how to build an ecommerce stratgegy that increases ...€¦ · august!29,!2012!...
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August 29, 2012 ©2012 Scion Advisors dba 1
Scion Advisors®
Food & Beverage Sector
Quarterly Insights
HOW TO BUILD AN ECOMMERCE STRATEGY THAT INCREASES ADOPTION AND LOYALTY? By Deborah Steinthal, Managing Director, Scion Advisors In 2012, it is hard not to notice that online sales are growing double digit and reaching a broader audience. Last week, while visiting my 80-‐year-‐old mom, she was busy on her IPAD ordering a pair of glasses through her favorite Eyefly.com site.1 And last month, on his IPAD, my husband was shopping for garden chemicals through Amazon.com. In fact, research shows that average order value per transaction on tablets are almost $125 -‐ outpacing both the PC (about $100) and smartphone (just over $75)2. Leveraging consumer shopping trends, large and small producers and retailers are investing in innovative business models, a new generation of business tools, practices and ecommerce technology to build digital sales channels that make it easy and convenient for consumers of all ages to shop online. And many more e-‐retailers are now focused on new strategies for generating loyalty and recurring customer revenues. So I ask: why does my mom return to Eyefly.com regularly and why is my husband turning to Amazon for every day pedestrian purchases? I believe the answer is a shift in CEO strategy (see page 2) along with new best practices being adopted (see page 3). What do YOU think is driving these trends? (Write [email protected]) Investments in innovative new business models enable consumers to taste before they buy, reducing risk and barriers to purchase. Silicon Valley investors are heavily backing a customer loyalty trend, which is called “subscription e-‐commerce.” Thirteen subscription e-‐commerce companies received funding between May 2011 and May 2012, in deals totaling more than $160 million.3 A growing group of “subscription e-‐commerce” businesses send boxes of treats to subscribers every month, in a Web-‐oriented twist on the old-‐fashioned “fruit of the month” club. The companies give consumers an opportunity to discover new products and get a surprise in the mail each month, while merchandisers get a new way 1 Eyefly.com has a great customer retention tool: Try on your glasses online! 2 Video + Tablets: The Mobile Catalyst for E-‐Commerce (Watch out... August 18, 2012. forbes.com 3 Silicon Valley / San Jose Business Journal. Direct to Mailbox, article by Diana Samuels, Technology Reporter. August 10, 2012. Content sourced: CB Insights.
August 29, 2012 ©2012 Scion Advisors dba 2
to reach shoppers. Love With Food’s website enables subscribers to review their products, giving their merchandisers valuable feedback. Their subscribers receive sample-‐sized products and if they like the food, they can purchase full sizes through Love With Food’s website. One example in the wine industry -‐ Tastingroom.com, is nailing this concept. Business models like these have the ability to reduce consumer risk and increase adoption of their product. Another example in beauty products, Birchbox Inc., mails luxury beauty samples each month. The company claims to have more than 100,000 subscribers. Online retail is popping! Consumers are massively moving to Internet retail from traditional bricks and mortar – much of this is due to the convenience of the ecommerce shopping experience. Here are some facts supporting this trend:4
1. Retail and travel related ecommerce reached $256 Billion in 2011 (+12% YA), significantly outpacing growth at brick-‐and-‐ mortar retail.
2. 2011 (non-‐travel) e-‐commerce spending jumped 13 percent to $161.5 billion.
3. In 2012, major retailers are seeing double-‐digit growth online.
4. Online shopping accounts for over 40% of total sales for many (See last quarter’s Top 500 headlines, Internet Retailer -‐ adjacent).
5. Customer satisfaction scores are soaring for many Internet retailers5 ‘If you make it easy, they will come’, confirms David Risher (former EVP Retail, Amazon.com).
