NitroSell Retailers Turn Challenging Economy into Advantage by Going Multi-Channel
Posted 25th Apr, 2008
The slowdown in the U.S. economy, whether real or
perceived, can ironically have a very positive effect for retailers who put
their Dynamics RMS-powered businesses online with an integrated NitroSell
WebStore.
NitroSell President Tom Keane asserted, “The reason for this is clear – in a tough economy, retailers need to do two things: increase their revenue from their existing customers, and gain new customers.” There is no better way to achieve these objectives than for a retailer to go multi-channel. Adding a NitroSell WebStore to an existing or new Dynamics RMS installation involves a relatively low expenditure of capital costs, compared to the potential increase in revenues and profits. It has been the experience of NitroSell customers time and time again that ongoing costs are only a small fraction of the increased revenues.
More and more retailers are looking for this competitive advantage, and this is being reflected in NitroSell’s sales figures. Compared to Q1 2007, NitroSell sales of integrated WebStores in Q1 2008 increased 196%. The outlook for the rest of 2008 is for even more dramatic increases.
NitroSell’s very healthy sales numbers are
reflected in the state of online retail, as reported in April 2008 by Forrester and Shop.org. Online sales (excluding travel) grew a whopping 17
percent last year to $175bn, or six percent of total U.S.
retail sales. Shop.org’s annual report predicts that this year the amount will increase
to about $204bn, or seven percent of total retail sales, despite the overall
slowdown in U.S. consumer spending. This is in sharp contrast to traditional
in-store sales, which are flat. An article in USA Today referring to the report
went on to say that “the sluggish economy has bruised many bricks [only] based
retailers”.
Sucharita
Mulpuru, a Forrester Research analyst and lead
author of the report, says that the rise in online shopping is being driven by
two types of consumers, including “the price-sensitive shoppers who appear to
be buying more items online as they look for better prices. And then there are
the more affluent customers, who have been increasing their online spending
because of the convenience and vast offerings.” Tom Keane adds, “While Forrester is correct regarding the
macro online trends, here at NitroSell we are also seeing a significant number
of NitroSell-powered retailers benefiting from customers who love shopping
online with those retailers with whom they already have an in-store
relationship. Retailers leveraging NitroSell’s multi-channel tools can achieve
online conversion rates that are higher than with online-only merchants.”
Shop.org’s finding provided some interesting statistics: “Online clothing sales were the most valuable online category in 2007, worth $22.7bn, exceeding sales of computer hardware, peripherals, and software, which were worth $20.7bn.” Not long ago, it was perceived wisdom that clothes could never be sold online, because they needed to be tried on first. Now it’s clear that with a NitroSell multi-channel solution, the retailer can leverage his relationship and in-store sales to his loyal customers in a manner that will facilitate ongoing online sales from these same customers. NitroSell is having real success with the apparel vertical market, and this success is mirrored in footwear and fashion.
Scott
Silverman, executive director of Shop.org, gave
some other insightful details to the press in relation to the marketing methods
(predominately search and e-mail) that are employed by the retailers sampled in
the report. Every $1 spent on winning orders via search marketing resulted in
$12.79 in order value. For every $1 spent on e-mail marketing, $17.51 in order
value was delivered. On average, the retailers in the Shop.org/Forrester study manage approximately 32,000 search terms
and send 77 e-mails per year to customers, spending roughly $300,000 and $1.9m
on e-mail and search, respectively.
These are big budgets, which are commensurate with the high sums that the sampled retailers have paid to put their operations online. Dynamics RMS + NitroSell-powered retailers don’t need to spend anywhere near these amounts to successfully extend their businesses to the Web.
For example, pay-per-click search advertising is very important in driving online revenues. NitroSell is leading the way with its free, tight e-commerce integration with industry-leading analytics engines, which is critical to any successful AdCenter or AdWords campaign (see NitroSell Knowledge Base (KB) article #267). In addition, NitroSell is tightly integrated with the leading U.S. e-mail marketing provider Constant Contact (see KB articles #193, #269, and #129), enabling retailers to target their customers with compelling product offerings that drive online sales. Constant Contact’s offerings start at as little as $15 per month.
What’s also clear from the Forrester/Shop.org report is that some
of the bigger players are beginning to experiment with new initiatives, such as
social marketing, through community Web sites and mobile marketing. This is
something that NitroSell-powered retailers have been able to do for some time
via features such as Facebook
integration (KB article #313)
and RSS feeds (KB article #387).
The report also forecasts that, despite bright prospects compared to traditional retailing, the total online sales growth in the U.S. will slow over the next five years, as the channel matures with fewer first-time users. NitroSell President Tom Keane disagrees: “The companies on which this study is focused are the bigger retailers who spend hundreds of thousands (if not millions) on their in-store and online systems. Many of these systems are not truly multi-channel and don’t have a fraction of the features of a Dynamics/NitroSell-powered solution. NitroSell is offering enterprise-class, multi-channel e-commerce at SMB prices – something that has not been previously available to small and mid-sized retailers.”
There are millions of independent retailers in the U.S., Europe, Asia/Pacific, and beyond. Once the “NitroSell effect” starts reaching this mass market of retailers, and their customers begin to learn that their favorite local retailer can service them online as well as in-store, the whole picture is going to change. Conversely and just as importantly, local retailers, particularly the ones with unique products, can reach a customer base beyond their local community – regionally, nationally, or indeed internationally. NitroSell delivers affordable mass-market, multi-channel retailing, which is going to drive online sales through the roof. Early adapters are already reaping the benefits!