Channel Intelligence Blog

Consumer Electronics Traffic is Up, Sales Volume Down

I compared three months of statistical data from May-July 2007 and May-July 2008 for consumer electronics manufacturers Samsung, Sharp Electronics, Panasonic and Philips. Overall traffic to these manufacturer product pages was up 5% on average. Orders were up 28% and units sold were up 59%. However, actual sales dollars were down 23% as the average product price dropped from $471 to $229.

Reflective of economic conditions, this supports my thought that more people are buying online but they are being frugal in their purchases. More people are going to manufacturer Web sites and are buying more products. But the overall dollars they are spending on these products is less.

To help put it in perspective, gas prices in the May-July 2007 timeframe averaged $3.07, about $1.00 less per gallon than now.

Brand's Guide to eCommerce Success

Thinking Like a Manufacturer

Imagine the following: You just built a beautiful product showroom at your factory. It has displays to show off your products to best advantage and employees specially trained to understand customer needs and help them find the right product.  You provide a list of locations where visitors to the showroom can buy your products because you don’t want to compete with your channel partners. You place ads in magazines, on TV, and on billboards to attract customers to your new showroom. And they come, a trickle at first, then in hordes. They love your showroom. They love your products. You feel great. Your new marketing effort is a huge success!

Only, at the end of the quarter sales are barely any higher. What happened!

It’s easy to explain. You got people interested in your products, then left them on their own to figure out how to buy them. You fell victim to the all too easy trap of thinking like a manufacturer. “What’s wrong with that?”, I hear you thinking. “After all, I am a manufacturer.” Yes, but in situations where you are dealing directly with end users, you can’t afford to think like a manufacturer. You have to think like a retailer!

Thinking Like a Retailer

Retailers really are very simple to understand: ‘Sell more stuff!’ Your stuff, your competition’s stuff, anybody’s stuff.  Maximize Sales, they just want to sell more. So they make it as easy as possible for customers to buy.

Walk into a major supermarket or chain store. The odds are good that if you have been in another store from that chain, you can find your way around. Products are grouped by the way buyers expect to find them. New items or products on “special” are on the end caps, readily visible. Overhead signs tell you where you are and where to go. Prices are clearly visible. Checkout counters are highly visible and conveniently placed near the exits.

Your showroom did part of the job. It generated demand by educating potential buyers about your products. It even did that part better than the typical retailer, since you know your own products better than any retailer could. But you missed the most important ingredient: You didn’t make it easy to buy. You sent potential buyers off with a list of retailers, but along the way most of them changed their minds. They got distracted by another product, they store was out of stock, or maybe they just plain forgot. Whatever the reason, the person that left your showroom intending to buy your product ended up not buying.  You didn’t capitalize on the buying impulse, and you lost a sale!

So what do you do?  Well,  let’s start by taking a look at your web site… YOUR FACTORY’S SHOWROOM!

To be Continued…

What Retailers Know About eCom That Most Manufacturers Don't

If manufacturers are going to implement a Where to Buy solution they should look at successful retailer Web sites to figure out how to do it right. One of the biggest mistakes manufacturers make with Where to Buy is allowing the consumer to become distracted.

Look at Amazon for example. When you first show up at Amazon there are all kinds of ways to search and navigate the site.

But once you show your intention to buy, all of that search and navigation goes away. They only thing you can do easily is continue down the path to buy. No distractions.

The simple lesson here is not to put things in the way of the purchase. Once a browser says they want to become a buyer don't include navigation to other areas of your site. Don't distract them from the purchase.

The Future is Now

According to Dan Stanek, executive vice president of Retail Forward, who recently spoke at the Retailing Smarter conference here in Central Florida, "retailers and suppliers will be shaking in their boots because the consumer will have complete control in 2015". I'm not sure what measure is used to determine complete control but if it includes...

• Free will to change their minds
• Abundant choice of products
• Access to multiple retailers that carry a product
• Practically unlimited information on products, brands and competitive offerings
• Social networking that provides instant consumer opinion, ratings and reviews
• Transparent pricing

...then retailers and suppliers don't have to wait until 2015. The future is now.

