E-Retail Commandments

Many a hangdog would-be netpreneur is feeling pretty punk during the economic slowdown and wondering if he or she has missed the chance to cash in on the net gold rush. Ned Desmond and the publication he edits, eCompany Now, is working on an editorial piece that might interest those would-bes. The title: Second Mover Advantage. That title is apt. Making a major market play after early initiatives have already fizzled and died can actually work to your advantage. Why? Because even though you have missed the white hot rush online, you can also learn from the lessons suffered by your fallen comrades. You've ventured nothing and lost nothing, but your online entrée can be smarter than those before you. Just what kind of lessons you should learn depends on what market you're entering. But if where you're headed has anything to do with selling something online, Ned Desmond has some advice for you. And it mostly boils down to speaking to your targeted customer and keeping shipping costs down.

High Shipping Costs Will Kill You

It seems so basic, yet it's such a big problem for so many retail sites: high shipping costs turn off customers. Period. Customers initially excited to find an item they want at a good price balk when they realize the item carries shipping fees ranging upwards from $7. "You can't burden the customer with a really high cost of delivery," says Desmond flatly. "You should strive to break even or perhaps even lose money to make sure the shipping costs don't throw the customer." Some studies estimate that 60% of customers abandon their shopping carts when they get a look at the shipping prices they'll have to pay. One problem is that costs are so high - when you're buying a $10 book that costs $5 to ship, it hardly seems worth it. But another problem is more insidious. "Some online sellers are a little ashamed of the shipping cost or want to try and obscure it from the customer, so they tuck it into the last stage of the buying process. You might go through four or five screens entering credit card numbers and so forth and so on, and then the site says, "Oh by the way, this is going to cost you $X to ship." That doubles the irritation. Not only is it expensive, but also the customer tends to feel a bit like they're being taken advantage of when this information gets inserted at the last moment," says Desmond. You must be clear with customers about actual costs. And keep the shipping prices low. Don't expect to make money on shipping; if you break even or lose a little, you're doing better than most.

Getting to Know Customers Can Pay Off

It was supposed to be so easy to get to know your customers online by analyzing e-mails, click patterns and other data with sophisticated software. Of course, nothing is ever as easy as it seems. E-retailers have learned not to expect a detailed file on each customer. You'll never know Bill Smith from Cincinnati has an uncle named Fred and his favorite color is blue. But you can offer something to get your customers to reveal more about who they are. And once they do, you need to find the opportunities to serve who they are. "We cite the example of Kmart's BlueLight.com," says Desmond. "They had an interesting offer where you could get a free ISP in exchange for providing detailed demographic information on your own household. As a result BlueLight created eight different homepages. So it knew that you had children under twelve in your home and when you came to the site, you would see things relevant to families with children under twelve." In August when school is in session that site would probably include information about back-to-school specials. And in winter, perhaps, those same pages would have information about specials on kids' coats. "This approach resulted in a dramatic increase in sales simply because the context of the website suited the customer as they arrived," Desmond says. He also recommends e-mail messages to customers that are targeted to their prior activity or purchases on your site. "I get tons of spam in my e-mail account just like everybody else, but when I see a notice coming from Orvis about a sale on fly fishing equipment, I open that e-mail. I might delete twenty-five others about refinancing my home or other rubbish I'm not interested in, but when I see something that is from a brand name that clearly speaks to my interest, I definitely open it," he says. So it's not necessary to know Bill's Uncle Fred - just to know he likes to buy fly fishing equipment. Pair this knowledge with a compelling site and merchandise shipped to the customer without steep additional charges, and hey, now you've got something smarter than the first-to-marketers.