George Michie, CEO and Co-Founder, Rimm-Kaufman Group

George: Based on new research from NielsenThe Nielsen data presented by Ad Age suggests that the average retailer gets less than 10% of its traffic from search, and that much of that traffic is navigational rather than what we refer to as “competitive search.”  In our experience that number varies wildly by the type of company.  Online pure plays may generate 50 – 75% of their traffic from competitive non-brand paid search, catalogers more often 15 – 20% and chain store retailers much lower at 5 – 10%.  We see the number vary with the age of the business as well.  Newer companies with less of a loyal following generate a larger fraction of their sales from paid search.  Are our findings inconsistent with yours, or did the Ad Age article misstate your findings?

Ken: We have been tracking how the top 200 online retailers attract visitors to their sites for a few years now, and we have consistently found that, among those sites, IN AGGREGATE, search driven visits account for less than 15 percent of visits to retail Web sites (the number varies from quarter to quarter, but falls in a 10 – 15 percent range).  However, there are a few really important qualifiers that cannot be glossed over:

Ken Cassar, VP, Industry Insights, Nielsen's Online Division

1. We are looking only at the top 200 retail Web sites.
2. We use a rigid definition of a search referral where there needs to have been a click from a natural or paid search link.   If a person searches and then types a URL, that would be assigned to our ‘direct-to-site’ bucket.
3. The methodology that we use to look at the aggregate view of the top 200 is one that assigns a heavy weight to the bigger retailers.  We look at total referrals from each source divided by total visits.  As a result, the bigger retailers such as Amazon, eBay and Wal-Mart exert a high degree of influence over the total number.  When we look at individual retailers, we see a wide variation, even among retailers in the same category.

Obviously, the reason that we do this is because of the clients that we do the work for.

The differences in the data for individual retailers drives very different advice for different types of retailers.  Walmart.com’s marketing strategy should be a lot different than Celticstore.com.  However, I do think that there are important lessons for niche retailers to be taken from what these bigger retailers have learned.  There is a reason that people type in the URLs of certain sites, and engage in navigational searches to certain brands and sites:  They are aware of the brand, it is top of mind when they think about what those retailers sell and that increases the likelihood of a direct visit, rather than one mediated by search engines.

Don’t get me wrong:  For the vast majority of retailers if search isn’t the most important part of their online marketing strategy, it’s next on the list.  The key point that I make, though, is that brand matters.  While the benefits of brand development are less quantifiable, they are of critical importance for all retailers.  Too many retailers that I see don’t pay enough attention to brand dividends because they are difficult to track.  The fact that the majority of visits to large retailers are the result of consumers typing in those retailers’ URLs or searching for their brands is the easiest proof that I can offer.

George: Does Nielsen suggest that money currently going into paid search should be spent elsewhere, or is the point more that other off-line media still drives the lion’s share of business for most non-pure play retailers?

Ken: I don’t think that there is one answer to this question for all retailers.  If I had to generalize, I would say that retailers allocate too few dollars to online marketing.  Multi-channel retailers only track the online sales benefit of the marketing that is trackable (like search) and ignore the offline sales benefit.  Most retailers, I think, under-invest in brand oriented advertising, whether it is display, video, sponsorship or in social media environments.  One of our biggest (and most fun) challenges at the Nielsen Company is helping retailers understand these difficult-to-measure offline effects.  I would like to see niche-oriented online retailers devoting more brainpower to creative ways to create exposure to their brands.  SEO and SEM are going to represent the lion’s share of their acquired sales, but they’ll work better if consumers have a level of awareness of their brands.

George: Paid search is often the largest ad spend among online channels but is usually small in comparison to what chains stores spend on TV and circulars.  Do you suggest that more money spent on those channels will produce better return on investment?

Ken: When we do analysis for advertisers looking at the efficacy of advertising in different media (traditional and online) I continue to be amazed at the strong performance of television advertising on an efficiency basis.  Despite the fact that it often constitutes the majority of an advertiser’s budget, it tends to drive at least an equivalent share of ad driven sales.  The decline in newspaper circulation does create challenges for retailers.  Over the past 20 years, newspaper circulation has dropped by about 20 percent (that number is probably a bit conservative).  The result is that printed circulars do not have the universal reach that they once did.  The biggest opportunity for retailers that were historically big print circular advertisers is figuring out how to disseminate their promotions online, rather than just putting their circulars on their sites.  Both search and display are well positioned to play this role.  The good news is that in our research, online ROIs  (measured against offline sales) have been quite strong.

George: We certainly agree that navigational search on a retailer’s trademarks shouldn’t be credited to paid search, but if someone searches for “Big Screen TV” do you think electronics retailers should credit that ad for the sale, or a TV ad they might have been running featuring their TV selection?

Ken: Attribution of a sale to a marketing event is clearly one of the biggest challenges that marketers have.  There are steps that can be taken, using well constructed test/control studies or regression based analyses to mitigate compound advertising effects, but it is not easy, and it is never perfect.

George: Some people interpreted the Ad Age article to suggest that Nielsen thinks paid search is bad and display advertising is good.  Is that your point?

Ken: Absolutely not.  Search is great.  If anything, retailers (particularly multi-channel retailers) should be doing a lot more with search than they are.  However, brand matters, and the devices, including display advertising, that allow retailers to develop brand are a lot more important than many people think.

George: We generally argue that paid search is not a demand generating channel, it is a demand capture channel and that there will always be a need for the demand generators (print ads, TV, display ads, etc.)

Ken: I like that distinction a lot.  While display and search compete for dollars, they are apples and oranges.

George: Have you folks studied the data on display ads carefully?  Many carefully controlled tests (where public service announcements are shown a fraction of the time) fail to show display ads producing any lift in site traffic.

