E-BUSINESS SPECIAL REPORT

The Reinvention of E-Commerce

In some ways, brick-and-mortar companies have it easy. They can study the successes and failures of firms that came before them. When contemplating a new venture, they can leisurely peer at the practices of giant corporations and thriving mom-and-pop operations to decide which strategy to employ.

In the past, brick-and-clicks and pure-plays have not had that luxury. But as the ins and outs of e-commerce have become better known, many companies have begun to change their practices. And rather than jumping into Web waters teeming with competitors, a significant percentage of businesses have chosen to focus on differentiating themselves and targeting consumers in smarter ways.

Turning a Corner

“In general, companies have moved away from an online strategy that was in many cases uneconomic and opportunistic to a business model that is economically sustainable,” Boston Consulting Group analyst Simon Stephenson told the E-Commerce Times.

Changes can be seen across the Web as companies focus on giving customers more of what they want — content — and fewer bells and whistles. For example, many automakers have retooled their sites significantly to reflect customers’ needs. If site visitors want to know the available colors for a car, they will likely find those colors very easily on a manufacturer’s site.

Sellers in other sectors — such as financial services firms, booksellers and clothing retailers — also have beefed up content and improved site navigation. In almost all sectors, the use of new technology to showcase products rather than design capabilities has helped e-commerce move beyond its beginnings.

“Lands’ End is very out there with adopting new technology,” Forrester analyst Harley Manning told the E-Commerce Times. “They use things like a virtual model to draw people to the site.”

Bumps in the Road

Of course, there might still be a long way to go until e-commerce evolves to the point of being truly useful to consumers. Site design, in particular, still seems to be a sticking point for some companies.

“On average, sites aren’t improving,” Manning noted. “But some of the leaders have really begun to crack the code and have started to open a wide gap between themselves and their followers.”

Companies that yearn to follow the leaders do not lack knowledge about usability and customer needs, Manning said. Rather, they often suffer from poor internal coordination. “Very often, design teams and outside experts know what to do,” he said. “But they’re ordered to do the wrong thing by people who sign the checks.”

Businesses that pull ahead almost always have an executive champion who is willing to fight for continuous site improvement and customer-focused design, Manning noted.

Future So Bright

For companies trying to reinvent themselves through e-commerce, there could be a shiny vista ahead. Stephenson said there has been a striking improvement in profitability for online retailers in particular.

“This is driven in large part by massive improvements in marketing efficiency,” he said. “They’ve moved away from broad marketing channels to more targeted efforts.”

A good example of this effort is the leading booksellers, Manning said. “Take a retailer like Barnes & Noble. They know how customers browse for books, how they shop for that particular product. So they’ve changed their site based on that understanding.”

Emulating effective strategies will likely be a popular course of action as companies mine their knowledge of proven online techniques and attempt to apply that wisdom to the Web. And as those who sign the checks begin to understand what must be done, perhaps even e-commerce followers can catch up to the leaders.

5 Comments

  • Where the web has failed in the design of sites somewhat parallels the problems faced in designing a store. It is not a case that one can place the blame on management’s telling the designers to do things that eventually get in the way of making sales. That does happen for sure.
    More likely, in both situations it is the fact that most store and web site designers have never spent any time behind the counter, experiencing the problems a poorly designed environment can cause.
    A web site is a store. That’s all it is. The same problems that plague first-time shoppers in a physical environment are duplicated many times over in web sites. While designers may see the results of their work as being "user friendly," they forget that this term only applies to those who are familiar with the environment they are in.
    To read that Barnes & Noble are taking their experiences and knowledge of what goes on in their bookstores and are looking to see how to apply these proven tactics/design to their web sites is just a start . . . a good start at that.
    But, what about the thousands of thousands of businesses that don’t have this background to work with? Where does that knowledge come from? Where are the designers who have spent time working in the industries they are designing sites for? Being technically adept at coding and graphics, while being very essential to the task, is not the prime criteria for becoming a designer of stores or web sites. The prime criteria is having gone through the pains of having to live and work where the design gets in the way of making sales or making information easy to get.
    Alan J. Zell, Ambassador Of Selling
    azell@aol.com
    Chairman, PNW Sales & Marketing Group

    • Alan Zell said: A web site is a store. That’s all it is. …WRONG! A web site is NOT a store because a store STORES stuff; and a web site doesn’t store anything at all! And if you think that’s not important, then just ask yourself if you’d like to have your goods left "un-stored" outside your locked front door if you couldn’t be home to meet the delivery guy!

      • I agree with the thought that having competency in code and graphics does not meet all of the criteria for becoming a designer of stores or websites. I would further state that having competency in I/T or business management does not automatically meet all the criteria for managing the back-end and front-end of an online store. A combination of these talents is needed, but as I review the actual product information contained in websites, I keep asking – where are the MERCHANTS?
        Consumers use a retailer’s website as a resource for valuable product information. The case for this influence on click & mortar sales is well established. But a quick review of many national retail websites will confirm a lack of complete, accurate and normalized product information. When was the last time you walked into a brick & mortar store to buy, for example, an electronic device (printer, PDA, stereo) and tried to understand the differences in features and benefits of the assortment? Other than reading the box if available, you may have store signage below each product that describes attributes. But try to use this information for comparison and you will quickly find that each sign has a different set of attributes that require the consumer to actually normalize the values in order to draw comparisons. Then move to that retailer’s website and find more information than is on the store sign, but again, a lack of normalization that allows you to actually compare products.
        Product information sufficient to make a purchasing decision is part of the merchandising function. Product content is what fuels retail websites with information. Technology is what supports the ability to access that information. Retailers need to put the merchandising function back into e-commerce and start looking at how they are actually influencing a purchase decision with product information.

        • azell – your point reminds me of the approach to software design that was championed in Scandinavia in the ’80s. Researchers like Pelle Ehn and Morten Kyng stated that to design really useful and usable software, designers should spend at least 2 years in the professional practice they are designing software for, be it banking, commerce, travel, office work, construction, etc. Understood in a strict literal way, this is of course not doable, but I believe they are right in principle (I even believe that time and common experience in our professional community has proven them right) and it certainly points to the importance of truly understanding the practices of the people and communities you are designing software for (be it shelf-software or web-based software).
          Klaus

  • As the internet use increases, companies must find an economically sustainable business model (the right mixture between fiscal and virtual environment), so they tend to contract e-commerce specialists who create the right model for each company, but management still have a preconceived way of viewing their business. Change is necessary, but not many people are ready to deal with it. The answer to the problem is learn to handle changes. A company must offer what the clients are looking for, and not vice versa.

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