Differing approaches to the use of the Internet in retail came to fore Friday at the National Retail Federation's Shop.org annual conference in a panel discussion between senior executives from Lands' End and Amazon.com.
Lands' End views the Internet as a place to visit, place an order and exit quickly, Bill Bass, senior vice president of e-commerce and international, told a room full of e-commerce and marketing executives.
“It's a pretty sad life if you're coming to Lands' End for entertainment,” he said.
Meanwhile, Neil Roseman, vice president of retail technologies at Amazon, had a diametrical view.
“It's the whole experience,” he said about his company's approach to wooing customers online.
Amazon's Gold Box feature is a prime example, he said. Introduced last year, the Gold Box is meant to engender loyalty with shoppers via promotions and offers.
Of course, it is not necessary that all recommendations are pertinent. Bass, who admits shopping extensively online, said he gets a turkey fryer offer in his Gold Box. And Roseman cannot figure out why he gets an offer for a vibrating mole chaser.
For Lands' End, the biggest innovation this year was allowing consumers to order custom clothes. The feature now accounts for 40 percent of its sales where implemented.
There were boomers, too.
Amazon's Purchase Circles, which disclosed which type of books was bought by organizations, was mothballed after corporate outcry. And Lands' End discontinued its body-scanning feature after only 3,000 people registered to have their measurements recorded. About 100,000 people visit landsend.com each day.
Moderator Raymond Burke, E.W. Kelley professor of business administration at Indiana University's Kelley School of Business, sided with Roseman's experiential approach. Companies creating virtual games are getting it right, he said, citing the James Bond movie “GoldenEye.” It cost $60 million to produce and made $120 million at the box office. By contrast, the “GoldenEye” video game cost only $4 million, but raked in $230 million in sales.
“You create experiences, you create customers,” Burke said. “I think we're held back [by the slow proliferation of] broadband and also by creativity.”
A key challenge many retailers face is finding out when online innovations are successful. Live customer assistance online was pioneered three years ago by Lands' End and it still enjoys a great degree of success. But for every innovation, Lands' End has to contend with its old legacy systems based on the catalog. That is not a problem for Amazon, which started off with a clean slate.
So, the challenge is stitching together those innovations, Bass said. At Lands' End the key measures are conversion rate and average order value.
Amazon is on the same page on that issue.
“One thing we've tried to develop is a culture of measurement,” Roseman said.
Amazon encourages company employees to innovate and offers an internal award for the best innovators. Amazon also is big on testing new features on multiple sets of customers. Lands' End does not believe in that. That company's employees are sufficiently aware of trends in direct and Internet retailing and marketing.
“If you're living in this space, you're not going to be too far off if you're going with your gut,” Bass said.
Which leads to other issues: How much time to give for coming up with an idea and how long before you pull the plug on a program? For Amazon, it could range from a few weeks to up to a year. And sometimes most innovations don't start out that way, Roseman said. The famous Amazon associates program was born in this inadvertent manner.
Again, Lands' End does not have the luxury of the time, since any innovation has high costs of implementation. So the company does not like dillydallying.
“If a project takes six months, then you diffuse it too much,” Bass said. “I prefer three months.”
Ultimately, it boils down to cultures. Seattle-based Amazon thrives on a software culture encouraged by founder Jeff Bezos. This includes pizzas and soda, Roseman said.
“Most young software developers don't have a life,” he said. “You want to get them young, keep them young and make the exits hard to find.”
For Lands' End, it's another story. The company is based in Dodgeville, WI — cheese and dairy country.
“It's a little different for us,” Bass said. “I've got to go out and milk the cows.”