Amid Net losses, e-tailers eke out positive results

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What makes a good e-tail site?

Let's ignore stock price. E-tailers are on Wall Street's clearance rack, with the field's best seller -- -- discounted to the price it traded at before its stock rocketed in the e-tail craze that started in late '98.

But e-tail is not dead. Consumers are buying; the category is real; some outfits -- pure plays and bricks-and-clicks -- will figure out how to make money.

So suspend reality for a moment. Forget the financials and instead look at what smart merchants are doing to take care of customers.

In retailing, a good e-marketer must first be a great merchant. Smart sites give customers what they want in an easily navigated site that's rich with content -- but not burdened with heavy graphics that overwhelm dial-up connections. The sites offer what surveys of customers say they are seeking and are constantly updated with new products, information and design to reflect customers' changing needs.


Creating the right mix of products, content and marketing messages can be a challenge. But those are among the best practices employed by the leading e-tailers, says Rebecca Nidositko, senior analyst-online retail strategies group for Yankee Group, a Boston-based consultancy.

The balanced presentation includes quick downloads, useful content and easy navigation luring new and existing online viewers and customers alike, Ms. Nidositko says. "Whatever you're using has to total up to shopping experience excellence and create a more loyal customer base from the get-go," Ms. Nidositko says.

For both pure-play e-tailers and established retailers going online, the goal is to develop customers, brand recognition and brand integrity, says Lee Eisenberg, exec VP-creative director with Lands' End, which headed online in 1995 and did $138 million in online sales last year. That's 10.4% of total sales.

"Customers prefer the brand to be a very reliable brand with a great deal of product and service integrity," says Mr. Eisenberg, a former editor at Time.

What follows are best practices of online sellers. While each example highlights one practice, many smart e-sellers employ all of them.

Translate a catalog into an online experience

Thirty-seven years after opening a retail store, 25 years after its first catalog, five years after debuting its Web site, apparel direct merchant Lands' End has created synergies between all of its properties.

The catalog and Web site share more than names. They share the infrastructure that makes the marketer a successful catalog company, says Mr. Eisenberg

In the hybrid model, the Web site ( features thousands of products, including many from previous seasons' catalogs to give users a wider selection of merchandise. The site piggybacks on the company's shipping and fulfillment departments, and many of its thousands of customer service reps work the phones and the computers.

Bolstering the online experience are services such as Lands' End Live, which enables customers to chat live with a customer service rep -- and even allow the rep to take control of the browsing experience; Shop with a Friend, which lets two shoppers access the site and browse or shop together; and Your Personal Model, which allows customers to enter and save their measurements for easier clothing sizing and shopping, Mr. Eisenberg says.

Lands' End will introduce several new services this fall designed to enliven the often lonely online shopping experience, he says.

"We won't allow it to be a solitary experience," he says, declining to discuss details.

The result has been a fertile migration of customers from the catalog to online -- plus many first-time Lands' End shoppers, Mr. Eisenberg says. This year, 20% of the company's new customers are coming through the Web site, resulting in between 15% and 20% of the company's sales this year, he says. The new users are helping increase the size and lower the average age of the 29 million-name database.

"There's a very strong relationship between the catalog and the Web site. The catalog comes out and Internet traffic just soars," says Mr. Eisenberg, adding that advertising this fall season from DDB Worldwide, Chicago, will hype both.

"We like to say that we're channel-agnostic and we really are. Most of our online customers are happy shopping both ways."

Lands' End's overall performance is underwhelming; the company last month warned sales will be flat for its just-ended second quarter, with sluggish growth seen for the full year. Lands' End is working on its merchandise and its mainstay catalog. But Lands' End recognizes the importance of the Web to its future, and it is investing in its site even as it works to get its overall business back on track.

Know thy customer is more than an online drugstore. It's a customer data warehouse.

Since its February 1999 launch, the company has amassed volumes of information on its customers' preferences and shopping patterns. Executives track shoppers' characteristics and buying habits. The result comes down to taking advantage of two key principles: leveraging the "intrinsic power of the Internet" and personalizing the shopping experience, says Judith McGarry, VP-strategic partnerships at

"It all comes down to those two points of philosophy," she says, "and everything else drives from those points."

