eCommerce in the Downturn

eCommerce in the Downturn How design can create opportunity January 2009 • Bill Westerman, Principal

Who is Create with Context? We are a strategic design and research firm focused on web, mobile, desktop, and consumer electronics applications We help companies with complex, strategic innovation projects: reinventing existing digital products, inventing entirely new digital products, and bridging the gap between physical products and the digital world Consumer and business-to-business behaviors  Ecommerce and social commerce  Social media and communities  Internationalization and multi-cultural experiences  Multiplatform products  Our clients range from the Fortune 500 to technology startups Founded 2005, with headquarters in Santa Clara, California, USA Copyright © 2009 Create with Context, Inc. All rights reserved. 2

Background Over the course of the last year, we’ve done hundreds of in-home, in-depth customer research visits across the US We’ve had the chance to speak in detail with people about their lives within the context of digital design … Goals and Attitudes Wants underlying Behaviors and beliefs and desires motivations … and we’ve seen first-hand how the changing economy is affecting the online purchasing behaviors of the American consumer Copyright © 2009 Create with Context, Inc. All rights reserved. 4

Background Hispanic Suburban 20's Accountant AOL user Green MSN Physician Asian Public TV Actress Ex-convict loyalist Human rights Urban Bookkeeper Black SF Area 30's activist Stay-at- Rural Social worker 40's Immigrant Single mom home mom 50's White Chicago Poet US-born Dentist Copyright © 2009 Create with Context, Inc. All rights reserved. 5

Background We’ve found that the changing economy is affecting online purchasing behaviors in two main ways: Make it work Make it resonate Traditional But importantly, ecommerce concerns, financial worries are such as usability and also changing how trust, continue to be customers perceive important factors in and interact with ecommerce success companies online We’ll start out by exploring how to make ecommerce resonate with customers in this economy Copyright © 2009 Create with Context, Inc. All rights reserved. 6

Transition from emotional to logical Consumption is becoming more logic-driven People are looking for things they require Not as open to ‘lifestyle’ impulse buys Aspirational content doesn’t resonate as well with customers Tone down the big glossy frivolous pictures Instead, make it more transactional, more logical Provide messaging about savings and longevity Copyright © 2009 Create with Context, Inc. All rights reserved. 8

Emphasize ‘good’ purchases People are concerned about their jobs and their futures, but they’re willing to spend money on things that they see as an “investment” in themselves, something that can make them more marketable Implies that buying this product can “empower” you to perform better in your job Doesn’t mention key selling points: value, learning anywhere, getting things done Highlight those aspects of your product that cater to this “investment” mentality, rather than improving their quality of life, making them happier, making them more efficient, etc. Copyright © 2009 Create with Context, Inc. All rights reserved. 9

Don’t seem desperate Very large discounts fall down a slippery slope from ‘great bargain’ to ‘something must be wrong’ Consumers don’t want to own something from a vendor they fear will go out of business “60% off? Something must be wrong.” Don’t make sales feel desperate - rather, help consumers feel like you’ve always been doing the right thing: watching costs, being economical, being their advocate Copyright © 2009 Create with Context, Inc. All rights reserved. 10

But make sure to provide bargains At the same time, people are increasingly looking for bargains, discounts, and deals And often the first place they go on ecommerce sites (and sometimes the only place) is to look for these bargains Clearance browser Highlighted deals Make it easy for consumers to find your bargains However, keep in mind that having too many simultaneous deals (for example, free shipping + buy one get one free + percentage discount) can be overwhelming from a usability perspective Copyright © 2009 Create with Context, Inc. All rights reserved. 11

Consider the customer’s mindset Difﬁcult times mean customersʼ mindset shifts Make sure your product responds accordingly Banking, for example, is suddenly a source of stress: people are sad, mad, worried, and scared - all very strong emotions These don’t convey solidity and stability; they show happiness and family values Recognize customersʼ emotions and be supportive Provide tools, forums, and reassurance to address their issues Copyright © 2009 Create with Context, Inc. All rights reserved. 12

