Conversion rate analytics to Retailer's rescue

by Deepak Sharma on Sunday, March 23, 2008

Retail Store Ops blog has a post on how retailers are adopting sophisticated traffic counting systems and developing conversion rate analytics to track how many shoppers are actually making purchases.

Given the economic slowdown and increased pressures to show top and bottom line growth, missing out on capturing customers while they are in a store is becoming an opportunity retailers can no longer afford to miss. Major retailers such as Virgin Megastores, Marks & Spencer, and Crabtree & Evelyn have served as a few of the early case studies for the benefits of measuring and improving conversion rates.

There are some interesting numbers thrown in the blog post. For example,

Virgin has credited the analysis with uncovering variations of up to 20% in average transaction values between stores, as well as a 15 point difference in conversion rates between its highest and lowest performing stores.


Once retailers start collecting the performance analysis from individual stores, they are often surprised by the results. “If you were to ask a retailer how many shoppers they convert, the assumption is typically north of 50%,” said David Smyth, Vice President of sales operations for Experian FootFall. “In reality, the average conversion rate ranges between 20% and 40% for most retailers. Using that average, that means about 70% of shoppers are leaving the store without buying anything. That means retailers are leaving an awful lot of money on the table.”

So you can understand the importance of Conversion Rate Analytics. Even a 1% improvement could potentially mean millions of dollars. But conversion rate analysis is more difficult then what it is for Online stores. Many retailers measure the sales and try to deduct the store performance on the same. Factors like store traffic are ignored in these cases.

Biometric Payments and Data Privacy

by Deepak Sharma

This news article caught my eyes because of the data privacy issues I see in this. Apparently a retail store in Chicago area stopped allowing biometrics payments, the reason being, the company behind the technology, Solidus Networks Inc., a provider of payment processing, is no longer operating its biometrics unit. The company went bankrupt sometime back. Now the question arises, what happens to all the Finger scans that the company must be having.

"If you think you've got problems when someone steals your Social Security number," said Saffo, "it's a much bigger deal if they steal your thumbprint."
Decentralized biometric systems that enable customers to keep their fingerprint information in their own cell phone or personal computer are inherently safer than centralized systems, Saffo said, though nothing is absolutely safe.

What does law say in such kind of scenarios?

Hypermart, the next big thing in Indian Retail

by Deepak Sharma

Big Retailers in India are planning to start Hypermarts after having successfully launched smaller format retail stores.

Reliance, Aditya Birla and Tata’s Star Bazaar are focusing on large European-style hypermart roll-out while old hands like Spencer’s and the Future Group too are scaling up their hypermart formats. Hypemarket are the next stage in retail revolution for some brands. They will get higher margins, volumes and more brand recognition.
“The supermarts have already established brands, now hypermarts can levearge that brand recognition and create a captive customer in smaller markets. European style of hypermarket with roomy isles and white lights seems to be favoured by the new players in India”, says a marketing consultant attached to an Indian retail business house.

Why this will be successful in India, See this definition from Wikipedia,

a hypermarket or multi-department store is a superstore which combines a supermarket and a department store. The result is a very large retail facility which carries an enormous range of products under one roof, including full lines of groceries and general merchandise. When they are planned, constructed, and executed correctly, a consumer can ideally satisfy all of their routine weekly shopping needs in one trip.

This will be successful because, Indians like to take their shopping at malls as weekend outings for the family.

Panel on Organized Retail in India

by Deepak Sharma on Saturday, March 22, 2008

Knowledge@Wharton India edition has a great article on Organized Retail market in India and what kind of challenges companies are facing setting up Organized retail in India. The article has senior executives from Best Buy, Staples and Aditya Birla Retail, who participated on a panel titled, "New Paradigms in Indian Retail," at a recent Harvard Business School conference sharing their experiences setting up Stores in India.

