The Marketplace

Mark Forrester blogged recently about his experience in buying T-Shirts from Oddica.com, a US-based online store. The package arrived along with free stickers, badges and postcards. He was so impressed that he wanted to tell the world.

Contrast this with two online purchases we have made recently in South Africa

Shane bought a laptop bag from PCMall. Can you imagine his excitement opening this delivery? Me neither.

And today I received my new shiny iPod Nano from ZA Store:

Inventory of the contents:

- 1 x Large Jiffy Bag.
- 1 x Crumpled Invoice, titled "ZA Apple Online Store". That's not who I bought from?
- 1 x iPod Box and iTunes CD.

That's it. I checked the corners of the Jiffy Bag twice, just to be sure.

What a wasted opportunity for ZA Store and PC Mall. They made the shopping experiences completely unmemorable for us. The products themselves are great, and the price was fine, but in the future when I need a fancy widget to plug in to my iPod, I would have completely forgotten who I originally bought from.

Where was the ZA Store fridge magnet? The voucher to give to a friend? The hand-written note from the guy who packed my order, saying how jealous he was of my new iPod? The invitation to join the exclusive club of ZA Store customers who get regular freebies and first option on new products?

When 10 different online stores are selling iPods and Laptop Bags in South Africa, you have to differentiate yourself, and the only real way you can do this is when the package arrives at the customer's door. He will tolerate clumsy, poorly designed websites, but unless you blow him away when the product arrives you've lost a potential repeat customer. E-commerce doesn't end with "Thank you for placing your order with us". It continues long after that.

I just hope the SA E-commerce Awards judges take this aspect into account when they dish out the prizes later this month.

Get Elastic has written a summary of 29 Facebook applications that promote e-commerce. There are social shopping apps, deal-finders and even apps developed by fans of shops like Threadless. A couple of online stores have attempted to create Facebook apps themselves, but the results are not startling yet.

We have discussed an app for Yuppiechef that would compliment the Facebook group we created. It would probably revolve around the new Gift Registry service we launched, although we're still trying to iron out the details in our own minds before we commit any development time to it.

Social Shopping is definitely on the up, but only the quick and brave will benefit from it any time soon.

Amazon.com are busy rolling out a new design. Get a taste here.

This will create an interesting trend in site design. Everyone has been copying Amazon’s tabbed-navigation; now watch how they will all change to match this new-look left-hand navigation.

Also fun to think that the old Amazon look was “scientifically proven” to lead to the most conversions. Does this mean they were wrong, and a better solution eluded them all this time?

Or perhaps they really are on to a new trend, and we would be wise to follow their lead. After all, surely the world only needs one way of navigating an e-commerce site. We are used to following the Windows way of navigating desktop applications ("File Edit View" along the top, then some icons underneath, Ctrl-C always copies, etc), even though many different companies produce software. Shouldn't the same apply to websites?

Last week Shane and I spoke to World Wide Creative's clients at their monthly Heavy Chef Session. We encouraged this group of business owners to get ready for the e-commerce wave that is coming to South Africa's shores in the next few years. It's a matter of "when", rather than "if" it will come. You can read Fred's summary and view photos here.

Arthur Goldstuck has released his latest e-commerce research which confirms that we're on the brink of an upturn. A big reason for this is called the "Experience Curve", which he described as follows:

"Only once users have been online for around six years are they comfortable with the more challenging aspects of the Internet, such as e-commerce. And the number of people who have been online for six years or more has finally reached the level where it is making a substantial impact in online retail."

Read the full press release here. 

I came across a soon-to-be-launched e-commerce site in the UK, Webtogs.co.uk. They have a blog at blog.webtogs.co.uk which is documenting their development journey. They are working through some of the exact same things that we are struggling with, so it is great to see their honest sharing.

Most gurus and books will tell you that repeat customers are more important than trying to gain new customers. They've already proved that they want to buy from you, and there is generally less customer service interaction because they've experienced the process once. Amazon have hatched a way to facilitate this with items like coffee pods, razor blades and washing powder. When you buy this type of product you are presented with the option to have Amazon deliver the same item at regular intervals. Convenient for the customer, and oh so profitable for Amazon.

This model works quite well for flags, which need to be replaced every year or so due to bad weather. We'll add it to the development wish-list.

myadsl.co.za has an article about how difficult it is to build a profitable transactional website (ie an e-commerce site like YuppieChef).

Arthur Goldstuck is quoted in the article:

“Even the large retailers are battling locally because of the high cost of maintaining a transactional Web site, with issues ranging from secure and stable payment systems through to effective fulfilment,” he says. “In addition, site audits of online retail sites indicate tremendous strategic gaps in implementation, content management and transactional processes, with local online retailers showing very poor awareness of best practice in Web site strategy.”

Well, that's a relief. If the big guys are battling, then I suppose it's OK for us to feel like there is still a mountain of work left to do on our sites!

Filipe Serralheiro, application performance management consultant at Compuware SA, says transactional sites should form part of any retail business, much like shop fronts.

“Yet how often are IT managers asked to justify additional bandwidth, or marketing managers asked if the online site is feasible?” Serralheiro asks. “The tools used to measure performance, accessibility and - most importantly - user experience, are therefore vital to any business decision maker.”

In fact, I'd take it a step further. The IT manager, who spent his morning ordering new network routers and meeting with hardware companies, spends his afternoon meeting with a web designer, or worse, developing the site himself in Frontpage! It amuses me how senior management put websites into the same box as "computers", and therefore it lands on the IT guy's desk, when in fact a proper website presence encompasses everything from marketing to the supply-chain. If you don't treat your company's website holistically, it's not going to work.

