This article by Stuart L. Adams, Jr. appeared in the 

Louisville Computer News

December 2000

Christmas Catalogs

(If E-commerce is working, why is the mailman bringing me so many catalogs?)

by Stuart Adams

    This year, as we approach the Christmas holiday season, it seems like there are more catalogs in my mailbox at home and at the office than there ever were before. I have to wonder how this can be, if everyone is shopping online.

    One answer may have come in the form of a recent joint study conducted by the National Retail Federation, J. C. Williams Group and BizRate.com. The report, Channel Surfing: Measuring Multi-Channel Shopping (available for a price at www.bizrate.com), and as reported in Infoworld by "Net Prophet" Jessica Davis, indicates that "...a retailer's multi-channel shoppers purchase more frequently, spend more per transaction, and, as a result spend more annually than its single channel shoppers do."

    Ms. Davis' column remarked that she had gotten catalogs from Amazon.com and eToys.com. These were not the normal HTML messages we've gotten used to receiving from anyone we ever bought a product from online. These were actually paper catalogs. Kind of brings back nostalgic visions of Jimmy Stewart's movie It's a Wonderful Life, doesn't it?

Multi-channel Marketing

    Apparently these two holiday sales giants read the Channel Surfing report, which indicates that 34% of shoppers bought something during a visit to the physical store which they had first seen at the retailer's web site. The study further indicated that 51% of shoppers bought something online which they had first seen in a paper catalog, while 27% bought something online which they had first seen in the physical store. Those who shop at the physical store, after having visited the web site of the retailer, spend 33% more at the physical store on an annual basis.

    Of particular note is the report's finding that online shoppers who also make catalog purchases will spend 36% more on the web site than those who only buy through the site without use of the catalog. Although the catalogs Ms. Davis received apparently did not provide the normal non-e-tailer toll free number, that may change next year.

    It looks like the clear lesson of the study is that you sell much more to your customers if you sell to them through multiple channels. The degree of detail, the graphics, the arrangement of products, etc. all appear to play a factor in making the item stick in the customer's mind. As a law student, I was taught that, to make sure you got your point across to a judge or jury, you should make the point three times. That's fairly easy in a trial setting where the procedure typically is to have an opening statement, where you introduce the case to the jury (which is, incidentally were many legal scholars think you typically win your case), followed by the trial, where you actually put on the proof by witnesses and documents; followed by the closing arguments, where you again summarize what you talked about in your opening statement and, hopefully, actually produced as proof during the body of the trial.

    Not unlike corroboration of a witness, when another witness testifies to the same thing, apparently this Channel Surfing report provides support for the theory that customers must often be seduced by multiple angles on the same product. I know that I get huge piles of catalogs, both online and in the mail. Many of the products are offered by several retailers. Some contain exactly the same picture, description and price. Often, however, this first view of a product will make me curious about it but not provide enough information to convince me I must buy it.

    Often, I will put a sticky note on the page of the catalog I get and visit the web site to see if I can get more details. I may also use a search engine to see if there are competing products out there, a skill I have obviously learned only in the last few years. I now know that there are many sites "out there" where you can plug in the name of a product, vendor name or other specifications and get comparative prices, as well as customer reviews and other information on almost anything. Typically, you can find all but the newest and hottest items at a discount from prices in stores or in catalogs. For consumer electronics and computer accessories, for instance you might go to www.pricewatch or www.pricescan.com and get several pages of vendors selling the same item at drastically different prices.

    According to Forrester Research, North Americans spent $17 billion shopping on the Internet last year and $38 billion is anticipated this year. Just because you see your competitors out there on the web while you struggle, don't think all is lost. A recent article in eWeek (www.eWeek.com) highlighted the amazing online success of Stapes, Inc. The November 13, 2000 issue gives Staples the number one ranking in their FastTrack 500 list of most innovative e-businesses. Two years ago, Staples was not even "in the race." As the eWeek article points out:

"...if there's one lesson to be learned from the current hangover economy that's facing dot-coms, it's this: Being first isn't as important as showing up at the right time, with the right technology and the right business plan."

