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The Mom & Pop Store: A Book Review, a Personal Perspective, and 5 Lessons for E-Commerce

I'm just back from a 2 week vacation where finally, for the first time in nearly a year, I had time to read books.  While I promised myself ahead of time that those books would not be related to e-commerce or retail, one of them was, and I am thankful that I allowed myself to break the "no working on vacation" rule.

Robert Spector's book " The Mom & Pop Store: How the Unsung Heroes of the American Economy Are Surviving and Thriving"  is well worth reading by anyone in e-commerce, retail, marketing or customer care.   While the book centers on the challenges and triumphs of small local brick and mortar businesses, there are lessons to be gleaned for anyone who interacts with customers in any channel (especially e-commerce, where personal  connections with customers are unfortunately rare).

Drawing from his own personal experience working in his family's "Mom & Pop" meat business, Spector explores the history and perspectives of dozens of small merchants from grocers to jewelers to booksellers to restaurateurs.  They range from century old legacy family businesses to 1st generation entrepreneurial ventures.

These business owners are passionate, innovative, resilient, service oriented and deeply involved in their communities.  No strangers to change, many of them are operating successful e-commerce stores in addition to their core brick and mortar businesses.

This book resonated for a personal reason.  While I was away, I periodically checked the news.  The headlines of the recession continued.  Last week's big news was the unemployment rate, now topping 10%.  The last time that happened was in the early 1980's, which coincided with my graduation from college.  Broke and discouraged by the lack of "real" jobs for new college graduates, I took a part time retail job in what could easily be described as a "Mom & Pop" store.  Without expecting to, I became a merchant. I checked in the new merchandise.  I decorated the store windows.  I helped customers (many I knew by name) and rang up sales.  And most surprisingly, despite the low wage, sore feet and weekend hours, I loved it.  That "Mom & Pop" experience was the foundation of my retail (and later e-commerce) career, and it taught me life long lessons about customers, communities and the importance of humility, whether you're selling in a store or selling online.

As I read Robert Spector's book, I realized how much these successful Mom & Pop stores have in common with one another, and how much the e-commerce community can learn from the guiding principles of successful Mom & Pops.  Here are my 5 favorites:

1) The store is uniquely yours:  I've written in the past about the importance of a compelling and unique value proposition.  Mom & Pops continually face stiff competition from national big box stores and e-commerce giants that under cut them on price and over do them on selection.  The smart Mom & Pops have done their homework and found their niche; the thing that they can offer that no one else can.  Read the story of a small urban grocer who had the nerve to get rid of Coke and Pepsi in order to carry an exhaustive selection of old fashioned bottled soda pops.  He's no longer slugging it out on price with big grocery chains, he's the long-tail merchant of soda pop and his customers love it.   Read about a tiny ice cream shop in Philly that still sells ice cream from a 5 generations old family recipe that defies the science of frozen desserts and keeps customers coming back for more.  And read about the small hardware store in Washington, D.C.  that's just blocks away from a Home Depot and takes care of customers with a well edited assortment and over the top service.   Whether it's a unique product, a unique experience or a level of service that can't be matched, these retailers (like good e-commerce merchants) have something special that is theirs alone.

2) It's personal: E-commerce sites take pride in offering algorithmically driven personalized product recommendations. Great, but is there a human touch to the site, to the service?  Read about the jeweler who visits a long time customer in the hospital.  Her terminal illness has caused her fingers to swell, so he gently cuts the ring off of her finger and has it re-sized so that she can wear it during her final days.  Read about the florist who reaches out to customers who have lost a loved one with a bouquet and a hand written note after the funeral and visitations are over.  On a brighter note, I recall buying swimwear from Landsend.com last year and receiving a friendly phone call the day after the package arrived to see if I needed to exchange a size.  Sure, e-commerce thrives on automation, but a true human touch at the right time is something your customers won't forget.

3) It's the community, stupid:  In the world of e-commerce, social networking and community are things we treat as somewhat novel and new.  Ask any successful Mom & Pop store and they'll tell you that the community is the essential foundation of their business and always has been.  Your reputation is all you've got.  Of course people talk about you.   When people shop, they connect with others, keep on top of community news and gossip and exchange information about who's got great products, who's having a sale, who sold them lousy meat last week.  Mom & Pops donate to local causes, sponsor Little League teams, hang banners out to congratulate high school graduates, take up collections for a local business or family in need.  They do it not as a means of promotion, but as a way of life.  They know that the community will be what pulls them through their own tough times.  Read Spector's example of a florist who lost everything in a fire and was back in business within 6 hours, thanks to the outpouring of support from the community (including supplies and resources from competing florists!).  Read the example of the grocery owner who was shot in a robbery.  The people of the community, including other local businesses, took up collections for the injured man and helped the family get back on their feet.