Unused to modern, organized retailing, the Indian consumer is still figuring out how to extract value -- beyond lower prices -- from the stores, supermarkets and shopping chains that are popping up everywhere. Meanwhile, retailers face other challenges: Indian consumers shop frequently and are used to traveling short distances to their stores; brand penetration is lower compared to developed-country markets; and interstate goods movement is fraught with taxes, delays and other inefficiencies.


"When you enter emerging markets like India or China, you really learn only through experimentation," said Kal Patel, executive vice president of emerging business at Best Buy. He recalled that when he worked on Best Buy's China launch a few years ago, "we had to throw away consumer research. The assumptions you have from a top-down marketing standpoint don't stand up in these markets."

IBM & Microsoft to partner on POS

by Deepak Sharma on Tuesday, March 04, 2008

A welcome news for many Retailers, IBM will now offer Windows Embedded for Point of Service as a pre-installed operating system option for its IBM AnyPlace kiosk, SelfCheckout and SurePOS 700, 500 and 300 point-of-sale products. The following analyst view sums it up well.

While unusual, Garf said the deal makes sense for both parties. “For IBM, it gives their hardware prospects and clients more choice for their operating system,” he said. “For Microsoft, given the leadership role IBM plays in hardware, it provides a great channel. Their go-to-market strategy is mostly through channel partners. It’s a win-win.”

Retailers can also benefit from the deal, Garf said. “From a retail perspective, especially when dealing with hundreds or thousands of stores multiplied by the amount of devices in each store, you want simplicity and a hardened technology that won’t break,” he said. “[Windows Embedded-based POS offers] resiliency and simplicity, and being a standards-based technology makes it easier to deploy. From a total cost of ownership standpoint, it makes sense for retailers as well.”

Garf said the partnership demonstrates the open nature of both technologies. “It underlines what both companies have been talking about for a while – standards-based open technology,” he said.

Live Chat Conversion Rates

by Deepak Sharma on Saturday, March 01, 2008

I was reading this Internet Retailer article on 10 tips for employing live chat profitably. The article talks about Live Chat as having one of the highest conversion rates among all channels.

“Live chat has one of the highest conversion rates of all our channels,” says Brad Wolansky, vice president of e-commerce at Orvis, a multi-channel outdoor gear and apparel retailer. “Particularly when someone doesn’t know what they want, it has the highest conversion rate of anything.” He says customers who chat convert 15% to 20% of the time, roughly triple the rate of e-mail.

This made me think what are the actual conversion rates of using Chat as against other mediums. After looking around, I was able to find some evidence of Live Chat having higher conversion rate and order values.


With Coremetrics, CompUSA was able to quickly calculate conversion rates of online sessions that included chat interactions. The chat session conversion rate was ten times that of the average site conversion rate. Coremetrics LIVE Profiles also showed a higher incidence of return customers among those who had chatted, as well as higher average order value. As a result of these impressive statistics, CompUSA hopes to expand the number of agents and extend the hours of operation for its live chat service.


Live chat produces a conversion rate of 15-20% at Backcountry, roughly 10 times the 1.7-2.0% buy rate for all customers, Bruni reports. It also produces higher orders. In one week this spring customers who chatted ordered $224 on average, versus $135 for the site overall. “We’ve taken what would be viewed as a consumption center—customer service—and turned it into a profit center,” Bruni says.

Backcountry is not unique—56% of retailers that used live chat said they found it a useful tool, according to the State of Retailing Online 2006 survey by research and consulting firm Forrester Research and retailers organization


Agents can boost sales at the moment of purchase by suggesting add-ons, such as a memory card with a digital camera or a carrying case with a laptop, says Kevin Kohn, executive vice president of marketing at live chat provider LivePerson Inc. He says LivePerson clients typically report average orders go up 25-30% when a customer chats.

So, there is enough evidence that using Live Chat effectively results in both increased conversion rate and higher order values.

Read More:

Chatting Up a Sale