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On-line retailer: role of e-serviceOn-line retailer: role of e-serviceThis company sold a range of durables, mainly in the IT area, to consumers and businesses primarily through the Web. The early success of the company was encouraging, but profit figures began to slip, even though costs were being reduced and hit rates maintained. The dip in sales was put down to increasing competition and an increasing abandoned rate for the online shopping carts. The company was smart enough not to react by reducing prices, but to look closely at its proposition, and why customers were (and were not) buying online. It realized that convenience, not price, was the main purchase driver among customers who purchased online. More than 50 per cent of its customers said that they purchased products on the net solely for convenience, and only 8 per cent said solely on price. About 79 per cent of online shopping carts are abandoned before the checkout, more than the 65 per cent the company estimated to be the industry average. Its research showed that the reason for the abandoned carts could be traced partly to time pressures for customers and technical problems (for example, hung line), but mainly because of the complexity of the site and the passive nature of the shopping experience. Its research showed that customers liked the convenience of online but that they also liked catalogue shopping by telephone because it allowed a dialogue, some human feeling, advice, and specific answers to vague questions. They knew that retail-based face-to-face transactions for the same category of goods can lead to a better experience and three or four times the basket size revenue. So the company adjusted its proposition around these findings. It integrated contact media, mail (catalogue, incentives, prompts to use), telephone (direct line, call me button and outbound order reminders to valuable customers, with their permission) and a redesigned Web site, which majored on the need for convenience, simplicity and reliability. Prices were gradually increased and although some price-based customers were no doubt lost, repeat purchasing by remaining customers has increased dramatically. It also utilized its greater customer understanding to develop simple cross-sell and up-sell rules, via the Web and the telephone, to create further value. 116
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