4) Invent, then re-invent. Staying in business is about change.  Read about the ethnic grocer who introduces new items as the neighborhood shifts from European immigrants to Hispanic immigrants.  Read about a long standing neighborhood bakery that now focuses on weekend business and smaller cakes and bread loaves for smaller families.  Read about an upscale London butcher  who now carries premium quality seasonal game since his neighborhood has become increasingly affluent.  Your audience might change, their needs and tastes might change, but you can still be meaningful.  You have to be.

5) Overcome adversity. Big adversity: Not every business survives recessions, fires, floods, death and destruction, but those that do teach us valuable lessons.  Read the chapter about Hurricane Katrina and the passionate bookstore owner who managed to get the store re-opened within 6 weeks after the disaster (it took Barnes & Noble 6 months to re-open).  Read about the beloved New Jersey deli that burned to the ground, only to re-open 9 months later to lines of customers wrapped around the block.  Many of the businesses in this book have been around for nearly a century and have endured much more than the e-commerce industry's "bubble" or the current recession.  They've taken the long view and weathered the inevitable hard times with dignity and perseverance.

Of course, I highly recommend reading "The Mom & Pop Store" in a beach chair with the sun on your back and a drink in your hand.  If that's not in the cards, I still recommend that you read it.  Every e-commerce leader has an inner-merchant, and this book should help you get in touch with yours.

For the record, the rest of the books I read on vacation don't have anything to do with e-commerce or retail.  Unless of course you have a lot of nasty office politics to deal with, in which case I recommend Roderick Graham's "The Life of Mary: Queen of Scots: An Accidental Tragedy".  Nothing quite like imprisonment, poisonings and be-headings to help you keep things in perspective.

Attention Accidental Shoplifters: Shop Online, Avoid the Dangers of Messy Store Shelves

Over a year ago, an article appeared in the WSJ; I read it and it stuck with me.  Laura Landro, a WSJ reporter, was accused of theft in a Kmart store. The article is well worth reading. In short, here's what happened:

Landro went to Kmart with her kids and bought a bunch of stuff (hundreds of dollars worth).  Among her purchases was a pair of flip flops.  When Landro was shopping and found the pair she wanted amongst the messy shoe display, there was no box. So, she put the flip flops in a random available shoebox and put them in her cart.

Turns out that the shoebox she chose was ticketed  for a cheaper pair of shoes, so at the register, the shoes rang up for $16.50 instead of the actual $24.50 price.  Security guards had been watching Landro and accused her of stealing $8.00 from the store.  Despite her protestations of innocence, a humiliated Landro was banned from making future visits to the store.   Offical word from Kmart indicated that they stood behind their security team, though it was "unfortunate" that Landro had this experience.  She was still banned from the store.

As a shopper, I was horrified when I read this article.  How could a good customer be treated this way for a simple mistake?

As a retailer, I was conflicted. Shrinkage is a huge problem and shoplifters cost retailers billions of dollas a year.  Loss prevention teams at stores work hard and follow firm processes to stop theft.

Of course, as a merchant, I was irritated that a messy shoe display was the real cause of this mishap.

In the end, I concluded that it was sad for everyone that common sense couldn't prevail in retail.  And, as an e-commerce advocate, I also concluded that Landro should have just shopped online and avoided this whole mess.

I was reminded of this article last week when I found myself in a near-miss situation as an accidental shoplifter.

It was the day before Thanksgiving and I had to do the unthinkable: make a stop at the grocery store.  I just needed two things: flowers for my holiday table and a few votive candles.   After arriving at Whole Foods and selecting my flowers, I headed to find the candles.  The store was packed.  The candle display was a nightmare, as you might expect on a busy day.  Hundreds of candles in boxes, out of boxes, in the wrong boxes, stacked irregularly in a very narrow aisle.  It took me almost twenty minutes to find the right number of candles in the right colors, which involved crouching on the floor and reaching for the sky.  At one point, a couple of kids came barreling  through the aisle with a shopping cart.  As I moved to get out of the way, candles tumbled everywhere.  Fortunately none broke.  I recovered the scattered boxes and managed to get them all back on the shelf ( as a retailer, I instinctivley started fixing the display). To my relief, there was no "clean up on aisle 4" loudspeaker announcement.   I headed for the checkout.

After I paid for my items, I looked down as I put my wallet back into my purse.  I was horrified.  In the outside pocket of my rather large handbag were two votive candles.  Now, I know that it's a cliche' for a shoplifter to say "they must have fallen into my purse...." but in this case, they really DID fall into my purse.  It must have happened when the kids ran through the aisle and all of the candles fell.

Embarrassed, I handed the candles to the cashier and said "I'm so sorry, these must have fallen off the shelf.  I guess this makes me look like a shoplifter, not exactly a title I'm eager to have!"  She looked a bit taken aback, but thanked me and took the candles out of my hand.  As if on cue, a supervisor-ish looking person appeared behind her and offered to put the candles back on the shelf.

