systems come in two main forms: Some vendors, such as Flooz.com, issue what amounts to private currency; you buy a batch of tokens or scrip with your credit card, then use it to pay for items. Other e-retailers use brokers such as eCharge and iPin that attach micropayments to phone, utility or ISP bills.

RETURNS

IF THE SHOE DOESN'T FIT

Smart vendors know that what they do after a sale is as important as anything they do before. Today's CRM tools have the potential (at least) to make customer service and after-sale marketing more effective than ever.

But the fanciest customer-retention marketing campaign and friendliest follow-up service in the world won't do much good if an e-shop can't handle returns. According to the Gartner Group, "reverse logistics" - the process of accepting customer returns - will cost e-vendors $3.2 billion this year. For some merchants, processing returns can eat up 100 percent of their profits from goods sold.

But there are ways to reclaim some of those lost profits. For example, Gartner says e-retailers can cut costs from returns by up to 73 percent simply by adding an "I Want to Make a Return" button to their storefronts. Customers selecting this option could then select the order they want to return. The site would authorize it and help arrange shipping, the customer would be happy, and the merchant would save the cost of the endless rounds of customer calls most returns entail.

Sites are increasingly outsourcing the returns process. Established shippers like FedEx, Genco and UPS, as well as startups like e-RMA, Managize.com and ReturnBuy.com, offer reverse logistics services. This is one area where brick-and-click merchants have the advantage: Online buyers can return goods at their offline stores.

COPYRIGHT 2001 Standard Media International
COPYRIGHT 2001 Gale Group