A Rice University faculty member just published a study on how effective merchants find Groupon. To Groupon critics, it was honey because a whooping 40% of participants wouldn’t repeat the experience.
But here’s the catch and why I’m still a huge proponent of the “group buying” model that encompasses Living Social, Buy With Me, Tippr and now the Yellow Pages and local radio stations and newspapers too: most of that 40% thought the Groupon customers were cheap and tipped badly.
If that’s the worst of the problems, this model may actually be worth much more than the billion-dollar valuations already placed on the space. Here’s why. First, businesses like restaurants can prepopulate the “tip” field. I went to a restaurant in Charlotte called Zebra which has done multiple group buying offers and they include a 15% gratuity in the bill. Any business not already doing that could and should be. Second, and more powerful, is that the group sites could capture information on who is a good and bad customer from the merchant. Every redemption has a unique code associated with it (see image). None of the group buying sites are doing that now and merchants, at least according to the few that I’ve interviews, are keeping track of redemptions in rudimentary excel spreadsheets. The first company to provide a merchant tool that allows the flagging of particularly good and egregiously bad customers will be the winner in this space. By eliminating the “bad” customers from the offer, a merchant is much more likely to experience profitability or service issues that strain these small businesses.
The eBusiness team at Forrester is excited to announce that we have launched The Forrester Community For eBusiness & Channel Strategy Professionals focused on the key business challenges that eBusiness professionals face every day. The community is a place for eBusiness professionals to exchange ideas, opinions, and real-world solutions with each other. Forrester analysts will also be part of the community, helping facilitate the discussions and sharing their views.
The community is open to all eBusiness professionals, whether you’re a Forrester client or not.
Here’s what you’ll find:
A simple platform on which you can pose your questions and get advice from peers who face the same business challenges.
Insight from our analysts, who weigh in frequently on the issues.
Fresh perspective from peers, who share their real-world success stories and best practices.
Content on the latest technologies and trends affecting your business — from Forrester and other thought leaders.
The findings from part two of Forrester’s annual survey conducted in conjunction with Shop.org will be available on the Shop.org site next week. This installment of the "State Of Retailing Online" series will delve into the world of key metrics as well as multichannel and global strategies.
Some highlights include:
Identifying improvements in performance and customer retention
Developing strategies for successful global expansion
Avoiding the pitfalls that many multichannel organizations face
We look forward to sharing the full version on Forrester.com near the end of October.
Social shopping -- and service -- has become a reality: The percent of US online consumers opting out of social media -- Inactives -- has fallen dramatically, from 52% in 2006 to just 17% in 2009 while all of the categories of social media usage have increased. In response, eBusiness executives are doing the best they can -- as fast as they can -- to experiment with social media and create solid strategies.
The challenge? Most social initiatives originate in interactive marketing departments with marketing goals like awareness and branding, while eBusiness executives must tie their efforts to increased sales and decreased service costs.
Social then tends to raise more questions than it answers: Who owns social? What is the role of eBusiness in setting the social strategy? How do we create a strategy that helps our online sales while coordinating with other departments? Our new report The Building Blocks For Social Success in eBusiness explores how some firms are dipping their toes in the water -- we call them “experimenting” eBusiness groups -- and how others are in the “directing and governing” phases with social -- owning not just the templates and process for social, but the execution as well, for their entire companies.
Where are you on the social spectrum? Does your company host a Facebook fan page? Do you offer customer ratings and reviews? Are your social efforts focused on increasing sales or increasing brand awareness? Is social integrated into your online sales experiences? I told you social raises more questions than answers! I’d love to hear your thoughts on the role that social can play in driving online sales.
The past couple of months have seen a number of new initiatives and shifts on the global online retail front: Zara went live with a series of eCommerce sites (in five languages in Spain alone) while Gap started selling to an international online audience. At the same time, eBay conceded the market in China and looked to partner with market leader Alibaba. More companies have started coming to us asking about eCommerce in less traditional markets, with markets like Russia and Saudi Arabia being brought up with increasing frequency in our calls with clients.
Forrester just kicked-off our 2010 Retail Executive Survey, and we want your input. We partnered with Pricegrabber, PayPal, Commission Junction, and StoreFrontBackTalk to create a survey which looks at multichannel retailers' organizations and topics relevant to the challenges currently facing their roles including:
eBusiness technology decisions
Social media and mobile trends
Online customer service
Customer loyalty programs
The survey takes just about 15 minutes to complete and all of the data will be used anonymously and in aggregate. As a thank you for completing this survey and once it is closed, you will be able to access the data to help benchmark against your peers.
