the e-tailing group & neustar webinar

Countdown to a Creative& Profitable Selling Season

August 17, 2010

15 years e-commerce consulting Author, It’s Just Shopping 50+ years traditional retail and

catalog experience Fortune 500 client projects

ranging from strategic planning, merchandising, marketing, to technology development and messaging

Cross-category projects spanning specialty retail to departments

Proprietary research studies on mystery shopping, merchandising and consumer behavior

The Voice of Cross-Channel MerchandisingStraight talk from “in-the-trenches” online

merchandising experts

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Holiday Forecast-Cautious Optimism• Q1 ecommerce sales grew by 6%1 while forecasts suggest annual

growth of 10% a year through 2013 2

• US retail sales are only poised to see 3-4% gains3

• Consumers will still be frugal this holiday season so deal seekers will be on the prowl

• Christmas falls on a Saturday so retailers have 29 days to market post Thanksgiving

• Consumers shop across a range of retailers online from Amazon to Zappos so competition will remain fierce where multi-channel merchants will likely have an edge due to their significant investments

• Today’s consumers are increasingly choosing to both research and shop via the web so cross-channel investments will continue to pay off where mobile and social will begin to take hold

3

1) comScore 2)eMarketer 3)NRF

The primary reasons for shopping online are stillconvenience and savings

4

Q17

Saving time

Locating hard to find products

Avoid the crowds at the mall

Saving money

Greater selection

Shipping ease

Save on gas by not driving to the store

Finding more personalized gifts

Ability to purchase from recipients pre-established wish list

Online peer recommendations or reviews

85%

82%

82%

78%

77%

76%

60%

50%

40%

38%

88%

84%

83%

80%

83%

81%

74%

50%

37%

32%

Rate the reasons you buy gifts online from 1-5 with "5" being the most important reason and "1" the least important. (TOP 2 - VERY TO SOMEWHAT IMPORTANT)

20082009

Mindset of a Multichannel Shopper Study; 2009

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the e-tailing group 100 4Q09

1-800-flowers Diapers.com King Arthur Flour SephoraAeropostale Dick’s Sporting Goods Kohl’s Shop NBCAmazon .com Discovery Channel L.L. Bean Shop PBSAmerican Girl Drs Foster & Smith Lamps Plus Skecher’sApple Drugstore.com Lancôme USA SolutionsArmani Exchange eBags.com Lands’ End Sony StyleAveda EBGames Lego StaplesBare Necessities eToys Lowes SundanceBarnes & Noble Famous Footwear Macy’s TargetBass Pro Forever 21 MoMa The AvenueBath & Body Works Frontgate New Egg The Children’s PlaceBed Bath & Beyond Gaiam Nordstrom The Container StoreBEST BUY Gap Office Depot The Home DepotBlue Nile Gardener’s Supply Orvis Things RememberedBluefly Garnet Hill Overstock Toys ‘R UsBorders Giggle PetSmart Under ArmourBrooks Brothers Godiva Polo Urban OutfittersBrookstone Golfsmith Pottery Barn Victoria’s SecretBuy.com Green Mountain QVC Vitamin ShoppeCabela’s Harry & David Radio Shack Walgreen’sClinique HP Home & Home Office RedEnvelope Wal-MartCoach HSN REI Williams-SonomaCooking.com iRobot Road Runner Sports Wine.comCrate & Barrel J.Crew Saks Fifth Avenue ZalesCrutchfield JCPenney Sears Zappos

Employ Essentials

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• One-stop shopping for gift giving

• Price-point links

• Recipient segmentation

• Gift card touted as “the gift that always fits”

• Holiday delivery timing

Feature % Penetration EG100 4Q09 EG100 4Q08 EG100 4Q07

Gift Certificate/Card 90% 92% 95% Gift Center 87% 91% 91% Gift Message Available 74% 78% 69% Holiday Shipping Deadline 74% 89% 90%