A Little Clean-up can Mean big Money

Say you’re shopping for a pair of sneakers.  You search on the web and get a ton of listings.  Which listing do you think you’re more likely to click on and eventually buy from: the one that says “Men’s Nike Air Max 360 Running Shoe” or “White Sneakers”?  Guess what, your customers are more likely to pick the first link as well.

Contrary to popular belief, most consumers don’t just roam the web clicking random products to buy.  The high majority of them are very targeted shoppers who are looking for specific items or specific types of items to purchase.  When you deliver your data to the CSEs or search engines, you’ll be far better off if you spend the time to look at what’s being sent and clean the data up.  Remove confusing text, rearrange the words, and eliminate HTML to actually help consumers find your products.  We’ve seen traffic increase by 10%, 20%, and even 50% just because someone took the time to look at their data and fix obvious problems.

In most cases, the publishers you’re sending data to don’t clean it up.  If you’re not doing it or have someone helping you, you can end up like one of the recent casualties I saw:

Product Name: “Nike Shoe”

Product Description: “function openReview(url){window.open(url, ‘ReadReview’, ‘toolbar…”

How much traffic do you think this retailer is getting?  How many sales has he lost because he never cleaned up his data? There are simply too many options out there for consumers to waste their time trying to determine if this blob of text is what they are looking for.

The product name isn’t descriptive enough to connect with consumers and the description is just plain bad.  Ensuring your product names and descriptions don’t have JavaScript or HTML is a simple way of making your data more readable by consumers and that turns into more traffic.

Take the time and look at your data or get help.  At least make sure you’re sending quality data for your most important products.  You can’t afford not to.

Should Manufacturers Sell Direct?

Out of the 100+ manufacturers that use solutions from Channel Intelligence, about 35 of them sell direct. The percentage of leads that go to the direct store range wildly from 0.3% to 90% but the average is around 9%. So it doesn't look like consumers flock to the manufacturer nor do they typically ignore them. Instead manufacturer direct stores are just like any other store to the consumer. So...should manufacturers sell direct?  The decision to sell direct is based upon many criteria:

• The manufacturer's relationship with their retailers
• The cost effectiveness of selling direct
• The manufacturer's brand strength
• The pricing structure of the product
• The availability of the product
• 400 other factors I haven't mentioned or thought of...

I've heard two comments from retailers in regard to manufacturers selling direct. One said, 'If manufacturers sell direct then I don't understand what we are doing as their retailer. What value do they expect us to bring if they are going act like a retailer?' Another said, 'We can't stop a manufacturer from selling direct. It's their Web site and their traffic.'

I believe manufacturers should sell direct. That sounds anti-channel, but the Internet is about abundance. Consumers demand the ability to buy through all available channels. Different products are sold through different channels and sometimes it makes sense to sell them direct. 

What is a publisher?

This is something I am often asked.  Not usually in the office or professionally, but frequently when I am among friends and family.  It happens , for example, when I start explaining the economic models behind the comparison shopping sites that people use.  I explain that some publishers use cost-per-click (CPC) and explain that the publisher gets paid for the “click” they send to the advertiser (retailer).   I then start to explain that some publishers use cost-per-action (CPA) as well, or a combination of CPA and CPC and blah, blah, blah...   That ‘s when I get the “what is a publisher, again?”.

Wikipedia defines publishing as - the process of production and dissemination of literature or information – the activity of making information available for public view.

Generally, I think of a publisher as any organization or individual that creates and posts content on a Web site.  I tend to focus on the online publishers that are doing it in an effort to generate revenue through their mostly product-centric content, but all publishers have something to share.   Comparison Shopping Engines are publishers that organize information about products and where to buy them, manufacturers are publishers that display information about their specific products.  Publishers are also blogs, review sites, manufacturer Web sites and other content aggregators. 

Some of the topics we will address in the coming weeks are traffic monetization and how different publishers gather and leverage the content they generate.  Whether their content is used for search engine optimization, search engine marketing or to provide value-added services directly to users, publishers vary widely in their efficiencies and success. 