The company conducted eight months of focus groups and usability studies to understand why core customers -- women aged 25 to 54 -- shop, what they like and dislike about the site, and how it can be modified to better suit their needs, Ms. McGarry says. The e-tailer learned that customers shop the site to enhance productivity, find information and learn about self-help or homeopathic remedies, she says. The company then adjusted its offerings to better serve those desires.

The site provides information, updates, product recall announcements and refill reminders on prescriptions. It also sends specials and discounts to customers for specific products they've purchased. The company's ePunchCard customer loyalty program awards free or discounted items based on purchases.

"We're hell-bent to deliver that best experience on the Web," Ms. McGarry says. "That's what any retailer should be doing in any medium: Know what the customer wants and deliver that." last week traded below $6, 92% off its post-IPO 1999 peak. Its fortune is tied, in part, to the financially troubled Rite Aid Corp., which owns an equity stake in the online pharmacy site. Drugstore has also aligned itself with, which owns a 23.7% stake in the online pharmacy and gives it the ability to sell through Amazon's site.

Ease of navigation

With apparel, books, videos and even bedding ranging from such brands as Scooby Doo to "Harry Potter" to "Buffy the Vampire Slayer" and "The Perfect Storm," it's easy to be swamped with content on the Warner Bros. Studios Store Web site (

"It's more of a merchandising challenge than for most companies," says Dave Clark, VP of e-commerce with WB Studios Store. "We had to figure out how to offer all of that in an easily navigated site."

The company used research and customer search patterns to design a site that simplified customers' navigation. The previous site was not as intuitive and easy to move around.

The company designs each Warner Bros. site -- from individual theatrical releases to TV shows and other licensed goods -- to be similar in presentation but still unique.

"We've tried to make it so that Superman and Batman look far different than Tweety, but that they still know they're in Warner Bros.," Mr. Clark says.

Customers can shop by brand or product category; each category contains cascading menus. The site also can determine whether the customer's browser is Java-enabled and provide alternatives if not. The site even provides multiple photographs of individual products and sizing charts to translate clothing sizes.

"It makes it really easy to navigate through hundreds of items," he says. "We're making it more intuitive and letting the customer see what they want to see."

Live and preach customer service to build brand loyalty

Listen, innovate and personalize. That's the mantra of's attempts to build its global brand, says Debbie Scott, Amazon's director-global brand marketing.

Amazon is, in a way, a classic merchant: It is building a brand by delighting the customer. That's the way to get repeat business and word-of-mouth buzz. That's arguably more important than any advertising Amazon could do to woo new customers.

Amazon is hardly a financial success at this point: It reported a net loss of $317.2 million on revenue of $577.9 million in the second quarter vs. a loss of $138 million on revenue of $314.4 million a year ago.

Amazon faces serious challenges -- one being whether it can translate its success in selling books and music to other categories. But Amazon is a success on one score: Taking care of the customer.

The company strives to deliver selection, information, reviews, timely fulfillment and a vision of good customer service shared throughout the organization worldwide. Amazon relies on customer feedback of a positive -- or negative -- experience to guide the user experience.

It's one thing for senior management to preach customer service from on high, Ms. Scott says. It's another to live it in the trenches -- from the customer service PCs and phone banks to the warehouse floor, whether in the company's Seattle headquarters or its international offices or even through its 400,000 online associates (or affiliates) whose sites link to the Amazon site, Ms. Scott says. Those sites are paid a commission for sales generated.

She calls it a "tightly shared vision and passion for doing what's right for the customer. It's at the core of what we do," she says. "It can't come from only one person."

Along the way, the company's desire for global accessibility has translated into adopting the latest technology to give customers access to the service. Its Anywhere electronic commerce division allows customers to log on and read a review or purchase any product from a Web-enabled phone or electronic organizer.

Delivering a reliable and positive experience, and responding to customer queries, suggestions, concerns and e-mail can help build the brand more strongly than can any ads from Amazon agency FCB Worldwide, San Francisco, Ms. Scott says. The ideal is to surprise customers with the latest innovations and personalization, she says.

"Nothing will build the brand better," Ms. Scott says, "than a good customer experience."

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