Wednesday, January 17, 2001

Online Apparel Sales and The Year Ahead

While retailers enjoyed strong growth in on-line apparel sales and made dramatic strides in fulfillment processes over the last year, holiday shoppers still registered dissatisfaction and diminishing patience buying apparel on the Web, according to the new eHoliday 2000 Apparel Report Card. This study was sponsored jointly by Accenture and Vividence.

The research, which measured site usability, as well as customer expectation and satisfaction, predicted that remedying the situation for the 2001 shopping season will require on-line retailers to focus on improvements in three key areas: the overall shopping experience, purchasing process and customer support.

“In the past, retailers have measured traffic and usage,” said Angela K. Selden, managing partner, Accenture Retail practice. “However, the power to capture the ‘how’ and ‘why’ of what customers feel gives retailers new opportunities to take customer service to the next level.”

Of greatest significance to retailers, the research showed that three in 10 customers reported having a negative experience shopping on a specific Web site last year, and that 72 percent of these unsatisfied customers are unlikely to return to that site. “Consumers expect the same experience whether shopping on- or off-line,” commented Selden. ”With the functional improvements that retailers achieved in 2000, customer service now becomes the lynch-pin for the year ahead.”

The study, which was developed and conducted by Vividence and analyzed by Accenture, measured results from more than 750 customers shopping for apparel on Web sites of more than a dozen globally recognized retail brands, including department stores, specialty stores and mass merchants with a Web presence. Combined, the on- and off-line operations of these 14 retailers represent annual revenues of more than $300 billion and account for a significant portion of all retail apparel sales.

"As the Internet evolves into a large-scale channel for retailers, they must be able to understand the customer’s online expectations," said Artie Wu, Vividence CEO. "By capturing direct customer feedback through Vividence's products, businesses can now gain the meaningful and actionable customer insight to dramatically improve the customer experience."

Specifically, the research identified several missed opportunities in the consumer shopping experience, purchasing process and customer support functions during the past holiday season:

1) Gift certificates
More than 70 percent of all respondents indicated that it is important to be able to locate the gift certificate function on a retail site quickly and easily – both when purchasing a gift certificate and when redeeming one. However, while a majority (nearly 82 percent) were able to complete a gift certificate transaction, 20 to 60 percent (depending on the site visited) of those completing a transaction reported frustration, unmet expectation and dissatisfaction with the experience.

2) Confidence in the return policy
While on-line shoppers acknowledged that stores have made strides in making customer support services more accessible, nearly one-third of these shoppers said they were not easily able to find a company’s return policy on a given site. Additionally, once they located the policy, only 66 percent of respondents were satisfied with it.

3) Easy-to-use search capability
When shopping on-line, consumers want to be able to view merchandise in countless, innovative ways (e.g., price, material, brand, style, etc.). Currently, sites are not meeting these expectations:

- Only half (54 percent) of respondents found the sites easy to use for apparel purchases
- One-third (34 percent) reported difficulty completing their on-line apparel shopping objectives
- More than one in 10 (13 percent) found it very difficult to find and buy an apparel gift item

Further, consumers want Web site search engines prominently displayed on the homepage of each site – and want them to accelerate the shopping process by quickly finding specific items or brands. The research indicated the following:

To purchase two apparel gifts online, a consumer typically had to run through 15 to 39 (a mean of nearly 22) page views
On average, purchasing two apparel gifts online required consumers to spend between 5 and 15 (a mean of nearly 8) minutes online

4) Clearly posted sale prices
Consumers indicated that they wanted the sale prices listed clearly – and they were frustrated by having to “dig” for sale information. They also indicated they wanted the following pricing information clearly displayed on-line:

- Innovative pricing and purchase techniques, such as auctions
- Value clearly denoted – on-line retailers did not consistently facilitate price comparison by listing the old and new prices in the same area
- Offers of free shipping, regardless of the value of order

“While technology continues to play a growing role in consumers’ lives, the old adage still holds true: The customer is always right," said Jeff Luker, managing partner, Accenture Retail practice. “Successful retailers will need to look past functionality. To enhance revenue while creating unparalleled customer satisfaction on-line, they will have to innovate to stay a step ahead of consumers’ expectations.”

Growth of the Direct Marketing Industry Online
Research data collected in the second annual "The Direct Marketing Industry Online: Perspectives on 2001" shows that E-commerce revenues among direct marketers with offline brick-and-mortar operations are anticipated to grow by 136% while the rest of the Web is expanding at 115%. Conducted by Millard Group and ActivMedia Research and sponsored by The Direct Marketing Association, this year's study builds upon last year's findings and shows the trends that are emerging. It also profiles the most, and least, profitable firms online, and provides documentation of the strategies that make online/offline direct marketers successful.

Research analysts believe that because direct marketers carefully planned their Web expansion strategies, they are more likely than dot.coms to be successful. Currently, one-third (36%) of all direct marketers online are profitable, and this proportion is expected to rise significantly over the coming two years.

The study was created to provide direct marketers with factual data about the impact of online marketing on the traditional direct marketing industry. It contains data and analysis on topics such as revenues, profits and estimated growth, web transactions, e-commerce, Web site characteristics, Web site security and fraud, advertising and promotion, and firmographics. New in this year's report are backend operations and fulfillment issues.

"The Direct Marketing Industry Online: Perspectives on 2001 demonstrates how the Internet is extending the sales base for direct marketers in terms of reaching new customers" stated Ben Perez, President of Millard Group. "Rather than cannibalizing sales from offline channels, direct-to-consumer direct marketers who sell online are finding that the majority of their site visitors and buyers are brand new customers, not just offline customers buying through a new channel. Furthermore, most direct marketers are expanding their sales reach geographically when they enter the e-commerce marketplace, both domestically and abroad" continued Perez.

Strategies for attaining profitability are described in detail in the study. For example, the survey results identify the relationship between consumer loyalty and profitability. "Sites that attract the most traffic are not necessarily the most profitable" emphasized Perez. "As is often the case in the offline arena, problem resolution is key to building online loyalty. Sites that have occasion for customers to interact with customer service personnel have lower incidence of fraud and other sales losses. Good customer care creates a happier, more loyal online customer".

H.R. Wientzen, President and CEO of the Direct Marketing Association, stated that, "The Web "gold rush" appears to be over with direct and interactive marketers now stepping back to refocus on their site development and promotional/marketing practices - focusing more closely on ROI. Going forward, direct marketing companies face several key challenges. Direct/interactive marketers are eager to explore how all aspects of integration between traditional direct channels and the Internet will strengthen their communications with customers, vendors, shareholders and other key constituencies. The findings in this report reinforce the importance of the convergence of the proven direct marketing business models and interactive technologies."