Conversion Rate Secrets of the Internet Retailer Top 1000

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1 Original Research by Conversion Rate Secrets of the Internet Retailer Top 1000 Insights into what s driving growth in sales conversion among America s leading web merchants

2 Conversion Rate Secrets of the Internet Retailer Top 1000 Executive summary Helping web merchants succeed one shopper at a time E-commerce and parcel delivery tied the knot in their permanent relationship shortly after the first web retailer took its first order. Now, it is projected that one out of 10 U.S. retail dollars will be spent shopping online by The largest driving force in the global economy is e-commerce, and it is expected to continue to grow by leaps and bounds. FedEx is fortunate to be a trusted consultant and shipping provider for many e-tailers around the world, and we value the insights we ve gained from working directly with those customers. From specialized delivery offerings and packaging solutions, to returns configuration and information technology assistance, we ve worked with our customers on solutions designed to navigate the dynamic online landscape. David K. Payton, vice president of product marketing and e-commerce services FedEx We know web merchants need access to key market facts, analysis and best practice information that will help them to successfully growth their business. That s the impetus behind this report, which is based on exclusive research and data from Internet Retailer, publisher of the leading magazine and web news source in the field of e-commerce. What follows is an examination of conversion rates, by way of original research through a survey of web retailers, data culled from the thousands of metrics Internet Retailer collects on its Top 1000 retailers ranked in the Top 500 Guide and Second 500 Guide, and analysis by Internet Retailer s seasoned researchers and journalists. This report also features case studies of retailers who are continually testing, deploying and upgrading strategies and tactics to improve conversion rates. Here are just a few key findings in this report: The secret to conversion rate success. There is no single tactic that raises a retailer s conversion rate. It takes a combination of effective web site design, marketing and customer service to convert more first-time visitors into buyers, and turn more once-only shoppers into repeat customers. E-retailers know the score. An exclusive survey of Top 1000 merchants for this report by Internet Retailer found that, aside from , direct navigation to web sites converts best for respondents it was cited by 45.2% of them followed by paid search (35.6%), affiliate marketing (24.7%), natural search (21.9%) and social media (11.0%). And 49.3% of survey respondents cite free shipping as the most effective customer service or web site feature for converting visitors into buyers. Mining the Top 1000 data. Consumers like to shop on tablets. For the 30 retailers ranked in the 2014 Internet Retailer Mobile 500 that supplied details on conversion rates by device, the average conversion

3 E-Commerce Thought Leadership rate for tablet shoppers was 2.63%, 2.5 times higher than the 1.01% for smartphone shoppers. This is especially true for the three largest mobile merchants that supplied data. Crate & Barrel, for example, which gets 80% of its mobile sales from tablets, reported a 2.35% conversion rate for tablet shoppers, compared with 0.92% on smartphones. Flash-sale discounter Beyond the Rack, which gets around 57% of its mobile sales from tablets, says 1.92% of visits from a tablet end in a purchase versus 1.04% on smartphones. And luxury apparel and accessories brand Tory Burch has a 1.5% tablet conversion rate three times as high as its 0.5% conversion rate for smartphone shoppers. Individual success stories. At Carolina Rustica better conversion begins with responsive design. Designing the new site took five months of development and testing and cost up to $100,000. In the month that followed, Carolina Rustica experienced a 22% increase in the average time of visits per consumer, along with a 13% increase in its conversion rate and a doubling of online revenue. The most significant gains came from tablet and mobile shoppers. I hope you find this report insightful, and are able to apply the lessons learned into growing your own online business. Continued success, David K. Payton Vice President Product Marketing and E-Commerce FedEx Which customer service or web site features are the most effective for you in converting more visitors to buyers? (check all that apply) Free shipping 49.3% Customer service call support 31.5% 23.3% Live chat 19.2% Toll free number 15.1% Shipment tracking 12.3% Account status/history 11.0% Express checkout 11.0% Return policy posted 9.6% Overnight shipping 4.1% Outlet center 2.7% Ship to multiple addresses 2.4% Toll free number 1.4% Source: Internet Retailer About this report All third-party sources that supply Internet Retailer with data for its Top 500 Guide and Second 500 Guide (Top 1000) provide full consent to Internet Retailer to use their data, which is outlined in the methodology disclaimer in each research project. Once provided by the third-party data partner, all permissions to publish the information is the responsibility of Internet Retailer. In addition, Internet Retailer surveys thousands of retailers for its annual global e-commerce research reports. If a retailer does not provide a certain metric in a given period of time for a particular project, Internet Retailer will create estimates based on past research histories of retailers and merchandise categories, analyst interviews and other data. Internet Retailer estimates are noted as such. Retailers are given the opportunity to respond to estimates, and Internet Retailer updates its estimates with any information provided by the merchant. Retailers are given full awareness of the reporting of the data in the Internet Retailer research products that are provided for public consumption. All Internet Retailer research and methodology is publicly available in print and digital formats and on and Retailers have been providing data for Internet Retailer s various e-commerce research reports for an average of 5 years. Some data has been collected directly from web merchants for more than 10 years, as in reference to the Top 500 Guide, which was published in its 11th annual edition in April For more information about FedEx and e-commerce, go to fedex.com/us/ecommerce 3

