Amazon Customer Experience Performance Metrics

Order Defect Rate

Pre-Fulfillment Cancellation Rate

Late Shipment Rate

Post Ship-Confirm Refund Rate

Performance Targets

Amazon Metrics and Targets

The target rates are:

• Order defect rate: < 1%
• Pre-fulfillment cancel rate: < 2.5%
• Late ship rate: < 5%

What difference does it make?

Day two of the 2009 Shop.org Strategy and Innovation Forum got started with brief talks by Fiona Swerdlow, Head of Research at Shop.org, and an overview of the eCommerce Forecast 2009-2013 by Brian Walker of Forrester Research. After these discussions, the keynote for the second and final day began - and it turned out to be one of the most inspirational business and marketing talks I've ever attended.

Bob Thacker, OfficeMax.com

Bob Thacker is the Senior Vice President of Marketing and Advertising for OfficeMax.com, and he overflows with creativity and enthusiasm that is surprising and fresh. His talk centered around phrases such as his "cornfed philosophy" and "be mature but never act your age", and he followed up each saying with substance, stories, and in many cases, video. Prior to OfficeMax, Bob spearheaded several wildly successful partnerships and campaigns with Target, such as their Michael Graves' partnership and their "It's a Wonderful Life" Christmas theme that was Jimmy Stewart's last appearance (a voice-over) before his death.

"If you don't have big bucks, you better have big ideas." When OfficeMax began to market their printer ink refill station, they waffled over a conventional approach and one that was riskier - bus stop images of women's tattooed backs. The tattoo approach was chosen and it was a huge success, leading the way for the world's largest rubber band ball and their teenage reality show "Schooled" on ABC Family.

"Look before you leap, but then LEAP!" was the phrase Bob used to introduce a segment about their ElfYourself website. The website reached the high-water popularity mark of the 55th most popular website in the world, due primarily to viral marketing and the phenomenal reactions people had to faces of themselves and their loved ones pasted onto dancing elves. But the most inspiration part of the talk was based on the idea that "brands are like people; they have to have heart". OfficeMax launched a campaign to provide school supplies to teachers, in a drive to "erase teacher-funded classrooms." When an idea has the ability to both promote a brand and alleviate a problem, you know you have found something great.

The State of the Economy: The VC Perspective

To be honest, I expected to be texting and twittering throughout this talk, since I'm not in the place to personally care about venture capital...however, the discussions were fascinating. The session was moderated by Brett Hurt, CEO and Founder of Bazaarvoice, and the panel was made up of Tom Ball of Austin Ventures, Jeremy Liew from Lightspeed, Satya Patel of Battery Ventures, Amanda Reed from Palomar Ventures, and Cyriac Roeding of Kleiner Perkins Caufield & Byers.

Brett admitted to tossing out a softie question to the entire panel but got great results to the question "How bad is the economy going to get?" Fortunately Tom believes that the economic downturn will have less of an impact on the online sector than it will for traditional retail. Satya, however, thinks it's time to hunker down, as it will take time to loosen the credit market, and we probably won't see an upswing until 2010. Cyriac echoed Bob Thacker's idea that fear kills creativity, and reminded us that this is a time to drive change, and that although retailers may need to streamline business, it's still a time to think big.

When asked whether 2009 will be the year of mobile retailing, Amanda explained that this was true in the capital venture world, where investors are extremely interested in mobile technology ideas. But she believes that we're at least a year out before mobile retailing becomes an action item for retailers. During the Q&A session, a conference attendee asked what Amazon's optimistic Q4 numbers indicated for the rest of us, and Jeremy responded with an inspiring idea that all of Amazon's wonderful technology is currently available to those of us without R&D departments and was likely present in the Expo Hall of the conference!

Case Studies

After another excellent lunch, three panels of retailer case studies were on the schedule. The first, "Innovation in a Downturned Economy: Pure-play Retailer Case Studies", gave attendees several core ideas to think about. The panel was moderated by John Squire of Coremetrics and included presentations by Marc Katz of CustomInk.com and Tomima Edmark, President of the Andra Group, with the complementary websites HerRoom.com and HisRoom.com.