Ken: I’ve got a few thoughts on that…

First let me clarify the data.  Our data is NOT showing that display ads generate more traffic than search.  In fact, we haven’t quantified the share of visits driven by search.  We quantified search driven traffic, direct-to-site traffic, and comparison shopping site driven traffic.  The remainder we classify as third party/other.  It includes clicks on display ads, as well as affiliate driven traffic, and email.   This is probably the biggest misunderstanding of the discussion that has followed the Ad Age article.

However, I do believe that the tools used to commonly quantify the effect of display advertising look at timeframes that are too narrow.  And that a lot of the display advertising used by advertisers has been too focused on trying to drive an immediate transaction.   Here’s an example from a different vertical that, I think, will shed some light on the issue.  We’ve run 300+ studies for consumer packaged goods manufacturers quantifying the impact of online advertising on offline sales.   When I run a simple correlation of the relationship between click through and ROI the correlation co-efficient is…drum roll….negative .07.   The takeaway from this is, I think, that to really understand the impact of display advertising, you need to look at it through a wide angle lens.  The low hanging metrics commonly used to measure ad impact aren’t great at that.

George: Would you suggest that retailers assess their own data, or rely on industry averages in making marketing decisions?

Ken: I would recommend that retailers take a hard look at their own data, and challenge themselves to measure the effects that are hard to see.  Secondarily, I think that there is a lot of benefit to come from looking at how other companies are driving traffic.  The right answer lies between the two.

George: What should be the big take away from the Nielsen research on this topic?

Ken: Brand matters.  While this might be more evident when we look at big retailers, it is an important takeaway for all retailers.

I’ll start this holiday series with consumer thoughts in response to the question, “When choosing to make holiday purchases from a given online retailer, what is most important to you?”

The number one response (yes, ahead of value or deals, merchant reputation, product selection and myriad other factors): seeing the shopping cart total before starting the checkout process. In other words – “Don’t surprise me, or I’m likely to head elsewhere to buy.” Almost three-quarters of consumers stated that this aspect of their online shopping experience was “very important” to them, while an additional 21% ranked it as “somewhat important.” The good news here: the 2009 State of Retailing Online Merchandising Report (produced with Forrester Research) found that fully two-thirds of retailers surveyed “…would make calculating the loaded cost of an order prior to checkout a priority [this year]”. No doubt shoppers will be pleased to see the results of that work.

Next up: clear product descriptions, cited by over two-thirds of consumers as “very important” and by another quarter as “somewhat important”. If you haven’t recently had someone outside your team give you feedback on your product descriptions, do so immediately, even informally. Whether chatting with your customer service reps (who hear about site issues from customers every single day) or with family, neighbors, your children’s friends, even your grandmother (no joke) over the weekend, you’ll see things with fresh eyes. Next, think about how your best store associates describe the functions and features of a given product – does that come through in the online descriptions? Consumers also are increasingly receptive to additional content such as video as part of the shopping process, and actively seek out consumer reviews and top notch imagery to further round out the picture about a product or service. (Side note: don’t forget to use any negative reviews to update your descriptions as well.)

“Value for money / good deals” strike a chord with 94% of consumers as very or somewhat important – no real surprise there, especially these days. Nine out of ten consumers also ranked as important a broad product selection and knowing that the product was available to ship immediately. Almost as many again noted that free return shipping offers are important. This latter appears something of a blind spot for retailers surveyed, of whom a tiny fraction will actively promote the offer this holiday season and over two-thirds don’t / won’t offer this promotion at all.

Shop.org members can download the full results – also segmented by age, sex, annual income and US census region – from the Shop.org Web site. As always, I welcome any feedback you might have about the eHoliday ’09 study.

Knowing that it’s all about making the best of the season in a tough year, Josh Greene, Shop.org’s VP of Member Services, recently sent to Shop.org members a summary of the many holiday resources available.  If you haven’t already done so, please take a minute to read the letter from our home page.

As you’ll see, the hardest part probably lies in simply figuring out where to dive in first among the many resources available.  For what it’s worth, my approach would probably be as follows:

“Ten trends to watch this holiday season.” From our colleagues at the NRF, great “big picture” perspective on consumers and the holiday season.

Hear what consumers have to say.  It’s one thing to read charts, graphs and numbers (this from someone who likes delving into a good set of data over breakfast).  Listen to what consumers have to say in their own words about how they’re approaching this holiday season.  Again – perspective.

Shop.org’s 8^th annual eHoliday Study – if you didn’t already catch some of the pre-holiday survey highlights, see my blog post on the subject.  Be sure also to check out the results summary (member login required for this resource).  We surveyed both consumers and retailers, so it’s a nice balance of consumer input and industry benchmarking.

There’s much more, so please share the resources with your colleagues / team.  We’ll also be following up in the coming weeks with additional insight and research for you.  In the meantime, here’s wishing you a strong start to the season!

This year we have had EIGHT webinars and have two more planned over the next several weeks. We have been receiving great feedback and are already planning our 2010 webinars – they are even a major part of our Marketing Month in May. Recently, a member-company CEO even shared with us that he values these so much that he hosts “team lunches” to log-in to our webinars in their conference room and watch as a group… a great tip if you ask me!

For those of you that haven’t had the time to register to date we decided to look back at our feedback and bring you one of our most highly rated webinars to-date for 2009. We will come out with the complete “Best Of…” list after our November and December webinars – but until then register (and SHARE!) this FREE MEMBERS-ONLY WEBINAR PLAYBACK with your colleagues:

Shop.org State of Retailing Online (SORO) 2009 Merchandising Report Findings and Analysis Playback

And don’t forget to register for our upcoming webinar on November 18, 2009 on Social Media Safety: Staying Legal and Out of Trouble featuring speaker, Andy Sernovitz, Author of Word of Mouth Marketing: How Smart Companies Get People Talking.

Click here for pictures from the event.