Now, I have no idea if I was on camera or if I was ever suspected of shoplifting at Whole Foods.  But it almost happened.  As I walked to my car a bit shaken, I could see the headlines: " 25  year retail veteran and e-commerce leader caught shoplifting " .  Talk  about a career killer.   I have no idea what would have happened if I had walked out of the store with the candles.  Would they have believed me when I told them it was a mistake? Would I blame them for doing their jobs and catching a thief?  Would I have wound up banned from my neighborhood grocery store, or worse?

So, as if I needed one more reason, I'll be doing my holiday shopping online this year.  Those messy shelves in the stores are more than an annoyance; they can lead to an unintended life of crime.  If you're shopping brick and mortar, be careful out there.

King Midas in Reverse: How Cross-Channel Influence Helps Your E-Commerce Sales

Typically, when executives talk about multi-channel strategy, they talk about the web's influence on offline sales.  For many multi-channel retailers, the e-commerce channel is about much more than the online transaction.  It's the means by which customers research products, compare prices and make purchase decisions before heading to the store.   Smart retailers actively use their websites to drive traffic to their stores, letting customers view store inventory or place orders online for in-store pickup.

Many multi-channel retailers track a multitude of metrics to quantify the importance of the website beyond e-commerce sales, looking at things like:

• Visits to the store locator
• Orders placed through an online catalog or catalog quick-order feature
• Calls to a separate 800# to stores or a call center
• Number of orders picked up at and returned to a store
• Orders placed or influenced by an in-store kiosk
• Online promotions on the website or sent via email redeemed in store

And the list goes on.  A study from Jupiter Research indicates that at least 40% of store purchases are influenced by the web, with that number expected to rise to over 50% by 2012.  All good news if you're an e-commerce leader in need of justifying the importance of your channel.

But here's another side of the coin that is probably looked at too infrequently:  the number of online sales that started in a store.  These examples are somewhat anecdotal, but since they both happened to me in one weekend, I'll consider that significant.

This weekend, my husband and I made a getaway to Portland. With a rare free Saturday in a different city on our hands, we went shopping.  Not long into our journey, I found myself in the dressing room at a Banana Republic.  The woman in the room next to me was running the salesperson ragged, asking her for a change of size in several items.  The salesperson was able to locate the desired size in two items, but was alas sold out of the other three.   At the end of the try-on episode, the customer said " you know, I think I'm just going to go home and get all of this online..."  I could almost hear the saleswoman sigh in frustration though the door.

As it turns out, I bought 3 items at Banana Republic that day, but the pair of jeans I wanted wasn't available in my size.  The poor salesperson worked for almost 20 minutes turning the store and the stockroom upside down for the pair that her inventory system said she had, to no avail.  I bought the jeans online this morning.

But it didn't stop there.  After lunch, we headed to Powell's Books, arguably one of the world's best independent bookstores, where I expect very few customers enter without making a purchase.

Like most people, yes, I buy a lot of books on Amazon.  And yes, I have come to rely on their algorithms to suggest the perfect books to me.   But as I wandered the cavernous rooms of Powells, I stumbled upon book after book that I had never heard of and found myself wanting an armful of them. 

But then I remembered; why buy a bulky, physical book when I've got my Amazon Kindle?  It would be so much easier, and maybe even a little cheaper to download these books.  Not to mention my already overcrowded bookshelves need some relief.   

I found a scrap of paper in my purse and wrote down the titles of about eight books with plans to download them from Amazon when I got back to the hotel.  The whole time, I kept wishing that there was a way that Powell's could get credit for the sale.  Why couldn't I download them right there in the store with Powell's getting some sort of commission for writing that charming review or having the good sense to feature them on a shelf with some of my other favorites?   

Alas, some of the books I'd written down weren't available for the Kindle.  But, I had already left Powell's, and I was in "one click" mode, so Amazon got the order for the physical books too.  Raw deal for Powell's.

So, it occured to me after these two incidents, only a few hours apart, that perhaps in these tough times for brick and mortar, store merchants ought to be a bit more vocal about getting credit for some of those online sales that seem to be outpacing their growth.  Be it for size/color selection or just not wanting to haul a bunch of packages around the city or mall, we're using the offline world to tell us what to buy online almost as much as the reverse situation.  And while the influence of online research on offline sales has gotten top billing as an analytics exercise, I don't hear or read much about the reciprocal effect.  If anyone has data points on brick and mortar impact to online sales, it would be great to see it.

And meanwhile, you might want to say thanks to all of those hard working people in the stores for all of the business they're sending your way.

   

Will Private Label Retailers Finally Get Public Online?