Channel Transparency

    There appear to be many lessons to be learned from the Staples example. Their competition seemed to be way ahead of them and well financed when Staples decided to enter the Internet commerce battle with giants, such as OfficeMax and Office Depot, Inc. The Framingham, Massachusetts company was no slouch either, of course, at an estimated $8.8 billion and 50,000 employees. Fortunately for it, the decision to go head-to-head came at a time when technology had made it easier to achieve what eWeek calls the "Holy Grail of click-and-mortar retailers: channel transparency."

    Staples executives anticipated they would get more of the "wallet" of their customers if their customers used all of the channels Staples was providing them. The supplies market has something on the order of a 10% growth rate. Staples beat that handily, after entering the e-commerce arena. Second quarter 2000 numbers show a 27% increase with estimates of an annual increase this year from $94 million to $350 million.

    eWeek used Gartner Group's Web Evaluation Tool to compare Staples to Office Depot, Corporate Express and U.S. Office Products. Although all of the companies scored well, Staples scored much higher overall. It's highest marks came in the areas of functionality, industry functionality and customer value.

    The Staples site had superior ratings in ability to personalize the shopping experience for individual customers and corporations alike, while providing clear, complete information on products offered, such as pricing and availability, product recommendations, cross-selling and upselling. The Staples site, perhaps rivaling the Amazon.com "one click" shopping setup, provides a shopping cart which stays with the customer while they browse different sections of the site. Staples also offers multiple payment options and a clear process to place orders. They offer to send you e-mail reminders of items you buy periodically, such a copier toner cartridges or copy paper and have a couple of varieties of "favorites" such as frequently ordered types of items and even favorite "aisles" you shop in. This, of course, would be the bleeding edge early adapter aisle for me.

    Key points in the success of the Staples site:

  • Search engine that is more useful than normal, grouping hits into categories

  • Shopping cart that stays with the shopper anywhere on the site

  • User-defined favorite items list for quick, frequent repeat ordering

  • Smooth and consistent navigation

  • Consistent quality of information

  • Single repository of all customer information so anyone in the organization can see data on customers, no matter how they shopped at Staples

    Staples founder, Thomas Stemberg defends the company's stock drop to a 52 week low October, predicting that the company's web business will be profitable by the end of 2001, ahead of schedule. The company actually has several web sites, to further personalize and speed up the customer's shopping experience. It maintains Staples.com for the individual small shopper. It also has StaplesLinkPlus.com for midsized companies which can aggregate purchases to be eligible of discounts. It has StaplesLink.com, where large companies can use procurement platforms with machine to machine procurement. It uses Quill.com for the Quill catalog business. In Canada, it uses BusinessDepot.com in Canada, which has French and English capacity.

    The key in all these situations is to give the customers what they want as quickly and easily as possible. While some sites seem to focus more on glitz than good sense, the "best" sites always err on the side of customer usability. Perhaps the reigning expert on web customer usabity is Jakob Nielsen, whose book Designing Web Usability, has become a classic.

    Nielsen recently conducted a survey of twenty web sites in various categories, such as clothing, music and toys. In each category, a comparison was made between the most successful site and less successful competitors, to determine if there really was a connection between web site usability and success. The test had 222 design criteria elements. One of the most important of the criteria was the ability of e-customers to search it and make a purchase easily.

    Not too strangely, the Nielsen study found that Amazon.com had the best designed site, meeting 72% of the studyís criteria for user friendliness. The average score for other major best-selling sites was 51%. In the early days of e-commerce, nifty spinning icons and other "artistic" touches seemed to set the standard for web design. Now, however, functionality has become the key.

    The Internet has lost some of the early mystery. It has become more of an "appliance" which people rely upon for information. It is, essentially, an information machine. In that context, its primary purpose is to make information available on demand. Your job, in putting together a web site for your e-commerce enabled business, is to ensure that visitors to your site cannot help but get the information they are likely to be searching for. Hang the glitter on your tree, not on your web site, unless there is a direct correlation to the purpose of your business.© 2000 by Stuart Adams

    This is the 8th installment in the Authorís online book. Your comments and input would be appreciated in helping the Author make this an "organic book," which will continue to grow and adapt to change, just as any business itself must do. E-mail your comments and suggestions to the author at biz-law@juristechnology.com.