Kate Terry, EVP Global Ecommerce, Tommy Hilfiger USA. Kate, who has deep e-commerce experience from companies such as Coach, Polo and Kate Spade is in a newly created position, EVP, Global E-Commerce, based in Amsterdam.  This new role combines global e-commerce and marketing for the direct  business, which had been separate prior to Kate joining.  The goal is to grow the e-commerce business to 20-25% of the store business.

Kate has overseen the creation of a new structure, which adjusts the mixture of functions being centralized vs. de-centralized.  The object is to centralize areas to gain efficiency and brand consistency, but to keep the local flavor where it’s most important.  And, to separate ego-authorship from local expertise.  I love the term, ”ego-authorship,” which is meant to describe situations where people are given decision-making authority as a way to give them a voice, which Kate believes is not the right reason to give someone decision-making authority.  Below is how some of the functions at Tommy are distributed:

• E-Commerce Platform – de-centralized, there is a different platform in the US than Europe
• Merchandising – 65% overlap / 35% local
• Service – 65% overlap / 35% local
• Marketing – 55% overlap / 45% local
• UI – 100% overlap

Cyriac Roeding, co-founder of MOBshop, made a bold statement about mobile that captured the audience.  “The future of online, is offline.”  He first made the case for the massive growth of mobile Web usage – particularly in the U.S. and primarily due to the iPhone.  He then discussed how the mobile Internet will change the in-store experience forever including the ability to drive foot-traffic to the store, close sales and increase loyalty.

Hiroshi Mikitani, CEO of Rakuten. He is the founder of Rakuten and built the company without any venture capital.  It was the first time most people in the audience heard the story of Rakuten, which is the #1 e-commerce company in Japan.  Amazon in Japan is 20% the size of Rakuten, a rare spot for Amazon, as it is the market leader in most other parts of the world. The Rakuten business model is to be a selling platform mainly for SMEs.  They currently have revenues of nearly $4 billion (and facilitate much higher gross merchandise revenue).  He gave an extreme example of an egg farmer on the Rakuten platform that sells $300,000 in fresh eggs per month.  The eggs he sells are fresher because selling directly to consumers is weeks faster than using the traditional distribution system, which, also addes a 70% mark-up after they pass through the various distributors. The farmer’s margins are so high that if the eggs arrive broken, he will resend them with no questions asked.  Mr. Mikitani also described how the Rakuten Eagles, the Japanese professional baseball team he purchased, supports the Rakuten business model by creating ongoing brand mentions due to the media coverage of the team.

Mr. Mikitani also spoke about the future of e-commerce.  He believes that Southeast Asia is poised to bloom and will be a bigger market than China.

If you’re interested in following global e-commerce topics, feel free to join the Global E-Commerce Summit group on LinkedIn.  You can also subscribe to the NRF Global SmartBrief free daily email newsletter.

Click here for pictures from the event.

François Momboisse Vice President of EMOTA and Susanne Czech, Secretary General of EMOTA, opened the Summit and shared data on European and French e-commerce:

• Europe is expecting 12% e-commerce growth in 2009
• French e-commerce is up 25% in 2009
• Average order value is down
• 23.5 million online buyers in France, which is up 44% in the last 3 years
• C2C commerce such as eBay and Priceminister are enormous in France – market leaders

Overstock.com CEO Patrick Byrne followed with a thought provoking keynote presentation that was a mixture of the Overstock.com business and Mr. Byrne’s concerns about the U.S. capital markets.   He painted a dim picture of the next 10 years, and when asked where he invests his money given his concerns about the economy he said that it is a combination of Overstock.com stock and gold.

Allan Christiansen,  CEO, Telmore, shared his thoughts on how to build “extreme customer satisfaction.”  Telmore answers 80% of customer service calls within 20 seconds, far faster than its competitors.  One of his most compelling quotes was that “customer loyalty is not how loyal a customer is to a company, but how loyal a company is to a customer.” 

Stay tuned for more blogging from the event.  You can also follow the event on Twitter (hashtag #GES09).

Have you seen the shopping habits of customers change as a result of the recession?

We have seen changes in how customers are shopping. The footwear industry has seen a pullback due to economic uncertainty and unemployment. What is great for us is that kids continue to change size and our children’s business is doing well — even in a recession.

We’ve recently seen a lot of favorable macro-economic data (GDP and other leading indicators) that suggests that the recession may be ending soon, but this was a consumer-led recession and the high levels of unemployment currently at play could slow the recovery on Main Street and at retail. Employment growth is really a necessary factor for vibrant growth in the consumer sector.

As a lower-priced brand, one might argue that Payless is well-positioned when people are trading down, but that customers might disappear when the recession ends. How is the company trying to hook consumers to ensure they’ll stick around even when the economy bounces back?

We are well positioned. We’ve actually gained market share, driven in large part by our success in our children’s category. Cross-channel shopping is not as prevalent in all footwear categories, and the trade-down effect for us is somewhat mitigated by heavy discounting in the off-price channel.

Our strategy, regardless of the economic climate, is to remain focused on the consumer. And we are attracting new shoppers every day with our newest brands like the Zoe & Zac green brand, the Unforgettable Moments by Lela Rose special occasion line and the Christian Siriano for Payless designer brand, among others. We can be successful if we understand our customers’ needs and desires, and then find innovative ways to deliver great product in a special and dynamic way and provide an outstanding, thoughtful experience in our stores. As well, our CRM capabilities have grown beyond our expectations in the last few years, and are providing us with meaningful new insights on how to reach and connect with our customers on a deeper level.

Just a few weeks ago, Collective Brands re-launched its website. Tell me about some of the new bells and whistles, as well as why you moved forward with a redesign during an economy like this one.

