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Online sales rose 18% in Q1 over last year?
69% of households have made an online purchase?
Just in time for the planning season, "The State of Retailing Online 8.0: Executive Summary Report" is here to help you benchmark your online retail success. Visit www.forrester.com/SORO for more information. Forrester clients are eligible for a discount on the "Executive Summary Report" and its companion piece, "Performance Benchmarks Report," slated for release in mid-June.
How Can Firms Make Customers Front And Center Of Their Innovations?
Christine Spivey Overby and Navi Radjou
June 27, 2005, 1-2 p.m. Eastern time
Web Analytics Go Cross-Channel
Bob Chatham
June 28, 2005, 11 a.m.-12 p.m. Eastern time
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Forget spring; it's baby season. The stork made a heck of a lot of stops this year, including Forrester's own retail colleague Sharyn Leaver (welcome Maggie!). In honor of Maggie's birth -- and many other friends' babies -- my First Look this month focuses on the parallels between infants and online shoppers. Sound ridiculous? Follow me, I promise I'll make it work.
Any new parent knows the three S's of a newborn -- they're not formalized in a book anywhere, but parents learn them fast. There are three S's of online shoppers as well, and retailers should get familiar with them if they want to grow sales as the demographics and behaviors of online shoppers develop and change.
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Swaddling. We do everything we can to mimic the comfort of babies' time in the womb: We swaddle them up like tacos and give them teddy bears with heartbeats. It turns out that new Web buyers -- folks who have been shopping online for less than a year -- have their own version of the womb when it comes to shopping: the store. When they leave it to shop, they want to be reminded of its safety and comfort, and they value features and functions that swaddle them by mimicking the in-store experience. Web buyers show a surprising interest in newer merchandising tools like product videos and personalized content that help them get over tangibility issues. They also want the advice of their shopping partner or friendly in-store clerk: More than 40% of new Web buyers find product and user reviews important. Most retailers haven't yet invested in the store swaddle: Fewer than 30% offer any of these comforting features on their sites, according to "The State of Retailing Online 8.0."
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Support. Watching their newborn's neck flop freely, every new parent knows to support the head. Online shoppers are looking for their own cradling arm in the form of service -- and for the most part they're not delighted by what they get. Fewer than half of online shoppers who used email customer service were satisfied with their experiences. And retail sites still fall short in providing contextual help throughout the buying process. In an audit of the top five discounter sites, we found that many fail to provide basic explanations for questions like, "Why do you need my email address?" or "When will my items arrive?" Online shoppers' proverbial necks are unsupported, leaving them skeptical of whether the retailer will follow through on its delivery or personal information security promises.
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Stubbornness. Babies learn quickly that screaming elicits a desired response -- food, a diaper change, or what a good friend of mine dubbed the maternity ward 500, a bouncing walk around the hospital floor. Try sticking a pacifier in a hungry baby's mouth: It just gets angrier -- a big rookie mistake. The nearly 30% of online consumers who have still not purchased online behave the same way. Although retailers stick security guarantees on their sites as pacifiers, 62% of these holdouts say that they still don't want to give out personal financial information online. Guarantees and even offline campaigns that hype online shopping safety won't stop the tantrum: It will take a new tack to get these folks over the online buying hump. Alternative payment methods like "Bill Me Later" and PayPal will help, as will participation in the "Verified By Visa" program.
Like babies, this newer generation of online shoppers will bring good new challenges and rewards to retailers. The trouble is, they're not hooked on online shopping like early adopters were, and tossing free shipping offers at them won't pacify them. The good news is that the challenges ahead for retailers are a lot like those first weeks of a newborn's life: frenzied, stressful, yet rewarding. I just hope that you get a little more sleep than I did during my son's first year.
Kind regards,

Carrie Johnson
Principal Analyst, Retail
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