4 Conversion Rate Secrets of the Internet Retailer Top 1000 Conversion rate success begins Top 1000 web merchants with the best conversion rates target the right consumers, make shopping easy and remove any obstacles to purchasing. SmartSign.com CEO Blair Brewster doesn t mince words when talking about how his online sign store boosted its conversion rate by 28% in one year. For SmartSign.com, the key to achieving higher conversion is following a formula of engaging marketing, great customer service, and giving consumers an informative and easy web shopping experience. Successful sales conversion is a balancing act, Brewster says. We can t just do one thing well, because everything has to be perfect. The conversion rate from personalized Honest Co. s is 170% greater than for nonpersonalized s. In 2013, SmartSign.com grew web sales 19% to $30 million and site conversion to 3.7% by thinking smarter and acting quicker, Brewster says. SmartSign.com looked at better ways to manage paid search to drive more targeted traffic to its web site. Brewster added more specific keywords and phrases to make its keyword inventory more relevant to repeat sign buyers such as safety managers that needed to purchase multiple emergency and safety first signs. Next SmartSign.com rolled out new web site features, including live chat and customer reviews. Finally Brewster updated key product pages with more technical specifications and product images, along with videos that advise consumers and businesses on the best ways to create and purchase the right sign. A satisfied customer is an informed buyer, Brewster says. We fine-tuned a lot of what we were doing to engage shoppers. Like SmartSign.com, many web retailers have recognized that there is no single tactic that raises a retailer s conversion rate. It takes a combination of effective web site design, marketing and customer service to convert more first-time visitors into buyers, and turn more once-only shoppers into repeat customers. And that approach appears to work for retailers throughout the Top 1000, which includes the biggest online retailers, best up and comers and top niche web merchants ranked by Internet Retailer in its Top 500 Guide and Second 500 Guide. And that s a big range: the Top 1000 vary in size from No. 1 Amazon.com with 2013 total revenue of $74.5 billion to No Chalkfly with annual web sales of $75,000. Tactics vary among the conversion leaders. Many are analyzing their paid search marketing to make sure they bring in the consumers most likely to buy. Some are finding that new ad formats introduced by Facebook and Twitter can bring in shoppers ready to buy. Retailers also are personalizing messages 4

5 E-Commerce Thought Leadership and ends with engaged buyers to spark a response from shoppers who have already purchased. They re making sure their web sites load quickly and are easy to navigate, and offer help for consumers who hit a snag. And an increasing area of emphasis is making sure shopping is easy for consumers on smartphones and tablets. Improving conversion rate starts with finding the kind of consumers who are likely to be interested in a retailer s products, and ready to buy. SmartSign.com looked for ways to make its Google Product Listing Ads retailer listings that Google places in a horizontal array high up on the first search results page for a product query stand out more prominently. Previous versions of the ads were too generic, Brewster says. Now safety managers looking for specific signs such as Emergency Shut Off, see SmartSign.com PLAs in bolder colors. SmartSign.com also updated its data feed to Google for PLAs with more specific product keywords and descriptions. Frequent A/B testing has resulted in better-designed landing pages that have been updated with easier-to-read pricing, more technical content, live chat and product recommendations. By doing a more focused job with paid search, from keyword bidding through the landing page, the conversion rate on some products has doubled, Brewster says. We spend a lot time looking across the board at what we are doing to convert more traffic into engaged shoppers, Brewster says. For such other Top 1000 conversion rate leaders as online grocer Peapod.com and coffee roaster and brewer manufacturer Keurig Green Mountain Inc., more effective targeted marketing and site design also are top priorities in maintaining a high conversion rate. Among Top 1000 web-only merchants Peapod has one of the highest overall sales conversion rates of 14.9%. That s not surprising, given that 79% of traffic to the web grocer s site is from existing customers, according to Internet and e-commerce research firm Millward Brown Digital. But Peapod has spent the past year focusing on boosting the conversion rate among the new shoppers that make up the other 21% of its visitors. We spend a lot of time looking across the board at what we are doing to convert more traffic into engaged shoppers. SmartSign.com CEO Blair Brewster Beginning with the recession and continuing over the next four years, the conversion rate of first-time shoppers on Peapod.com dropped from an average of 12% to as low as 10%, says director of marketing Brad Porter. We weren t attracting and converting as many new shoppers as we once did because it was a tougher sell for people with less disposable income to give us a try, Porter says. It was a challenge coming up with new ways to boost conversion. Peapod worked with a tag management applications developer to more effectively track how shoppers navigate Peapod.com. Armed with that data, Peapod targeted new shoppers with more relevant coupons. With better targeted marketing, Peapod recently has been able to boost its 5

6 Conversion Rate Secrets of the Internet Retailer Top 1000 What steps are you taking to cut back on shopping cart abandonment? (Choose all that apply) Reducing clicks required to complete a purchase 56.2% Offer more promotions 31.5% Displaying security seals and/or satisfaction guarantees 20.5% Making return policy more prominent 20.5% Showing tax and shipping fees earlier in the purchase path 19.2% Add more shipping options 16.4% Offering additional incentives during checkout 16.4% Other 6.8% Source: Internet Retailer sales conversion rate for newcomers back to around 11% and aims to meet or exceed its previous rate of 12% in We are making our shopping experience for newcomers faster and more personal, Porter says. And increasing areas of emphasis are making sure shopping is easy for consumers on smartphones and tablets and offering more free shipping and diverse options. In a recent Internet Retailer survey, 49% of web merchants ranked free shipping, customer service or web site features as their most effective strategy in converting more visitors to buyers. Nearly 20% of all retailers taking part in the survey also are showing tax and shipping fees earlier in the purchase path as one tactic to reduce shopping cart abandonment, and 16% are adding more shipping options. At Keurig Green Mountain, which boasts a relatively high 13% conversion rate, an expansion of its online selection has prompted a new look at how the web and catalog merchant converts browsers to buyers. In recent years the addition of new types of coffee makers and several new brands of coffee, tea and other beverages has produced a much larger online inventory of about 500 products compared to several hundred just a few years ago. And that bigger inventory has Keurig Green Mountain thinking about the several steps a consumer takes before she clicks the Buy button, says senior vice president of marketing and digital George Neill. We think of successful conversion as a journey that engages a customer at key milestones along the way, Neill says. The first milestone is driving traffic through search, marketing and social media, the second is getting them quickly and easily to the products they want, and the third is creating a unique and easy shopping experience. To maintain a high conversion rate, Keurig Green Mountain has crafted a broad a plan to identify more web shoppers looking for a new coffee maker and attracting more tea, coffee and hot chocolate drinkers to its growing portfolio of beverage brands, Neill says. For its Google PLAs, Keurig Green Mountain now includes clearer images taken by professional photographers of a specific type of coffee maker or beverage. When a shopper clicks on a Google ad, she is now directed to updated landing pages that feature more detailed information on a particular appliance or beverage, customer reviews, related product recommendations, and deals, such as free shipping on orders for $45 and up. In recent months Keurig Green Mountain also has been doing a better job of analyzing the behavior of online shoppers who buy specific products and brands. That allows it to better segment shoppers, and to send them more personalized s with reminders and coupons to reorder or try a new blend of coffee or tea, says vice president of digital and direct Tammy Hegarty. Keurig Green Mountain overhauled its site taxonomy in 2013, which is how web merchants categorize their products on various pages and in a site search engine. Hovering over main navigation tabs on the home page of 6