Suggestively Sell Your Products &

Provide Promotional Offers To Close The Sale

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• Selection and value with, “Hundreds of gifts under $50!” messaging

• Gift card sweepstakes

• Free shipping designated on holiday décor and specified product

The Gift Card Should Keep on Giving

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• 90% of the EG100 currently making them available on their sites

• Consumers prefer choice relative to type and redemption option• 90% offer to mail the card• 60% offer digital delivery (unfortunately)

• Cross-channel redemption optimal so merchants should strive to accommodate both format and channel flexibility

Feature % Penetration EG100 4Q09 EG100 4Q08 EG100 4Q07

Gift Certificate/Card 90% 92% 95% Mailed Certificates 90%* 90%* 91%* Electronic Certificates 60%* 53%* 56%* Redeemable online 98%* 96%* 94%* Redeemable in store 91%* 85%* 91%* Ability to Personalize/Customize 19%* N/A N/A *Subset of 100 merchants N/A = not tracked in that survey edition

Personalize and Customize Gift Cards

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• An array of engaging house designs available

• Design your own card

1 in 5 merchants offered custom capability in 2009

1/3 of consumers spent between $50 and $200 total on gift cards purchased online-BigResearch-4Q09

Enable Group Gifting

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• Best Buy gets creative with their Pitch In™ Card. It’s a hybrid between a gift card and a wish list that enables group gifting.

• Shoppers simply sign up for a free card

• Friends/family can add funds at any time

• Recipient can draw from for purchases on the site

Innovation via Mobile GiftCards and GiftCoins

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Target’s customers can take advantage of two more innovative gift card options:

• Mobile GiftCards- save their gift card to their phone to check balances and make in-store purchases

• GiftCoins in

denominations of $5 sold in-store only in bags of five for $25 making them ideal as “small gifts, rewards or prizes.”

Give Clear Directions for Wish List Use

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• One can quickly find, create or update a wish list

• Tips are wisely shared including cross-channel wish list creation capabilities

• Helpful links are merchandising-driven beginning with top sellers

• Subsequent options help find the right product by age and category

Relative to value ranking of website gifting features consumers gave wish lists 2nd billing behind only gift centers

4Q09 Mystery Shopping penetration up from 49% to 56%

Showcase Top Sellers & Top Rated

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Customer ratings/ reviews were the most important capability for retailers to have on their websites when it comes to selecting and purchasing product

PowerReviews/e-tailing group 2010 Social Shopping Study

Inspire with Creative Promotions

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• Out-of-the box thinking is mandatory to compete with the savviest of merchants

• Test and Tweak in the 4th Quarter to see what resonates with your customers

Feature or Functionality % Penetration EG100 4Q09 EG100 4Q08 EG 100 4Q07 Limited Hour Specials (Lunch Time, 4 Hour) 40% 42% 18% Internet Only Sales/Specials 24%* 19%* 23%* In-Store Only Sales/Specials 23%* N/A N/A Online Outlet/Clearance Area 83% 86% 72% Gift with Purchase 46% 44% 62% Sweepstakes/Contests 42% 43% 32% Other (PWP, Other Promotions) 36% 35% 26% Buy More/Save More 27% 20% N/A *Subset of 100 merchants N/A = not tracked in that survey edition

An Array of Promotional Tactics is Sure to Appeal

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Bath&BodyWorks : $10 and Under Stocking Stuffers + Santa’s Secret Sale

• 6 value-priced products with links to more

• Prime real estate devoted to holiday shipping cut-off dates

• Online only sale with rotating offers

• $3 shipping on orders of $50 or more

• Purchase-with-purchase

Daily Deals Generate Impulse Buying

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• Over a 4-day campaign Discovery Store’s home page presents 3 deals a day

• Sneak peak of tomorrow’s deals fosters return visits

• Floorline links facilitate easy shopping for holiday gifts

Buy More/Save More – In Time For Christmas

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• Bluefly: 12/19/09 email SAVE Up to 65% + $2 Two-Day Shipping – In Time for Christmas!