Be up-front with everything Trust in big companies is fading; companies can seem irresponsible, not trustworthy, and can disappear overnight People think companies are trying to ʻtrickʼ them: added taxes, shipping and handling, batteries not included, …, which has a visceral negative effect + shipping Clear return policy In stock Free returns To combat this, make relevant information easy to ﬁnd, state costs and extras up front Copyright © 2009 Create with Context, Inc. All rights reserved. 13

Be up-front with everything And when companies do seem to be hiding things, people are going to get upset and tell others Source: newnetworks.com Copyright © 2009 Create with Context, Inc. All rights reserved. 14

Free shipping is big. Really. Shipping feels like an extra “tax”, a frivolous charge that customers are willing to pay for the convenience of online shopping But in a down economy, this can be the final detractor Provide free shipping, even if you have to reduce discounts to compensate If you do charge for shipping, be up-front about costs When people find shipping is more expensive than expected after entering their information, they get upset and leave Copyright © 2009 Create with Context, Inc. All rights reserved. 15

Promote online shopping as thrifty One of the original promises of ecommerce was that lower overhead resulted in lower prices; however, this message has largely been lost over the years Airlines have focused on driving traffic to their own sites through “You’ll always get the ‘lowest fares online’ lowest … price, guaranteed.” Promote online shopping as the low-cost channel Provide web-only deals Communicate to customers that you’re able to provide lower pricing on your website due to lower overhead than physical stores Copyright © 2009 Create with Context, Inc. All rights reserved. 16

Embrace coupons, sales, and email Especially today, people are looking for deals Saving money, getting value for their spend Provide easy-to-find coupons and discounts Let people share deals they find with their friends Reward repeat customers: give them a personal discount code (People like to think they’re getting something that others aren’t) And you’d be surprised how many people use unsolicited email as a way to find new online stores and deals Copyright © 2009 Create with Context, Inc. All rights reserved. 17

Tone down the visuals In the downturn, people are subdued, concerned, pensive; they’re watching their wallets, tentative, and worried Bold, happy-go-lucky design no longer resonates Visual design needs to ‘tone it down’ to match; it should be calming and logical, not jarring or bold Possibly too Calm and yoga-like, straightforward too inspirational However, feeling yoga-like or ‘zen’ can seem frivolous because time spent on relaxation is money wasted Copyright © 2009 Create with Context, Inc. All rights reserved. 18

Establish new guiding principles An early step in the design process is to describe the feeling of the thing you are trying to create Often, this is captured through two lists: what we want to be, and what we donʼt Typically, these closely mirror the brand positioning; however, in a downturn they are more subdued: Not now Yes Lifestyle-centric Stable Opulent Secure Frivolous Responsible Over-the-top Rational Vibrant Calming Exciting Relaxing Impulsive Straightforward Extra Logical Copyright © 2009 Create with Context, Inc. All rights reserved. 19

Make it work While functionality and usability has always been important, it becomes essential during the downturn People used to be willing to put up with a bit of confusion and inconvenience in their quest to make a purchase But today, consumers are skittish, thinking about every dollar they spend; the decision to make the purchase is hard enough, especially if the product is optional in their lives When the buy impulse comes, companies need to have rock-solid functionality and usability Anything that gets in the customer’s way is enough to break them out of the impulse mindset and let them think “wait, I don’t really need to buy this” Copyright © 2009 Create with Context, Inc. All rights reserved. 21

Don’t give a reason to give up It can take very little for the customer to give up Even minor glitches in usability or slightly confusing task ﬂows through the site, can break the ﬂow and lose the sale Error message doesn’t “pop”, looks like other non-error text on the page Error fields aren’t Server issue highlighted; people causes page to only aren’t always willing to partially load go searching for them Copyright © 2009 Create with Context, Inc. All rights reserved. 22