The results from the survey will serve Forrester's eBusiness and retail research agenda; we look forward to gaining insight from your responses.
Okay, so it’s no Brown v. Board of Education, but for those in retail, the 1992 U.S. Supreme Court case of Quill v. North Dakota could be considered just as landmark. For the uninitiated, it spelled out the regulations surrounding collecting sales tax for states in which they have no physical presence – in short, that they weren’t allowed to do it.
With elections around the corner, many politicians and associations are stumping on this very issue. They believe that many retailers are exempting themselves from paying the sales tax that the state ultimately deserves. After all, 45 states in total collect sales tax from brick and mortar stores, which end up accounting for roughly 25 percent of their total income. Sensationalism abounds in the discussion of this lost revenue: "Some of the things that have gone on in this recession would not have happened if sales taxes had not gone uncollected," said Scott Peterson, executive director of Streamlined Sales Tax Governing Board.
Since 2003, a majority of the remaining retailers have followed suit in collecting tax, leaving pureplays, many of whom are mom and pops who in this economy are at least earning income. Assessing taxes on these businesses won’t really help anyone except Walmart. And let’s be realistic here: Even studies like the one by the University of Tennessee say only 25% of eCommerce sales taxes that are “due” go uncollected. And we know from our surveys that 65% of people say that Web sales taxes (if increased) would cause them to decrease their online spend. With these facts that chip away at the supposed billions that supposedly go uncollected, this appears to be a much less pervasive issue than once put forth.
On Wednesday of last week, Ann Zimmerman of The Wall Street Journalreported on my former employer, Toys “R” Us, which is planning to open up 600 temporary “pop-up stores” in anticipation of the holiday shopping season. The WSJ describes it as a super-sized bet while the company maintains it is a proven strategy. Like most prospective retail decisions in this uncertain economic period, it is likely a mixture of both.
Ann certainly has some legitimate weight behind her assertions:
The space in which the pop-up stores will reside is distressed for a reason. Who can guarantee that a watered-down version of Toys “R” Us will be able to overcome inherent issues such as poor foot traffic or a bad location?
Toys “R” Us has historically experienced issues with inventory; the majority of it never turns and Toys "R" Us often sells out of its best sellers before the season comes to a close.
While trends show improvement, there is no guarantee of economic rebound for the holiday seasons. This could spell disaster if Toys “R” Us moves forward with 600 new shops.
One of the things that continues to surprise me about many banks’ multi-channel strategies is how little most banks have integrated their ATMs into those strategies. Cash machines are by far the most commonly used banking channel. According to Forrester’s Consumer Technographics data, 74% of adults in Western Europe use a cash machine at least once a month, far more than use either branches or online banking that often.
Despite the introduction of Windows-based operating systems and colour screens, most banks aren’t doing much to engage customers on this most-frequent touchpoint. Most do little more than promote the product of the month to all comers. Only a few leaders, like Singapore’s OCBC Bank and Spain’s La Caixa, have integrated ATMs into their CRM systems, which lets them do clever things like remembering customer’s normal withdrawal amount, wishing customers a happy birthday and making products offer that are relevant to that particular customer.
I am intrigued by last week's announcement from UK payment processor VocaLink and Australian financial software vendor eWise that they are collaborating to build an online banking transfer payment system for the UK. Online banking transfer systems make it (fairly) easy for online shoppers to authorize payments through online banking by integrating the payment details into their bank's secure online banking site. The customer is routed directly from the merchant's site to the bank to authorize the payment and back again.
In the Netherlands, the iDEAL online banking transfer system has been highly successful. It's now used by some 10 million Dutch online shoppers for about 5 million transactions a month. But the UK's online shopping market is different to the Dutch one in a couple of important ways. Firstly, debit cards can be used to pay online in the UK. Since almost all adults have a debit card, paying online is not a big problem in the UK, unlike many other European markets. Secondly, UK Net users have always been relatively complacent about online security compared with other Europeans. That means that one of the primary attributes of an online banking transfer system -- more robust security -- may not cut that much ice with British online shoppers.
Forrester has long argued that any new payment system needs to overcome three hurdles to succeed: providing a clear improvement over the existing alternatives, driving consumer and merchant adoption, and developing a viable business model for all parties.