• Guaranteed delivery by Christmas

• 2-day shipping only $2.00

• Enticement of new designer shoes starting at 20% off

Optimize Outlets & Clearance Events

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• Frontgate: 12/11/09 email Save up to 50%: All New Holiday Reductions!

• Over 100 holiday items just added

• Reductions to 50%

• Organized by department

Insert MarketLive Logo

Free Shipping Likely to Be Shoppers Tactic of Choice

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Q13

Shipping charges are too high

Being in the stores is part of the holiday season and puts me in the spirit

I find it easier to research and compare products in physical stores than online and employees are available if I need assistance

I am not sure what I want to buy and browsing online is too difficult

I buy last minute so the web is not ideal for my shopping behavior

The products I want are typically not in-stock online

The sites do not give enough product information to make me feel comfortable buying online

Shopping in a store provides social opportunities (i.e. the ability to ask others around me for their opinion, etc.)

I prefer to pay cash

I don’t like giving my credit card information to retailers/brands online

I find it easier and more convenient to shop in a store during the holidays

62%

20%

16%

14%

13%

13%

10%

10%

8%

7%

7%

78%

16%

10%

12%

14%

7%

12%

6%

10%

10%

5%

Why don't you to plan to buy more online this holiday season?Check all that apply.

2008

2009

Mindset of a Multi-channel Shopper Study; 2009

Tout Free Shipping Benefits

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• Urban Outfitters Creative Free Shipping Email

• Free Returns and Exchanges highlighted

• Stocking Stuffer link for impulse buying

40% of 4Q09 EG100 merchants offered free shipping tying it to a dollar threshold (i.e. free shipping on orders over $100)

47% made that same offer based on a pre-designated product selection

Put a Promotional Calendar in Place Around Key Dates

• From Black Friday to Cyber Monday and post-Christmas have a calendar of promotions ready to put in to action

• Include promotions for early-bird selling through holiday clearance sales which are an important source of year-end traffic

• Early January is an opportune time to showcase new products in hopes of maintaining margin during this heavy markdown period

• Augment gifting tactics with targeted onsite placement during the fourth-quarter

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Date Day Nov 30Cyber Monday Dec 14Monday Nov 27Black Friday Dec 5 Tuesday Dec 7 Monday Dec16 Wednesday Big Research/Shop.org

4Q09 Top Revenue Days

Choose Visibility Tactics Based on the Importance of Gifting to Your Overall Business

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Visibility tactics can include any or all of the following:

• Gift certificate positioned in universal navigation and select other locations

• Top navigation link with holiday color or with holiday design treatment

• Recommendations of gift product, services or tools from the home page to the product page or via shopping cart

• .

After Early-bird October Tactics, Post-thanksgiving Cyber Monday Kicks Off The Online Season

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• Online-only exclusive deals

• Limited-time offers kick-off a 25-day customer communication program

• Traditional standards from Buy More/Save More to take an extra percentage off one’s total purchase

• Gift center access

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Reinforce Year-round OpportunitiesSecure visibility onsite via navigation and key page placement

Add Timely “Last Minute” Messaging from the Home Page to the Gift Center to Checkout

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• Lego’s gift center is a prime example of how to incorporate this information

• Holiday shipping cut-off dates top the page

• A holiday countdown re-enforces the urgency to buy now

• A gift card feature provides excellent suggestive selling for the undecided

Last MinuteSelling StrategiesDrive Revenues

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• Forever 21 aggregates value prices with gifts under $20

• Message to timely delivery

• Supported with Free standard shipping

• Free upgrade to expedited shipping when orders are placed by 12/21

Extend Shipper Options at the Last Minute

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• Crate & Barrel extends shipper options with a “2-day gift countdown”