If you ask any smart e-commerce leader what site feature they've implemented in the last 2-3 years has been the most effective in driving sales and customer insights, most would likely answer that it's customer ratings and reviews.  While Amazon was early to the party with their book reviews, it is now commonplace to see reviews, usually powered by Baazarvoice or PowerReviews on most leading websites.  The statistics are hard to argue with. Customers love them, and have come to rely on them as the "real" source of helpful information when they shop online. Most retailers love them just as much, as they are a proven driver in search ranking, conversion, and customer satisfaction. The Baazarvoice website is loaded with great stats (in case you need to do an internal sales job to implement this feature), but here are a few highlights:

• 74% of online shoppers say they choose companies and brands based on what say about their customer service experience (2008, Society for New Communications Research)
• Over 58% of shoppers said they used product reviews to make decisions (2007, Shop.org)
• People who read a review are 30% more likely to purchase a product that those who do not (2007, Coremetrics)

Now, as an alumni of private label apparel, I have often wondered how long it would take for those selling their own goods to adapt to this level of public exposure.

Sure, it's one thing to be a brand aggregator (Wal Mart, Zappos, Petco, Office Depot, Amazon and the like). Customer reviews are about somebody else's product.  "Dell made that computer, not us, so go ahead customers, have at it, rip it apart. It only makes us look better for being so open and transparent.  Those reviews help us know which suppliers to covet or drop, and they provide valuable insights into brand preference."

So, now let's say you're a private label merchant.  You've poured your heart and soul into the Fall season line.  Everything looks beautiful together - the colors, the fabrics, the styling. It's a brand story that comes to life beautifully on the landing pages you've built, in the outfitting tools, in email... its YOURS. And then some crazy person on the e-commerce team has the audacity to suggest that you let customers make comments about YOUR product, right there on the website.  Are they crazy? Someone could say something bad and influence other people. Someone might mention a competitive brand in the review.  And for what? This is seasonal product, it's only on the site for about 8 weeks - by the time there are enough reviews to be meaningful, the product will be gone....why should one person's opinion spoil a whole season's worth of sales?

Now, I have no idea if this is really what happens in private label organizations.....but if I do a quick inventory of who has reviews on their sites, JCrew, Eddie Bauer, Gap (including Banana Republic & Old Navy), Land's End, Gymboree and a host of others in the private label game don't offer them. While these players were quick to adopt rich product imagery, outfitting tools and other "one way" forms of merchandising, they have been remarkably slow to move into the world of online interactive customer input. 

While I do understand the likely internal politics and fear, I would argue that the private label retailers have the most to gain from taking the bold move to let their customers talk.  Here's why:

• First, they have passionate followers. Brand loyalists will jump at the chance to say something good about you when you invite them to do so and thank them for their input.
• Second, a majority of the reviews you get will probably be positive. Statistics (thanks again, Bazaarvoice) show that 88% of people who posted or planned to post reviews said they would be positive reviews (2007, Neilsen)
• Third, if a review or two is negative, (get this) it can actually help conversion. Too many positive reviews can leave some people skeptical, and a constructive negative review can actually fuel shopping confidence.
• Fourth, if a bunch of reviews are bad, don't you really want to know so you can take care of the problem?  Why wait weeks/months until the returns flood in? You could catch a manufacturing defect or a fit problem and avoid an even bigger customer satisfaction issue.
• Fifth, what if you could harness those reviews and use the customer feedback to build better products for the next season?

And as for mentioning competitors, if your customer really likes your competitor better than you, again, don't you want to know?  And don't worry, you can screen out abusive, obscene or other reviews that are truly and unfairly damaging.

At the Shop.org Summit last week, I raised my glass to LL Bean, one of the first of the large private label apparel retailers to implement customer ratings and reviews.  While I am sure the internal battle might have been big, the company is already seeing  merchants embrace this powerful new source of customer insight, and thousands of reviews have been posted on the site.  So much for the worry about critical mass.

If you shop private label websites, I suspect there is good news ahead.  These retailers do tend to copy one another, and I would imagine the other private label sheep will follow LL Bean into the greener pasture of public exposure.

E-commerce Merchandising: Re-defined, Re-energized and A Lot More Fun

What a difference a year makes.  When I first started this blog back in the early Summer of '07, I wrote a post on why online merchants and marketers tend to fight, and how the lines between these critical functions were becoming blurrier as marketers with rich customer data were driving and influencing product strategy(read the post here).  I also speculated that the growing need for robust product content was rapidly becoming a runaway train in many organizations, and this was the place where merchants needed to take the reigns, view content as a strategic asset and apply merchandising know-how to the equation (read the post here).

In July of this year, the annual Shop.org Merchandising Workshop was held (always a great event, well worth attending) and I was thrilled to see that the e-commerce merchant role is evolving and gaining in importance.   And, it looks like some of my earlier predictions are coming true.  So, if the online merchandising role is evolving, are retailers keeping up?

First, what is an online merchant, and what does she/he do?  Online merchants are the product specialists on the e-commerce team.  It's their job to know the product they sell inside and out, and, using customer insights and e-commerce technologies, make that product discoverable, considerable, and purchase-able on the website or through other online distribution channels.

