Shop.org Blog

In my second interview for the Word-of-Mouth Wisdom Interview Series (and the last of 2006), I was fortunate enough to get some of Joan Broughton’s time.  Joan is a good friend and a former fellow Shop.org Board of Directors member.  I have worked with Joan for many years while at Coremetrics as REI was (and still is) a Coremetrics’ client.  While at Coremetrics, Joan and I worked on a project that tracked the success of Google paid search campaigns (SEM) to offline (in-store and call center) sales, and the results were very enlightening.  When I was contemplating launching Bazaarvoice in May of 2005, I asked Joan for her wisdom on the matter.  In short, I have always respected Joan’s intelligence, accomplishments, and true partnership. 

Joan is Shop.org’s VP of Content and Education.  I remember how excited I was on the day Joan told me she was joining Shop.org’s executive team, and she has already had an enormous impact on the quality of the events, new hires (such as Larry Joseloff), and new initiatives (such as the recent blog launch).  Joan couldn’t have brought a better background to the Shop.org team.  As I mentioned, she previously worked for REI as their VP of Multi-Channel Programs.  She managed two business units, encompassing over $100 million in annual revenue with a team of 200 people.  Joan was responsible for launching REI’s “order online, pick up in store” option for customers, as well as many online services.  Prior to REI, Joan was Office Depot’s Director of Web Publishing.  She has spent more than 12 years in the online industry, including working at O’Reilly & Associates and America Online.  In other words, Joan has more online experience than almost anyone I know.
 

Here is our interview:

1. Please tell us our readers about your success with the pick-up-in-store initiative at REI.  Did the light-bulb go off for the rest of the organization about how much cross-channel shopping was occurring?

The REI order-online/pick-up-in-store program was definitely a team effort, and literally every department in the company played a part in its success. I think that the organization had already had more than an inkling that cross-channel shopping was going on, but this helped underscore how much one channel influenced another in a big way.

[Note from Brett: Internet Retailer reported that in-store pick-up of online orders accounted for almost 30% of REI’s web sales; that sounds like a huge success to me.]

2. Now we live in a world of the increasingly more connected customer, due to the Web.  Broadly speaking, what are the three biggest impacts you think the Internet will have on multichannel shopping over the next three years?

I think that Internet sales will continue to become a larger percentage of a multi-channel company’s sales; the Internet will become more prominent within a MC retailer’s marketing strategy; MC retailers will need to figure out Web 2.0 technologies and see what’s going to work best for them.

3. User-generated content and Web 2.0 are all the rage with the acquisition of del.icio.us, YouTube, MySpace, and many others.  Shop.org itself had a Web 2.0 Boot Camp at this year’s Annual Summit, which attracted an amazing 2,300 attendees.  Why do you think Bazaarvoice is experiencing such rapid adoption by established, multichannel retailers?

The summit had over 2000 attendees, but the attendees for the Web 2.0 boot camp numbered around 150. My personal opinion about Bazaarvoice’s success is that it is based on an idea whose time has finally come. That is, consumer reviews and consumer-generated content, in general, have become mainstream to the point where they can successfully influence browsers to become buyers.

4. What do you think will happen in stores when customers have their mobile Web browsing device with them?

I think that eventually customers will use some sort of handheld (probably a phone) to do pretty much everything in brick & mortar stores: scan product codes to get pricing/product/sourcing information; compare prices with other online and offline retailers; find other brick & mortar stores that have the product in stock and are selling it for less by using Google maps and such; and even use the device to buy the products in the stores either by scanning a credit card or using some other payment method through the phone. Maxwell Smart would be proud!


5. How will user-generated content be used on these devices?  Does your answer change if you consider 1 year from now versus 3 years from now?

In the scenario above, the user can call in customer reviews as part of the product information. Using social networking, s/he can ask advice in real-time on whether the people in his or her network think s/he should buy the product, etc.
 

6. Thinking back to your experience with the pick-up-in-store initiative at REI, how do you see multichannel retailers leveraging user-generated content in an increasing always-connected environment?

I don’t know if I can relate the work I did at REI to this new, always-connected scenario. But I can see that eventually people can use that handheld to reserve/buy a product that they then go in and pick up at a brick and mortar store.
 

