Rules for E-Commerce Startups to Live By, Part 1: How to Increase Sales

These days, just about every business — from the corner store to Wal-Mart — has a Web presence. While the Internet’s vast expanse provides companies with the ability to reach more potential customers, it also pits them against more competitors than ever before. As a result, it has become increasingly difficult for companies to convert site visitors into buying customers. To complicate matters, nine out of every 10 users log off without buying anything, according to some estimates.

While companies cannot arm-wrestle consumers and force them to buy their products, there are steps they can take to make it more likely that a transaction will occur. Following are five tips from e-commerce experts that could entice consumers to purchase your products.

No. 1: Make Sure Your Site Is Easy to Navigate

Web site design is crucial to a positive user experience, yet as many as 95 percent of the better-known sites fail to meet minimal usability standards, according to Todd Follansbee, vice president atWeb Marketing Resources. Initially, companies focus on making their sites functional — meaning that when they launch them, they try to ensure that most functions work. However, having a functional site is different from having an effective one.

“Unless a company is willing to put in the time and effort needed to test the site, it will have no chance of building a usable and persuasive site,” Follansbee told the E-Commerce Times. “It’s similar to expecting a gymnast to become a champion without having the proper tools and a coach. The gymnast may have talent, but unless the person has someone who knows the sport, can ask the right questions and make the right recommendations, the athlete will fall short of her goal.”

No. 2: Use Web Analytics to Monitor Customer Tendencies

With the advent of various monitoring tools, companies can now generate oodles of information about how customers interact with their Web sites. As a result, a new challenge that businesses face is making sense of all of the data. “Web analytics is a new software genre designed to correlate collected information into meaningful measurements,” noted Gene Alvarez, a research vice president at Gartner.

These programs are designed to correlate information about visitors’ browsing habits with their buying tendencies. The potential measurements often center on customer acquisition and conversion rates associated with such items as keywords, search engines, marketing campaigns or pay-per-click campaigns. Ideally, a business will learn from these measurements which of its initiatives are working and which need further fine-tuning, and then be able to make the proper adjustments.

No. 3: Map Your E-Commerce Infrastructure to Your Products

Different products place different demands on a company’s IT infrastructure. “E-commerce sites that deal in sales of high-bandwidth products, such as e-books or streaming videos, need systems that will accommodate the demand generated by these applications,” noted Eric J. Hansen, president ofSiteSpect.

They require high-performance servers that can search vast files quickly, and lots of bandwidth for speedy file transfers. Generally, hosting companies offer base packages that support most companies’ needs, and then offer upgrades to companies that need more bandwidth or storage.

No. 4: Make Sure That Your Web Pages Flow From Place to Place

Users want to enter as few keystrokes as possible to find and buy desired items. Companies can streamline the discovery and checkout processes by creating different sections of their Web sites for various markets; providing relevant information, products and Web copy to different types of customers; and eventually walking them through the checkout process.

E-commerce suppliers can construct flow charts that indicate where the customers start on the Web site and what process they will click through before reaching a desired action. A company can then use Web analytics software to determine what stage of the process people are dropping out at and make changes to increase the likelihood of users reaching the desired action.

No. 5: Create Credibility

There are many methods of increasing product credibility, depending on the product or services a company sells. “Companies need to encourage customers to provide feedback on their buying experiences,” said Patti Freeman Evans, senior analyst at market research firm JupiterResearch.

Customer reviews and ratings can be very powerful influences in a user’s buying decision. While the potential buyer expects the company to provide biased information, the reviews and ratings of other consumers are seen as much more informative, and they weigh heavier in a purchase decision. Store owners are encouraged to allow legitimate negative feedback, as customers will give more credence to positive remarks if they know that negative reviews could also have been posted.

Having customers visit your Web site is the first step in the sales process. Companies need to take additional steps to make it more likely that their customers will return. If they do, they can reap significant rewards: U.S. companies sold US$116 billion worth of merchandise over the Web in 2006, according to JupiterResearch, which expects that number to grow to $171 billion by 2011.

Rules for E-Commerce Startups to Live By, Part 2: What Not to Do