Return to: GROK Dot Com 10/15/2000

The Emperor Has No...CLOSE!
You know the story, the one where it took a little kid to point out the obvious: the vain, self-important Emperor who thought he was wearing a glorious new outfit was, in fact, appearing in public completely naked. Nobody had the nerve to tell him, but to the little kid it was so obvious, how could he not?

Well, look at the current state of e-business. Lots of hype, lots of pie-in-the-sky predictions, yet the truth is painfully obvious. If e-commerce is that fabled Emperor, then where are the sales? Folks online are learning thereís a big difference between putting up an e-commerce site and actual sales. From where I sit, the Emperorís lack of clothes is e-commerceís lack of close. Sales arenít happening because, while sites are doing everything else including singing and dancing, they arenít selling.

Talk about running around naked! It's really embarrassing. And I'm the "kid" pointing the finger!

The size of the problem is amazing. Sites supposedly set up to sell experience terrible customer conversion rates, astronomical costs of customer acquisition, and appalling customer retention rates. Itís no wonder the web is awash in red ink.

Just how naked is that emperor? Let me paint a clearer picture.

The typical conversion rate on the web is less than 2% (compared with 48% in the brick and mortar world), and that rate is going down.

Even out of the people who do buy from a site, 90% never come back, and that number is going up.

In 1999, as much as $9 billion in US retail sales were lost due to slow download times alone, and that figure is going up.

During the 1999 holiday season (can you say "most critical time of year?"), at least $7 billion in sales were lost to a combination of website and fulfillment problems, and that figure is going up.

62% of shoppers who are looking for a specific product simply abandon their search. Yep, still going up.

42% of online shoppers resorted to bricks and mortar alternatives to meet needs they tried to satisfy via the Internet. That number is going up, too.

67% of shoppers who actually put items in their online shopping carts still abandon the transaction before checking out, and that rate is going up.

The typical cost of customer acquisition far exceeds the lifetime value of the customer.

As many as 43% of online shoppers who are computer-knowledgeable and want to buy still fail.

Many e-tailers are redirecting their efforts to business-to-business relationships in an effort to salvage their companies, yet fail to resolve any of the underlying problems.

Yes, itís not just bad, itís getting worse. And thatís despite literally hundreds of millions of dollars being thrown at the problems by so-called experts. Do you think thereís just a tiny chance those ďexpertsĒ might be missing something? Plus, itís not just about those shoppers that bail out. A customer who experiences a bad online shopping experience tells an average of 10 other people, people who will never even point their browsers in your direction.

The crazy thing is that people want to buy. That's why they came to you in the first place! And both research and plain old common sense prove that, while people donít want to be pushed, of course, people do want to be sold. Sell them and theyíll buy more; ignore them and theyíll buy less. Yes, it really is that basic. Think about this: would you build a brick and mortar store, stock it with stuff, but then not hire any salespeople? No? Well then, how can you build a digital store, not staff it with Digital Salespeopleô, and expect it to sell? Sure, some people will buy - maybe. But even then, ďsomeĒ isnít nearly enough. Want new clothes? Pay attention to your close.

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Return to: GROK Dot Com 10/15/2000

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