7. Any predictions on how user-generated content will change in-store signage, circulars, or other forms of offline advertising?

I think that consumer reviews have a great deal of power to sway buying decisions. That’s gold for retailers, and they are likely to try to use them in any way they can. It’s just a matter of figuring out the best way to get that information across in more traditional online and offline formats.      

I look forward to seeing Joan in a month at Shop.org’s FirstLook conference, where I will be speaking with Sarah Fay, President of isobar, and Jacob Hawkins, SVP of Online Marketing at Overstock.com, on the future of marketing as it becomes impacted by user-generated content.  Joan has significantly changed the format and focus this year, and I think it will be a fantastic event.  I hope to see you there, too. 

Happy New Year, and see you in 2007!

Amazon.com has posted an amazing holiday season, shipping 3.4 million items on its peak day of December 11.  You can learn a lot about “what’s hot” by looking at their top sellers in each category (a $19,999 MP3 player?!).  But it was Frank Barnako at MarketWatch who blogged about Radica’s 20 Questions being one of their top sellers in toys.  This product has 205 reviews with a 4.5-star average rating on Amazon.com, and it claims to be able to read your mind.

Why do I love this product?  Because, as the title of this post says, it is a “crowdsourced”, word-of-mouth wunderkind!  Let me explain what I mean.

First of all, I have written about crowdsourcing a few times on Bazaarblog (see my May post introducing the term, August post on Yahoo! crowdsourcing ads - with a nod to GM doing the same, September post on Google crowdsourcing image labels, or early December post on JPG Magazine crowdsourcing photos).  I have also referenced the book “The Wisdom of Crowds” several times.  20 Questions is the wisdom of the crowds.  It is a database of over 46,700,000 (and rapidly counting) individual games played by “the crowd”.  The crowd, of course, is you, as in “you: the person of the year” (as you have recently been named by Time magazine).  Yes, 20 Questions is a huge database of consumer(player)-generated content!

You can play the game for free here.  I first heard about it a year ago, from one of Chris Sherman’s articles on ClickZ (theorizing what would happen if 20Q was applied to search engines).  If you haven’t played it yet, it is quite entertaining.  I recommend “Classic 20Q”, which has been built by players’ answers since 1988.  It is hard to beat - pretty much guessing anything you can think of by asking you less than 20 questions.

Second, what does this have to do with word of mouth?  Well, everything!  This game was literally built by word of mouth since 1988.  The basis of most great word-of-mouth campaigns is a great product.  This game became great by people constantly playing it.  Once you play this game, the chances are pretty high that you will tell someone about it.  The more people that play, the “smarter” it gets, the greater the “wow factor”, and, therefore, the pass-along factor continues to increase.

So, once you get done with all of your returns, pick up 20 Questions for $14.95 at Amazon.com, CompUSA. or Sears.  All of that AI brainpower for such a small price.  And now you have a great story about crowdsourcing and word of mouth to go along with it!  Finally, for more interesting reading on the background of 20Q check out the Wikipedia entry, especially if you want to tell your friends about folk taxonomy, neural network, AI experiments.

There was an interesting article in yesterday’s Wall Street Journal (the link, however, is to a re-published version in the Pittsburgh Post-Gazette because a subscription is needed to read it in the Journal) about local search. The article discusses some innovative local search companies such as NearbyNow and BrandHabit.com that have successfully collected inventory data from retailers to allow customers to find in-stock products in specific stores. A quote in the article nicely summarizes the current state of local search: “Online local searches have been around for a while, but they have been hit or miss, largely because inventory information at the store level is hard to get.” It’s hard to get because retailers are very conflicted about making it available. On one hand, if a retailer makes their inventory information available, it helps customers find products in their stores and can be a great marketing tool. But, making inventory information available to a third party makes that third party more powerful and allows them to get between a retailer and its customers. What’s a retailer to do? If you haven’t decided yet, you can at least get some food for thought by listening to Hung LeHong from Gartner Group talk about the “Pre-tailer Phenomena” at Shop.org’s FirstLook 2007 event, January 31 through February 2 in Orlando. Or, discuss it here.