Since Collective Brands was formed, we have worked hard at developing our strategy, building our dynamic teams, positioning our brands and integrating our company to provide a powerful platform for our individual brands to leverage as they execute their unique strategies for their target customers. The core strength of Collective Brands is the world-class brands that are platformed by shared resources and infrastructure in the global marketplace. We have made tremendous progress, and we have a great story to tell about what a dynamic business Collective Brands has become. The new website is designed to provide our core audiences — potential associates , investors, media, business partners, and others — with a resource that fully illustrates the vision, strategy and story of CBI through a web experience that is engaging, informative and compelling. Many people have an incomplete understanding of Collective Brands, and this new site provides a singular place that communicates the breadth of the businesses and brands, the character of the company. While CBI is only two years old, we have a rich heritage and diversity of brands, products and people.

I see that people can become a fan of Payless on Facebook or follow it on Twitter. What are your thoughts on the role that social media is playing in retail right now?

Social media is clearly an innovative new way to reach customers, and like any consumer engagement tool, we want to be thoughtful in our approach to make the experience meaningful. We want to utilize the forum to listen and engage and interact.

One of the programs that Payless is involved with is Shoes4Kids, which will donate more than 77,000 pairs of shoes to children this holiday season. Tell me a little about the program.

Payless Gives is a program that I’m very proud of. It really started last year with an idea…a “what if?” What if we were to give away $1 million worth of free new shoes to kids in need during the holidays? Could we do it, and if so, how? I posed this question to our leadership team, who really stepped up and rallied around this important holiday giving idea. In just weeks, we organized a massive grassroots campaign, secured nearly 3,000 applicants, selected more than 630 charity partners, sent them the coupons and the kids started shopping! It was a groundbreaking campaign.

There is a massive need for children’s shoes and we are in a strong position to help out. But the need is 10 times what we did last year…and it’s international. So this year, we expanded beyond just the U.S. to Canada, Puerto Rico and in 10 Latin American countries where our stores are located. We expect to give away more than 77,000 pairs of free new shoes valued at more than $1.2 million through a network of hundreds of localized charities. Oct. 30 is the application deadline for charities, and we are wanting as many charity partners as possible to apply to help us create an extensive and wide-reaching network to get the shoes into the hands of children that need them the most. The grassroots approach is important because it ensures widespread and diverse coverage in urban and rural areas. And it helps support the localized nonprofits — the smaller charities — which are seeing less funding support as well, due to the economic crisis.

Information on how non-profit organizations can apply and the selection criteria can be found on our site, www.paylessgives.com.

I recently read about a new line of Stride Rite shoes, which helps children just learning to walk. Tell me about the new shoes.

Collective Brands is committed to product innovation, and this is a strong example of how our Stride Rite team is using innovation and technology to create products that really make a difference to our customers. Stride Rite partnered with the prestigious Leon Root, M.D. Motion Analysis Laboratory at Hospital for Special Surgery in New York to better understand the effects of footwear at the important learning-to-walk stage of a child’s development. The research enabled the Stride Rite team to create a new collection of footwear for toddlers featuring a patent-pending innovation called Sensory Response Technology that helps guide young children to walk in the healthiest way possible. This groundbreaking line of footwear was launched this fall, and is gaining market share and validating Stride Rite’s premium brand position as the premier brand to promote healthy feet for children.

I hear you make regular visits to your stores. What do you learn from those experiences and why do you think interacting with customers is so important?

Getting to the stores is critical. It is where our customers come and our people interact with them. When I visit stores, my approach is to listen, observe and ask questions — to get first-hand insights. Besides, it’s the place where people are having the most fun so I truly enjoy it.

You’ve had some incredible experiences at well-known retailers like J. Crew, Cole Haan, Revlon and Tommy Hilfiger. What did those different positions teach you?

We learn from all of our experiences. The commonality I’ve found in all my career experiences has been to know, respect and entice the customer with great product that is well presented and valued. Make sure you have a thoughtful feedback loop and keep your head up as you look forward, while also understanding the road your brand and business has traveled. Make sure you know what makes each brand and retail destination special and unique in the market. Amplify that uniqueness and keep it focused on its core. The business of retail and brands is fun and challenging work that is immensely invigorating and fulfilling.

What would you say to anyone considering a career in retail?

Stay focused on the customer. They hold the key to any retailer or brand success. Be ready for dynamic action, pace and change. It’s a great place to be creative, work with teams and build. It’s also great because if you make a mistake you can mark it down, learn from it and move on.

Which leaders do you look to for inspiration and what traits do they possess that you try to emulate?

People who are focused on the consumer, who master the fundamentals, respect the teams they work with and drive to the win.

What shoes are you wearing right now?

Sperry Top-Sider dress loafers. I am in here in the our global headquarters offices today, but when I am in my Sperry’s I can take a moment to think of a great day on the water.

Who will be shopping online? As noted in the NRF consumer holiday survey earlier this week, not quite half (42%) of consumers surveyed plan to do some portion of their holiday spending via the Web. However, these online shoppers will also be buying in discount, department and specialty stores. Approximately two-thirds of consumers estimate spending about the same as they did last year for the holidays.

Merchant expecations and preparations. 4 out of 5 merchants surveyed expect to see growth for Holiday ’09 vs. Holiday ’08. To achieve this growth, merchants surveyed have prepared significantly over the past months, investing in new / improved cart, site search, cross-selling, sale, and video functionality on their sites (though not as much in imagery, which consumers actually want), and renegotiating with suppliers to contain costs.

What matters to consumers. Ultimately though, consumers tell us that what matters most to them in choosing to do business with a given retailer is seeing the complete shopping cart total before checkout, clear product descriptions, value for money (yes, in third place this year, economic pressures not withstanding), free returns shipping offers (more on this below…), and the merchant’s reputation. Once on the site, consumers will most want to see product reviews from other customers, clearance / sale pages, and the shipping deadlines calendar (among other things).

