Few Companies Use Websites Effectively

E-Commerce:
Filled With Potential, Filled With Flaws

Online sales conducted between businesses may go over $3.2 trillion by 2003, according to new data released by Forrester Research Inc.

"Companies that seek to get online face a chaotic e-commerce landscape in 1999," Varda Lief, Business, Trade and Technology analyst at Forrester, said. "A combination of internal organizational issues, uncertain technologies and a range of growing market models challenge every firm that wants to buy or sell products over the Internet."

Leif said firms that will succeed are those able to establish a progressive Web interface first. Forrester said that worldwide online sales should reach $3.2 trillion by 2003 as opposed to the $55-80 billion estimated in sales for 1998. The analyst said that by 2003, online trade between companies should reach 1.3 trillion in the US alone. At that point, the Forrester report predicts that Internet commerce will represent over 9 percent of all business sales. Industries such as the computer business are expected to use the Internet for as much as 23 percent of all transactions.

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New research published by Shelley Taylor highlights many of the user issues growing around online commerce sites.

Taylor & Associates presented the "Click-Here Commerce" report at a briefing in Silicon Valley. After gathering data for an international study of the success factors of online stores, Taylor concludes that today's Web outlets need to simplify their features in order to meet the needs of consumers. While industry leaders such as Intel Corp. are busy focusing new initiatives on speeding PC performance to enable more comprehensive e-commerce, the study said that Web shops should get back to basics and apply more traditional retailing knowledge to their sites.

Among the companies that have the best-rated e-commerce sites, according to Taylor, are CDNow, Barnes and Noble, Brainplay, Lands End and Blockbuster. The report analyzed some 50 consumer sites marketing a wide range of products including technology, entertainment, books and music, apparel, sporting goods, and travel services.

Taylor & Associates uses 175 proprietary evaluation criteria to rate the content and activities offered at each online store. "Online stores fail to translate the lessons learned from centuries of land-based retailing and merchandising into successful online shopping," contends Taylor, managing director and author of the study. "Even though technology has changed, the way we humans process purchasing decisions has remained the same."

Taylor contends that sites which require consumers to use technologies like new browser versions, downloaded plug-ins, and high modem speeds may actually discourage first time shoppers and laptop users with older equipment. The study indicates that only two of the 50 rated companies provided a reduced bandwidth or text only-option. Only one site specified the minimum browsr required required for viewing the site. The researchers suggested that including these simplified features would boost e-commerce adoption.

The study also criticizes a lack of site navigation information in many online stores. According to Taylor, 24 percent of the sites researched lacked global navigation, which the researcher defines as tools that allow users to move between major sections of a site. Only 8 percent of the sites provided contextual navigation, the Web-based equivalent of a brick and mortar mall's "you are here" map.

Another fault highlighted in the report is a general lack of sufficient product information. Some 24 percent of the tested online stores offer no pre-sale assistance and 32 percent failed to provide purchase instructions. While two-thirds of the e-commerce sites offered some product specifications, only 12 percent provide third-party reviews.

One technology that the study recommends for development is the shopping cart feature offered on many sites. Taylor said that to be more effective the carts should list selected items on every page at a site. Only 8 percent of the sites provide a current list of cart contents on each page.

Other analysts have predicted that the high-end design approach being pushed by developers like Intel will help increase the adoption of e-commerce. Intel is marketing its new Pentium III microprocessor as a major breakthrough for PC users accessing the Internet.

"The kind of PC buyers who are looking to shop online are for the most part willing to move toward the high-end PCs," said Van Baker, analyst for Dataquest. "Developing better three-dimensional (3-D) content with Web site designers may help Intel convince users to move from Pentium II PCs to Pentium III machines."

Baker added that using technologies to close the "touch and feel" gap which exists between shopping in person and purchasing online will also spur growth of e-commerce.

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Few Companies Use Websites Effectively

According to a recent survey, one-third of Vancouver's top companies don't reply to simple e-mails generated from their Website, or don't employ an e-mail link. But, says corporate Internet strategy expert Tod Maffin, that's better by twice the national average.

Maffin conducted the survey anonymously on February 16 by visiting corporate Websites, searching for their e-mail link and sending them a message reading: "Hi, could you please tell me your mailing address. Also, what is your Web site's URL? Thank you."

His mailing included 200 companies in 23 industry categories and included ten Canadian national corporations.

The study found that public sector organizations scored best overall, while advertising agencies did worst. Maffin found industries that deal directly with consumers ranked poorest as a group.

