The Mercado Blog

Corey Leibow, President & CEO, Mercado

…and I’m not the only one saying it. I talked to a lot of retailers a couple of weeks ago at Internet Retailer in Chicago, and if they’re worried about recession, you sure wouldn’t know it. This year’s show saw a nearly 25% jump in attendance over last year — a good indication that retailers are still looking to invest in their eCommerce sites, despite news of slumping sales, layoffs, etc. in the retail sector. In fact, when it comes to eCommerce I saw nothing but bullish optimism, determination and talk of eCommerce representing a heck of a bigger grab of holiday sales than last year. Pure-play online retailers are adding a lot more products and investing in technology to convert more traffic. And interestingly, multi-channel retailers are doing things with their sites to emulate the pure-plays.

The last half of 2008, particularly this year’s holiday season, is going to be very interesting for retailers and the vendors, consultants, etc. who work with them. There will be challenges… there will be some nervousness, but I am very optimistic that eCommerce will prevail and save the day. Judging from the interest eCommerce businesses are showing in investing in new technology, I’d say retailers are banking on the Web more than ever.

Look, we’ve been through tough economic times and elections before… we get through it… people always buy stuff, Christmas always comes. So let’s get to work and show the economists just what we’re made of these next six months.

Corey Leibow, President & CEO, Mercado

“It takes an integrated multi-channel retailer to meet the needs of a cross-channel shopper.”

I love this statement. It really says it all. Lately I have been talking with a lot of multi-channel retailers about what they’re doing to achieve a level of multi-channel integration that enables the ultimate customer journey… just what does nirvana look like for these guys anyway? There are so many things wrapped up in multi-channel success, the most challenging of which is the preservation, enhancement and proliferation of a retailer’s brand promise or brand value.

I really enjoyed reading Brian Kilcourse’s new report Finding the Integrated Multi-channel Retailer — I encourage you to download it. A couple of great take-aways on brand:

• “… retailers have come to define their brand value as how well their product and service offerings work together to solve their customers’ lifestyle needs.” 
• “Multi-channel retailing has become inextricably intertwined with consumers’ sense of what a retailer’s brand value is relative to their lifestyle needs”.
• 99% of retailer respondents to SRS’s recent survey indicated that they have a need to “create a single brand identity across all channels“.

So of course it’s about sales: enabling shoppers — tactically speaking — to move fluidly from one channel to another makes sales happen. But retailers should not discount the impact of delivering, or not delivering, on their brand value — it’s how customers experience your brand that matters and determines its worth.

Kevin Lindsay, Director of Marketing, Mercado

Did I hear that right? 1500% increase in conversion rates… no there isn’t an extra zero in there. Ergo In Demand is a distributor of ergonomic computer furniture and accessories. They’ve found that since going live with new search and merchandising on their site, use of search by their customers has increased 3x. What’s incredible is that 15X more of these customers are buying something than their non-searcher shoppers. Why the improvement? Chad Goldsmith, Ergo’s eCommerce manager says: “it’s just easier for people to easily find what they need — especially the more technical products like LCD monitors or plasma TV mounting systems”.

B2B sites like ErgoInDemand.com do typically have higher conversion rates than B2C sites, but this improvement is pretty remarkable, and is definitely a record in our books.

Kevin Lindsay, Director of Marketing at Mercado

Michael Klein recently joined Mercado as Director of Worldwide Merchandising Consulting. He has a very strong merchandising background, and brings a lot of cool ideas to the team. Yesterday I grabbed Michael for a coffee at Starbucks and thought I’d share part of our discussion (and use this as a forum to introduce him, since he’ll soon be blogging here too).

Kevin: You told me that you’re a merchant at heart — what does it mean to be a merchant?

Michael: To me, a merchant is much more than a buyer. Being a merchant means you understand what it takes to open the door in the morning, conduct business throughout the day and lock up at night. The same concept can be applied to an eCommerce, or direct-to-consumer multi-channel retailer. Where are the shoes? Where’s the checkout? Are there signs on all of the products? Is the product detail complete? What about window displays or homepage promotions?

