Leveraging Your Genius Via E-Commerce
By 2018, there are expected to be 6,000 e-commerce retailers--and that's just for baby products. If you have an e-tail dream you can expect fierce competition (and difficulty in getting noticed). But a fragmented market can actually be good for newcomers, and despite a surfeit of players there is still plenty of opportunity to innovate in virtually every segment of online shopping. Inc. Editor-at-Large Kimberly Weisul spoke with Forrester retail analyst Sucharita Mulpuru about what aspiring e-tailers need to worry about (aside from Amazon).
What promising innovations have you seen in e-commerce lately?
There's a company in Virginia called Relay Foods that has an interesting model. It's hard for working professionals to get to farmers' markets, so they do it for you. You order everything online and they put it in a big refrigerated truck and tell you where it's going to be-;someplace central and convenient, for example a megachurch parking lot. The idea is to focus on delivery part of the equation.
What mistakes do new e-commerce companies commonly make?
The single biggest mistake is that they don't know history. They haven't seen what's been tried before. I'll ask how they differ from another company, and either they're not familiar with it or they make up some nonsense.
How about the online experience itself?
Many companies put a lot of effort into navigation and design, but need to work more on functionality. If I add something to my cart it needs to get there. It should be easy to complete the transaction, and there shouldn't be any surprise surcharges or fees at the end. Similarly, JC Penny used to have this ridiculous thing where you had to put in a promotional code before you even started shopping. That's a bad experience. On the other side, One Kings Lane always seems to throw a nice little extra into your package, a candle or something. That helps customer loyalty.
How important is it that delivery be fast or free?
Free shipping is the single biggest successful promotion in e-commerce. People don’t like paying for delivery. They would rather wait than pay for delivery. With respect to speed, you can't be outrageously slow but it doesn't need to be overnight. The dirty secret of Amazon Prime is that about 20 percent of orders don't arrive in two days, and the vast majority of customers don't say anything about it. In most situations, for most customers, three to five business days is good enough. As long as you do that, people are happy.
Is anyone doing a good job of merchandising online? That seems to be the Achilles heel of most sites.
A lot of companies try to give you ideas that are relevant to your aesthetic. Wanelo and Etsy try to do that with pretty pictures. But a large part of it has to do with good content; part of what attracts you to a book is the back cover description versus the art on the cover. Right now a lot of discovery happens on information sites: You discover things on Facebook or Twitter and once you make that discovery you go buy it on an e-tail site.
Does that mean e-tailers should rethink the role of social media?
Social media works the best when you’re an unknown entity. It's great for enabling people to discover things they've never seen before, or didn't know existed. Beyond that I think its utility is pretty limited. It's largely abut the "moment of discovery": a great sale that's going on for the next 10 minutes, or a product that's brand new, or a a new store. But once you discover it, it's gone. That's why we see the biggest bursts on social media occur early in a product's cycle. Then it wanes.
What about e-tail opportunities for service companies?
Yes, if you're creative. If you cut hair you may feel that your only options are to incur high startup costs to open your own salon, or to work for someone else and not get paid a lot. Instead, you could become the Uber of haircutting, or of almost anything. You can hang your own shingle [on the web] and disintermediate the business that would once only pay you peanuts. It's a great way for an individual to get the full market value of their skill. I pay a guy to come to my house and wash my car. If he's willing to do it, he makes more money because he keeps it all. I pay the same, but for me it's a convenience. It's genius all around.