7 E-Commerce Thought Leadership GreenMountainCoffee.com pops up new dropdown menus that let a shopper quickly find a particular type of coffee, such as dark, light or medium roast. The left-hand navigation also has been updated with more specific categories such as roast style, brand, caffeine, qualities and region of origin for coffee. There are multiple touch points that go into successful conversion, she says. It s a journey of successfully engaging the shopper from the start of the buying cycle to the end. Top 1000 sales conversion leaders pay close attention to marketing and social media to generate more new and repeat business. The Top 1000 merchants with the highest conversion rate send out an average of eight monthly campaigns compared with seven campaigns for all Top 500 and Second 500 merchants. But Top 1000 conversion rate leaders also broadcast highly targeted messages that include personalized subject lines, social media and videos links, and coupons based on the recipient s buying history. The Honest Company, an e-retailer of natural bath and personal care products, is finding it can convert more new site visitors into customers, and more quickly, when it personalizes the welcome s it sends them. The e-retailer applies data from a new customer s visit and aggregated data from other visitors to show her in the welcome message offers that are most likely to appeal to her, says Sue Cho, manger of marketing for Honest Co. When a consumer first visits Honest.com, the site requests her address. If she provides it, she soon gets the first of six s in Honest Co. s welcome series. Crate & Barrel reported a 2.35% conversion rate for tablet shoppers. The message she receives, and the ones that follow, are personalized based on the data Honest Co. and its predictive analytics vendor cull from her visit. For example, the four photos in the may vary depending on what she clicked on the site or how she arrived. We are showing the offer that makes the most sense based on how they are opening and clicking, Cho says. Instead of going from a trial offer and waiting to convert to a bundle, we now see people subscribing to a bundle right away. Jao adds that consumers who receive personalized s typically sign-up for subscriptions a day or two earlier than consumers who do not. As a consumer opens more Honest Co. s and returns to the site, the messages become more personalized. They are also sent based on an algorithm that determines when she is most likely to open it. Previously, all welcome messages were sent on a pre-programmed schedule, Cho says. The conversion rate from personalized Honest Co. s is 170% greater than for non-personalized s, Cho says. Top 1000 conversion rate leaders are avid users of social media channels such as Facebook which can yield highly qualified shoppers for retailers that know how to find them. Web-only flash-sale site retailer NoMoreRack.com is an example of a retailer that is drawing the right kind of consumers from its Facebook campaigns. NoMoreRack is on a roll, with e-commerce sales that grew 250% in 2013 to $350 million and a conversion rate that grew to 6% in the last year from 1.4% in And a key reason for that conversion rate success is the company figuring out better ways to convert visitors from Facebook, says CEO Deepak Agarwal. NoMore Rack.com grew its conversion rate to 6% from 1.4% in 12 months. NoMoreRack is selling more to consumers who click from Facebook because the e-retailer now views the social network as a way to directly boost sales, and not just build brand awareness, says Agarwal. The majority of its posts focus on a specific product. That s also true for most of the posts it pays for to promote via Facebook s Promoted Posts ad unit the main ad product it uses which lets a marketer pay to ensure that a particular number of targeted consumers see a post in their newsfeeds, the first page they see on Facebook. The shift in its approach has led to 35% of the retailer s traffic in a typical month in 2013 stemming from social networks, Agarwal says. And that traffic is lucrative. When we look at the last click from Facebook, shoppers are typically buying an item they saw on their newsfeed, he says. It s really purchase-driven, whereas non-social traffic is more about browsing. 7

8 Conversion Rate Secrets of the Internet Retailer Top 1000 What are you doing to increase your conversion rate? (Choose all that apply) Web site redesign 65.8% Improved product pages 54.8% Improved site navigation 53.4% Drive higher quality traffic through better use of paid search, search engine optimization and social media 50.7% Better site search 39.7% Enhanced shipping options 20.5% Adding security seals and privacy guarantees 15.1% Enhanced returns program 9.6% Other 4.1% Source: Internet Retailer That was particularly true during the 2013 holiday season. NoMoreRack.com generated $32.3 million in online sales during the five-day span between Thanksgiving and Cyber Monday topping the $29.1 million it generated for the entire period between Nov. 1 and Cyber Monday 2012, its previous best sales window. During the corresponding 31-day start to the 2013 holiday season, the discount products retailer s sales grew 168%, topping $78 million. Social media marketing was a big part of the retailer s success, as roughly 25% of those sales stemmed from shoppers clicking from Facebook and other social networks to the retailer s web site, says Agarwal. The retailer generated about $19.5 million in sales from consumers coming from social networks in November and the first two days of December, he says. Just as they ve adapted to the growing amount of time consumers spend on social networks, retail leaders in conversion also are responding to the growing amount of time consumers spend online using smartphones and tablets. One thing is clear: Consumers like to shop on tablets. For the 30 retailers ranked in the 2014 Internet Retailer Mobile 500 that supplied details on conversion rates by device, the average conversion rate for tablet shoppers was 2.63%, two and a half times higher than the 1.01% for smartphone shoppers. This is especially true for the three largest mobile merchants that supplied data. Crate & Barrel, for example, which gets 80% of its mobile sales from tablets, reported a 2.35% conversion rate for tablet shoppers, compared with 0.92% on smartphones. Flash-sale discounter Beyond the Rack, which gets around 57% of its mobile sales from tablets, says 1.92% of visits from a tablet end in a purchase versus 1.04% on smartphones. And luxury apparel and accessories brand Tory Burch has a 1.5% tablet conversion rate three times as high as its 0.5% conversion rate for smartphone shoppers. For Top 1000 merchant Wine.com, figuring out how consumers use mobile devices as well as computers has played a big part in boosting conversion rate. In particular, the web-only retailer has boosted results by making it easy for a consumer to begin shopping on one device and complete the purchase on another. Today about 42% of all traffic to Wine.com comes from a mobile device. But compared to its Internet Retailerestimated conversion rate of 4% for desktop e-commerce, the conversion statistic across mobile devices was lower, says Wine.com chief marketing officer Peter Elarde. To boost overall conversion rates, Wine.com implemented simple, but effective, design and marketing changes. Wine.com first analyzed its mobile traffic and segmented its mobile list into groups of buyers such as Cabernet lovers. It then began sending those buyers coupons for discounts off their favorite wine. Wine.com also retooled its 8