Marketing and promotions. In addition to reaching out to their all-important existing customers via email, approximately two-thirds of retailers surveyed have either added new or recently improved their Facebook and Twitter presence as well. As it turns out, consumers may not actually start their shopping at social media sites and blogs, but they do turn to them when they are researching products. Merchants also won’t be waiting long to start offering discounts and free shipping offers. Consumers most want to see free shipping offers and coupons – creating a balancing act for merchants who have to manage the costs involved for both of those. Merchants’ biggest promotion blind spot? Call it the Zappos factor – free shipping for returns, which two-thirds of merchants surveyed don’t offer/won’t use at all, and which just a fraction of merchants surveyed plan to emphasize this holiday season.

As mentioned earlier, there is much more data available to Shop.org members from the pre-holiday consumer and merchant survey results. Members can now download the summary deck as well as the aggregated data itself, which includes consumer data segmented by sex, household income, age and U.S. census region.

Please feel free to post a comment below with your thoughts and comments. In the meantime, here’s to a fast and strong start to your holiday season!

The most interesting trend for the online folks is likely this one:

#8: When looking at store sales, consider the Internet. The web will influence one in three holiday purchases this year, and retailers are using the Internet not only as a sales channel but also as a marketing vehicle. (Those of you at the Shop.org Summit who heard Terry Lundgren’s keynote got a first-hand account of how this happens at Macy’s.) Keep an eye out for Shop.org’s eHoliday survey, which will provide more insight on how people will to shop online this holiday season as well as what online retailers are planning. Hint: hello, social media!

Other holiday-related items that might be appealing:

• A short video of how different shoppers plan to compensate for the economy this holiday season
• Audio from the briefing, if you have 45 minutes to listen to the complete Top 10 rundown
• NRF’s first holiday survey, which outlines shoppers’ holiday plans

One of the most frequent questions I heard at the recent Shop.org Summit was “how do I get more out of my membership?”  Many of the folks we talked to, or heard from in our annual member survey, didn’t know about some of the new benefits we’ve launched, such as participation on CyberMonday.com, or how to find the latest information on Profitability from the State of Retailing Online report. With many new member companies, and new individuals at those companies, we thought it would be a good time to have a webinar on the benefits of membership.

Some key areas we’ll cover will be:
-  An introduction to Shop.org shows, webinars, and research.
-  An overview of the Shop.org website and where to go for more information.
-  Details about our new Shop.org events – the Global eCommerce Summit and the Retail Innovation & Marketing Conference.
-  Information about public policy initiatives, and how Washington can affect your business
-  A guide to how to get involved (for members and non-members).

And, if you can’t make it, all webinars are archived and available for later playback.

A couple of highlights:

While many retailers would probably like to put behind them the past year as quickly as possible, fully 87% of the online retailers we surveyed noted that their eCommerce business in 2008 was, in fact, profitable – and for over half it was actually more profitable than in 2007. When we probed how retailers accomplished this feat, over half credited putting a strong focus on preserving margin. While increased promotions also played a role, retailers played up the “value” message on their Web sites, worked hard to grow market share, and targeted profitable transactions and/or customers, among other measures.

Site conversion rates actually increased for almost half of retailers surveyed; while there is still work to do for everyone when it comes to shopping cart abandonment, returns on average are still respectable. And while over half of these retailers believe the economy should improve somewhat in the next year, they’re largely sticking with or even slightly lowering their outlook for their business for the next year.

True multichannel operations are increasingly a reality, not just a goal, for many retailers. Whether sharing product or branding imagery across channels, tapping email to promote in-store events and specials, or using marketing messages to distinctly promote multiple channels, we see those old channel silos slowly starting to crumble in earnest. And it’s not just a breakthrough on the marketing side of the house – executives in numerous functions are increasingly responsible and rewarded for driving results across multiple channels.

Finally, social media – retailers are, it appears, a pioneering bunch (and, we found, not because senior management is pressuring them on this point). If a retailer isn’t already on Facebook or tweeting, it’s likely on the drawing board for either the remainder of this year or certainly next. Two-thirds of retailers surveyed noted that the ROI from social marketing initiatives may be as yet unclear, but almost as many agreed that the reason they are pursuing them is because “it is a great time to experiment and learn more about what they can do.”

Shop.org Members can download the full report now. Be sure also to check out Ellen Davis’ blog from the Annual Summit about Sucharita Mulpuru’s keynote presentation that referenced some of these SORO findings along with much more.

As the group widely credited for coining the phrase “Cyber Monday,” we’re always looking for ways to raise the profile of this important kick-off to the online holiday shopping season, trying to think outside the box for ways to bring shoppers online after the Black Friday weekend left them wanting more. In 2008, an estimated 85 million people shopped on Cyber Monday, and many retailers are looking to the Monday after Thanksgiving to bring another sales surge this year. For information about what Cyber Monday is (and what it isn’t), view these FAQs.

Shop.org offers several ways for retailers to maximize their Cyber Monday efforts, both ahead of time and on the all-important November 30. Here’s a rundown of what we’re working on this year:

CyberMonday.com: After a 42-second shout-out on Good Morning America this week (but, really, who’s counting?), Shop.org’s CyberMonday.com is moving full speed ahead for the holiday season. Last year, the site was named the #1 place to shop on Cyber Monday by Time magazine and has been featured on the Today Show, USA Today, the Wall Street Journal, the New York Times, and thousands of other places.

According to Mall Networks, which powers the site for us, shoppers spent more than $12 million through CyberMonday.com last holiday season and more than $23 million since the site was launched in November 2006. The site had 2.4 million unique visitors on Cyber Monday alone last year, up from 1.5 million on Cyber Monday 2007.

