Avail Intelligence CEO Rolf Elmer on Bridging the Advertising-Merchandising Gap

Many e-commerce companies have boosted their fortunes by expanding their markets beyond the United States. Avail Intelligence is hoping to help such merchants boost profits and sales by doing the reverse — expanding from Europe into the United States.

The move comes as e-commerce growth begins to slow, a function of the sheer size of the market and strong market penetration, and as retailers seek to follow the lead of e-commerce giants such as Amazon.com, which is legendary for its product recommendations and the use of past customer behavior to suggest new buying opportunities.

Improving Sales

The Sweden-based Avail launched eight years ago and has built a strong reputation for enabling e-commerce merchants to improve their sales in its home market of Europe.

As Avail geared up to launch its revenue optimization products into the U.S. market, CEO Rolf Elmer discussed with the E-Commerce Times his company’s growth and evolution and how the changes in the e-commerce marketplace are sending merchants in search of solutions such as Avail’s.

Fast Growth

Avail posted 300 percent growth during 2007 and is on track to do the same this year, Elmer said.

The reason, he argued, is simple: The rapidly rising cost of online advertising — especially pay-per-click keyword ads — is forcing online merchants to look more closely at how well they convert those customers who actually do arrive at their site and how they can convince those shoppers to spend more during each visit.

Avail helps customers do both those things through an approach billed as “collective intelligence,” offering an e-marketing suite that includes products such as Navigation Predictor, Social Search Optimizer, Landing Page Optimizer and Customer Interaction Broker.

E-Commerce Times: What is driving interest in your product and the strong revenue growth you’ve seen in your existing markets?

For one thing, we are 100 percent focused on the e-commerce market. A lot of our competitors do things with news articles and content, but we are exclusively focused on helping retailers merchandise better. We also offer businesses proof that our solution is working by using control groups to demonstrate the difference between the old way of highlighting products and the advantages and advances we can bring to them.

ECT: Why is merchandising becoming more important, in your view?

The fact is that of all the elements that make up the financial picture of a retailer — from the cost of advertising to the cost of goods — the only two items that are totally under a retailer’s control are average order value and conversion rate. In all other cases, the market is setting the rates. But when customers get to a site, if a merchant can boost average order value and increase their conversion rate, they’re going to help their bottom line. Right now, the cost of pay-per-click advertising has continued to rise. At the same time, in a lot of organizations, the advertising and merchandising functions have been separated.

ECT: How does Avail help bridge that gap?

We’re all about using community intelligence to optimize relevance for visitors. Right now, the main approaches to merchandising involve the top-seller approach, which aims to push the items that sell the best, and the rules-based segmentation approach, which categorizes customers and other social behavior approaches. Being able to truly personalize and target is the dream of marketers, but it’s not so easy to do.

ECT: Your firm’s business model has a couple of twists. Can you explain?

First of all, we offer our product both as a hosted service and as a boxed product. Some retailers are not comfortable sending their customer interaction data to a third party, so this gives them the flexibility. Also, we are 100 percent performance-based.

When a merchant uses our product, they get a built-in A/B testing module. When shoppers land on the site, they are divided into two groups, one of which is exposed to our recommendations and the other of which is not. This enables customers to see the effects of the technology in real time. But also we are so confident that we are adding to sales, that our business model involves us taking 5 percent of the added sales that we create. If we don’t create any additional sales, there’s no cost. It’s a no-risk scenario for merchants.

ECT: Your solution seeks to leverage transactional data, which is something many other analytical tools try to do as well.

The idea is that retailers already have captured behaviors hidden in their transactional database. They’re looking for ways of utilizing things they already know about their customers. Often, merchants end up with too many applications, and they end up with really hard work in managing all this kind of stuff on their site. A retailer might have all these reports from these various analytical tools but never have any time to go through.

Our solution is engaged at each interaction point. If you click a certain way on a site, you’ll get certain recommendations. If you search, you’ll leverage the intelligence of the user community rather than just a mathematical tool. That means more commercially relevant results, and that means a higher probability that you’ll sell something. If people have to scroll down two pages of search results to get through things that aren’t what they’re looking for, they will abandon that shopping effort.

ECT: Why is now the time to enter the U.S. market?

We are already market leaders in much of Europe, which in many ways is growing faster than the U.S. e-commerce industry. We have expanded into new markets in Europe and the United States is the next large e-commerce market where we think there is demand for our products. Retailers are ready to turn their attention to merchandising and making the most of every visit they are able to drive to their sites.