9 E-Commerce Thought Leadership mobile shopping cart to make it easy for repeat shoppers with stored payment and shipping information to purchase wine in as few as two or three clicks. Wine.com developers and designers next implemented another change that enables a shopper to begin a purchase on her mobile device, store the pending transaction on Wine.com and finish the purchase later on her smartphone, tablet or desktop computer. The marketing and design changes took several months to implement. But they paid off with a 42% boost in overall conversion, Elarde says. What s more, Elarde is confident the conversion rate will remain higher now that shoppers begin and end transactions anywhere they like, and on any device. We are changing with how consumers shop, and that s increasingly mobile, Elarde says. We will convert more shoppers going forward because we are taking more of the obstacles out of the way and making buying easy. Not all changes that Top 1000 retailers make to improve conversion are major. But most conversion rate improvement programs start by analyzing data. That was the case at e-retailer FootSmart.com, which redesigned its shopping cart as part of a project to reduce cart abandonment. A recent survey of 74 Top 1000 merchants by Internet Retailer reveals that 45.5% of all retailers have a cart abandonment rate of 25% and 14.7% a rate of more than 60%. FootSmart.com reduced its shopping cart abandonment by 10% by revamping the shopping cart, and that action in turn was a big reason the company s overall conversion rate of 5% held steady in 2013, says CEO Alan Beychok. The new streamlined shopping cart automatically enters a promotion code for deals such as free shipping for shoppers that click through from an message. A return shopper now can complete an order in a few clicks, with FootSmart.com entering the customer s stored payment and shipping information. Another new cart tweak automatically enters shipping information and shipping costs rounded to the nearest whole numbers. It s a journey of successfully engaging the shopper from the start of the buying cycle to the end. Keurig Green Mountain vice president of digital and direct, Tammy Hegarty Little changes can boost conversion and keep shoppers from abandoning a cart, Beychok says. If we send a shopper a targeted message with a great offer to come and buy, they shouldn t need to worry about entering codes or whether shipping is $29.90 or $30, they just want a quick and easy shopping experience. At Balsam Brands, a web retailer of high end artificial Christmas trees with an average ticket of $270, any metric affecting conversion rate is open for discussion and improvement, says CEO Thomas Harman. The site s overall conversion rate is about 1.7%. But Harman puts what might seem to some observers to be a low conversion number into perspective, by pointing out web sales increased 46% in 2013 to about $51.3 million while the conversion rate for some buyer groups doubled. By more effectively using paid search and other forms of marketing, Balsam Brands was able to reach out to more of its best customers: affluent women between the ages of 50 and 65 who own their homes. By looking at conversion rate numbers from different angles what we are really doing is figuring out how to target our best customers and new visitors most likely to buy, and shepherd them successfully all through the purchasing process, Harman says. We look at the whole process and not just at individual pieces. At SmartSign.com the company will continue to explore ways to boost conversion rate, Brewster says. But he believes he already knows the secret to conversion success: Build and maintain an e-commerce site that s fast, fun, and easy to shop, and follow through with good customer service. We never want our customers to be more than two or three clicks from the ideal product, he says. You gain authenticity and credibility with a great site and attention to detail. In turn, that means a higher conversion rate. 9

10 Conversion Rate Secrets of the Internet Retailer Top 1000 INTERNET RETAILER SURVEY From visitors to buyers Boosting conversion rates means retailers have to examine all aspects of their e-commerce program. What is your average conversion rate (for all products) on your primary e-commerce site? 0.5% or less 16.2% 0.51% to 1% 25.0% 1.1% to 1.5% 8.8% 1.6% to 2% 10.3% 2.1% to 2.5% 7.1% 2.6% to 3% 12.8% 3.1% to 3.5% 7.4% 3.6% to 4% 2.9% 4.1% to 5% 2.0% 5.1% to 6% 1.5% 6.1% to 10% 1.5% 10.1% 20% 1.5% 20.1% to 30% 1.5% More than 30% 1.5% Never take for granted the selling power of trends and celebrities. They can help online retailers boost their conversion rates just ask Coastal Contacts Inc., a web-only retailer of contact lenses, designer frames and other eyewear. Over the past year the company has focused more on marketing to online shoppers by luring them with better web content. That includes beefing up its blog, called thelook, with meatier information about how TV and movie stars wear their glasses. The blog also features testimonials from employees about their eyewear and other personal tastes. The e-retailer, which could already brag about a 14.5% conversion rate and an $85 average ticket, according to the Internet Retailer 2013 Top 500 Guide, finds that consumers who read the blog buy more than other site visitors. Individuals who are reading the articles and visiting the blog convert higher with a higher average order size than the average site visitor, says Coastal vice president of marketing Curtis Petersen. We ve seen a 25% lift in average order size and an increase in time on site from these customers. Those who visit our blog are much more valuable, so we re focusing on integrating our blog into our site more to get our content in front of people, while also driving more traffic to the blog. Other retailers are also finding that social tactics boost conversion rate. Indeed, 50.7% of the 74 retailer respondents to a new and exclusive Internet Retailer survey report driving higher-quality traffic through better use of social media, paid search and search engine optimization. And 11% of respondents say that after marketing, social media brings in the best-converting web traffic. But there s no single method that guarantees a high conversion rate. The survey shows retailers are using a variety of tactics to encourage more site visitors to buy. They include site redesigns, improved product pages, free shipping offers and keeping their paid search programs in tune with how Google Inc. presents search results. The Internet Retailer survey not only sheds light on the conversion-rate tactics of top e-retailers but imparts the equally important knowledge of the defects in an e-commerce site that retailers recognize dissuade shoppers from buying. 10