• Free shipping, a gift card promotion, and a link to last minute gifts

• Holiday and gift card links are visible in seasonal colors

• Annual furniture clearance starting the day after Christmas noted

• Localized effort with closest store to encourage shoppers to visit before and after the holidays

Plant the Idea of Sending Gift Cards with

Reminders Throughout the Site and via Email

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• Crutchfield boldly expresses the need and the solution in this email sent on 12/23/09 with the subject line, “There’s still time: e-mail gift cards still available”

 • Execution is clear from the

headline “Need a present? Problem solved” Headline

• December 24th deadline for e-gift cards

• Card visual showing available denominations

• Express shipping cut-off dates accompany a link for last minute gifts

• Toll-free phone number for personal touch

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When In Doubt Drive Traffic In-store

Incentivize on total Purchase

Reinforce rewards

Highlight social links

42% of US retail sales were accounted for or influenced by the web

Forrester Research

Include Merchandising in Post-Order Communications To Boost Year-End Sales

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• HSN’s comprehensive onsite order confirmation includes a right-hand column with three product suggestions based on “customers who bought this item also bought…”

 • At the bottom of the page 3 banners

in holiday red/green offer 3 more suggestive selling messages to promote a charity tie-in, gift cards, and a contest.

 

Circle Back with Post-Christmas Cheer

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• Reminding recipients to use gift cards particularly post-Christmas

Customer Service Should be a Differentiator

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• Strong customer service starts with onsite tools that can be self-service in nature starting with comprehensive contact information coupled with complete details delineated by FAQs

• Ensure that your customer service representatives respond swiftly to all email queries and are well trained in both product knowledge and corporate protocol

• Customers have heightened expectations that often stem from last minute

purchasing; communicate quickly and clearly when out-of-stock situations arise

• Deliver in a timely fashion; 4Q09 delivery time on orders placed via standard delivery was 4.05 days and sophisticated sellers will push this time

Insert MarketLive Logo

Customer assistance “top 2 ratings” for importance whenbuying gifts online find that accessible contact information

(ideally toll free) and access to one’s cart at all timessmooth shopping experiences

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Q20

Accessible contact information (phone, email)

Perpetual Shopping Cart (ability to add an item to your cart or view cart contents without leaving the page that you are on)

800 or toll-free telephone #

Click to Chat (live text chat help available)

Click to Call (live phone help available)

70%

66%

65%

45%

41%

81%

72%

75%

48%

44%

Thinking about a website's customer assistance, rate each feature from 1-5 with "5" being the most important and "1" the least important when buying gifts online.

(TOP 2 – VERY TO SOMEWHAT IMPORTANT)

2008 2009

Supply a stellar service destination

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Marry Customer Service & Merchandising

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• Williams-Sonoma’s order confirmation

• Clear links to track one’s order

• Visible 800#

• Customer service hours of operation

• All occasion Gift Card touted

• What’s New in Store drives cross-channel traffic and preserves margin

the e-tailing group Holiday Readiness Checklist

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1. Review your current 4Q plan including performance metrics from last holiday season2. Brainstorm with your entire team and re-prioritize your promotions and gifting

strategies based on current business trends3. Get creative developing compelling tactics that inspire customers to spend freely4. Build-out a calendar that includes all key selling dates and associated merchandising

strategies from early-bird to post-holiday5. Evaluate all potential marketing tools taking advantage of traditional tactics including

email to more forward thinking social strategies that foster reach6. Test tactics early in order to revisit as the season swings into full gear7. Focus on having products in-stock and when that is not possible communicate with

customers about back-order status 8. Institute and/or upgrade your gift card offerings to ideally offer them electronically as

well as via mail with redemption in all selling channels9. Assess if wish list functionality is appropriate for your site and your customers

10.Make delivering best-in-class customer service a priority year-round 

Thank You

• Lauren Freedman• President, the e-tailing

group• LF@e-tailing.com• 773-975-7280