Retailers Judge Their Online Success By The Wrong Metrics.

Jupiter Media Metrix reports that 69 percent of retailers are wrongly judging the success of their Internet investments on top-line metrics such as online sales and profits. According to new Jupiter retail infrastructure research, brick-and-mortar companies that look at the non-transactional benefits of their sites — including online influenced sales and improved payroll productivity — will find that the ROI of their Web sites are 65 percent higher than if they only considered sales that occur online. Jupiter analysts say that brick-and-mortar retailers must strive to maximize their sites’ ability to not only drive online sales, but to also drive informed customers into stores.

“Brick and mortar retailers should not blindly follow the lead of their pure-play competitors by adopting a laser-like focus on the profitability of their Web sites,” said Ken Cassar, senior analyst, Jupiter Media Metrix. “A typical brick-and-mortar retailer’s Web site can yield financial benefits well beyond the transactions it generates. Jupiter estimates that nearly two thirds of the total Web benefit for retailers will be in offline transactions influenced by online research.”

Key findings from the latest Jupiter retail infrastructure research report, “Profits Are for Pure Plays: Prudent Online Investment Strategies for Brick-and-Mortar Retailers,” include:

Brick and mortar retailers only “pay lip service” to the value that their sites have to their stores, tracking metrics that treat their sites as selling channels. According to a Jupiter Executive Survey, 46 percent of retailers cite sales as the primary metric that they base the success of their Web sites on, followed by 23 percent that are focused on profit. Meanwhile, a Jupiter consumer Survey reveals that 45 percent of consumers have used a retailer’s Web sites to research a product before buying it in that same company’s store.

Jupiter analysts say that only Internet pure-play retailers should focus solely on driving profits from their Web sites. According to the Jupiter ROI model, a brick-and-mortar retailer with a fairly successful transactional Web site is likely to extract nearly two thirds of its total Web benefit from the non-transactional capabilities of its site. In this model, the site’s ROI is 65 percent higher when the non-transactional benefits are included than when they are ignored.
Integrating online and offline systems will become increasingly important for retailers who are focused on driving consumers into their stores with purchase intent. A Jupiter Executive Survey reveals that while only 31 percent of retailers already provide visibility of store inventory on their Web sites, another 23 percent expect to offer this capability within the next 24 months. Jupiter analysts advise that while systems integration is inevitable, the costs can be high enough that many brick and mortar retailers should delay aggressive integration efforts until after their in-store systems have been brought up-to-date with software that was built to Web-based standards — something that will happen in due course for nearly all large retailers.

“Brick and mortar retailers cannot ignore the impact that their Web sites have on store purchasing because it is difficult to quantify,” Cassar said. “The retailer that spends its limited Web resources shoring up the transactional elements of its site at the expense of the elements that would send a customer with purchase-intent into its stores may ultimately lose offline market share to smart competitors.”

For more information at http://www.jmm.com.