“A high proportion of visitors to most sites begin a shopping process but then abandon their baskets during the checkout process – often due to the complexity of the transaction process,” he says.

You will notice that on our e-commerce sites we don't ask a user to register before making a purchase. We see this as yet another hurdle in the checkout process, particularly when they are required to come up with a unique username, a password that contains 9 characters and at least 4 digits, and then wait for an e-mail to confirm their registration, which often doesn't arrive. Having user registration does make the second purchase slightly easier, but that doesn't help if they never complete the first purchase!

On our sites, after the customer has added everything to their cart, we have a simple form to capture their name and contact details. At that point the order is entered in to our system and an e-mail sent to the customer, so even if they pull out then we can still make contact to push the transaction through. We use a cookie to store a reference to the user's information, so in most cases if they make a second purchase in the future they won't have to re-type information.

After the first transaction is succesfully completed we could ask the user if they want to make a username and password to speed up future purchases. This step will always be optional.

Half the respondents claimed to monitor and manage the performance of their transactional Web sites – yet only six percent have specific information about the end-user experience for each individual logging on. In fact, 61% of companies have no idea whether, or when, a client drops off a page - or how many times they might click the refresh button in a particular section.

Goldstuck says that local online retailers do have the data available to track the behaviour of their customers, but most have no idea how to monitor that information or make it meaningful in order to improve their performance.

I agree, anayltics is hard and time-consuming. We use Google Analytics and Crazy Egg on our sites, but we have only experienced a hint of their full potential. The massive online retailers can afford to pay a professional a few thousand dollars to tweak their site, because increasing conversions by half a percent will easily earn that back. For smaller sites like our's, a 1 percent improvement in the conversion rate would barely cover the cost of the phonecall to a professional analytics company.

Goldstuck predicts the market will not remain as forgiving as it has been until now. “Our research indicates the online shopper of 2008 and 2009 will be much more demanding, forcing online retailers to be far more strategic in managing their Web sites,” he says.

It's decision-time for South African companies - make a serious go at developing an online presence and be prepared to put a lot of money behind it, or don't bother. Sometimes a one-page site with your contact details can cause less damage than a poorly executed e-commerce site.

We are in the process of giving our work space an extreme makeover which let me tell you is not the easiest task. I now know why Interior Designers exist!

In SA, when you are looking to purchase something, you need to decide whether this is going to be something that is available on the net, or whether you are going to thumb it through the Yellow Pages. Most of the time the Yellow Pages wins hands down because most businesses don't even appear online. Optimistically, you decide to start off with Google, hoping that something has miraculously changed in the last 24hours.

I'm looking for office furniture. I type in "office furniture" on Google and do a "pages from South Africa" search, and wait for the results.  There are a few SA ads that come up (well done to those companies that are taking technology by the horns), it looks promising and at this point your heart rate starts increasing. Could this be it? Is there someone who has their entire offering online? Do they have what I am looking for? You frantically click through, the design is fresh, looks like this one could be up to date - and then you realise that you still have to phone through anyway because there is no pricing anywhere. A great example is CN Business Furniture, these guys could really up their game very easily and if we had seen something we liked, we may very well have purchased it online. I know, alot of stores don't want their competitors knowing their pricing, but is this still valid argument in this day and age? If a competitor wants to know what you are charging, they'll make a plan.

This whole process could be a lot easier if stores positioned themselves online more effectively. If they realised that there IS a growing market out there; people who would like to at least start the process online. At the end of the day, I think it comes down to understanding, priority and budget.

Bfg have taken their products online, I have ordered one of these couches already. I like the fact that someone can look around and get the full extent of their offering without having to first visit the store.

Also, fatSak have done an excellent job in presenting their gigantic "beanbags" online. Well done.

Last week I was sent a gift through NetFlorist. I thought maybe it was in response to my recent post about their exorbitant spend on systems, but alas, this blog is not that famous yet. 

There was an outer brown box that took the brunt of the journey here (they use RAM, and everything seemed fine. We haven't tried them yet). Inside the brown box was a classy black box with lid, ribbon printed with the NetFlorist logo, and a handwritten card that presumably the sender had composed online.

Inside the box was a Sally Williams nougat extravaganza. Don't click the thumbnail on an empty stomache! The nougat boxes and loose items fitted snugly in the black box and were interspersed with raffia and tissue paper. In summary, it was a delight to open.

We are still working on our packaging situation, as shown by this picture where our fulfillment department is cutting a bigger box down to size. We've said it before and we'll say it again - there is a big opportunity for a box/packaging company to clean up the SA e-commerce market. We would go online today and order a bunch of different sized boxes, and we'd pay to get them here. Surely we're not the only ones who are battling?

A big reason that we are pursuing online businesses as opposed to physical stores is the relatively small amount of capital that is needed to set up shop. Our goal is to create the methods, systems, processes and marketing plans to launch a new business and have it supporting the owner within a year. Clearly we're talking a different language to the big boys. Netflorist have published a press release where they boast about their R3 million site redesign and system overhaul, apparently moving to Microsoft Commerce Server technology. I have to admit the site looks pretty good, and there is no doubt they are handling way bigger volumes than we are. But R3 million? If we had that type of cash we could hire 5 decent programmers and designers to work solidly for nearly 3 years. I wonder whether I could keep them busy for more than a few months?

At Live Alchemy we develop most of our website technology in-house (other than a few open source plug-ins or tools like Google Analytics), using PHP and MySQL, and hosting on Linux servers with Hetzner. We have explored various off-the-shelf and free shopping cart systems, but years of working on homegrown systems has given us a level of familiarity that is hard to give up. However, there is a lot to learn from other systems, so we will be reviewing and researching things like MS Commerce Server in months to come.