Monday, December 18, 2000

SmarterKids Outranking Toys R Us Online

SmarterKids just barely fends off a challenge from the new Toysrus.com/Amazon.com partnership to finish first in the latest PowerRankings of online toy and game sellers by Forrester Research, Inc. Forrester PowerRankings combines survey data from online consumers and unbiased shopping tests to provide objective rankings of the leading US eCommerce sites. The companies that rank below SmarterKids are Toysrus.com/Amazon.com, eToys, and KBkids.

Shoppers looking for products that meet SmarterKids' educational criteria will appreciate the wealth of information available like the learning style and skills addressed by a toy. But the site is not for everyone -- its educational focus means it doesn't sell popular items like Barbie. The site also lacks external product reviews and the ability to cancel orders online.

The combined Toysrus.com and Amazon.com site places second -- less than a point off the lead, with features such as automatic recommendations and the quickest express checkout process of all the sites tested. But Amazon's ongoing customer service failures continue to plague the site -- shoppers must search for a buried customer support number and wait longer than at rival sites for an email reply or a live phone representative.

"SmarterKids just eked out a victory, but its limited product selection curbs its appeal," said Tom Rhinelander, senior analyst at Forrester Research. "By joining with Amazon.com, Toysrus.com dramatically improved its score over its previous ranking. If Amazon’s customer service had not faltered, the partners could have enjoyed a victory."

eToys comes in a strong third -- but slight tweaks could vault the site to the top. The site offers inventory information and some enhanced tools for displaying products, but its shipping costs are high. Despite having the fastest customer service, KBkids could not overcome numerous shortcomings in its shopping experience.

For the latest PowerRankings, Forrester surveyed 20,000 consumers from the NPD Group's online panel. These consumers identified the eCommerce sites that they purchased from most recently and rated their experiences.

40% of Websites in Unsatisfied With Clickstream Systems
A recent Gantry Group study of the Media Metrix Top 50 Web sites indicates that in the largest e-businesses, Web traffic is over-whelming the knowledge management systems that direct core marketing programs. The majority of those surveyed said the explosion of Internet traffic would likely overwhelm their systems within the next 12 months. Nearly all participants also indicated that data analysis can dramatically improve the effectiveness of their Web sites as measured by customer retention and customer lifetime value -- by as much as 50 to 100 percent in some cases. Central to this issue is the ability to scale rapidly to accommodate growth of Web traffic and the ability to perform meaningful analysis beyond the analysis tools currently available commercially.

The results of the study also suggest that for these systems to extract valuable and comprehensive marketing information, click-stream data must be integrated with terabytes of offline transaction and demographic data.

The Gantry Group study highlighted a variety of interesting findings including:

40% of those surveyed said existing click-stream analysis and marketing recommendation systems are insufficient to support their corporate marketing goals;

60% believe their systems will not be able to support business goals and growth beyond 12 months;

Slightly more than half the sites survey said they receive more than 20 gigabytes of data daily;

More than half of those surveyed also said they expect the volume of Web data flowing through their sites will more than double over the next 12 months.

"E-businesses are collecting unprecedented volumes of click-stream data to assess site usability, predict buying patterns and evaluate content, but according to our survey most companies are just accumulating the data in the hopes that someday there will be effective analysis tools that will render it valuable," said Dawna Paton, partner at the Gantry Group. "Our study confirms the need for an end-to-end solution that offers end users speed, scalability, data integration and, most importantly, actionable insight into companies' customer databases."

The Clickstream Data Usage study consisted of 25 interview-style surveys of CTOs, vice presidents of marketing and data analysis executives in the Media Metrix Top 50 Web sites. Additional data was derived from a follow-on research program consisting of two focus groups of marketing vice presidents or directors, to explore issues raised from the survey in greater depth.

News Tidbits (appears every day on front page)
- There are more layoffs in the dot com industry. This time HomeGrocer.com fired 100 employees. More layoffs are expected to when HomeGrocer.com is taken over by Webvan, which purchased HomeGrocer.com in June.

- According to an AP article about eToys in USA Today, "The Los Angeles-based toy retailer blamed poor sales on 'a harsh retail climate' caused by concerns over the economy, current attitudes toward Internet retailing, and consumers who have been 'meaningfully distracted by the presidential election and its aftermath.'