Kevin: What are the biggest pains you saw in the retail world?

Michael: There are still many pains out there. I’ve seen technology replicate, rather than improve, customer experience issues. The legacy systems entrenched in many retailing environments have always been a source of frustration due to the lack of flexibility they afforded a merchant. On the flipside, I had the opportunity to be involved in several technology implementations in large retail environments, and as much as people complained about what they had, it sometimes is easy for merchants to become complacent and resistant to changing out technology tools. I remember facing substantial skepticism when managing the implementation of a software solution in 2006 that enabled Discoverystore.com to finally communicate electronically with its drop-ship vendors.

Kevin: Tell me about one of the shining merchandising moments from your retail career.

Michael: Growing up in retail merchandising, I’ve had so many fantastic experiences. I recollect many shining moments when a product took off, or a promotion really clicked. A particular Thanksgiving promotion comes to mind. I had inherited some excess wine glass inventory that had been kicking around for a couple of years. I decided to use the glasses for a GWP (gift with purchase) program, which we featured weekly leading up to Thanksgiving through emails and banner ads on the site. We not only cleared through all of these wine glasses, but ended up driving more that 10K in sales for a single day for a single SKU. Not bad!

Kevin: Why did you decide to join Mercado and what do you hope to accomplish in this new phase of your career?

Michael: I believe in the power of the product. If you do things right, your products should sell themselves. But you’ve got to make those connections happen between your customers and your products. Mercado really gets this. I want to help retailers stretch the bounds of online merchandising. From SEO to category and product level site merchandising, I believe many online retailers are simply under-exploiting the power of the Web to do this.

Kevin: What do you see as the biggest trends in eCommerce or multi-channel retailing?

Michael: Multi-channel retailers are going to continue to find creative ways of leveraging the power of trading in multiple channels… in-store pickup, local inventory visibility, geo-targeted, email campaigns are some examples. Product content is going to get more attention. The biggest challenge an eCommerce retailer has is presenting products in an appealing fashion so as to inspire a purchase. Enter myriad variables: vendor artwork, screen resolution, thumbnails, to zoom or not to zoom, etc. Broadband is a wonderful thing!

Kevin: Okay, I can see the caffeine is kicking in. Last question: what talents do you have outside of work?

Michael: If Mercado has a baseball team, sign me up. I played college and semi-pro, and still play in the Tri-Valley Men’s Senior Baseball League. I also coach little league and am a soccer ref. I’m a gourmet cook (when i have time), and a culinary gardener (I grow to eat). I have no musical talent whatsoever.

Michael’s going to be pretty busy over the next while, but as he gets out there working with Mercado’s customers, we’re hoping he’ll take some time to share some more insights and observations here on this blog.

Kevin Lindsay, Director of Marketing at Mercado

We recently hosted a Webinar featuring Patricia Seybold Group analyst Sue Aldrich and Evo’s Nathan Decker. We talked about different elements of the customer journey, including what both guests think it takes to engage online shoppers in 2008.

We had some great discussion, out of which emerged 5 key principles. I thought it would be useful to share those here. First, consider engagement as everything a merchant does to get and maintain customer attention. In the uncertain econonomy ahead, customer engagement may prove to be the key to retail success.

1. Every interaction should take a shopper a step closer to his goal.

There are two key reasons to streamline your customer’s path to his goal. First, every additional step is an opportunity to abandon the interaction. Second, a streamlined process is actually attractive, making your company more desirable because you save your customer’s time and energy.

You should make sure you understand your customers’ goals and contexts, so that you can identify what the streamlined paths are. Focus on reducing the steps the customer is required to take to reach his goal. A design or offer that adds a step should be heavily debated, and its effects monitored.