New (but old) business practices and tools are driving returns on digital investments. “Many more innovators are applying more discipline to understanding their customers, building unique positioning, meaningful value propositions and sustainable competitive advantage with more success”, says Urban Outfitters Managing Director of Urban Outfitters Direct and Marketing, Steve Hartman. Indeed, digital marketing innovators are focusing resources in the following areas:
4 Scion Advisors’ May blog: What will it take to scale online wine sales to a billion dollar channel? 5 The American Customer Satisfaction Index
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1. Product strategies targeting well segmented Internet customers. 2. Tactics that leverage and convert bricks and mortar customers to digital channels. 3. Strategic partnerships that create large customer acquisition machines. 4. Experienced staff that has ecommerce sales knowledge. 5. Best of breed technology, platforms, analytics and logistics tools. The table below, On planning and digital investments, synthesizes new practices from our clients’ trial and error in the last 18 months.
On planning and digital investments: 3 insights from business Leaders 1. Digital goals and strategy need to integrate with overall business goals to drive more
revenues around all sales channels and deliver enterprise wide results. 2. Online shopping experiences produce better results by coming alive, more personal
and a lot more meaningful to consumers. • Digital marketing through social networks opens new communications gateways
where insights are shared ‘among trusted friends’, building stronger customer experience and intimacy -‐ generating deeper brand loyalty.
3. Consumer insights are becoming an important tool for Chief Marketing Officers (CMOs), enabling them to measure and influence purchasing behavior – and achieve much better shopping results.
Top ecommerce sites are adopting new best practices. On the next page is a list of Ten Top-‐Rated Sites. Here is what I noticed when perusing them. 1. Homepage
• Products are being sold on the home page (not two layers down). • Pop-‐up windows ask for email addresses (with offers). • Free shipping is visible on the home page.
2. Path to purchase • Consumer access to social engagement tools are integrated throughout the
shopping experience. • Customer insights are being generated and used at point of sale. • Contests drive purchase activity as well as special deals, discounts. • Personalized recommendations make it fun, easy to shop and buy.
3. Easy, convenient access to relevant information • Blogging has become a place to engage in conversations (e.g. buyer chat). • Customer service buttons aid live help through Internet chat or by phone. • Branding comes alive thru video (see table below: Video is now king). • Consumer planning tools are everywhere.
August 29, 2012 ©2012 Scion Advisors dba 4
4. Next generation mobile interface (tablets and smartphones) • Mobile shopping is now super easy.
Ten top-‐rated sites 1. Urban Outfitters (Single-‐mindedly focused on their fans’ needs):
www.urbanoutfitters.com/urb. 2. Levi’s (Facebook is huge source of fans):
us.levi.com/home/index.jsp?clickid=header_logo. 3. Chamilia (The easiest navigation ever, search and shopping bag are very visible):
www.chamilia.com. 4. Eyefly.com (Great tool: Try on your glasses online!): www.eyefly.com. 5. Createmychocolate (Customize your own chocolate bar):
www.createmychocolate.com. 6. BeautyChoice (Engaged makeup artists with followings on YouTube, create videos
featuring BeautyChoice products and specials; the site now draws 30% of its traffic from YouTube.): www.beautychoice.com.
7. Lillipulitzer: www.lillypulitzer.com. 8. Stella Artois (Use of video branding): www.stellartois.com. 9. Wine.com (New, easier navigation; Friendly Wine Finder; ‘Prime’ shipping):
www.wine.com. 10. 1.800.flowers (Mobility made easy): ww10.1800flowers.com. With tens of billions of American consumers ‘bought into’ the convenience of online shopping and today’s technology supporting easier and faster solutions – innovators have more tools than ever to drive significant results. Find out how to expand your reach, increase customer loyalty and drive growth through your digital channels. Call Deborah Steinthal, Managing Director, Scion Advisors to set up a meeting to discuss realistic growth strategies. (707.246.6830)
About Scion Advisors – www.scionadvisors.com With offices in Napa, California, Scion Advisors is a business and strategy consulting firm that has a proven approach taking businesses to the next stage: positioning to grow or preparing for exit. Scion Advisors is comprised of seasoned executives from world-‐class organizations with established track records of achieving results across 100 companies and several industries.
6 Invodo, Austin, TX 2012 research and Internet Retailer
Video is now king, driving customer engagement and conversion.6 • Video viewers are 64% more likely to make a purchase and 144% are more likely to place
that item in a shopping cart. • 52% say that watching the video makes them more confident about their purchasing
decisions (read: fewer returns).