Perhaps I need of a good hobby, but I find free shipping fascinating. According to a research paper written by Wharton marketing professor David Bell, “a free shipping offer that saves a customer $6.99 is more appealing to many than a discount that cuts the purchase price by $10.” If you didn’t get your fill of math formulas from Good Will Hunting or you’re suffering from insomnia, then you’ll want to read Dr. Bell’s 31 page research paper to understand the math behind this claim.

According to the Shop.org/BizRate Research eHoliday Mood Study, 83 percent of online retailers this year were planning to offer free shipping with conditions. And, 36 percent of online retailers planned to offer free shipping without conditions. I wonder how many of these retailers wish they didn’t have to offer such promotions? Based on the conversations I’ve had, most retailers lament the advent of free shipping. While it’s great for shoppers, free shipping is certainly not free to online retailers. Moreover, a strong argument can be made that shoppers are getting free shipping when they would have paid for it anyway.

So, would the industry be better off (or at least more profitable) if free shipping didn’t exist? I don’t think so. For most retailers, promotions are part of their business - whether it’s a sale, door buster special, purchase with purchase or something else. If, as Dr. Bell has proven, a retailer can spend less money on a free shipping promotion than other promotions, then what’s the problem? Also, how do you take into account the power of the free shipping promotions that are so prominent in marketing emails and on the home pages of online retailers? Free shipping is arguably one of the most compelling promotions an online retailer can offer. In the eHoliday Mood Study, shipping costs consistently ranks as the most popular reason online shoppers cite when asked what prevents them from purchasing more online. Free shipping gives customers what they want. Still not convinced? Think about what makes store pick-up so popular. My guess is that not paying for shipping is one of the top reasons for store pick-up representing 30 percent of the online orders of retailers who offer it. If anyone has conducted research on store pick-up, please share the results.

Have I convinced you? If not, it doesn’t matter because more than 8 out of 10 online retailers are already offering some type of free shipping during the holiday season. But, maybe it’s worth considering during other times of the year? And, if you haven’t done so already, some detailed analysis of when to offer free shipping and pricing thresholds could result in free shipping strategies that deliver (no pun intended) more revenue and higher margins.

Congratulations to all of the online retailers who took advantage of Cyber Monday this year.  It was only a year ago that the term was added to the vocabulary of the holiday season.  In 2006, armed with the knowledge that this term has caught on to describe the kick-off of the online holiday season and the online equivalent of Black Friday, a number of retailers across the country took advantage of this industry development to use Cyber Monday as a platform for launching their online holiday campaign.

And, Shop.org is very proud to have launched www.cybermonday.com as a central location for Cyber Monday and holiday promotions from nearly 400 merchants.  Thanks again to Mall Networks for building the site for Shop.org.  With cybermonday.com, Shop.org gets into the business of affiliate marketing.  All of Shop.org’s proceeds from this site go to our Ray M. Greenly Scholarship Fund, which provides tuition assistance to college students seeking e-commerce careers.  To date, we’ve raised more than $100,000 for the scholarship fund!  I couldn’t be more proud of such an innovative way to honor the memory of Ray, a Shop.org team member for nearly seven years and who served as Shop.org’s VP of Research and Membership until he passed away in September 2005 from cancer.

Shop.org’s involvement in Cyber Monday has been an interesting ride.  When we coined the term last year, the media response was nothing like I’ve ever experienced.  Front page stories in the Wall Street Journal, New York Times, Washington Post as well as extensive coverage in national TV news.  As a big fan of The Daily Show with Jon Stewart, the high point for me was seeing an hilarious bit about Cyber Monday by “Senior Retail Analyst” Rob Corddry.  Although, as they say, no good deed goes unpunished.  We continue to see chatter describing Cyber Monday as all hype.  And, some reporters and bloggers are still attempting to debunk the myth that Cyber Monday is the biggest online shopping day of the year – a claim that wasn’t made by Shop.org or any other credible industry research firm.

In any event, hopefully the Cyber Monday media coverage helped energize the kick-off of the online holiday shopping season.  There are only a few shopping days left before Christmas, but based on data I’m seeing from the Shop.org/BizRate Research eHoliday Mood Study and other sources, it’s safe to declare that the 2006 online holiday season was a smashing success.

Good luck with the rest of your holiday season.  And, please don’t forget to tell your friends, family or anyone else to start their holiday shopping (or redeem their gift cards) at cybermonday.com and help raise money for a good cause.