2. Customer experience should be orchestrated from end to end.

Customers may start their experience at your home page, but more likely they started from Google, an email, thumbing through your catalog or looking at your ad in the newspaper. You should orchestrate and manage the experience from each of these starting points. Your Internet search results and ads should be optimized to search words customers use on your site, and link to customized landing or product pages. If your newspaper ad says “city shoes” then make sure that search phrase produces results on your site search. Retail and online stores should reflect the same campaigns and make it clear which offers are store- or Web-only.

3. Make sure customers are successful.

You must help customers make the right decision, and you must ensure they buy all the things they need. Your customer may not be an expert in what he is buying: support him with guides and product finders. Help him feel confident, and get practical information, by providing customer ratings reviews. Make it easy to compare products. Always offer the accessories your customer may need, and explain why he needs them.

4. Search is the foundation of eCommerce, so get it right.

Your searching customer is really looking for the one perfect answer. Your challenge is to find it for him, regardless of the ambiguity or vagueness of his request. The best sites offer a clear set of choices to broaden, narrow, and steer the search in a different direction. Make reviews searchable, because there is information in reviews that exists no where else. Refinement choices should change after each refinement. Finally, track the percent of customers having unsuccessful search experiences. These are customers you didn’t engage.

5. Enlist customers to help you segment and personalize.

Personalization is a goal with one remaining obstacle: customer information. I think the solution is to enlist customers help. You could show them segments and ask them to choose, or if that makes you cringe, give them opportunities to provide smidgeons of information. If what they get in return is highly relevant search results and useful offers, they will be motivated. Have the call center collect observations: barking dog, crying baby, my son’s back from soccer practice. Or, pick some segment-focused products, and use customers’ interests to make a segment assignment: if he looks at the iphone, he’s a trendy guy.

The bottom line is every point of interaction the shopper has with your site must be a productve one. This much seems obvious. But what is not so obvious, perhaps, is how to go about creating and delivering the good content, good guidance, and smooth path to completion that connects the shopper with the products she needs. Applying these five principles is a great way to make sure you’re on the right path to facilitating mutually successful journeys.

Kevin Lindsay, Director of Marketing at Mercado

A few days ago Aaron Rubin, CEO of S&A Industries (www.karatedepot.com, www.scrubsgallery.com), posted an interesting tip I thought I’d share here. This merchandising trick resulted in 69% boost in conversions.

From Aaron’s blog:

I have a big conversion rate mover that is repeatable that I can share with you.

Go to Karate Depot.

Clear your KarateDepot.com cookies, then google MMA Gear and click on the link to the KarateDepot.com front page.

Notice the targeted banners and products. (If you do not see the MMA banners, you probably still have karatedepot.com cookies set).

The different front page being served has resulted in a 69% improvement in conversion rate among those who searched for “MMA Gear” and clicked through to our front page.

Excited, we followed up with a test for terms including “Karate” and “Karate Uniforms” and more than doubled our conversion rate for those searches. There are thousands of terms that lead to our front page but we don’t want to have thousands of customizations for our front page. Our tech isn’t customizable enough to be able to efficiently manage that many different front pages. I can envision a system that would, but for now we’re grouping those terms and creating customized pages for those groups.

Implementation

We set different front page items and banners for different buyer segment in Mercado.

If the entrance keywords match certain rules, we assign the session to the appropriate buyer segment. If the term doesn’t match any of the rules, or if the visitor wasn’t referred by search, we assign the visitor the default buyer segment or add the visitor to an A/B test that we’re running. To determine whether the user came from a search engine we simply look for certain referring urls and then inspect the term the user searched for. For example, a search for “karate” coming from Google will contain “q=karate” in the referring url.
We pass the selected buyer segment to Mercado.

Mercado gives the visitor their customized front page. That front page remains the customized front page throughout the visitors session, to maintain continuity.

Is this for me?

If you have a high volume of visitors to your front page via organic search and some of the keywords are converting poorly, it’s for you.

But my software?!