11 E-Commerce Thought Leadership What is your primary merchandise category? Apparel/Accessories 17. 6% Automotive Parts/Accessories 5.9% Books/Music/Video 5.9% Computers/Electronics 13.2% Flowers/Gifts 2.9% Food/Drug 5.9% Hardware/Home Improvement 10.3% Health/Beauty 4.4% Housewares/Home Furnishings 10.3% Jewelry 2.9% Mass Merchant 2.9% Office Supplies 5.9% Specialty 4.4% Sporting Goods 5.9% Toys/Hobbies 1.6% Key findings from the survey include: 25% of respondents report an average conversion rate of between 0.51% and 1% for all products sold via their primary e-commerce sites. That represents the largest single bulge of responses to that question. 16.2% report an average conversion rate of 0.5% or less, while 8.8% report a rate of 1.1% to 1.5%. For first-time visitors to primary e-commerce sites, average conversion rates stand at between 0.51% and 1% for 30.9% of survey respondents. The average rate for newbie shoppers stands at 0.5% or less for 11.8% of respondents, and between 1.1% and 1.5% for 22.1% of respondents. Free shipping is the customer service or web site feature 49% of all retailers say is their most effective tool in converting more visitors to buyers. Aside from , direct navigation to web sites converts best for respondents it was cited by 45.2% of them followed by paid search (35.6%), affiliate marketing (24.7%), natural search (21.9%) and social media (11.0%). Keeping conversions high requires that retailers win and maintain the loyalty of customers, says Howard Wyner, CEO of web-only fragrance retailer Scentiments, with an Internet Retailer-estimated conversion rate of 4.89%. That s especially true for products such as perfume and cologne that are not normally bought daily, weekly or even monthly. Compared with your direct competitors, is your overall conversion rate: About the same 40.9% Lower 30.3% Higher 28.8% To keep customers coming back, the e-retailer is combining its Scentury Club loyalty program with social media marketing. Scentiments offers Scentury Club members points to follow or connect to Scentiments on Twitter and Facebook, to refer friends, to make purchases and for other tasks. The retailer, 11

12 Conversion Rate Secrets of the Internet Retailer Top 1000 working with its loyalty club technology vendor, determines the unused loyalty points carried by Scentury Club members and uses that information to drive additional sales. When club members get an nudging them to spend unused loyalty points, their average order value jumps to more than 30% the non-club site average. It s all about keeping them loyal to you, Wyner says. Sure, retailers can face significant costs getting such programs off the ground; for instance, LoyaltyPlus subscriptions start at $2,000 per month. (The vendor hosts the software and clients like Scentiments connect to it via the Internet, through the software-as-a-service hosting model.) But the ROI is there, he says. Not every conversion gain requires a formal loyalty club. Look at free shipping: 49.3% of respondents to the Internet Retailer survey cite it as the most effective customer service or web site feature for converting visitors into buyers. Other features that pack a punch include customer service call support (31.5%), (23.3%), live chat (19.2%), a toll-free customer service number (15.1%) and shipment tracking (12.3%). Respondents could select multiple answers. E-retailers also have to get shoppers who put items into online shopping carts to follow through with the purchase. Respondents report doing so by reducing the clicks required to complete a purchase (cited by 56.2%), offering more promotions (31.5%), displaying security seals and satisfaction guarantees (20.5%), and making return policies more prominent (also 20.5%). Respondents could select more than one answer. Other tactics involve showing tax and shipping fees before checkout (19.2%), adding more shipping options (16.4%) and offering additional incentives during checkout (also 16.4%). What is your conversion rate for repeat shoppers on your primary e-commerce site? 0.5% or less 4.4% 0.51% to 1% 4.4% 1.1% to 1.5% 20.6% 1.6% to 2% 11.8% 2.1% to 2.5% 7.4% 2.6% to 3% 10.3% 3.1% to 3.5% 8.8% 3.6% to 4% 2.9% 4.1% to 5% 8.8% 5.1% to 6% 7.4% 6.1% to 10% 7.4% More than 10% 5.8% What is your shopping cart abandonment rate for all shoppers? 1% or less 2.9% 1.1% to 5% 11.8% 5.1% to 10% 7.4% 10.1% to 15% 10.3% 15.1% to 25% 16.2% More than 25% 26.5% More than 50% 10.3% More than 60% 14.6% 12

13 E-Commerce Thought Leadership What is your conversion rate using retargeted marketing after a cart is abandoned? 0.5% or less 27.7% 0.51% to 1% 12.3% 1.1% to 1.5% 9.2% 1.6% to 2% 15.4% 2.1% to 2.5% 7.7% 2.6% to 3% 7.7% 3.1% to 3.5% 3.7% 3.6% to 4% 1.5% 4.1% to 5% 3.1% 5.1% to 7% 4.6% 7.1% to 10% 3.1% More than 10% 4.0% Offering consumers more choice can help ensure that those shoppers buy, says Richard Sexton, president of Carolina Rustica, which in late 2012 was bought by Mattress USA Inc. One example is offering multiple payment methods. For Carolina Rustica, that includes ebay Inc.-owned PayPal and Amazon Payments. Sexton will not share the retailer s conversion rate but says it was up as much as 40% in the first quarter of 2014 compared with the first quarter of He credits part of that to focusing, and spending, more on Google s Product Listing Ads. These are the paid ads that appear in the center of a Google Turn just browsing into just bought. Don t lose customers due to long delivery times. FedEx Home Delivery is faster to more residential locations than UPS Ground. Find out how fast at fedex.com/ground. FedEx. Solutions That Matter. FedEx E-Commerce Solutions 2014 FedEx. All rights reserved.