BIzzarro World: From Search to Sale (part 3 of 3)

.tomorrow (part 3)

"Tomorrow World" is roughly equivalent to "Bizzarro World" from Superman, or more recently from Seinfeld. Imagine that your consumer plays the part of the merchandiser and product expert! Often I hear, "but that has always happened - customer referrals have always been key to my business."

While that behavior is certainly ingrained into society, never before have there been the tools to represent "package" products or the conduits to quickly reach a multitude of people friends, acquaintances, or the mass public. The cost of "publishing" information has little or no fixed cost online and the associated variable cost or additional cost to reach an extra person is nil!

Thank Blogs (like this one). Thank LinkedIn. Thank Facebook. Thank YouTube, eBay, and the Internet at large. Each of the touch points to other consumers is a chance to "initiate commerce."

eBay is my favorite example as it is often not spoken about. Browse it, and research products and you will see that eBay is merely a collection of product pages. Product information created by consumers. Just as an example for our friends at Harman Kardon, there are more results from mistyping "Harmon." Sorry Sidney. Any Brand Manager making that mistake would have a very short career!

But consumers thrive! Imagine more complex messaging and the representation of brand essense. Brands should think about how they can influence but not control this ensuing chaos and treat and empower the customer as a distribution channel.

$5 Gas = eCommerce Boom

In a rough economy with gas prices steadily rising it looks like people would rather buy online than spend $5 to drive down the street to their local brick and mortar store. This economy looks very, very good for eCommerce. It's not just my thought - it also seems to be the thought of many online retailers...

I just met with Michael Carioti and Michelle Stoll from Provantage. They are yet another retailer who has a very positive outlook on 2008 sales. Provantage is a pure play online retailer with tens of thousands of products that are supplied through distribution.  They know their margins and are very competitively priced. They know who they are and what they are. They also know their client base and have done well in servicing that client base the past 24 years.

Service, selection and low prices. Sounds like a recipe for success. How is your online business looking for the remainder of 2008?

How Social Media is Changing eCommerce

The re-invention of eCommerce is happening continuously and with the lightning speed of retail innovation, still, some retailers are choosing to stand by and wait.  With the state of today’s economy some retailers are reluctant to invest in new, unproven ideas that don't provide a known ROI (return on investment).  They are especially conservative about making changes to their eCommerce Web sites because they are beginning to produce a significant contribution to the company's “Bottom Line.”  Many retailers are of the "if it isn't broken, don't fix it" mindset that leads to stagnation.  In our industry, those who innovate will gain market share and margin share.

Enter social media and social networking, these are the next generation of Web sites.  They are focused on a product or product group and focus on the details.  Compare the Best Buy corporate Web site with a photographer's Web site focused on specific digital cameras.  Best Buy will have the information needed to make a buying decision, however, the photographer's Web site or personal blog will have the same info, along with reviews, opinions and stories focused on the “experience” the user had with a product.  The online landscape has gone through a transformation over the past couple years that has taken the control from the “webmasters” and put it in the hands of the end-users; i.e. customer, clients and vendors.  This is a paradigm shift that could change the way people shop as profoundly as the transformation from brick and mortar to online shopping.

As experts are indicating that social networks are the next wave of online commerce, traditional retailers are scrambling to understand how to benefit from them.  The social media user community has created a new space to do business which has created a new brand inside this space.  Shoppers are now looking to see what their friends or members of an online community purchased versus going directly to the retailer.  The branding is associated with individual credibility instead of the retailer’s main eCommerce site.  If retailers can learn to embrace, encourage and influence this space it could become a significant sales channel and an effective testing ground for new concepts and new technologies.

I would think that if risk and effort are non-existent to the retailer, then these sites are a good way to explore new retail concepts.  Also, think about them as an effective testing ground for new concepts with unique business models and they can also be used for evaluations when trying new technologies and ideas.

The biggest questions facing the retailers will be – how do you tap into the mindset of a whole community? How do people interact within an online group?  How do retailers or manufacturers re-invent their corporate way of thought when the landscape is changing every month?  These are the questions being answered today by the social marketplace … we are no longer selling to an individual, we are selling to a community and that community tells us what our product will be, do, have.