E-FILES: Catching and keeping customers

The New Zealand Internet Shop shows how to catch customers and lure them back for future purchases

www.shop.co.nz

Back when The New Zealand Internet Shop was incorporated as a company in Easter 1995, electronic commerce was barely more than a whisper.

The shop is a retail outlet, carrying primarily computer hardware and software, entertainment titles and some food lines to customers based around the world. Unlike most other online retailers in New Zealand, the Internet Shop was conceived entirely as an online venture and has no storefront or physical outlet.

The company supports two sites, both hosted in the US. The sites are identical in content and both run code developed in New Zealand by three employees who all share company responsibilities.

Technical director Rhys Lewis says that the Shop’s customers are almost evenly split between US and New Zealand residents, with a smattering of enquiries and purchases from people in Europe, Latin America and “quite a few” Asian nations.

Being an online retailer has certain advantages, according to Lewis. “It gives us an immediacy that other retailers don’t have,” he says. “It allows passive shopping, so people don’t have to face up to someone when they’re unsure of what they want, there’s no pressure. There are still people who want to talk to a shop assistant, but for a lot of research and price comparison, it’s easier to do it yourself.”

Lewis gives as an example the number of US customers who are prepared to pay a slight premium in price in return for the convenience of Internet shopping. He sees the greatest challenge as attracting visitors to the site and then encouraging them to return.

He describes two marketing objectives: the initial capture and then the generation of loyalty.

“A large part of our sales come from ‘repeat offenders’,” he says. “Once people have come to the shop and realised the benefits of the service, then they’re quite likely to come back again.”

Compounding traditional logistical problems are challenges brought by the widespread nature of the customer base. “There’s quite a lot of credit card fraud, especially from countries where economies aren’t doing very well. We have to be continually aware of what the latest tricks are in making bogus purchases,” says Lewis.

When building an e-commerce site, Lewis advises concentrating on business issues rather than starting with technological wizardry. “[You should be asking], if I’ve got this product, will people buy it and what is the profit and loss associated with that? The actual technology for electronic commerce is becoming a commodity, so unless you have a specific reason, for example, a strong brand identity you have to portray, you shouldn’t be spending a lot of money on your e-commerce site.

“The average Web site has an expected life of six months to a year-and-a-half. If it hasn’t changed in that time you’ll start to lose customers. A traditional retail fit-out might last five years, so you really need to look at a shorter time span for your return on investment,” says Lewis.

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