The devil, as we know, is in the details.  E-commerce technologies and best practices have advanced significantly over the last few years.  Merchants have more data and tools than ever, and their customers are demanding more product information than ever.  But customers are also participating more than ever, and leaving behind valuable insights into how they shop and what information they expect to find.  The difference between an "old world" online merchant and one in the "new world" is how well they have incorporated these robust customer insights into their online merchandising practices and how well they are using them to optimize the site experience.

When I listen to "old world" online merchants talk about what they do, they usually list out tasks like this:

• Decide what products to feature on the home & landing pages
• Decide what navigational categories and sub-categories products belong in
• Sequence thumbnail & search results pages so that new or best selling items appear first
• Assign coordinate or up-sell products to display on product and shopping cart pages
• Coordinate photography needs
• Determine feature products for affiliate partners and email campaigns

If you're an online merchant doing the above, you're probably a bit bored by now, and you're probably starting to sense that there's a whole new world out there.  There's an additional level of horsepower that you can be adding to optimize the effectiveness of the e-commerce channel by harnessing customer insights.  The job in the "new world" looks something like this:

• Mining product reviews and customer generated content to determine what product features and language to use in product descriptions, search meta data and comparison tool criteria.
• Creating new navigational paths beyond standard categories by mining search records and user generated content.
• Forging new ways for customers to discover product that can be automated on the back end, like "best sellers", "top rated", or "new additions" sections that are continually updated based on business rules - not manual merchant population.
• Determining automated solutions to cross selling and up-selling based on product attributes and purchase history.
• Diving deep into the way that people shop for key product categories both online and in store.  See my previous post about buying swimwear at Land's End.  They've made a deliberate decision to own the category, and their selling process is right in synch with how customers want to buy the product.  Can you say the same about your online selling experience?
• Determining the visual product presentation needs at the category and product level. Zoom, larger views and alternate views have become ubiquitous. Video is on the rise.   Smart online merchants take an in-depth view of presentation needs by category and product vs. a cookie cutter approach to display.
• Partnering with stores to make the web an integral part of the in-store selling process. What do customers want to know? What information do store sales associates need at their fingertips when they work with a customer?

We’re well into the back half of the year, and in addition to readying your site for the upcoming holiday season, you’re probably starting to think about '09 priorities and budgets. If you're an online merchant and you're feeling a bit stuck in the "old world", consider giving yourself a new job description as a holiday gift.  The "new world" might be a bit more work, but it's bound to be a lot more fun and effective.

REAL Category Ownership: The Tugless Tank = Seamless Shopping at Land's End

True e-commerce excellence is always worth applauding, after all, it's not easy.  Some companies have become so good at it that we tend to take them for granted.  Amazon wowed us with one-click ordering years ago, and it remains the standard for speed and simplicity at checkout.   I buy online all the time, and I must admit that it's rare that I have an experience that is so seamless and well executed across channels that I feel compelled to tell the story.  Don't get me wrong, I have good online shopping experiences all the time - but they have become so commonplace that it takes something out of the ordinary to get me to the keyboard.  In this case, it's the human touch at just the right moments that makes the difference.

Some time ago, Land's End decided to own the women's swimwear category.  A somewhat risky move, given that Land's End does not have physical stores for customers to try on product, and the return rate for the swimwear category can run in excess of 50%. 

A swimsuit is a product that most women don't like to buy - there's nowhere to hide, and photos of flawless models only exacerbate the situation.  Most retailers in the swimwear business barely put their toe in the water (or shall I say the pool?) in this category, concerned about the tough economics and inevitable customer dissatisfaction.

Land's End decided to be the comprehensive resource in the category, and a woman's best friend to boot.  Lucky me.

For the record, I should confess that I don't swim (not much opportunity in Seattle anyway) and I don't have a bathing suit body.  But later this summer I'm going to Iceland on vacation (yes, I know, an odd choice) and I am intrigued by the number of thermal pools I'll have the opportunity to experience.  So, I need a bathing suit. Land's End to the rescue.

I was prompted to start with Land's End from their catalog. The page investment they've made in the swimwear category is truly impressive, and the product assortment drives way down into the long tail of offering: petite, tall, plus size, mastectomy, and more.  I doubt that there are many women that Land's End couldn't serve in this category.   Once I saw a few attractive styles in the catalog, I went online to finish my selection.  Here again, I was greeted by a broad assortment, easy navigation, and plenty of rich product information to help me find the right style and fit.  I meandered between two styles a number of times, and a pop-up window appeared, offering me live help.  I declined, but was impressed by the timing...just at the decision point.  In the end, I added both styles to my cart assuming I would return one of them (remember that 50% return rate?).  My suits arrived a few days later, with easy return instructions in the box.  Thanks to Land's End's great tips and product information, both suits fit and actually looked good.  Given that swimwear shopping is a rare occurrence for me, I decided to keep them both. Begone, high return rate!

