Jan 18, 2011

What Two Ecommerce Giants Can Teach Small Businesses

[caption id="attachment_393" align="alignright" width="347" caption="ecommerce"]

[/caption] Amazon.com Inc. and Apple Inc. are in the news. Amazon is newsworthy for its initiative to eliminate the “wrap rage” affecting its customers. Amazon is an ecommerce phenomenon, selling directly and offering a platform for other merchants to sell more than a million different products—books, music, toys, consumer electronics, household products, and more. Amazon’s fulfillment-operation workers box up ordered items and ship them from one of 18 U.S.-based warehouses. That routine operation was one of the company’s biggest sources of complaints. Customers were angry that they received products packaged in plastic that couldn’t be easily opened. Others ranted about the waste: A cardboard outer box would be stuffed with plastic packaging material to cushion a product that had been sheathed by its manufacturer in tough, plastic armor that was seemingly indestructible (and couldn’t be opened without scissors, a knife, and strong teeth). Amazon CEO Jeff Bezos decided to remedy this source of frustration for Amazon shoppers. The other company, Apple, came up from IT roots. Technology equals geeks, and that usually means the focus is all on product gee-whiz, not the buyer. But this computer-maker-turned-consumer-electronics-company is renowned for its customer focus, which begins with product design and continues for the life of the product. Apple reported its revenue for the third quarter of 2010, and as usual, the analysts went wild. The company for the first time sold $20 billion worldwide in a single quarter. In that three-month period, the company sold approximately 3.27 million iPads, 8.4 million iPhones, 9.41 million iPods, and oh yeah, computers, too. Mac sales were 3.47 million. But Apple is not just a powerhouse in the design and marketing of cool, gotta-have-it products. Company minds have considered how Apple wants to relate to online customers, and it is in this regard that small businesses can learn from the giant. Apple does a lot of small ecommerce transactions. It sells iTunes and iBooks and apps at commodity prices. When you download something from the Apple site for 99 cents, you don’t want to spend a lot of time at it. Nor will you. Click “Buy.” Click “Confirm.” You’re out of there. That’s because credit card info is stored on the Apple site, and the visitor’s card is charged at the same time as the purchase is downloaded to the visitor’s iTunes library. But Apple knows that there are customers who will not want to be coerced into shopping in such an instantaneous, too-easy-to-be-true environment, so it also offers a Shopping Cart option. And each, the 1-Click and the Shopping Cart option, is given the same prominence on the site. Any ecommerce site needs to assess its checkout from the customer’s point of view—try it out, but also ask customers and hear from them about how the site works or doesn’t work. The goal should be to make the buying experience so seamless that customers will never click away when products tempt them. Agent Anything Inc. gets it: An online business that launched in September 2010, Agent Anything is already winning kudos from potential customers just for listening to and replying to negative comments. “The most valuable customer is the one who doesn’t like your product, or who likes it but thinks it could be improved and tells you so. Whatever you’re doing to get your current customers…you’re already doing it. It’s the ones [who] don’t buy whose opinion matters,” said Harry Schiff, president of the venture. “That said, you don’t usually hear much from these people,” Schiff said. “They don’t generally feel the need to tell you why they didn’t buy. As a business owner, you have to do everything you can to get these people to talk to you.” Schiff checks his website analytics daily and if he sees a URL that’s a little unusual, he’ll check the post. It could be a blogger writing about his company or a poster on Digg.com or the similar Reddit.com, where digerati check in to read and comment on social, e.g., web community, news. Just weeks after the launch of Agent Anything, Schiff followed the analytics to Reddit, where there was a flurry of upvotes and downvotes about the site. What bugged Schiff was that although there were far more upvotes than downvotes, the three or four people who had downvoted did not leave comments, so there was no way to fix problems. So Schiff posted, “Downvoters: I love you. You’re going to make this website more useful. Please tell us why so that we can fix it! Hit the feedback form on the site or comment here. I’ll read it.” That encouraged more “redditors” to check out agentanything.com, and the comments got constructive. Downvoters said things like, “This is a problem that can be fixed and you guys should look at it.” And Schiff and his partner, Oliver Green, took the advice. Then Schiff went back to Reddit and wrote, “Hey, remember that suggestion you made? Well, we implemented it. Thanks for the good advice.” That’s powerful customer relations. “If you have a good product and a good company,” Schiff said, “feedback is always going to be helpful because the problems that you have are always impermanent, and if you’re a good company, you want to get them changed.” Now, back to Amazon: The company decided to tackle the problem of over-packaging two years ago. In November 2008, Amazon announced that 19 of its best-selling products would be offered in frustration-free packaging. The company convinced manufacturers to package simply in cardboard, without all the plastic and wire ties. Trying to get more manufacturers on the bandwagon, Amazon discovered that it was a hard sell to talk the manufacturers into abandoning their plastic blister packs and clamshells. The reason that blister packs and clamshells exist is to discourage theft from retail stores in the brick-and-mortar world, but in the online world, there’s no need for display cases that no thief can tamper with. Yet manufacturers don’t want to create different packages for the two different worlds. Manufacturers don’t hear the frustration that retailers hear. But now they will. Amazon is taking its customer feedback directly to the companies it is trying to convince, such as Philips Electronics. That company recently changed its packaging for any Essence electric toothbrush that Amazon sells, because its marketing guys cringed when they saw Amazon customers’ emails about the experience of unpacking the Philips product. So convinced is Philips that its new, durable-yet-recyclable, non-rage-inducing wrap is a winner, the company wants to use its new cardboard packaging for other online retailers. It has met resistance there, presumably because other ecommerce giants, unlike Amazon, operate in both worlds, brick-and-mortar and online, and don’t want the distribution nightmare of handling two versions of the packaging for a single product. Amazon, two years into the “frustration-free packaging” initiative, has about 600 products in that group. Change is slow, but it’s happening. The lesson here for small business owners: Listen to your customers. Work with vendors to resolve problems. Be tenacious. And if you are a manufacturer, strike a balance between packaging that is secure and resists crushing, and packaging that frustrates your customers.