Shop.org Blog

Shop.org held its first international dinners last week in London and Paris.  As part of Shop.org’s vision to be the world’s leading membership community for digital retail, the dinners provided an opportunity for British and French retailers to share online and multichannel best practices with US retailers. Representatives from JC Penney and Timberland attended the dinners from the United States.

The London dinner on March 11 featured leading UK retailers including Artigiano, B&Q, Debenhams, Isabella Oliver, Koodos, Littlewoods, QVC UK, The Body Shop and Urban Outfitters UK.  Check out the pictures.

The Paris dinner on March 13 featured leading French retailers including 3 suisses, Yves Rocher, Alapage, Auchan, Galeries Lafayette, Kiabi, L’oreal, Morgan, Priceminister, Redcats, eBay, Wengo, CCB Paris and Telemarket.fr.  Check out the pictures.

It was a great learning experience.

Navigating through the complexities of cross-border logistics, legal issues, managing multiple currencies and cultural issues is hard.  European online retailers, by necessity, are quite experienced in this area.  And, as online retailers seek further global expansion into Asia and other markets, those who have mastered cross-border excellence will be at a distinct advantage.

Around the world, online shoppers’ expectations continue to rise - from tracking packages to returning items to the store that were purchased online to seeing shipping charges before checkout.  US retailers, who operate in a more mature market place, have had more time to implement and fine-tune these features for their customers.

These are a couple of the conclusions drawn from the dinners. The most important take-away for me from these dinners, however, is the value of best practice sharing among retailers from different international markets.  Everyone has something to learn from somebody else.  And, Shop.org plans to continue expanding its international footprint for just this reason.

I’d like to thank the UK and French retailers for the warm reception to Shop.org at these dinners and in the numerous meetings I had during my trip.

The second keynote of the morning featured Andy Nulman, President and Chief Marketing Officer, Airborne Mobile. To say Andy is enthusiastic would be an understatement. Unlike many speakers, Andy asked everybody to turn their cellphones on and up. His company is in the mobile content delivery business, a ringing cellphone is money in his pocket.

Mobile devices are everywhere, they’ve become a third appendage. Couple this with people’s passion for shopping and you have powerful mix…but how do you use it?

The fear, from consumers, was that mobile marketing would be disruptive. If it was, the mobile marketing business would be dead.

Mobile marketing is at its core, 1 to 1 marketing. It’s about building a stronger relationship. You need to allow people to opt-in, but this should not lead to opt-in overload. You want to be perceived as a dear friend….not a nudge. What would you whisper to them? What can you tell them that will make love your more?

NOW is the word and the acronym that Andy’s been thinking about.

Near-by, customers need to be in your radius, close, local
Only, there has to be a limit
Wow, make a compelling offer

The power is getting the person when they’re ready to buy. The basic building block is the text message (SMS).

Andy provided five things you can do NOW.

1 The NOW Pssst: Limited time offers, but it needs to be engaging and special. Target people near your location.

2 The Secret Sale: Things like in-store sales, or special offers. Texting to a special number will provide them a message/discount/coupon. It’s completely opt-in. No paper costs.

3 The In-Store Experience: Give the customer control of what they want. Give them additional information, the backstory on products.

It should be noted that text messages have to be short, so the message is message, no marketing speak.

4 Woot! Like Countdown: Send limited offers to opt-in customers. The idea is similar to Woot!

5 Mini WAP Sites: Basic mobile web sites that provide information about a store.

What are the benefits? Once again an acronym HUMID.

Hyperlocal - Operate things at a local level. Give local managers the tools and power.
Uurgent - Text messages hit, e-mail sit. People respond to text messages quicker than other forms of communication.
Measureable - Mobile is a data-crunchers dream.
Immediate - Promote cold, fast, hard sales
Dynamic - Take action when you need to. Empty store? Do something.

Shoppers love discovery, talking, bargains and recognition. Mobile delivery can address all of these.

Day two of the Strategy & Innovation Forum kicked off with a general session by FAO Schwarz CEO Ed Schmults. Ed talked about the challenge of expanding their reach, while protecting their brand.

FAO has been around since 1862. There were two recent bankruptcies in 2002 and 2003. However their direct-to-consumer business is growing. Their retail locations are in New York City and Las Vegas. With their brand equity they are looking to expand their private label toys.

FAO has some brand perception issues. They’re perceived as expensive. The store is sometimes seen as a museum or a tourist site. Other issues: Net relevant to today’s kids, it’s all about the New York store, just for the holidays.

The plan was to repurpose the brand. This started with the merchandising strategy. They wanted to target items that had: Quality, Design Integrity, Orginality, Health/Safety.

With this change they removed hundreds or brands and vendors. Shortly afterward same-store sales rose 20%. Other than Thomas the Tank engine, FAO did not carry a single recalled toy. That’s part of their focus, safety and quality.

Their product mix is very selective. There are more private label products and exclusives. The brand repositioning has allowed FAO Schwarz to stand out among children’s retailers once again. This change has led Hollywood to their door. Movie studios look to FAO for exclusives for movie-related toys (think Charlotte’s Web, Harry Potter, etc).

Their research has shown that FAO is strongly associated with quality. They also had a very high net-promoter score. FAQ has brand recognition similar to large global luxury brands. There is also high affinity within children.

Research showed that FAO is seen as the expert in child development. At first it’s kind of scary, but now they’re looking to really embrace that. FAO is working with an advisory board to help build that development arm. Ed was sure to mention that their advisory board was a real board of experts, and not a pretend board like some others.

