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Survey: Online retailers building better Web sites

September 18, 2007

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Las Vegas—With shoppers becoming more discriminating about how they shop online, Web retailers are fine-tuning site design, adding customer ratings and reviews and boosting cross-channel integration, finds a new Shop.org study released at the research group's annual summit in Las Vegas.

"Today's online shopper is extremely Web-savvy and expects more than ever, forcing retailers to raise the stakes," said Scott Silverman, executive director of Shop.org in a press release issued on Tuesday. "Companies are investing in new features that will keep customers coming back, and homepages everywhere are getting a major facelift."

Top priorities for online retailers include fixing Web site design and performance issues, improving the efficiency of online marketing and enhancing cross-channel integration, according to the 150 retailers surveyed for the second part of The State of Retailing Online 2007, the 10th annual Shop.org study conducted by Forrester Research.

Fixing product detail pages is at the top of online retailers' to-do lists for the next 12 months, the survey found. Some 88 percent of retailers plan to focus on improving product detail page content, with 80 percent adding alternative images, 72 percent incorporating lifestyle photography and 63 percent integrating customer ratings and reviews onto those pages.

Retailers are also focusing on their homepage content, adding such features as top sellers and "what's new" sections as well as dropdown menus and rollover lists in navigational areas. To differentiate themselves from competitors, online retailers are also making customer service a priority, with 33 percent of companies responding saying they plan to invest more in live chat functions, and 53 percent planning to streamline the guest checkout process within the next year.

In 2006, online retailers continued to allocate the bulk of their marketing dollars (51 percent) toward acquiring new customers online and an additional 24 percent to online customer retention programs.

Paid search continued to be the most effective marketing tactic for customer acquisition, and e-mail marketing retained its position as the most effective—and economical—tool for customer retention. Seventy-three percent of retailers e-mail customers about new products, and 51 percent rated the method as very effective, the survey says.

Retailers also understand the value of operating in multiple channels, the survey reveals. Respondents said that 43 percent of catalog customers have also purchased from their company's online store, while 35 percent of online customers have also purchased from their company's brick-and-mortar store.

Online retailers reported that in 2006, they dedicated on average 18 percent of their marketing spend to cross-channel sales, up from 13 percent in 2005. Typically, such tactics included direct mail initiatives such as sending out catalogs and e-mails to drive customers to local stores. However, more retailers are wielding print mail as a way to increase online sales. According to the study, 66 percent of retailers weight a catalog's success by how well it increases Web sales.

"The perception that catalogs are a dying breed could not be further from the truth," said Silverman. "For online retailers, catalogs are an incredibly important tool for acquiring new customers and providing current customers with their first look at new products. Retailers understand that many consumers get a catalog in the mail, then buy the item online."

The State of Retailing Online 2007 is currently available to Shop.org members and can also be purchased directly at Shop.org.
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