14 Conversion Rate Secrets of the Internet Retailer Top 1000 search results page in the area once reserved for natural search results that could not be bought and that replaced in late 2012 unpaid displays of products available from various retailers relevant to the search term. Retailers like Sexton are recognizing that they can t rely as much on appearing high in natural search results, now that those paid Product Listing Ads draw the eye of many shoppers. As the amount of organic search space has shrunk, he says, you have to find the highest ROI. The retailer also has embraced responsive design, which detects the type of device requesting a page and then formats text, images, product data and site features to fit that device a concept with increasing appeal for e-retailers as more consumers shop from multiple web-connected devices, often over the course of purchasing a single product. The responsive redesign cost the furniture retailer about $100,000, Sexton estimates. The money could end up being well spent, as it addresses one of the major factors that retailers see as discouraging conversion. According to the survey, 34.2% of respondents cite poor site design as a factor that discourages visitors from converting. Only poor site performance (39.7%) and high prices (32.9%) rank higher. By comparison, limited product availability shoppers are no doubt used to the seemingly endless aisles offered by the likes of Amazon.com Inc. and ebay was cited by 31.5% of respondents. But the key takeaway from the survey is that there is no single way to boost conversion. Boosting conversion rates means retailers have to examine all aspects of their e-commerce program, and find those areas where they can perform better than the competition. What is your shopping cart abandonment rate for repeat buyers? 1% or less 7.5% 1.1% to 5% 10.4% 5.1% to 10% 22.4% 10.1% to 15% 10.4% 15.1% to 25% 16.4% More than 25% 13.4% More than 50% 7. 6% More than 60% 11.9% What percentage of orders from your site are delivered with free shipping to the consumer in the fourth quarter (October through December)? 10% or less 17.9% 10.1% to 25% 11.9% 25.1% to 50% 16.4% 50.1% to 75% 20.9% 75.1% to 100% 13.4% All 13.4% None 6.0% What percentage of orders from your site are delivered with "free shipping" to the consumer in the first three quarters (January through September)? 10% or less 20.9% 10.1% to 25% 14.9% 25.1% to 50% 16.4% 50.1% to 75% 17.9% 75.1% to 100% 14.9% All 10.4% None 4.6% 14

15 E-Commerce Thought Leadership Case study: Carolina Rustica A responsive approach Conversion strategy: Carolina Rustica needs a better site design to appeal to the growing number of consumers using mobile devices Highlights: A 2013 redesign that focused on responsive design techniques Developing and testing took five months, and the project hit speed bumps The effort has helped produce double-digit conversion gains Turning site visitors into shoppers requires e-retailers to understand consumers and respond accordingly, not only via online marketing but through site design. That s why furniture retailer Carolina Rustica last year sought to improve its conversion rate by embracing responsive design. The term refers to technology that detects the type of device requesting a page and then formats text, images, product data and site features to fit that device. The idea is to make it easy for a consumer to browse and buy no matter if she is using a laptop computer, smartphone or tablet. Google says that 85% of online shoppers start shopping on one device and finish on another, highlighting the importance of a retailer presenting its web site effectively on the growing variety of webconnected devices shoppers use today. Carolina Rustica unveiled its responsive design site in November 2013, says president Richard Sexton. We had been experiencing some deterioration in conversion rates as more of our traffic switched to tablet and mobile devices, he says. The retailer lacked separate sites for smartphone and tablet shoppers, resulting in what he calls clunky navigation and search for consumers using those devices. Carolina Rustica sought to have one uniform site across all platforms and devices. Your entire site is equally represented on an iphone as it is a tablet, desktop or laptop, Sexton says. It is the same site using the same data, user interfaces, graphics and text information, just re-arranged differently. A dedicated mobile site does not do this because it s a completely different site, with a different URL (such as m.carolinarustica.com). Regardless of how you view our [new] site, it s the same site at the same URL. Designing the new site took five months of development and testing and cost up to $100,000, he estimates. We used a small independent contractor who was familiar with our Magento-based site, Sexton says. Our initial post-launch experience was pretty rough, because we tested various individual components but not the holistic site itself. After some considerable cosmetic tweaks, we re-launched at the end of 2013 and the results were much more favorable. In the month that followed, Carolina Rustica experienced a 22% increase in the average time of visits per consumer, along with a 13% increase in its conversion rate and a doubling of the retailer s online revenue, he says. The most significant gains came from tablet and mobile shoppers. While he will not share the retailer s overall conversion rate he says it was up as much as 40% in the first quarter of 2014 compared with the first quarter of Carolina Rustica in late 2012 was bought by Mattress USA Inc., and that company has an Internet Retailerestimated conversion rate of 1.0%, according to the 2013 edition of the Top 500 Guide. The retailer s average ticket stands at $650, a reflection of its relatively pricey product range. Every retailer needs to look at their own model, their own customer base, and decide for themselves on a responsive design site, or a specialized mobile site, or a native app, Sexton says. He adds that the responsive design site holds special appeal to the retailer s more affluent consumers. It s good because they love their ipads. 15

16 Conversion Rate Secrets of the Internet Retailer Top 1000 Case study: Orchard Brands Inc. Easy shopping, easy buying Conversion strategy: Update site design and payment options to keep shoppers moving toward the transaction Highlights: Tabs on each site to link shoppers with all other brands Shopping cart that follows shoppers from site to site Multiple payment options Not long ago a consultant with a major ad agency told Orchard Brands Corp. executives their web sites needed a redesign, in part, because the shopping cart and search box were in the same place as everyone else s. That meant shoppers would quickly find the cart and search, instead of spending time looking around and engaging with the site, which this consultant viewed as preferable. The consultant s strategy was just the opposite of what has made the apparel, housewares and health products cataloger successful, says Bill Bass, co-president and chief marketing officer. Our customers are not trying to find site features, they want to buy something, Bass says. Our goal in site design is to make it easy to find products and check out. We don t want sticky pages, we want Teflon pages, so the shopper can slide right through to checkout. Ensuring a frictionless shopping experience is part of the reason the merchant s conversion rate holds steady at about 8.5% across its 14 e-commerce sites, including NormThompson.com, Blair.com and Appleseeds.com. Its target audience is men and women over age 50. Catalogers like Orchard Brands tend to report higher conversion rates than other online retailers because they reach shoppers and repeat customers through two channels; their paper catalogs drive buyers to e-commerce sites. For Orchard Brands, product mix is another advantage, as the retailer sells its own private-label merchandise. It comes down to having proprietary products, Bass says. Our conversion is better than general merchandise retailers because more people window shop their sites. Orchard Brands conversion rate is more than triple the median rate of 2.50% for e-retailers listed in Internet Retailer s 2014 Top 500 Guide and more than double the 3.50% median among 75 catalogers. In addition to its inherent advantages, the retailer has also taken several steps to achieve that high conversion rate. For example, the company broke down some conversion obstacles when it began adding tabs at the top of each of its sites linking to all the other sites. The project, which was completed in summer of 2013, eliminated the need for shoppers to log in and check out of separate web sites with different carts. The results had a positive effect on Orchard Brands conversion rate, but Bass declined to be specific. Multiple payment options also lead more consumers to complete a purchase. In addition to the usual credit and bank cards, Orchard Brands has private-label credit cards for its brands that include rewards certificates for every $150 spent, a 25% birthday month discount and access to invitation-only shopping events. The merchant introduced PayPal in early 2013 to provide an option for those shoppers who prefer that online payment method. Surveys show some consumers fearful of giving an e-retailer a credit card number prefer to use PayPal. PayPal now accounts for about 10% of sales, Bass says. About a third of visitors to Orchard s sites use the on-site search box. And the merchant also has recommendations algorithms in place to provide alternatives in site search results if a product is out of stock. If a customer is looking for a blue dress and we don t have one we want to suggest another, Bass says. Keeping its conversion rate up requires a blend of tactics; there s no single on that stands out, Bass says. It s like making soup it s how all of the ingredients interplay. 16

