FREEDyourMind

How Far We've Come

Check out this newscast from 1981 about the future of online news. It starts:

“Imagine, if you will, sitting down to your morning coffee, turning on your home computer to see the day’s newspaper. Well, it’s not as far-fetched as it may seem.”

Someone from the San Francisco Examiner is quoted as saying:

“This is an experiment. We’re trying to figure out what it’s going to mean to us, as editors and reporters and what it means to the home user. And we’re not in it to make money, we’re probably not going to lose a lot but we aren’t going to make much either.”

28 years later, and people now get more news from the internet than from newspapers.

Honestly, I'm a little surprised it took 28 years.

Amazon and Netflix Shine - Satisfaction and Revenue

Amazon announced their fourth quarter results yesterday. 

Now, remember back when the holiday season was coming to a close...at ForeSee Results we released our Top 40 Holiday Research and I wrote about it in this post, and guess who came out on top...Amazon and Netflix.  And not only were they on top, but both had a substantial lead over the next closest pack of retailers. 

There have been many reports about how tough this holiday season was; Comscore reported that online holiday sales were down 3% year over year.  But based on our holiday research, we expected that there would be clear winners...and many others that suffered greatly.  Well, Amazon reported that Q4 sales were up 18% from 2007 Q4.  Pretty impressive results in a tough economy.  And Netflix recently reported subscriber growth in Q4 of 26% year over year and revenue was up 19% in Q4 from the prior year.  Also very impressive results...but not surprising based on their high customer satisfaction scores.  In a tough economy the leaders in customer satisfaction lead the way in financial results as well.  (This is of course also true in a good economy but I am guessing we have a while before we have to worry about that scenario.)

But why?  In a tough economy the pool of consumer spending (or corporate spending) is either shrinking or not growing anywhere near the rate that we have come accustomed to.  So what does that mean?  Well, it means increased competition.  And the competition is increased for two reasons.

First, the number of sellers are roughly the same as it has been and they are now competing for a shrinking (or slower growing) pool of customers.  That translates to increased competition. 

Second, switching costs on the Internet are very low, especially when compared to other channels.  For example, if you are shopping in a store, to go and shop at another store brings with it a cost to the consumer.  You have to take the time and effort to switch and you may not find anything better.  But on the web it is a different story.  You can clone yourself by opening up another browser and be in two places at the same time, with almost no effort.  A very low switching cost.  That translates into increased competition.

So with increased competition the winners are going to be the ones that are providing a high level of satisfaction to their consumers.  (Amazon and Netflix)

So how do you win?  Satisfy your customers...and remember you cannot manage what you cannot measure.

Where Do You Get Your News From?

Back in December I wrote about the changes going on with the Detroit Newspapers.  Well earlier today I saw a interesting stat from The Pew Research Center about that in 2008, for the first time ever, more Americans relied on the Internet for national and international news then they relied on newspapers.  When looking at the 18-29 year old group, the Internet equaled Television as a main source for national and international news.

It is no surprise that advertisers are following the same trends, shifting more of their focus to the web.

The Internet Presidency

As a technologist (or as others like to say, a closet tech geek) it is great to see the Obama administration embrace the Internet and technology.  I thought I would do my part. 

I wasn't able to watch the inauguration live -- far too busy of a day.  But on my drive home I wanted to get caught up.  Now my satellite radio provides me the most current news, and many different channel/station choices, but I wanted to hear his speech. I didn't want to wait until I got home and watch it on the DVR.

Hmmm... what could I do?

Well, I got out my trusty iPhone, accessed YouTube, clicked on the inauguration, and spent my ride home listening to his speech.  How is that for the use of technology!

So what other role will the internet play in this administration?  More on that tomorrow.

Sears Drive-through - A Very Interesting Concept

Just think about it.  Buying online and picking up in store is not always what it is cracked up to be.  While great in concept, how many times have you had to wait in line at the store, or park a long way from the store, etc.  What is your expectation when buying online and picking up in store?  I always expect it to be just as easy to pick it up in the store as it was to buy it online.  Well, it does not always work that way.

Well, Sears is planning on opening a warehouse style concept store in Joilet Illinois this summer.  The store will feature a drive-through.  I like the idea of that.  This also could be a great way to appeal to a younger, more internet savvy audience, that historically has been a challenging segment for Sears.  Check out more details here.

On the surface this sounds like a very interesting idea for Sears to test out.  I can't wait to find out how successful this concept will be.  Think of the possibilities not only for Sears, but other multi-channel retailers. 

And it could even be an effective way for online only retailers to compete with multi-channel retailers.  Do we see an Amazon Drive Thorugh in our future?  Or, maybe in a shared environment, a drive-through for Zappos - Newegg - Netlifx?

Do you think you would use it?

The True Cost of Free Shipping

We've just released our report on the impact of free shipping during the holiday shopping season. We see free shipping offers increasing every year. More importantly, people who remember seeing free shipping offers are more satisfied with the website overall, and research shows us that satisfied visitors are more likely to purchase, recommend, and return.

Greg Sterling's takeaway (and I think he's right) is that free shipping and lower margins will probably be necessary for most e-retailers to remain competitive. The one catch is that our study was really finding out what's true for e-retail overall, on average. An individual retailer may find its own customers have different needs, priorities, or expectations. So while the study certainly would indicate free shipping as a best practice during the holidays, it may benefit retailers to survey their own customers and shoppers to see if it has the same impact as it does on retail populations overall. Retailers may also find some valuable information by seeing how free shipping affects different audiences--new visitors. vs. repeat customers, high-dollar shoppers vs. low-dollar shoppers, early shoppers vs. late shoppers...
The name of the game in this economy is understanding what YOUR customers want and not making assumptions based on general data or findings.

You can read more about our free shipping findings in Promo Magazine or download the report from our website.(now that I've told you not to make assumptions based on general data!)

1,600 UK Retailers to go out of business this year?

Doom and Gloom from the UK!
Interesting article about expectations of 1,600 UK retailers to go out of business this year.  But what was most interesting to me in the article was the following:

'Despite the gloom on UK high streets, online retail has continued to grow. Online entertainment retailer, Play.com has reported a 24% growth in sales year on year for the Christmas period.   Simon Perree, CEO at Play.com commented:  “Despite concerns this year about the credit crunch and holding back on gift spending, Play.com has had a hugely successful Christmas with strong sales across all product categories.”  At its peak trading time (Monday December 8th 08), Play.com processed 1000 orders per minute up from 700 orders per minute at the same stage in 2007.'

Based on our holiday research of the top 40 US Online Retailers and the top 30 UK Online Retailers we expect many retailers to have strong holiday results...and others to not come out so well.  In fact, Play.com had the highest satisfaction score of the UK retailers we measured, tied with Amazon.  By the way, Amazon reported that they had their best holiday season ever.

Coincidence?  I don't think so.

If you satisfy your customers...you will have financial success.  When the competition gets tougher, as it always will in a tough economy, those that meet their customer's needs and exceed their expectations will survive - and thrive. 

Why does the competition get tougher?  I think most people's first reaction in a tough economy is not to think about the competition getting tougher, but that is the key to success.  At the beginning of a tough economy the same number of retailers are competing for a slowing (or shrinking) consumer spending.  That scenario makes for a much more competitive environment.

The Shirt Off Someone's Back

This one made me laugh, although I know many people are not laughing. 

Madoff memorabilia being sold on eBay.  Check it out here.

Happy 2009

Happy New Year from the team at ForeSee Results!

And yes, this picture was taken in Ann Arbor - but back in the summertime.