One quick side note: We’re excited that CyberMonday.com has become a major holiday shopping destination, but we’re particularly proud that all of our proceeds from the site go directly to the Ray M. Greenly Scholarship Fund. Since launching in 2007, CyberMonday.com has brought in more than $900,000 for the Fund, which provides financial assistance to students pursuing careers in retail and e-commerce. Ray was a good guy, and we all miss him, so it’s gratifying to be able to channel our passion for Cyber Monday into something that helps our community remember Ray.

If you’re not one of the 658 retailers that is currently listed on CyberMonday.com, there are still opportunities available to participate on the site this year. In order to be listed on the site by Cyber Monday, your company must have an affiliate program with Linkshare, Commission Junction or the Google Affiliate Network and sign up by November 20. (A bonus: if you sign up by Oct. 31, we’ll waive the $3,000 integration fee, which includes site placement, a listing in two categories and a logo along with a description of your company.) To learn more about how you can get your site listed on CyberMonday.com, email Marc Mazzone at Mall Networks.

If you already are one of the retailers listed on CyberMonday.com, there are still ways to make your company more visible on the site. Among them:

• Mall Networks tells me that the home page is almost sold out, but there are two spots open (that’s an opportunity only for current Shop.org members).
• There is still space available on shopping category pages for banners and logos.
• After a hugely-popular experiment last year, CyberMonday.com will feature a “Deal of the Hour” for Cyber Monday and — new this year — Black Friday. There are still some opportunities available for companies who wish to provide exclusive discounts or offers on the site.
• There are a handful of spots remaining for the “Top 5 Deals” placement on the home page

Marc is also the one to contact about these opportunities. (Something tells me after this post, he’s going to be a busy guy!)

Media opportunities: If you want your company to get in the news this holiday season, and you’re a Shop.org or NRF member, we can most definitely help. In the past, we’ve heard from retailers who are open to discussing their Cyber Monday plans with the media. This year, we’re ramping up that partnership to help our members get the most out of their Cyber Monday news while also helping the reporters we regularly work with gather in-depth information from reliable sources for their stories.

Feel free to contact me if you would like more details about providing your company’s Cyber Monday promotions to reporters in advance and/or if you have a company executive or spokesperson who can talk with the media on the record about what your company is planning for Cyber Monday this year. I’m also the person to contact if you would like us to provide a holiday-related quote for your company’s press release, if you want to use any of our Cyber Monday research, or if you’d like to refer a reporter you’re already working with to us to round out a story.

Something tells me it’s going to be an insanely-busy few months for all of us. While many of us at NRF and Shop.org finalize our Cyber Monday plans, we wait anxiously to learn what all of you have in store for this year!

I sat down with Kelly Gilmore, my counterpart at RAMA, to learn some more about the Racie awards.  I hope you enjoy the interview with this true industry leader.

Let’s start with the basics.  What does Racie stand for and what exactly are the Racie Awards?

Racie stands for The Retail Award for Creativity, Innovation and Excellence. Each year the Racie Awards honor the best in retail advertising and marketing, whether it is TV, digital, or integrated campaign work.  We even have a category for gift cards.

Can anyone enter any category?

Yes, any retailer, agency or media company can enter their clients’ retail work in any category.  I had someone call me and ask if the Shop.org community can enter other categories besides the six new digital categories–the answer is “YES.”  Our goal is to showcase and celebrate the best work in multiple categories happening in the retail industry.

How does the entry process work?

We have worked hard to make the process as straightforward as possible.  All entries are done online at www.nrf.com/racie.  The checkbox system and option to write up some comment to tell the judges makes it easier then ever.  After you are done entering, the actual creative is mailed to Schawk Studios in Chicago where the judges will meet and score the work.

How are the entries judged?

Each piece of work entered is judged on creativity, strategy, results, and innovation.  Innovation is a new piece of criteria that we just added this year!  The judging panel consists of professionals from the retail advertising and marketing industry and partners from agencies, media and consultants who serve the industry.  Each piece of work is independently scored, without any debate or discussion.  It can be a grueling process, but it’s also a lot of fun to be so hands on with all of the great creative.

How much does it cost to enter?
There is a $75 fee per entry.  Campaigns are considered one entry.

Over the years, have you had a favorite winner or a most memorable entry?

It’s hard to pick just one favorite.  I can say that I always look forward to seeing what people submit for the Peter Glen Cause Marketing Award.  We started this award in 1994 and each year it has been presented to winners who have given back to the community or environment in a unique way.  I’m always so proud of our industry and the commitment they make to communities, a specific cause or global issue.  Retail makes in impact!

I would say our wackiest entries are gift cards that come in the shape of race cars, transformers, and some even sing to us!  Another entry that had the judges buzzing was a brown wallet. One store dropped wallets in a competitor’s parking lot for their grand opening down the street. Knowing that everyone picks up a wallet and looks inside, these wallets had coupons for the competitor’s grand opening.

In the digital space, I’m exited to see the innovative ways retailers are touching their customers through the web, Facebook, apps and cell.

You mentioned six new digital categories. This sounds like something that appeals directly to the Shop.org community.  What are they?

They do! This year we wanted to really focus on expanding our categories to include all of the amazing digital creative work that is being done right now.  The six new categories include: digital / in-store experience, motion design, website experience, rich media online advertising and promotion, social commerce, and mobile apps.  That is on top of our other digital categories, such as website, online and interactive.

Is there a place that I can go to check out past winners, just to get a feel for what type of work you usually honor?

If you go to www.nrf.com/racie you can not only find out all of the latest info on the Racies, but you can also view past winners.  We show the winners as far back as 2003. It’s a great archive to not only see who has been honored over the years, but also to see how creative work has evolved.

