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A Salute to Brave eCommerce Retailers

Date: November 26th, 2008
By: Raquel Hirsch

There are brave eCommerce retailers, truly working both hard and smart at making sure the avalanche of bad economic news does not sweep them over.

This morning, AdAge reports a ComScore finding that consumer web spending dropped 4% so far in November versus the same period last year — the first time e-commerce figures have shown a year-to-year drop. “Despite the recent reprieve that plummeting gas prices have given American consumers, the depressed and volatile stock market, declining housing prices, inflation and the weak job market all represent dark clouds hanging over their heads this holiday shopping season,” said comScore chairman Gian Fulgoni.

But there are positive forecasts too:

ComScore is predicting that spending will come later, and that holiday e-commerce sales “will ultimately match the $29.2 billion spent during November and December of last year.”

So what are brave eCommerce retailers doing?

Right now, they are testing different web page designs and offers to optimize their conversion rates – to make sure they get each and every possible sale from that expensive traffic coming to their site.

In the past (meaning ‘throughout the history of eCommerce’), the “IT Lockdown”, that is, the notion that whatever web site you’ve got on November 1 (or October 1, if you’re an early bird) is the one you’re going to live and do business with through to mid-January was pervasive.

This freeze was instituted for two reasons primarily:

1. Merchants think that testing will be too complicated at a busy sales period, or might entail more risk and more potential for lost sales

2. A lockdown makes the IT department’s life easier. (To be fair, getting all the e-commerce systems working is complex and unstable, so when the load goes up multiple times over Christmas, IT folks believe that whatever benefit they might get from changing the site does not overwhelm the risk of taking the site down.

That rationalization worked well when eCommerce rates were growing by leaps and bounds. But no longer.

Today’s economy calls for brave moves.

As a result, running conversion optimization experiments aimed at improving the eCommerce sales conversion rate is an absolute must. Smart eCommerce retailers (including all our clients who are right now knee-deep in conversion rate optimization experiments!) have figured out the opportunity cost of delaying tests is overwhelming.)

Let’s do the math (you can replace the figures for your company):

Say that at the current run rate, a company expects to get 400,000 visitors to the site in December and get a 1% sales conversion rate, for an average order value of $60 and revenues of $240,000.

Postponing a conversion rate optimization experiment by just one month that would end up lifting the conversion rate from 1% to 1.5% (a 50% increase), that one month push-back will cost $120,000 in sales.

Testing technology has changed and eCommerce merchants no longer have to fear that making changes in a site, testing them and then measuring the results will put any real restriction on their daily traffic or run the risk of a system-wide failure.

Can you afford to wait? Let’s go!

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