Holiday Advice for E-tailers

E-commerce consultant Jack Jia reveals the secrets of improving traffic and getting more sales out of your Web site

By Jack Jia

With the 2009 holiday shopping season upon us, more retailers—both large and small—are investing in social technologies to mimic digitally the Mom-and-Pop feel consumers experience when they walk into their local privately owned hardware store or clothing boutique. Here are five rules that savvy online retailers already have in place heading into Nov. 30, aka Cyber Monday, the day Internet holiday shopping traditionally kicks into high gear. For those of you not yet incorporating these practices, fear not. They're easy to implement and each can help your business year-round.

Step 1: Let like-minded customers merchandise your products for you.

Since the beginning of time, the societal norm has been to trust experts—our teachers, doctors, lawyers, etc. It was the best strategy available when we could interface with only a few people at a time. The increasingly social nature of the Web has changed this dynamic. James Surowiecki reveals in his best-selling book, The Wisdom of Crowds, something that scientists have known for years: Random groups of informed people can predict outcomes far more accurately than any individual expert. Since that time, companies such as Netflix (NFLX) and Amazon (AMZN) have popularized the use of recommendation engines to identify new patterns in behavior as customers browse and purchase online.

Leveraging crowd wisdom is especially important in content—and product-rich "long tail" sites where manual merchandising and editorializing is neither cost- nor time-effective. Long tail is the concept of selling fewer units of many different special-interest products, as opposed to selling large quantities of fewer popular products, such as the iPhone (AAPL). Instead of asking a merchandiser to define the thousands of niche segments along the long tail, why not let the crowd of site visitors self-define those segments? By tapping into the wisdom of these like-minded shoppers, your customers can effectively recommend products to one another and actually sell for you.

Step 2: Pinpoint customer sentiment ahead of the curve.

Leading industry analysts at market research firms Gartner, based in Stamford, Conn., and Forrester Research, in Cambridge, Mass., have both been giving a lot of attention to the concept of studying customer sentiment to make predictions on future consumer trends. Forrester calls this "customer intelligence," and Gartner has dubbed it "pattern-based strategy" (PBS). According to Gartner, PBS "provides a framework to seek, model, and adapt to leading indicators, often-termed "weak" signals, that form patterns in the marketplace. This is something that transactional-based systems, such as business intelligence (BI) and complex event processing (CEP), simply haven't been able to deliver.

Predictive technologies have helped organizations become much more efficient by automating their interactions with customers. These applications, however, have historically prioritized the wrong set of indicators, often identifying consumer trends weeks, if not months, too late. It's a well-known fact that e-commerce transaction data lag other types of purchasing indicators― such as comparison shopping or length of time the computer mouse lingers on a product ― by months. Only by tapping into the browsing behaviors of shoppers visiting your Web site is it possible to detect early signals, spot trends, and develop new selling strategies before your competitors.

Step 3: Blend community wisdom with expert control.