There’s e-commerce software that has exactly this functionality built-in. We did it with buyer segments and Mercado made it easy. If your software doesn’t have that functionality, ask if they have or can provide a method for creating custom landing pages.

From Here

We’re showing the customer what he wants more often that we were. Therefore we’re selling more product. We will see if we can do the same for visitors to other pages of the site where the page they’re landing on doesn’t have the exact product selection they may be seeking.

We can also take the buyer segment that the customer is assigned for the session and change other elements of the website - such as our related items and others bought sections - to show items the customer might be interested in. Additionally, we can splash MMA branding across the website for our MMA buyer segment and see if we can convince our visitor that for MMA we’re the place to shop for MMA. While of course showing Karate branding across the website for our Karate buyer segment, because for Karate as well, we are of course the place to shop.

Kevin Lindsay, Director of Marketing at Mercado

Earlier this week I caught up with Tim Jackson, Managing Partner of PlumberSurplus.com, a pure play online retailer of home improvement products like kitchen faucets, and brands such as Moen and Kohler. He had just returned from eTail West, where he participated in the Search Day roundtables with Corey Leibow, Mercado’s president and CEO. I was curious to get his impressions of the event. Here’s a bit of what he had to say:

“I’ve been to a few of these events and I’m always amazed at range of types of businesses and the varying levels of expertise of the attendees themselves. I decided to conduct my own little informal poll (where 1 was absolutely no eCommerce expertise and 10 meant the retailer should have been up there giving the speeches). I would say that most of the attendees thought they were in the 5 to 6 range.

This year there seemed to be a few B2B eCommerce types and a lot of real niche players. These guys ranked themselves 2 or 3, and expressed some skepticism around the effectiveness of search marketing programs for their businesses. I also talked to some really sophisticated smaller online retailers who seemed to really get it – and probably should have been up there delivering some of the presentations (they were modest, but I would give them a 10).

I had a conversation with one big brand retailer (a self-ranked 2) and was really surprised with where they’re at with their eCommerce strategy. They’re just now looking at commerce-enabling their site and are asking themselves a lot of those painful “build or buy” questions. This guy was like a kid in a candy store – a bit overwhelmed by the possibilities, but really excited too.

Corey and I had great conversations with the retailers at our roundtables. The retailers were pretty tired by the afternoon, but were keen to discuss our topic. We posed the question of how to engage shoppers throughout their journey – from Google to checkout. This was a pretty hot topic. All agreed that the high cost of generating traffic is an issue, and that it’s getting more and more expensive. But while some folks were familiar with conversion tactics, others weren’t; they were quite interested in discussing how dynamic navigation, sorting, merchandising and custom landing pages work well in moving shoppers closer to a purchase.  

We also talked about how important it is to understand where shoppers are at in their purchase process. For example, if someone is in the early stages of the buying cycle you don’t want to overwhelm him with products. Corey talked about ‘The Paradox of Choice’ (a very interesting concept, and a book that’s now on my must-read list) and how shoppers don’t necessarily want nor need an endless variety of goods, but might rather prefer the opportunity to discover that gem of a product that suits today’s need or desire.

Overall, I was really encouraged by the excitement and bullish optimism at eTail. I always learn a cool thing or two from talking to fellow retailers, and my team will be happy to know I’ve brought back some great ideas. So how would I score myself? I’d rank myself an 8 – that way, I’ll always be charging towards 9 and 10.”

Kevin Lindsay, Director of Marketing at Mercado

I was just on the site of one of our coolest customers — evo. I love what they’ve done with their homepage for Valentines Day. These guys sell stuff like skis and boards, but they were not to be left out of the V-Day action.

They’ve created this beautiful banner with little candy hearts all over it (I didn’t know these were still around). But these ones have little brand logos on them like Rossignal, Vans, Dynastar… and when you click on them you go to a custom brand landing page — complete with navigation refinements to make it easy to find the perfect equipment for your sweetie.

Check it out at www.evogear.com.