Marc began with a joke that his company not only has no research and development team, but that he doesn't even own a mock turtleneck or iPhone! But his website showcased brilliance in simplicity. CustomInk.com sells custom-printed t-shirts, and their design application is beautifully simple. They are also brave enough to show "uncensored reviews" of their company and service right on their homepage. They also do a fabulous job of telling their company story (straight down to a photo of the green couch that has been with them since day one) and engaging customers in a community with idea such as a photo contest.

Tomima described how women hate to shop for lingerie, citing factors such as unhelpful salespeople, and then gave her sites' goals of developing a shopping experience that is better than the one in a store. Her site features lots of photos, including extra shots of bras in larger sizes, overlays of different shirt styles to see whether a bra is compatible, and even video bounce tests for sports bras! She is very focused on protecting the company's intellectual property, but the most astounding fact that stuck with me was that the sites are entirely self-funded and were profitable after only eighteen months.

"Driving the Living, Breathing Store: Retailer Case Studies of Innovations in Delivery Dynamic Content" was up next, moderated by Kelly O'Neill of ATG Commerce with panelists Ronit Weinberg from Diane von Furstenberg and Kate Forbes of QVC. Ronit described how the goal of the DVF website was to develop content that engaged customers and developed an online community. They added a news feed, two blogs, and a 9000-fan FaceBook page. They also connected with fashion-oriented bloggers, developing relationships within the blogosphere, while generating content that helped secure brand equity, instead of focusing solely on selling as part of their site. Kate discussed QVC's marketing strategy relating to Fashion Week, one of the "POW Events" they do once a month. Because QVC was originally a TV-based medium, and still maintains that as a large part of their sales, they felt the need to maintain a consistent theme across multiple channels. QVC also utilized FaceBook, YouTube, Twitter, and blogs to create a sense of urgency among its customers.

The last panel of the session, "Leveraging Your Most Valuable Asset: Creative Ways that Retailers can Make Consumer Information Actionable", featured Jennie Carlson from Levi Strauss & Co. and Sam Taylor of Oriental Trading Company, and was moderated by Nick Pahade of GSI Commerce. Jennie showed videos and information about the eye-tracking and other usability studies that Levi's did prior to their 2008 site redesign. After finding that users were very focused on images, they redesigned their leaf category pages to be image-intensive. They then took satisfaction surveys to prioritize other planned improvements and to establish a baseline prior to the redesign. Sam showed the attendees some terrific ways that negative customer reviews have positively affected their business, after reestablishing the use of customer reviews after his predecessor canned the idea. They take the reviews further, offering a top-rated products promotion on the homepage, and even featuring content from the reviews in their printed catalog. Oriental Trading Company took the time to read every 1- and 2-star reviews to improve their service and product line. Sam said that if a site "disappoints a customer, they will never come back and will tell ten people about their bad experience." He ended the conference with the following "Top 5 Recommendations" for all of the retailers of the Shop.org conference:

1. Commit the necessary resources to do customer ratings and reviews right.
2. Embrace the negative review.
3. Leverage online data in other retail channels.
4. Personalize your content by customer segment.
5. Let your best customers generate your content for you.

Well said and done! Thanks to Shop.org for a wonderful conference.

The 2009 Shop.org Strategy and Innovation Forum kicked off today at the Gaylord Palms hotel in Orlando. The convention is filled with the top names in ecommerce, a variety of vendors, and a small but fun and elite crowd of attendees.

Avinash Kaushik, Author

Day one of the annual Shop.org Strategy and Innovation Forum was great from many perspectives, not the least of which was the first keynote presentation from Avinash Kaushik, author of Web Analytics in an Hour a Day. Avinash is a popular blogger and speaker whom I've wanted to see for awhile now, and during his presentation, "Moving Beyond Faith Based Initiatives: Lower Risk, Innovate, and Be Great", Avinash displayed his depth of knowledge, generous nature, and humorous wit. His talk described three kinds of innovation: incremental, where one steadily improves over time; incremental with side effect, which is similar to the first but also encompasses an "aha" jump in performance due to some key factor; and transformational, where the model reflects an unnatural and rare, almost immediate skip from low-return to high-return. From there, his talk focused on the second innovation, the incremental with side effect module. Two examples were, in evolution, the benefits provided by opposable thumbs, and online, the development of the Google Adsense program that opened a monetization path to virtually all online content providers.