But here's the clincher.  Two days after my suits arrived I had a voice mail on my home phone from Land's End.  The friendly phone rep said she called to find out how the suits fit, and offered to answer any questions or help me with an alternative style or size.   Wow.  I never called back, I didn't have the need, but what a phenomenal service. They know this is a tough category, and instead of leaving the customer in the lurch to figure it out, they were with me every step of the way, owning it, being the experts, being my friend, even providing in-home service.  Bravo.

Sometimes, e-commerce excellence that truly differentiates is achieved by the human touch.    

A Tall Tale Called the Long Tail? A Sensible Merchant's Point of View

WARNING: This post is too long by almost anyone's standards. But it's a cool and very important topic to e-commerce merchants.  You might want to read it anyway.

Back in 2006, like a bunch of other people, I bought Chris Anderson's book The Long Tail: Why the Future of Business is Selling Less of More.  Like a bunch of other people, I loved it.  At last, it seemed that someone had intelligently outlined the forces at play in the world of e-commerce and the changing dynamics triggered by increased product choice & accessibility.

Anderson's work sent an alarm bell to many traditional merchants: it's time to start obsessing about product extensions, limitless choice and highly personalized niche "micro" assortments.  For those tasked with managing inventory and running a profitable business, not an easy task.

Then, just to keep us on our toes, around the same time The Paradox of Choice: Why More is Less by Barry Schwartz was published, calling on those same merchants to avoid the pitfalls of over-assortment, to allow customers to focus on just a few choices and avoid the "overwhelm" factor.

So, what's an e-commerce merchant to do?  Sell less of more and risk over-assortment and dead inventory? Or sell more of less and risk commoditization and lack of brand differentiation?

I was prompted into thinking about this again recently, when I saw a brief article in the WSJ: Study Refutes Niche Theory Spawned by Web, which highlights recently released research by Anita Elberse and her supporting Harvard Business Review article Should You Invest in the Long Tail?

As it turns out, the conclusions of Elberse's work challenge some of the Long Tail's key principles. Specifically:

• Best sellers are more important than ever (Anderson says they are losing steam to niche products)
• Scores of niche products are never purchased and are unprofitable (Anderson says they are gaining importance to retailers)
• Niche products don't rate well in terms of customer satisfaction (Anderson says that some long tail products are just bad products)

Elberse's work has spawned a very interesting discussion on Chris Anderson's blog longtail.com. Overall, while Elberse's research is solid and her conclusions worthy of debate, some aspects of her work, specifically the use of percentages vs. numbers in her reporting and her definitions differ from Anderson's.  Those differences are big enough to cause loyalists of The Long Tail to stand firm, and confused merchants to perhaps become even more confused.

After reading the books, the research and the blog (all well worth your time to read, by the way), it seemed to me that it was time for a bit of merchant sensibility to be infused in the mix.

The risks of going too far with both limited "best seller" assortments and over-specialized niche offerings are well known to retailers.  While the web gives us exciting opportunities to break down brick and mortar barriers, capitalizing on those opportunities takes strategy, discipline, investment and plenty of hard work.   To be successful mining long tail profits, there are are few big things you need to master:

A) Know your product category. Long tail examples typically cite books and music: digital consumption or high sku count or both.   If you're not in one of those categories, you need to think through how the long tail applies to what you are selling.  Are there niche size ranges, colors, designs, or features that cater to an under-served market or to extreme loyalists who can't get enough of what you sell?   What data do you have to support investing in long tail inventory?  It's not just about carrying everything under the sun.

B) Take clues from your other channels.  If you are a multi-channel retailer, talk to the merchants for stores and catalog to understand where the opportunities are for logical product extensions.

• Is there a hot category where the limits of shelf space simply don't allow for a full assortment?
• Are there areas of the catalog where space has been cut back due to tighter mailing budgets?
• Are there product lines where the amount of product information desired by the customer is inappropriate for the store or catalog to tackle?
• If you have a limited number of stores, are there opportunities to aggregate demand via the web, therefore building enough volume to justify the investment in an extended product line?

All  of these areas could potentially yield insights as to where long tail merchandising could be successful.

C) Invest in customer insights.  One of the key takeaways from Elberse's research is the need to have intimate knowledge of your customers and their buying behavior.   There are some customers that will never venture into the long tail (such as the busy mom who always buys the same brand and size of popular jeans).  Others will actively seek out long tail products (such as a petite woman who is hard to fit, or a cooking enthusiast eager to try a rare French sausage in her cassoulet recipe).  Understanding who will buy in the long tail and successfully predicting what they will buy is critical to inventory management and profitability.  Elberse points out that a large number of long tail products in music are never purchased.  That's no surprise.  The long tail doesn't let merchants off the hook; quite the opposite.  We still need to intelligently select, assort, and manage inventory to our customers' needs.  A good merchant is a good editor, even in....NO, especially in the long tail world.