He comments: "If Vancouver's companies were in grade school, they would have just passed with a D grade. Just. As a whole, companies were only 50 percent effective in their use of e-mail with a prospective customer."

"Clearly, we've still got a long way to go," he says. "Many Canadian consumers already use Websites as their only means of communicating with a company. If companies don't find a way to build that relationship online, they simply won't be around in the next decade."

Maffin reports that in North America, only 10 or 15 percent of companies that maintain Websites use them to full effectiveness. "I think Vancouver is probably ahead of the game, quite frankly. My sense is that, with the exception perhaps of New York, San Francisco and Vancouver, the results would probably be worse."

He reveals that one of the best tests to measure whether a corporate Website is utilizing their e-mail well, "is whether or not they engage someone in dialogue." He explains that while his missive was a very simple e-mail: "That could have been a potential investor or a potential customer, or an existing customer, and most companies just kind of spat back the information. The good companies took some time and responded well."

Maffin concludes that companies fail to use Website-generated e-mail to build relationships with potential customers. In most cases, they're not even trying, he says.

In his survey's introduction he writes: "Many Internet surfers know the frustration of finding a company's Web site, and trying in vain to find a way to contact the company quickly from the site. If there's an e-mail address or feedback form on the site at all, in many cases the e-mail goes ignored for weeks (or forever)."

The survey ranked respondents against four criteria: How easy was it to find an e-mail address on the site? How fast did they reply to a very basic question? Did the reply answer the question completely? What was the tone of the e-mail, helpful, abrupt, polite, rude?

To ensure stability, a 24-hour dedicated high-speed Internet connection coupled to a Pentium-266 with 64 MB of RAM was used during the study.

The full report is available for free download at http://maffin.net/survey/

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If your local mall or department store seems less crowded these days, it may be virtually and actually true. " Shopping 2000," a survey conducted by Greenfield Online, finds that 39 percent of consumers with access to the Internet say they go to the store or mall less often, now that the variety of online shopping choices has dramatically increased.

"These results are significant to retailers, since Americans who use the Internet hold 60 percent of the buying power of the total US population," explains Rudy Nadilo, Greenfield's CEO.

The study was conducted for sale to Greenfield clients, but highlights are available on the company's Website.

The survey shows an online success story among book buyers. One of every two Internet-enabled people buy books on the Web and online book marketers are poised to surpass mall bookstores, the figures reveal. Consumers say they are just as likely to make actual purchases online (49 percent) as at the mall (51 percent). However, the demise of local bookstores is not yet imminent. Some 63 percent of consumers still visit their local bookstore to buy. Still, they do an equal amount of their browsing for availability and price online (64 percent) as they do at their local bookstore (63 percent).

When it comes to buying computer software, the study shows that while the tendency to window-shop online is about the same as at local stores (70 percent vs. 71 percent), the Internet still trails the local store as the place where wired consumers make their actual software purchases (49 percent vs. 68 percent). The Internet, however has overtaken malls by a margin of 49 percent vs. 42 percent, and catalogs by 49 percent vs. 22 percent, as a point of purchase for software.

In the soft goods department, shopping for apparel online is now almost as popular as shopping in catalogs. More consumers (38 percent) still leaf through catalogs than browse online (30 percent), yet malls (75 percent) and local stores (70 percent) still rule for window shopping. When it comes to making actual purchases - online, at 18 percent - is nearly as popular as catalogs at 22 percent. Nevertheless online and catalog retailers are still not as popular as malls (68 percent) and local stores (66 percent) when consumers reach for their wallets to buy.

Among some other key findings: 33 percent of respondents say the two best things about online shopping are that it is quick, and it is easy to compare prices. Twenty-seven percent say they can shop easily and quickly any time they like. As for store/mall shopping: 69 percent like the fact one can see/feel/touch/try the products before buying and 25 percent like the instant gratification of being able to get their products immediately. Twenty-nine percent like catalog shopping because catalogs are fun to browse through, while 16 percent like to take time to make up their mind.

Some results add up to more than 100 percent, Janensch concedes: "There could be multiple answers and you could actually check more than one box."

The study, done between December 23, 1998 and January 6, 1999, tracks the Internet's effect on consumer shopping attitudes and behavior based on a sample of 1,286 respondents, drawn from an Internet-user panel of nearly one million people The sample is representative of the Internet population in terms of age, gender and region. "The study was fielded on the Internet in a password-protected site," Janensch states.

The company's Website is at http://www.greenfieldcentral.com.

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