17 E-Commerce Thought Leadership Case study: RealTruck.com Many routes to conversion Conversion strategy: Increasing the percentage of site visitors who buy by updating smartphone and tablet sites to appeal to mobile shoppers and increasing YouTube parts installation videos geared to bringing customers back Highlights: Over 3.7 million views on YouTube Mobile site conversion rate is 0.7%, desktop site conversion is 1.7% 38% return shoppers Converting site visitors into buyers at a high rate is no easy task for an auto parts and accessories retailer like RealTruck.com. The e-retailer offers 550,000 SKUs, many popular products have price tags in the hundreds of dollars and there are seemingly infinite ways to filter product search results. Each of those factors can prevent a customer from completing a purchase. Given those obstacles, most auto parts retailers are happy with a conversion rate approaching the Top 1000 category average of 1.8%. RealTruck s desktop conversion rate sits at 1.7% 1.27% including mobile devices, up slightly from 1.25% in 2012, says president Jeff Vanlaningham. The retailer is trying a variety of ways to improve that statistic, as any uptick in conversion can have a major impact on sales for a retailer whose average ticket is a relatively high $239. One key tactic is improving its smartphone and tablet sites, which account for 38% of RealTruck s 737,500 average monthly visits. In the past, RealTruck shoppers tended to use mobile devices to browse for products rather than buy, but that is starting to change as they become increasingly familiar with mobile phones and tablets, Vanlaningham says. The retailer s mobile conversion rate is about 0.7%, but he expects that to go up now that his mobile sites let visitors narrow searches by vehicle make, model and year. RealTruck is also redesigning its s to be easier to view and click on for shoppers on mobile devices. The retailer expects mobile conversion to be lower because RealTruck highlights the Click-to-call button on its smartphone site, knowing that some shoppers prefer to order higher-priced items over the phone. Vanlaningham says the click-to-call function does lead to sales, but the retailer does not factor it into mobile conversion rate. Designing mobile-friendly campaigns is also a priority for RealTruck. The retailer sends two promotional s each month, and that number may increase this year because more customers are opening those s on smartphones, Vanlaningham says. While visitors who arrive at RealTruck via to a smartphone currently convert at a slightly lower rate than those on a desktop, Vanlaningham knows the rapid growth in mobile traffic, and mobile open rates, cannot be ignored. He says the company has tweaked designs to be more device-responsive and fingerfriendly in recent months. RealTruck also keeps a close eye on two key forms of marketing: pay-per-click search engine advertising and social media marketing. Vanlaningham says that for RealTruck, paid search is important because the retailer can control the landing page the visitor arrives on. That s not the case with natural search results, where the search engine determines which page to link to. Visitors from paid search ads convert at a higher rate, but he did not provide metrics. RealTruck gets 38% of its site traffic from returning shoppers, and Vanlaningham would like to bring that percentage up, as previous buyers convert more often than first-time visitors. A strong presence on YouTube may be the key. YouTube, and our installation videos especially, have proven a giant positive influence, he says. 17

18 Conversion Rate Secrets of the Internet Retailer Top 1000 Case study: BookPal LLC Communication to conversion Conversion strategy: BookPal needed a new design and better features to convert more visitors to buyers Highlights: The old site was able to display only the final cost of a bulk order during checkout Advanced search narrows a few million titles to one or two books Today, $5,000 orders are common, and the site s conversion rate is up by 40% A year ago, on a good day for book wholesaler BookPal LLC, a shopper might order as much as $2,000 online, says president Tony DiCostanzo. Today, $5,000 orders are common, and the site s conversion rate is up by 40%, he says. As simple as the sale of books is, when you start dealing with it in the business-to-business environment, it takes on a whole new dimension, DiCostanzo says. BookPal, which requires a minimum order of 25 copies, discounts prices in tiers depending on the number of books and the title, he says. We were really struggling to communicate that as simply as possible on our previous platform, he says. People were abandoning too much. The old site was able to display only the final cost of a bulk order in the cart during checkout, not on the product pages as a shopper browsed, DiCostanzo says. In contrast, a product page on the new Book-Pal.com lays out clearly in a table the bulk pricing tiers, with per-unit costs and discounts according to the order size range. As a shopper types different amounts of copies for that book into a box next to the table, it automatically highlights the appropriate pricing tier with a label reading, your price. Above the table, the new subtotal for the order also updates as the order size changes. In the first 90 days after the site went live last April, the improvements boosted average order values by 19%, BookPal says. Bounce rates which measure the percentage of consumers who leave the site after visiting only one page also dropped by 15%. About 60% of BookPal s sales come from the web, with the rest via mail order or phone, DiCostanzo says. On product pages, shoppers can also fill out a form to request BookPal to match the price of another seller, select an item and compare it side-by-side with others, or save the item to buy later. The product comparisons tool is uniquely suited for B2B, DiCostanzo adds, because it helps a shopper to quickly pull up and see in a table the differences between various formats of books as well as various titles. For instance, a Shakespeare play might come in several lengths of abridgements, with or without translations, by different translators all factors a high school department head might find crucial to the selection. The new site also offers an advanced search tool that can narrow a few million titles to one or two books based on a single typed-in phrase. For instance, a customer can enter in the site search window To Kill a Mockingbird and only get results related to that book, instead of also getting results about books on mockingbirds and killers or creeks referred to as kills, the retailer says. Web sites are like houses, there s always work to be done, DiCostanzo says. His staff communicates with BookPal s new design firm at least every other day by phone or , he says. The development firm handles everything from minor display changes to building new functionality. For example, in two months BookPal will debut the ability to order digital books in bulk, and it will offer mobile reading apps that the development firm is designing, he says. 18

