E-COMMERCE

Remember those fears that e-commerce would cannibalize other channels? Remember how companies siloed the running of their Websites, to the point of even spinning off their online divisions as stand-alone companies? For the most part, that’s all such fears and practices are — memories. As Multichannel Merchant’s exclusive Benchmark Report on E-commerce makes clear, the Web complements, rather than competes with, a company’s other marketing and sales channels. Case in point: Fewer than 23% of respondents have separate online and catalog divisions, compared with nearly 31% of last year’s survey participants. What’s more, the majority of respondents — 66% — offer the same pricing and promotions across all channels.

The size of the matter

Proof that the Internet is far from a mature channel: The vast majority of respondents reported a year-over-year increase in Web sales. And company size wasn’t much of a factor here: Of the respondents from the smallest companies, those with less than $10 million in annual sales, 84% reported an increase in online sales; so did 86% of those from the largest companies (those with annual revenue of more than $50 million) and 91% from the midsize merchants (those with sales of $10 million-$49.9 million).

Size does make a difference elsewhere, though. Take the use of analytic tools. Seventy-two percent of respondents from the largest companies said they used site/session analysis, compared with 43% of those from the smallest merchants and 64% of those from the midsize companies.

Likewise, only 25% of the smallest merchants had their e-commerce order database directly linked to their catalog fulfillment system. Among the largest companies, 62% did.

And as you’d expect, the smaller companies spent less — considerably less — money to maintain their Websites. The smallest merchants spent a mean $43,955 a year on site maintenance, whereas the largest companies invested a mean $321,250 annually. (Those in the middle spent a mean $181,071).

For both the largest and the smallest companies, however, the mean amount spent on site maintenance this year was less than that spent among last year’s participants. The smallest companies in last year’s survey had spent 17% more, or a mean $53,204. The largest companies last year had spent a mean $362,500, or 11% more. This year’s midsize participants outspent last year’s, however, by roughly 5%.

The onsite features offered vary somewhat by company size as well. While 70% of the largest companies offered online order tracking, only 35% of the smallest did. Likewise, only 26% of the smallest companies but 57% of the largest provided a catalog quick order option.

Interestingly, there were several onsite features that the midsize respondents were more apt to offer than their larger participants. Catalog quick order was one of them: 70% of the midsize participants offered it. Likewise, 96% of the midsize companies provided e-mail confirmation of orders, compared with 80% of the larger respondents and 75% of the smaller. And whereas 70% of the largest merchants offered automatic calculation of sales tax and shipping and handling on their Websites, 74% of the midsize companies did; among the smallest marketers, that percentage declined to 61%.

Hitting the target

Sometimes target market is as much of — if not more than — a factor in discrepancies regarding Web practices. Take the methods used to promote the Website. Consumer marketers were more than twice as likely as business-to-business marketers to participate in affiliate programs: 34% of the consumer merchants but only 14% of the b-to-bers used them. While 78% of respondents from consumer catalogs promoted their site via e-mail, just 50% of the b-to-b respondents did. And more than two-thirds (69%) of the consumer companies took advantage of search engine marketing, whereas fewer than half (42%) of the b-to-b participants did.

On the other hand, b-to-b respondents were far more likely to offer the same pricing and promotions across all channels than their consumer counterparts. Eighty-one percent of b-to-b merchants adhered to channel consistency, compared with 64% of consumer respondents.

Companies selling to businesses were also much more likely to have higher average order values from print catalog buyers than from Website orders. Among the b-to-b participants with both print and online catalogs, a full three-quarters said that their print catalog orders were larger; only 4% reported larger online orders. But among the consumer marketers, only 40% reported that their print catalog orders had a higher average value — the same percentage as said that their Web order sizes were about the same as their print order sizes.

Then again, only 78% of the b-to-b marketers said they offered secure socket connections for online credit-card ordering, compared with 94% of the consumer merchants. And whereas just 3% of the consumer merchants said they didn’t accept online orders, among the b-to-b marketers that rose to 19%.

Methodology

On Feb. 1, Primedia Business e-mailed 3,642 subscribers of Multichannel Merchant (then known as Catalog Age) selected on an nth-name basis, 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 a chance to be entered into a drawing for one of four $50 Amazon gift certificates. A follow-up e-mail was sent on Feb. 8. A second follow-up was sent on Feb. 15. By Feb. 28, Primedia Business had received 148 completed surveys; 592 of the outbound e-mails were undeliverable; and three surveys were incomplete. The effective response rate was 4.9%.

Mean annual Website maintenance costs (includes staff, promotions, order fulfillment)

Consumer marketers $136,272

B-to-b marketers $129,015

Marketers with sales of less than $10 million $43,955

Marketers with sales of $10 million-$49.9 million $181,071

Marketers with sales of at least $50 million $321,250

Median percentage of total budget spent on Website

Consumer marketers 4.8%

B-to-b marketers 5.6%

Marketers with sales of less than $10 million 4.7%

Marketers with sales of $10 million-$49.9 million NA

Marketers with sales of at least $50 million 7.0%

Pricing and promotions offered across channels
Consumer Discounts to customers who purchase online 14%
Free shipping, gifts, or other promotions to online buyers 20%
Same pricing and promotions across channels 64%
Other 2%
B-to-B Discounts to customers who purchase online 9%
Free shipping, gifts, or other promotions to online buyers 6%
Same pricing and promotions across channels 81%
Other 3%
Totals may not equal 100% due to rounding.

Percentage that spend no more than $5,000 on site maintenance

Sales of less than $10 million 33%

Sales of $10 million-$49.9 million 5%

Sales of at least $50 million 0

Percentage that outsource Web management functions

Hosting server 65%

Search engine optimization 31%

Maintenance/page updates 18%

Affiliate marketing 16%

Back-end operations 13%

Online ordering 11%

Advertising on the site 11%

All of the above 23%

Mean percentage of direct (non-store) sales that come from Internet

Consumer marketers 36.4%

B-to-b marketers 24.3%

Marketers with sales of less than $10 million 36.5%

Marketers with sales of $10 million-$49.9 million 26.8%

Marketers with sales of at least $50 million 31.4%

Who has ultimate responsibility for managing the Website

Marketing department 51%

Web department 17%

Creative department 12%

MIS 6%

Production department 2%

Outsourced 3%

Other 10%

Total exceeds 100% due to rounding.

Interested in the complete results from Multichannel Merchant’s exclusive Benchmark Report on E-commerce? To purchase the full study, go to www.MultichannelMerchant.com, or contact Lynn Adelmund 913-967-1891; ladelmund@primediabusiness.com.

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