We’ve heard a lot of questions and discussion this year – notably at the Annual Summit a few weeks ago – about international e-commerce. There’s a (rapidly!) growing set of literature and research on the topic, from the just-published J.C.Williams Group study “International E-Commerce Expansion Benchmark Study” to a raft of resources that Troy Brown at Demandware made available via this blog earlier this year. For a slightly different view on the subject, I highly recommend reading also Scott Silverman’s interview with eBags’ Peter Cobb on why they decided to pull out of Europe for now. And if you’re really serious about the subject, no doubt you’ve already registered for the second annual Global E-Commerce Forum, this year held in Monaco (playground not just of the generic “rich and famous”, but now also savvy e-commerce executives from around the globe!).

We’ll keep you posted on future resources for Shop.org members on the subject, and would like to hear from you your thoughts on the subject, including what kind of research would be helpful to you on the subject going forward.

We’ve just concluded our Q3 survey and it appears that the gradual improvement we’ve seen quarter over quarter this year is continuing (see a recap of the numbers and a summary of the results). 70 retailers responded to our most recent quarterly (anonymous) one-question survey that asked simply, “How did your gross online sales (top line) for the period July 1 through September 30, 2009 perform relative to the same period last year?” Some highlights:

• The average growth for gross online sales in Q3 of ’09 compared to Q3 of ’08 was 16%.
• Almost three-quarters of retailers surveyed reported experiencing some YOY growth for the quarter.
• Large and medium sized retailers overall did well, as did half of the retailers who identified themselves as generating annual online sales of $10 million or less.
• Multi-channel retailers and manufacturers who participated in the survey also reported largely doing well, along with half of those identifying themselves as online-only retailers.

As part of the survey, we invite participants to note any (optional) comments about the quarter, such as trends that they’re seeing. It’s of course difficult to generalize from comments across retailers of different sizes and types of companies, but some multichannel retailers with primarily store-based operations noted things like average order value AOV staying either flat or declining somewhat, while also experiencing increased traffic and longer purchase cycles as consumers shop around more and wait for discounts. Multi-channel retailers with primarily online-based operations noted some of the same, including seeing increased traffic as consumers shopped around significantly before actually committing to a given purchase.

Calling all retailers: we need your participation in our upcoming holiday sales flash surveys. Please email me if you didn’t receive an email to participate in this last round, and I will add you to our list. As always, the more retailers who participate, the more granular the results we can report back to you. Thank you for supporting Shop.org research!

We’ll wrap up the series of posts we’ve pulled together this year on international e-commerce by highlighting some of the dialogue that the study stirred up.

One of the best comments came from a CEO-guy across the table who attended the session where Jim Okamura hit the highlights of the study and interviewed the esteemed panelists.  He had that slightly worn look one has at the last session of the last day, but he was totally into the idea of going global.

Finally he looked over at his VP of e-Commerce and said “Let’s just do this.”

The International Growth Story

Chris O’Neill, who runs Google’s retail practice, was a welcome opening host for the session.  He set that stage nicely by commenting that:

• Well over 50% of Google’s growth is from markets outside the U.S.
• In order for Google’s CEO to approve any program, it must have a global plan
• From an organizational perspective, discussions about international initiatives often revolve around the trade-offs between centralization and de-centralization

What should we watch for on the international front? According to O’Neill, innovations in payments “in a world without the financial payment infrastructure the U.S. takes for granted.”

And stay tuned for how machine translations will fulfill the vision of a border-less e-commerce landscape and where advancements in analytics will leverage data to understand international customer needs that are not being met.

A New Chapter in the Customer Experience Saga

Of the many barriers the study highlighted, the one that requires the most urgent attention is the generally poor online experience that most international shoppers encounter, an ironic similarity to the early days of e-commerce in the U.S. the study points out.

Another key finding was that an expanded range of strategic options has replaced the “all or nothing” mindset that until recently prevailed among international strategists.  Each option has its own different risk/reward profile and collectively, they provide online retailers and consumer brands greater strategic flexibility, which is critical in today’s challenging retail environment.

A “middle” stage of international e-commerce expansion is emerging, which the study calls the “Participatory” stage.  Aided in part by the emergence of “sell-and-ship” solutions providers, this stage offers online retailers a low-cost, low-risk way to dramatically improve the international customer experience while also ramping up global sales.

Global Logistical Expertise is Evolving Regionally

An interesting ancillary finding emerged on the expo floor at the Summit.  As one visited the vendors that are opening doors to international e-commerce, one found that those with logistical expertise currently tend to specialize in different regions of the world.

Not surprisingly CanadaPost/Borderfree excels in Canada while Pitney Bowes (e4x/fiftyone’s logistical partner) delivers the goods throughout Europe.

Access Technology Solutions has built a sophisticated network of trade channels and customs brokerages throughout Asia-Pacific. In fact you can ship express packages from the U.S. into Japan for about what it costs to ship from California to New York. And it can get there quicker.

Meanwhile Borderjump/Aeropost is fulfilling thousands of international orders daily throughout South America.  Look for some consolidation in this sector in the year ahead, but for now, choose your market and go with the strongest player in that region.

Social and Mobile: Hot Panel Topics

No way can we hope to pack in highlights from the report’s findings plus insights from the panel session at the Summit into this no-longer-short post.  Several quick take-aways for you.

One of the biggest challenges of going global is balancing existing brand equity/controls with the need for local relevance.  The panelists agreed that tracking and measuring brand equity is tough globally, especially in the Asia-Pacific regions.

However, social media is evolving as a means to cost-effectively tap communities and facilitate word-of-mouth ─ and by doing so, to better understand how to adapt brands to local market preferences.

Panelists also agreed that having a mobile strategy is an essential component of going global.  Depending on which international market you target, expect 20% to 40% of the traffic coming to your site to originate from mobile devices ─ and plan for women to over-index on mobile.

Organizational Catalysts?

The panelists provided advice for e-commerce professionals trying to push their leadership to go global.  After conducting initial market assessments, focus on understanding the types of payments that are locally relevant.

