By  on June 19, 2007

SAN JOSE, Calif. — Anticipated growth in high-speed Internet connectivity has retailers toying with bandwidth-hungry Web site features they would not have considered last year.

Streaming video, podcasts, 360-degree viewing and product customization tools were once only on the wish lists of many, convinced that not enough homes had the broadband access needed to run these features properly. That view is changing, and with new confidence that faster Internet connections will be the norm, retailers are ready to say "go" to adding Web site interactivity that engages shoppers, creates social communities and ultimately builds loyalty.

"We are in a lot better shape than some of the headlines would lead you to believe…that we are in horrible decline in broadband deployment, behind Denmark, behind every Third World despot nation on the planet," said David McClure, president and chief executive officer of the U.S. Internet Industry Association.

He spoke here in Silicon Valley earlier this month at the Internet Retailer show, which drew more than 3,000 Web merchants and 1,100 technology vendors. The conference and exhibition were organized by Vertical Web Media of Chicago.

McClure said 85 percent of U.S. households will have broadband Internet access by 2012, which is in line with projections cited by other speakers. Estimates on today's broadband access varied more widely, however, from a low of 55 percent to a high of 67 percent.

J.C. Penney Co. Inc.'s Craig Horsley, manager of site operations for jcp.com, whose sales hit $1.3 billion in 2006, said Penney's customers are ready for advanced Web site tools that require high-speed connectivity. He said more than 70 percent of jcp.com shoppers use a broadband connection, such as a DSL (digital subscriber line) or cable modem.

Last year, jcp.com launched an online feature that helps consumers design, configure and accurately measure window treatments. The results: sales up 20 percent over plan, product returns decreased and repeat site visits increased, Horsley said.

Later, an interactive tool was added to let shoppers create their own "bed in a bag" and view the resulting bedroom outfitted with their chosen pillows, sheets, comforters and window treatments. Horsley said sales rose 290 percent, but Penney's could not be sure if sales were driven entirely by the new feature, if the financial plan was flawed or a combination of both."The important thing is there was no adverse effect to the infrastructure," Horsley said.

That's a serious consideration because while consumers may be adopting higher-speed Internet connectivity in their homes, stores may not be up to the task. Both Penney's and Recreational Equipment Inc. said point-of-sale terminals and kiosks running their Web sites in stores may have slower speeds and deliver a less rich experience than shoppers might have at home.

"While our stores have broadband access, it's probably not as high" or as fast as many household computers, Horsley said. "And you don't want to deploy anything that can potentially take out your store POS because you lose your bread and butter and that's your ability to check somebody out."

Other powerful Web site features demonstrated at the conference included a personalized "due date" countdown clock at Due Maternity, a maternity apparel retailer, and "Will It Blend" streaming video from Blendtec, which showed what happens to an iPod, garden rake or golf balls when placed inside an industrial blender. Speakers said these features add fun to the online experience and encourage shoppers to return and even contribute original ideas and content.

Other conference speakers included executives from Wal-Mart and REI, which said in-store pickup continues to pay off because shoppers tend to make extra purchases when they collect their online orders at a store.

At Wal-Mart, half of customers picking up Internet purchases in store spend an extra $60, said Brian Osborn, vice president of marketing, walmart.com. The retailer began rolling out its Site to Store pickup option in March and by July, more than 3,300 U.S. stores will have it, he added.

About 40 percent of rei.com orders are delivered to a store for customer pickup, said Brad Brown, vice president of e-commerce and Web strategies. About 30 percent of those customers make additional purchases in-store — generating $15 million incremental revenue in 2006, he said.

Those cross-channel shoppers are REI's most valuable and spent $730 on average last year, Brown said. By comparison, REI's Web-only shoppers spent $168 and store-only shoppers spent $304 last year.

Gary Briggs, senior vice president and chief marketing officer of eBay, called for more innovation and said online users can be a great resource for new content and functionality. "What can we do to truly innovate and focus a little less on copying each other?" he asked. Offering free shipping like the next guy does not constitute innovation, he said. "Sameness does not drive demand."

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