Corey Leibow, President & CEO of Mercado

Wow. It’s been a little more than 3 years since I joined Mercado — and what a ride it has been. We have seen our business grow to hundreds of retail brands, and we now have 115 employees in four countries.

This morning we launched our new Website. I am so thrilled with the new look and feel — but more than that, what it all represents. When developing our new branding, we really wanted to capture what we’re all about — the customer journey. We wanted our logo and other brand elements to reflect the three, but very inter-dependent, stages of the customer journey: attraction, conversion and retention.

Later today, at eTail 2008, we will announce our plans for this year — exciting innovations that will take Mercado on our own journey, not a new and unplanned one, but a well-thought-out one for which we’ve been preparing for some time. I’ll also be speaking with Tim Jackson, Managing Partner at PlumberSurplus.com at today’s Search Day roundtable. We’re going to be discussing how online retailers can accelerate the customer journey by adopting a “from Google to checkout” philosophy. More on that later (I’ll look forward to sharing feedback from the roundtable).

Randi Barshack, VP of Worldwide Marketing at Mercado

I recently hosted a Webinar with Susan Aldrich, SVP and Analyst at the Patricia Seybold Group and Nathan Decker, eCommerce Director at evo. We had a great discussion about shopper engagement and what online retailers can do to engage shoppers throughout their journey to reach mutual success. Sue and Nathan agreed that there is so much more that has to happen beyond just generating traffic.

Industry experts tell us that smaller Internet retailers, in fact, depend on search engines for 50% of their business. Sue Aldrich has observed that as many as 3/4 of shoppers will leave a site within one or two minutes of not finding what they’re looking for — and 1/3 will not return to that site. That means that online retailers must do a good job of connecting shoppers with products once they hit the site.

We had nearly 150 folks participate in our Webinar. I really encourage you to go to the Mercado Webinar Archive and play the recording when you have some time. We ran out of time to take all our questions that day, but Sue and I continued our discussion and I asked her a few more questions:

Randi: What sort of design and/or usability elements on a Web page do you think can help boost conversion rates?

Sue: The biggest thing you can do for conversion is A/B or multivariate testing. It is impossible to guess how apparently minor changes will impact conversion. That said, I’ve seen comparisons boost conversions 3x; dynamic navigation increase conversion 5x; and great search easily increase conversion rates by 100%.

Randi: In the few seconds you have to engage an online shopper when the arrive at your site, what is the critical content you have to have to convince them to stay?

Sue: Easy — you have to show the content they were expecting to see when they chose to click on a link and come to your site. Do all retailers do this? Certainly not. If shoppers are responding to an ad, an email or a search engine result, the link must take them directly to very specific content (ie. tied to your campaign). When you don’t know what got a shopper to your site (all you know is they started on your homepage), you must provide a clear path that connects them to the right segment or product line. And here’s a tip: images work best: a tab that says “Business People” is not as effective as an image of business people.

Randi: What percentage of online shoppers prefer to use the search box rather than navigation, or vice versa?

Sue: This is completely dependent on the quality, or relative quality, of each site’s search and browse capabilities. In general, I think most shoppers prefer a combination of search and navigation. On sites that do this well, shoppers can search, then navigate and refine — and maybe search again, combining these activities until they find exactly what they’re looking for.

Randi: Final question for today. How do you see shoppers utilizing mobile phones for eCommerce over the next 2 years in the United States? What do you think companies and vendors will do to build out this functionality?

Sue: Phones will be big — especially outside the U.S. where mobile phone technology has been adopted so rapidly and widely. But in the U.S. too I believe that retailers need to make it easy to find and buy local store inventory from mobile devices. We’re going to see a lot of use of text messaging to advertise goods, and services to check inventory at nearby stores (such as Nearby Now). As always, I want to emphasize that retailers need to be thinking about cross-channel consistency when it comes to engaging shoppers — and mCommerce will be no exception to this.

Randi: Thanks a lot Sue! I look forward to future discussions.