The key questions are: How do they appropriately participate in the parenting community? Who is our audience? Women are a key customer segment. “Women don’t just buy brands, they join them?”

Ed noted that they passed on WebKinz. They had a first look at the product, but they felt the quality of the plush was not that great. But that’s not what the toy was meant to be. With that

FAO is leveraging their brand by working consignment deals. Vendors pay for the build-out, repay staff costs and FAO only pays for inventory sold. Ed noted that he has brands lined up for these deals. For FAO it’s great, they can constantly update/upgrade their stores with no capital outlay.

Recent external capital investments did not focus on IT or infrastructure. Moving forward, one of the key focusses is updating the infrastructure.

With the brand repositioned, FAO is building new revenue channels. They include clothing, health & wellness as well as publishing.

Looking beyond the storefront (Catalogue and Internet) there are things they need to improve on. Their site was boring and not up to date and it doesn’t match the excitement of he store experience. They’re looking to replicate the in-store experience as much as they can.

Retail expansion has been spearheaded by their Macy’s in-store presence. The Chicago Macy’s story is performing way beyond expectations.

The next phase is licensing. They’re working to license the FAO name to media properties, etc. Internally they’re developing a brand book. The brand books sets internal and external expectations.

For Ed, one of the things that drew him to FAO was the ownership. They’re owned by a hedge fund. Ed asked the audience, “How many of you are owned by private equity firms?” A few hands went up….Ed’s response, “Just you wait, it’s coming.”

Ed described the relationship he has with the owners, it’s not unlike a traditional board. There is a need for constant communication. You need to know are they investors or operators? Investors are starting to think like brands. They want to be seen as innovators.

However, owners will always look to extract brand value. You need to watch this since it can lead you astray.

The key challenges of working with owners:
- Want it all, want it now
- Push for every opportunity
- Challenge convention
- Uncomfortable pressure
- How much do you shield your team?
- Must be comfortable working with senior people
- Expectations of success
- Fear

Lessons learned:
- Great brands are much more rugged than most people think.
- FAO’s key asset is its brand. We need to honor our heritage, but keep relevant.
- Chart a path that has a chance to succeed.
- Know your customer.
- All innovation must pass the brand filter.
- Private equity ownership has been a huge plus for FAO Schwarz.

400,000 reviews were posted on QVC.com in the last 8 months. Amazing.

There’s a signal in this for all etailers: Consumers want to be heard. They want to be part of the process. They want to share what they think with you … but more important they want to talk to your other shoppers.

400,000 reviews represents more content volume than any marketing team could ever generate. That content fills the site with richness — richness that is a magnet for search engines.

More important: That review content has credibility that no marketer could ever have with corporate written copy. Each review sends key messages to shoppers:

1. Real consumers just like you are shopping here. Every review is an implied endorsement of the entire site.
2. This company cares about what we think.
3. The products are good. If they weren’t, why would the company let us review them?

(QVC’s review technology was provided by BazaarVoice. Disclosure: I’m an advisor to the company.)

Posted by Andy Sernovitz, Author, “Word of Mouth Marketing: How Smart Companies Get People Talking” - blog: http://www.damniwish.com

There are not many retailers that have not heard of the long tail (if not go check out Chris Andersen’s book). The final breakout session of the day featured Jack Jia, CEO, Baynote and Brian Elliott, President and CEO, Alibris discussing how the long tail applies to online sales.

Jack Jia from Baynote was first to speak. Jack defined the major problem as being poor search and navigation, 83% of leads to a site will abandon in the process. Sure you’re driving people to your site, but are they conversions? In measuring loss, they found that 95% of visitors will give a site 3 clicks before abandoning. Compare this to most commerce sites which require 6 clicks to complete a sale (from inbound link to sale).

Enter the long-tail dream. Is it better to sell many of 1 or 1 or many? In Jack’s words it’s tail or torso. In order to benefit from the long tail you need to expand your inventory. Here’s the problem, when you increase you inventory, you also increase you chances of users getting lost.

One way to help users navigate sites is the wisdom of crowds. The other concept is emergent behavior. Rather than relying upon what somebody ‘tells’ you what they do, watch what they actually do. Track usage patterns and learn from them. Recommendation technology is based upon these tools.

Jack showed an example using US Appliance, how they make recommendations based upon browsing habits of other users. Community involvement also helps bring relevance to keyword searches.

A side benefit of the long tail is that long tail products have a higher margin.

Jack then sat down to talk with Brian Elliott of Alibris. Jack mentioned that Brian and Alibris stumbled into the long tail way before it was fashionable. Alibris currently sells 75 million SKUs, 15x what Amazon sells.

Brian talked a bit about Barry Schwartz’s book The Paradox of Choice. People are sometimes are paralyzed by choice. How do you balance offering more (long tail) without scaring it off (paradox of choice).

At Alibris they do have a number of options for single items, but they allow other customers to rank/rate and this helps other customers. They’re also constantly refining their site based upon customer testing.

Alibris built their own recommendation engine. The looked to their vendors for data. Many of their vendors have a wealth of information about their products. The challenge is to hook into that data. The second factor the look for is demand. A high demand product doesn’t always make a good recommendation.

Jack asked Brian about some of their SEO/SEM tactics. Brian stressed that the keyword strategies need to appeal to the machine (i.e. the spiders) as well as the consumer.

So much of the recommendation model looks at user behavior around purchases, but what about the non-purchaser? How can you take the data from those sessions and do something with it? That’s the next step.