D) Invest in product discover ability & accessibility.  Herein lies the key to long tail success.  Carry a lot of the right stuff, and be religious about helping people find it.  Assuming you know your customer and have picked the right products, they have to be able to discover those products in a relevant context.   E-commerce technologies are critical to unlocking the long tail.  Among the the tools you must have in place are:

• Powerful search, preferably in guided navigation format, allowing customers to sort, edit and drill down on a wide variety of attributes, from top level to granular.   Tools like this will help your customer avoid the paradox of choice.  And don't underestimate the manpower and work required behind keeping your product data in search shape.
• Product recommendations.  Don't think that this can be done by a merchant manually assigning "you might also like" items on every product page.   That won't scale, nor will it give you the success rate of automated recommendations that draw from customer history and product data.
• Product information.  Sure, amassing and maintaining a vast body of product content is hard.  But a huge part of what makes that long tail product discoverable to people that might want it is what you have to say about it, or in the case of customer reviews, what other people have to say about it.   The more that oddball product is described, tagged, and recommended, the more likely it will be found by the perfect prospective owner.
• Product reviews and ratings.  As mentioned above, it's not just the reviews themselves, but how you use them as a discovery tool.  Incorporate them into search, comparison tools and site navigation.  Allow customers to ask questions and answer one another.  Incorporate the terminology and attributes used by reviewers into your product descriptions and copy.   And of course, read what customers are asking and saying about the product.  Sometimes a long tail product is a poor seller because it's a lousy product, not because people can't find it.

E) Don't abandon best sellers.   Elberse makes this a cornerstone of her article, citing her research findings indicates that retailers are selling more blockbusters, not less.  Anecdotal case in point:  Last week I bought a CD that would, by anyone's definition qualify as a blockbuster.   The only reason I bought it was because I was on a site  that offered me "top sellers" as part of my recommended products.   Now that I am no longer 15 years old, I am not that savvy about what's selling in music.  I would have likely never known that this CD existed or that it was appealing to me.  The fact that the site I was on knows my musical tastes and offers me a multitude of ways to navigate and discover products was what drove the sale.   So, just like good e-commerce merchandising tactics help people discover the long tail products, they also help less aware customers discover the blockbusters.  And sometimes, it's the blockbuster purchase that drives the customer into the long tail the next time they visit.

So, is The Long Tail a tall tale or a real profit opportunity?  Ultimately the question rests with the retailers who are working to execute e-commerce well.  Comments and success stores are of course, welcome.

And, if you are still in the mood to read more, here are a couple of good case studies of companies successfully navigating the world of long tail retail:

The Hyper-Personalized Business Model Trend

A Niche E-tailer Size up Glamour....One Customer at a Time

And, last year's post:  The Long Tail in Real Life....3 Variations on a Theme   

Think Your Website Is Hard to Navigate? What About Your Store?

I've seen the insides of a few too many stores and airports over the last 3 weeks. Normally, I spend most of my time looking at e-commerce websites; doing competitive audits, looking for emerging best practices, and yes, buying stuff. 

After what I've seen in stores and airports lately, I'm convinced that the "real" world is actually no easier to navigate than the online world. In fact, it's probably worse, but we're all just more forgiving because we live with it every day. 

I wound up on the wrong road to the airport in one city despite Google maps, courtesy of  bad road signs. Once I found the airport (just in time, thank you), my walk to the gate was dangerously close to going in the wrong direction, again, thanks to overlapping signs that contradicted one another.  And why is it that when this happens, I am the one who feels stupid?

This experience prompted me to revisit an article that appeared the WSJ late last year: To Clarify Sloppy Signage, Airports Hire 'Wayfinders'. 

The article left me optimistic that there is indeed someone watching us flounder, and that they do want to help (for a fee, of course).   As it turns out, wayfinders (short for professionals that specialize in environmental design and signage) don't have it any easier than information architects have it on the web. 

In my conversations with great IAs over the years, what irks most of them is that time after time, things that would make the site truly useful to customers wind up getting axed or convoluted by politics and conflicting business goals. The airport folks have it just as bad, as it turns out. Building ordinances, foreign languages, legal concerns, safety and maintenance issues, the list goes on. Everyone wants to be sure the sign works for their department, but few, if any are looking out for the 'whole' customer, who just wants to find their gate quickly, thanks.  The article even cites one pathetic example of signs being so bad that an airport resorted to dedicating an employee to stand and give directions to passengers.

Chances are, the same issue exists in your retail store.  There are signs telling your customer where the women's department is located, signs directing her to the ladies' room, signs telling her that shoes are 20% off and signs telling her not to smoke or bring her dog in the store. And in some cases the 20% off shoes are called 'shoes', in other cases, they are called 'footwear'.  Chances are a number of people in the store can order signs, decide what they say and  put them pretty much where ever they think it makes sense.   

