SAN JOSE, CA – Last week’s Internet Retailer Conference and Exhibition addressed the growing business of online retailing and highlighted the benefits of a multichannel approach, as well as the power of online video for retail.
The show drew about 4,000 vendors, retailers and marketers to the McEnery Convention Center in San Jose to discuss new ideas in e-commerce. Brian Osborne, Walmart.com’s vice president of marketing, spoke about the retail giant’s strategy to grow its business through online and offline programs.
“We want to be the leader in multichannel retailing, to make it easier for customers to shop at Walmart.com or in one of our stores,” Mr. Osborne said. “We have 130 million customers in our physical stores per week. Of this population, 75 percent are online, 49 percent have visited Walmart.com and 39 percent have made a purchase on Walmart.com. So there is plenty of untapped potential.”
The presentation looked at three strategies that Walmart.com is using to innovate its online approach to retail. These include the redesign of Walmart.com, the debut of the site-to-store program in which customers can order a product online to be delivered to a store and the new in-store availability feature that lets customers on Walmart.com check on the inventory of products in a local store. All of these tactics are part of Wal-Mart’s plan to acquire new customers and retain existing ones by making the shopping experience more seamless.
Outdoor retailer REI also stressed the importance of a multichannel approach in its overall business. Like Wal-Mart, REI has used online selling with free in-store pickup as a way to drive business in both channels.
“Forty percent of our online orders were picked up in store,” said Brad Brown, vice president of e-commerce and Web strategy at REI. “And of those customers who picked up orders, 50 percent of them bought something else when they visited the store,” “We experienced $15 million in incremental sales in 2006.”
According to Mr. Brown, encouraging consumers to come into the store from the Web site is an area for potential growth. In 2006, a customer’s average purchase from an online-only customer was $168. A retail-only customer spent an average of $304 in the same year. While the multichannel shopper’s spend averaged at $730.
In fact, Kurt Peters, editor-in-chief of Internet Retailer Magazine, challenged the concept of success with mutiple channels, saying the real strength was in adding e-commerce.
“The whole notion of a multichannel retailer is an outmoded concept,” Mr. Peters said. “Nowadays you have to be online to compete. The Internet is powering the reinvention of retailing.”
In a keynote, he quoted a Jupiter Research study that predicted that online retail would reach a trillion dollars in sales by 2012.
Last week’s event also drew leaders from online-centric stores like NetFlix, 1-800-flowers and Blendtec.com to present their online strategies -all of which are embracing the online video trend.
Blendtec, a relatively unknown blender manufacturer with a direct business, used YouTube to boost its brand awareness. In his presentation, “Blending Video and E-commerce,” Tom Dickson, CEO of Blendtec, discussed its “Will it blend?” campaign. The campaign tests its products ability to liquefy specific products not meant for a blender.
“It’s got to be entertaining and worth watching,” Mr. Dickson said. “It’s sponsored by us, the manufacturer, and based on real people. The interactivity is incredible, we have hundreds of thousands of people suggesting us things to blend.”
Netflix is tackling the emerging online video space by offering its traditional DVD by mail offering and including a download feature within one package. The new service lets users watch movies that are streamed over the Internet, with a time limit option so users can watch a film for 15 minutes, and decide whether or not to watch the whole thing. This addresses the shifting consumption patterns that online video has seen the rise of in trends like video snacking.
Partnerships announced at the show include e-commerce services firm Accretive Commerce’s new partnerships with online merchandising services firm Allurent, imaging services firm LiquidPixels, and global payment provider CyberSource. These new alliances speak to the growing trend in a one-stop-shop for retailers looking to fulfill their back end e-commerce needs.
The traffic on the floor was steady and smooth, according to most of the exhibitors.
Maggie Rabe, marketing coordinator at Junction Solutions, Lincolnshire, IL, said that she was busy demonstrating the firm’s e-commerce platform and point-of-sale systems.
Compared with Shop.org and e-Tail, Internet Retailer drew a bigger crowd, according to attendees.
“This show is bigger than e-Tail and Shop.org, but those shows do tend to attract bigger named retailers,” said Paul Rosenblum, vice president of marketing at MyBuys, Redwood City, CA. “This show draws more smaller to mid-sized retailers, but more of them come out.”