Online Sales CONTINUE TO CLIMB

Mar 01, 2008 10:30 PM  By

Overall sales may be sluggish for many marketers, thanks to the lackluster economy, but e-commerce sales are on the rise. Sixty percent of the respondents to Multichannel Merchant’s Benchmark Report on E-commerce say that their online sales volume has increased during the past 12 months.

Just 8% of respondents say their online sales decreased, while a quarter of the respondents say their Web sales had stayed about the same in the past year. (Another 8% say they don’t know if or how online sales had changed.)

Among the survey participants, nearly half of sales come from the Web: An estimated mean 47.8% of direct sales came from the Web. That’s up from 2006 — the last time we conducted the survey — when a mean 43.4% of direct sales were from the Internet. In 2005, a mean 32.5% of direct sales were from the Web.

But since you have to spend money to make money, Website expenditures continue to climb. Fifty-five percent of respondents say that Website costs now account for a greater percentage of their total budget, vs. 44% in 2006. Conversely, 42% this year say that the percentage held steady, compared to 54% in 2006.

ANALYZE THIS

Nearly 40% of this year’s respondents say they use site session/clickstream analysis. Another 25% aren’t using it, but say they are considering it. Twenty percent say they have no plans to use the technology, and 15% don’t know if their company is using it.

Why don’t more merchants use site session/clickstream analysis? The plurality (36%) say the reason is that they don’t have time, while 32% say they don’t understand how it works. A quarter of the respondents say the analysis is too expensive. Hybrid catalogers — that sell to both businesses and consumers — were more likely to use it, as 47% of these respondents say they did, vs. 43% of b-to-b merchants and 37% of consumer marketers.

Among the respondents using site session analysis, half say they have a user registration function on their Websites, but registration is optional; while 29% say they require users to register to order.

Making people register to place an order is a good way to lose the sale. Surprisingly, just 27% say they have a guest checkout option, although 37% say they are considering it.

It’s no surprise, however, that 81% of respondents who collect data from buyer registrations use it to e-mail customers about special offers. Forty-five percent say they add registrants to their print catalog mailing list, and 22% say they use the data to customize the site according to past purchases.

Aside from collecting the name, street address, and e-mail address during buyer registrations, most respondents (72%) also get the registrant’s phone number. B-to-b respondents are more likely to collect phone numbers, as 79% say they did, vs. 63% of the consumer respondents.

INTEGRATION ISSUES

Given the industry lip service paid to seamless integration of channels, it’s a bit of a shock that the percentage of respondents who have their e-commerce order databases directly linked to a catalog fulfillment system slipped. It was 58% in 2006 and 43% in 2008.

While 20% of respondents say they are considering integrating e-commerce with the catalog system, 23% say they have no plans to link it. But since 14% say they don’t know if their e-commerce order databases are linked to a catalog system, more respondents could be leaning toward linking than it seems.

Smaller companies — respondents with less than $10 million in sales — were less likely to link systems. Just 36% say their e-commerce order databases are directly linked to a catalog fulfillment system.

SHOW ME THE MONEY

Among the multichannel merchants surveyed, 28% say that their print catalog orders are larger, 14% say online orders are larger, and 13% say the order sizes are about the same size. Nineteen percent of the respondents say they offer only online catalog sales, and 26% say they do not know how sales differ.

Sadly, most (63%) still don’t know their approximate conversion rate of site visitors to buyers. But at least this is a slight improvement over the 68% who didn’t know their conversion rate in 2006. Among those who did, 19% say their conversion rate was 1%-3%.

Most respondents this year — 67% — also don’t know what percentage of online buyers also buy from the company’s other channels. No wonder many struggle with matchbacks.

WHO’S IN CHARGE HERE?

As for who’s running the Website, the marketing department remains in charge of online. Forty-four percent of 2008 respondents say that marketing owns the Website — up slightly from 42% in 2006. And fewer respondents this year — 26% vs. 32% in 2006 — say that they have a Web/online department overseeing the company’s site.

When it comes to design, most merchants are doing it themselves. Just over half (51%) of respondents say an inhouse staff designed their online catalog, while 37% created their sites using a combination of inhouse and outsourced expertise. (Four percent did not know who designed their Web catalog.)

Consumer respondents (56%) were more likely design Web catalogs inhouse, compared to 42% of the business-to-business marketers and 47% of hybrid catalogers who sell to both.

Who is responsible for managing your online catalog?
Marketing department 44%
Web/online department 26%
Other 9%
Creative department 7%
IS/IT department 5%
Do not know 5%
Outsourced 3%
Production department 2%
What do you use site/session analysis for?
Monitor search engine marketing/optimization effectiveness 88%
Monitor site abandonment 76%
Improve merchandising 71%
Monitor cart abandonment 68%
Gauge conversion rates 61%
Determine most effective referral sites 54%
Monitor affiliate programs 37%
Other 5%
Which of the following functions are performed by outside companies?
Hosting server 58%
Site or other e-commerce analytics 42%
Search engine optimization 29%
Affiliate marketing 24%
All of the above functions are handled inhouse 22%
Back-end operations/fulfillment 20%
Maintenance/page updates 15%
Advertising on your site 11%
Electronic ordering 11%
Other 3%
Do not know 3%
How respondents promote online catalogs
E-mail 81%
Search engines 62%
Promotions/URL in catalogs 50%
Print advertising 38%
Affiliate programs 37%
Banner ads on other Websites 34%
Links with suppliers 31%
Direct mail (other than catalogs) 28%
Links on portals or other online malls 26%
Phone reps 26%
Insert media 22%
Point of purchase/in-store promotions 18%
Other 8%
Do not know 7%
Radio 6%
Television 5%

METHODOLOGY

On Jan. 8, Penton Media e-mailed 11,458 subscribers of Multichannel Merchant an invitation to an online survey. The e-mail contained an embedded URL linking the recipients to the Website where the survey was located. Respondents were offered the opportunity to be entered into a drawing for one of four $50 Amazon.com gift certificates. Follow-up e-mails were sent to nonrespondents on Jan. 15 and Jan. 17. Penton Media received 135 completed surveys; 1,132 of the outbound e-mails were undeliverable; 3 surveys were incomplete. The effective response rate was 1.3%.