Signs can be conversion drivers or conversion killers,  just like website navigation.  Just like web teams solve these problems, stores can too.  Watch your customers as they come through the door, locate what they're looking for, seek out dressing rooms and get details about their pending purchase.  Where do they breeze through the store? Where do they have to ask for help? Where do they give up and walk out (assuming they can find the door, if it's properly signed "exit")? 

For some good (and amusing) examples of signs gone wrong, visit one of my favorite sources of usability foul ups, This Is Broken.  Based on the example below (one of my favorites), it looks like some signs might be a source of confusion even before you get the customer in the store....so what exactly does this store sell....?

Attention Merchants: Retail Therapy is For Real, So Stock Up On Lipstick

In the beginning, man created the wheel. And shortly thereafter, someone (probably a woman) put a shopping cart on top of it.  (After all, why waste a perfectly good wheel?)  From there, consumer behavior (otherwise know as shopping for fun) was born.

No shock, an article in the WSJ last week, The Neuroscience of Retailing confirms that there really is such a thing as Retail Therapy. No surprise to those who have shopped to feel better for the last 21 centuries, but we now have scientific evidence that shopping is fun.  Or at least it makes our hearts beat faster and our brains release serotonin.  Don't believe it? Just try shopping with a heart monitor and eye camera strapped to your body, like the subject in the article did.   And she was in T.J. Maxx.  Just imagine what happens when she's in a designer boutique. Call the paramedics.

Alas, with high gas prices and the economy in a downturn, many retailers are in a slump. But just think about the customers; they're slumping worse, poor things, depressed that they can't shop as much as they used to.

The answer? It could be as close as the cosmetics counter.  A recent article in the NY Times, Hard Times, But Your Lips Look Great discusses the "Lipstick Index".  Theory behind the Lipstick Index says that in times of economic hardship, we still need to satisfy our shopping habit. We still need to feel good about ourselves, even when world events or economic conditions make it inappropriate.  In other words, lipstick and small indulgences experience an up-tick in sales when the rest of the retail world lags.   

While there is not scientific evidence to support the Lipstick Index like we now have with Retail Therapy, my merchant common sense indicator says there's something here.  A friend of mine who worked for a large lingerie retailer confessed shortly after  September 11  that online  sales in the days immediately  following  the attacks were almost uncannily robust. Same principles apply. Something small, comparatively inexpensive and a bit self- indulgent.

So, as a retailer facing tough times, what's your "lipstick"?  What's that affordable, irresistible item that someone can buy, even if their gas bill has tripled and they didn't get a raise?  We used to point to a $4 Starbucks latte' as the affordable indulgence; but with more than three locations on every street, Starbucks hardly qualifies as an indulgence anymore. That means there's room for someone else to be the retail therapist and help people feel good, even when they can't afford it.  Chances are, if you can make them feel good when they don't spend a lot, they'll come back to you for a bigger dose of serotonin when the economy improves.   

   

A Second Look at Second Life...A New Practicality Emerging For Virtual Reality Technologies?

A few weeks ago, I was far from the first to speculate pessimism on the viability of virtual reality site Second Life as a marketer's dream.  A few recent articles have prompted me to revisit the topic of virtual reality; one which validates my thinking on Second Life, but a couple of others that discuss remarkably exciting and practical uses of 3-D and virtual reality technologies.

For an entertaining look at Second Life through a fellow skeptic's eyes, there's a great read in a little-known magazine called GOOD.  The article, Get a Life: The Hollow Promise of The Internet's Next Big Thing had me both laughing and pondering the bizarre motivations of Second Life's most loyal users.  One thing's for sure, these people are not likely to be the marketing target of any high profile company anytime soon.

On the more practical side, a recent WSJ article, A Virtual View of the Store Aisle got me very excited about a real world application of virtual reality technology; using it to observe and improve the customer experience and effectively drive sales.  Consumer packaged goods companies like Kimberly-Clark and P&G are using virtual reality labs to get consumer and retailer insight on new products, packaging and displays in early stages of development.  Replicating how new packaging looks in virtual store aisles, observing how customers find a product on virtual store shelves, and experimenting with the size, color and effectiveness of virtual merchandising displays are all part of the new  real world of product development.

Similarly, you'll enjoy an article in Storefront Backtalk called The Strange World of 3-D E-Commerce, about how retail chain Tweeter is working to make 3-D replications of customers' living rooms a practical tool in making home entertainment purchase decisions.   The whole process of photographing customers' homes, replicating them in a 3-D technology environment and helping customers select the right products specifically for them not only builds confidence in the selection and purchase process, it builds a highly personalized level of engagement, and likely, loyalty.

One of the key questions I ask myself is this:  if I'm such a skeptic, why do I keep reading articles about Second Life?   I think the catch is that while the current execution of Second Life and the motivations of it's users are not that interesting to me (other than for pure humor and entertainment), the practical tools that virtual reality technology will eventually bring to us as marketers and creators of customer experience are well worth investigation and testing.