Product forward, UI back Consumers come to ecommerce sites to purchase things; everything else should be secondary The experience isn’t about the brand, the logo, the message, the splash screen, the store, or the fancy interface - it’s about the product The user interface is simply a frame for the product Copyright © 2009 Create with Context, Inc. All rights reserved. 23

Product forward, UI back Product photos are Engages the customer, large and plentiful - encourages browsing making it easy to and serendipitous browse and buy purchases Copyright © 2009 Create with Context, Inc. All rights reserved. 25

Keep people in the purchase funnel In the past, the checkout process was a common place to present the user with other products to purchase However, in a down economy, we want to ensure that people make it all the way through the funnel to checkout, by removing distractions from the process But once they hit the checkout, remove all distractions from completing the process Copyright © 2009 Create with Context, Inc. All rights reserved. 29

Keep people in the purchase funnel Product navigation has been replaced by a progress indicator Notice that all the chrome is gone, leaving only things that progress the purchase Open-ended ‘browse’ navigation is replaced with clear, specific instructions Copyright © 2009 Create with Context, Inc. All rights reserved. 30

Don’t require registration In customer visits, we often ﬁnd that mandatory registration causes customers to drop off and never complete the purchase, especially if the person isnʼt sure theyʼll use the site again Customer is required to Customer can buy provide email address without registering, to continue and register later if they want Copyright © 2009 Create with Context, Inc. All rights reserved. 33

Cross-sell and up-sell after checkout It is often recommended that companies put cross- sell and up-sell opportunities into the purchase process ﬂow in order to increase basket size before checkout However, in todayʼs economy, this can derail the purchase process; one may think “wow, maybe I should be buying the better one”, or “I really should get the accessory kit; maybe Iʼll hold off until I can afford both” Present Find product Add to cart Checkout cross-sell and up-sell Instead, move cross-sell and up-sell to be immediately after checkout; allow customer to instantly ʻupgradeʼ their existing order Frame it as a reward: “thank you for your order - we now have a special discount for you - would you like to add this to your purchase as well?” Copyright © 2009 Create with Context, Inc. All rights reserved. 34

Use the confirmation page to drive signup Now that the purchase is complete, attract customers with additional deals More later Register with the site, More now sign up for email alerts Cross-sell and up-sell for deals; send them the cross-sell and upsell Copyright © 2009 Create with Context, Inc. All rights reserved. 35

17 rules of thumb for ecommerce in the downturn Make it resonate Make it work Transition from emotional to logical Don't give a reason to give up Emphasize 'good' purchases Product forward, UI back Don't seem desperate Keep people in the purchase funnel But make sure to provide bargains Don't require registration Consider the customer's mindset Cross-sell and up-sell after checkout Be up-front with everything Use the conﬁrmation page to drive signup Free shipping is big. Really. Promote online shopping as thrifty Embrace coupons, sales, and email Tone down the visuals Establish new guiding principles Copyright © 2009 Create with Context, Inc. All rights reserved. 36

How Create with Context can help you Our proven process provides a clear path from research to design, drawing on customer insights to generate things that people will want and use Structure Research Ideation Concepting Design Define the Understand Generate Render ideas Deliver key business need the customer dozens of into tangible design and structure and business ideas and concepts for components the project contexts select those user testing and help that are most and funding ensure user compelling focus during development For further information or to receive periodic reports such as this one, please contact info@createwithcontext.com For new business inquiries, please contact Bill Westerman, Principal bill@createwithcontext.com +1 408 834 7601 ext 24 Copyright © 2009 Create with Context, Inc. All rights reserved. 37

Thank you! Find us on the web at createwithcontext.com Websites and products mentioned in this report are shown as examples, and their inclusion does not necessarily indicate that these companies have been clients of Create with Context. Images and other materials incorporated into this document may be copyrighted by their original owner, and are included within under the doctrine of “Fair Use”.

eCommerce in the Downturn

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