Accept that payment models will not be one-size-fits-all.  In China, expect to accept at least five types of payment.  In Germany, more than half your holiday orders may go out with an open invoice.

Next Stop: Monaco, October 26-28th

It’s always intriguing when you put almost a year into conducting a study and then it’s done.  But of course research is never really done, in fact, we’ve barely written the first chapter of the international e-commerce expansion story.

The next chapters will provide different viewpoints.  The Shop.org Global e-Commerce Summit will offer a diverse collection of best practices and insights from leading global e-commerce professionals outside the U.S.

And look for a quantitative study exploring international e-commerce expansion from the J.C. Williams team next spring, with a focus on how online merchants of different sizes are mastering global e-commerce.

Until then, enjoy the International E-commerce Expansion Benchmark Study, the most uncreatively-titled report out there today.

Thanks,

The J.C. Williams Group

At Shop.org, we’ll be releasing the results of our just-concluded pre-holiday online retailer and consumer surveys in the coming weeks. In the meantime, check out the incredible resource that Shop.org’s parent, the National Retail Federation, puts together every year – the Holiday Survival Kit. The brand-new 2009 edition is chock full of facts and figures: what percentage of annual sales occurs during the holiday season for different types of retailers? How many Americans shopped online for last minute purchases last year? How many people started shopping for the holidays before Halloween? What payment methods do consumers use? Which were consumers’ favorite holiday TV ads last year — and how many watched TV while simultaneously using the Internet? How many gift cards did consumers buy on average last year – and which were the most popular gift cards purchased? What about free shipping offers last year – were they as pervasive as we all think they were (hint: yes, indeed). How readily do consumers recognize the term “Cyber Monday” – and how many retailers said this was the biggest sales day for them last holiday season? And, as they say, there’s much, more more…

Stay tuned for the eHoliday ’09 results shortly. As always, please don’t hesitate to ping me with any questions or comments.

If your company is already conducting cross-border e-commerce, the reasons for attending this event are clear – you’ll tap into the most impressive gathering of global e-commerce executives in the world.  If you are one of the many U.S. online retailers looking at overseas expansion as a growth opporunity, you may also want to consider attending.  (And, if you’re a Shop.org member, you’re eligible for a substantial discount on your registration fee.)

There are two keynote speakers that stand out for me and who I look forward to hearing speak at the event.

Hiroshi Mikitani, Chairman, Founder and CEO, Rakuten

The first is Hiroshi Mikitani, Chairman & CEO, Rakuten.  If you aren’t familiar with Rakuten, you should be.  You may know them as the parent company of U.S.-based LinkShare.  But, they are also Japan’s leading Internet company with 2008 revenues of more than 2.7 billion USD.  They have a fascinating array of Internet businesses is Asia including in the No. 1 shopping portal and they recently purchased a 67% stake in Thailand’s largest e-commerce company.  Mr. Mikitani is the charismatic founder, chairman and CEO of this global Internet powerhouse.  In addition to their Internet interests, Mr. Mikitani also arranged for the purchase of the Rakuten Golden Eagles, a baseball team in Japan’s Pacific League.

Paul Delaoutre, Chairman and CEO, Galeries Lafayette

The other keynote speaker that has piqued my interest is Paul Delaoutre, chairman and chief executive officer of Galeries Lafayette.  Up until recently, pure-play ecommerce companies have represented the lion’s share of French online retail revenue.  Not anymore.  Major French retail brands are now flexing their e-commerce muscles and leveraging cross-channel strategies.  Galeries Lafayette is leading this trend.  It’s rare to find U.S. retail CEOs from large stores with hands-on e-commerce experience and even more rare outside of the U.S.  But, that’s exactly what Mr. Delaoutre brings to Galeries Lafayette.  Prior to coming to this famous French department store, from 1999 to 2004, Mr. Delaoutre was CEO for La Redoute, a leading mail order company in France, which he transformed into an international company as well as a web driven company.

Visionary keynote addresses from Mr. Mikitani and Mr. Delaoutre are just part of the reason to consider being a part of this event.  The full agenda includes e-commerce executives from Denmark, German, The Netherlands and more.

And, did I mention that this event is in Monaco?  By the way, thanks to some of the lowest airfares and hotel rates in recent memory, a trip to the Global E-Commerce Summit in Monaco is much less expensive than you think.

I hope to see you in Monaco later this month.

In a discussion with a leading on-line retailer in the UK (£1.6 billion) regarding the opportunities to support the selling of products using customer reviews, the conversation led to the subject of how manufacturers and suppliers can, but rarely do, provide the desired detail and content to fully support the sales of their products on-line.

Web Ready Merchandise – merchandise that is sold to retailers as a physical good with supporting digital content – seems to be a no brainer and a chance to differentiate your brand, but the CIO at the above-mentioned firm could provide me with only one example of the process done-right (The consumer electronics division at Philips.)

No doubt we will see more focus on the sharing of digital information up the channel but when someone who is informed and in the loop like this CIO sights a gap in quality, it seems like an interesting data point worth sharing.

As someone involved in retail and service innovation, I spend time conducting and studying customer interviews.  Frequently these interviews delve into the how’s and why’s of customer engagement. They are an exploration into motives, needs and wants. They hope to uncover pain points, workarounds, stakeholders, activity patterns, key moments, the usual range of outcomes that can help designers get closer to meaningful truths and designs.

I never thought to study the research to help with the development of title pages, URL’s, tag’s, attributes, blog content, and other content to help improve SEO performance.

If the conducting of interviews seems like too much work, don’t worry. The fancy new field of digital anthropology – analyzing web reviews and youtube content for clues on how people talk about your space  – can be an easy first step.

It frequently takes four times the length of the content on a really good day to make sense of raw content. But the end result may be worth it.