By  on September 18, 2007

A surprising number of online retailers are embracing customization, user reviews, blogs and other cutting-edge Web trends typically known as "Web 2.0," according to a National Retail Federation report.

The study, which is to be released today, surveyed plans of online merchants for the next 12 months. As e-commerce takes over a greater share of all retail, the sector is becoming more competitive, and online shops must continuously rise to the challenge even as Web sales are forecast to grow by 18 percent this year, the report said.

The findings were based on responses from 150 online retailers out of several thousand invited to participate. The survey was conducted in June.

Top e-commerce retailers such as Neiman Marcus and David Yurman last year significantly changed the look and feel of online shopping with better product detail as well as more lifestyle photography to set a mood. Retailers surveyed by the NRF said they plan to emulate that strategy. Eighty percent said they will add alternative images, and 72 percent said they plan to introduce lifestyle photographs.

A rising number of retailers are adding user-generated content. Sixty-three percent of retailers said they consider adding customer ratings and reviews a priority. Not far behind was the "top-rated products" feature, with 59 percent of retailers reporting they consider it a spending priority, and wish lists, with 56 percent. A smaller group, 48 percent, said they plan to let customers tag, or categorize, product detail pages so they can be searched by other customers. Twenty-five percent said they plan to let customers share video.

The survey also found that merchants' priority online has changed from acquiring new customers to retaining existing customers.

"They recognize that the number of brand-new customers online is beginning to slow down," said Scott Silverman, executive director of NRF's group. "If you want to keep sales increasing at the same nice pace, you really need to focus on customer retention and improving the experience you're delivering on the Web site."

Retailers continue to put most of their marketing dollars into e-mail and search, but 42 percent said they plan to spend more on marketing and advertising on blogs and message boards, and 39 percent said they plan to do the same on social networks. Forty-nine percent said they offer custom products now. A third of all retailers said customization is very effective, and almost half said they consider customization a spending priority in the next 12 months.

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