19 E-Commerce Thought Leadership Case study: Farfetch Dressing up conversions Conversion strategy: Added behaviortriggered messages to increase traffic and sales conversion Highlights: Behavior-triggered messages increased traffic to the edits pages by 14.3 times Displaying information on certain policies boosted conversion rates up by 7% Customers who visit the shopping edits on the site convert at a higher rate than those who do not Online fashion retailer Farfetch sells high-end clothes for men and women from designer boutiques in 24 countries, with single items priced from the low hundreds of dollars to $3,000 or more. Customers arrive on the site from more than 170 countries, and convincing them to make such expensive purchases on the web requires building trust in the retailer s shopping, shipping and returns policies, says Kelly Kowal, digital marketing director. With help from its behavioral analytics company the retailer found a way to do it. Farfetch ran A/B tests based on customer segments identified by measuring site visitors behaviors. In the first, it displayed a screen overlay with information about its shopping and shipping policies to customers who were new, but also highly engaged with the site they d viewed five to 10 pages in one visit. Those shoppers conversion rates increased by 17%, Kowal says. I didn t think it would have as high an uplift as it did, she says. It sounds so simple just showing people more info about your policies. In a similar test, displaying information about the retailer s policies to all new web site visitors, conversion rates went up by 7%, Kowal says. That test displayed the information in a different type of pop-up overlay known as a lightbox, which doesn t cover the whole screen. In addition to explaining the retailer s global shipping and returns policies, the overlays in both tests also used a customer s location to tell her whether the prices she s viewing include country-specific taxes or duties, Kowal says. Farfetch is now testing a way to help customers who seem hesitant or confused, which its analytics provider identifies by measuring how long they hover over a product listing. After a certain amount of time spent hovering, the retailer displays a message to those shoppers suggesting that they shop our edits, or try browsing through one of its men s or women s collections. We have a lot of products it can be overwhelming if you re new, Kowal says. So for new users who we can tell are engaged but not really finding what they re looking for, we serve them an overlay asking if they need inspiration, which then takes them to a part of the site that s a bit more curated. So far, adding these behavior-triggered messages has increased traffic to the edits pages by 14.3 times, which is in turn boosting conversions, she says, without giving the exact rate, as the test is ongoing. In general, though, she says customers who visit the shopping edits on the site convert at a higher rate than those who do not. The analytics vendor provides a web-based dashboard for Farfetch to measure customers site behavior and segment them into groups for A/B testing. However, Farfetch mainly relies on its weekly calls and communications with its vendor s account managers to get the custom reporting it needs and to discuss strategies for running new tests on the web site, Kowal says. The web dashboard does provide a tool that her team can use to query on its own when it chooses to. They ll even give us the raw data if we want to do the analysis ourselves or cross-check it. 19

20 Conversion Rate Secrets of the Internet Retailer Top 1000 Conversion rate leaders by principal market 2012 Company Conversion Rate 2012 Web Sales Apparel/Accessories Monthly Visits 2012 Monthly Unique Visitors 2012 Average Ticket AmeriMark Direct LLC 10.00% $73,900,000 1,000, ,000 $55 Mason Companies Inc. 8.50% 1 $144,480, ,600, ,000,000 1 $64 1 Orchard Brands Corp. 8.46% $240,000, ,260,000 2,356,000 $73 L.L. Bean Inc. 8.10% 1 $1,140,000, ,000, ,000,000 1 $150 1 CustomInk 8.00% 1 $115,000,000 1,641, ,027,230 2 $77 1 Automotive Parts/Accessories Shock Warehouse Inc. 4.00% 1 $3,823, , ,577 3 $160 1 Discount Ramps.com LLC 3.00% $23,639, , ,918 $173 JuicedHybrid.com 2.50% 1 $4,989, , ,000 1 $110 1 AutoZone Inc. 2.40% 1 $181,300,000 5,471, ,302,193 2 $140 1 Styles Logistics Inc. 2.39% $5,800, ,000 90,000 $185 Books/Music/Video MovieMars.com 14.00% 1 $58,000,000 1,300, ,000 1 $25 comixology 13.00% 1 $2,808, , ,000 1 $3 1 School Specialty Online 6.50% 1 $133,200,000 2,500, ,500,000 1 $60 1 Redbox Automated Retail LLC 6.00% 1 $14,859, ,644, ,036,812 3 $2 1 Follett Higher Education Group 5.20% 1 $423,000, ,000, ,000,000 1 $163 1 Computers/Electronics RitzPix.com 12.00% 1 $16,157, , ,000 1 $16 1 FireFold 11.00% $4,500,000 53,000 37,000 $108 Goja LLC 8.00% $4,800, , ,000 $22 CablesForLess LLC 7.50% 1 $4,011, , ,000 1 $60 1 PC Connection Inc. 5.90% 1 $790,000, ,250, ,000 1 $800 1 Flowers/Gifts Flowers.com Inc % 1 $515,200,000 4,000, ,025,165 2 $70 1 FTD Group Inc % 1 $340,010, ,220, ,646,961 3 $65 1 CTA Inc. 9.30% $5,700,000 49,000 28,000 $100 FlowerShop.com 7.69% $914,561 9,595 7,597 $82 Potpourri Group Inc. 6.70% $150,100,000 2,065,000 1,476,000 $91 Food/Drug Peapod LLC 14.90% 1 $525,000, ,700, ,000 1 $155 Keurig Green Mountain Inc % $365,000, ,128,000 2,161,000 $66 Harry and David Holdings Inc % $171,900,400 1,126, ,000 $91 Edible Arrangements International LLC 12.05% $258,682,347 2,463,868 1,545,404 $72 Myotcstore.com 11.36% $32,851,429 1,022, ,534 $30 Hardware/Home Improvement Interline Brands Inc % $273,808, ,811 49,736 $395 Appliance Zone 8.00% $18,736, , ,448 3 $55 National Trade Supply 6.73% $32,716, , ,132 $95 MSC Industrial Supply Co. Inc. 6.00% 1 $966,000,000 2,000, ,034 2 $575 1 OverstockDeals LLC 5.50% 1 $14,000, , ,000 1 $233 1 Source: Top500Guide.com

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