The subtopic that I found most interesting was the idea that companies need to "Fail Faster". Not all ideas are good ones, and the faster you can recognize the poorly performing initiatives, the faster you can fix or eliminate them. He also said that many websites suck because of the "Hippo" - that decisions are made based on the Highest Paid Person's Opinion, and not on hard, quantifiable test results.

Finally Avinash recommended several tools to ecommerce managers wishing to expand their data reporting, understanding, and knowledge base: 4Q Surveys, Google AdPlanner, and Google Insights, as well as a robust analytics package such as Google Analytics or ClickTracks.

Alfred Lin, Zappos.com

Zappos.com is best known for its reputation when it comes to online customer service. Their COO and CFO, Alfred Lin, gave the second keynote presentation, titled "Building a Brand that Matters One Employee at a Time". In it he described some of the ways that Zappos focuses on building a solid relationship with their customers. All orders receive free shipping, and many are "surprise" upgraded to overnight shipping at no cost to the customer. Zappos also pays for return shipping, and offers a 365-day return policy. However, one of the most revolutionary ideas they implement is that they pay their employees to quit! At the time of this conference, the current payout (during the Zappos 5-week training program) is $2000 to any trainee who doesn't feel like it's the right job for them. No questions asked.

Zappos' figures are outstanding. At over $1 billion in sales in 2008, they carry 900,000 skus, 200,000 styles, and 1200 brands of shoes...and they are expanding into clothing. They currently employee 1500 people, and they foster a corporate culture in the same dedicated manner with which they build customer relationships.

With this kind of success, a discussion by Lin about building a retail brand comes with a lot of experience behind it. Here are his key factors for building your brand:

1. Vision: It needs to be bigger than yourself. Does it have meaning? Once you have your vision, chase that vision, don't chase the dollar. (Hopefully that implies that the dollar will follow!) Zappos often asks interviewees, "What would you do for 10 years if you didn't make a dime"?
2. Repeat Customers: In order to attract customers to make a repeat purchase, Zin recommends picking two of the following three factors: great product, great service, and low prices. Then focus on those two. Don't focus on the third one; you can't do them all.
3. Transparency: Be real and you have nothing to fear. Zappos exposes daily sales data to all customers, including brand data to individual vendors. They also discuss their business and culture on Twitter, Facebook, and via blogs.
4. Culture: Corporate culture should be based on commitable core values. Some of Zappos? "Deliver WOW through service." and "Be adventurous, creative, and open minded."

(Unfortunately, Zin didn't exactly answer my question during the Q&A session about where smaller businesses can focus on creating stronger customer relationships without cutting too far into their revenue. My thought is to reduce your shipping and packaging costs as much as possible, and pass as much of those savings along to your customer as possible. Someone at my table pointed me in the direction of Mail Express; if you've tried it, please leave a comment about your experiences.)

McKinsey & Co.

After lunch, Josh Leibowitz and Alex Tenessa from McKinsey & Co. talked about "The Multi-Channel Shift: How Consumer Behavior Will Change in the Next Economic Recovery". Unfortunately, this was a presentation that made at least one Twitterer remark, "I think I may need to get under table and suck my thumb now." Their models don't predict a quick turnaround for the recession that began in 2008 and looks to plague us for the foreseeable future. We're all hoping for the "battered but resilient" prediction over the "long freeze" one!

However, they did identify six trends that online retailers should consider:

1. The shift to value is here to stay.
2. The aging consumer (over 50 years of age) will capture over 50% of online spending.
3. The online channel will continue to capture sales
4. Product and service development is key
5. Science will replace art
6. Prepare for a "winner take all" scenario

In 2009 customers will resort to more one-stop shopping, they will wait for sales and discounts to make a purchase, and they will buy more generics over brand names.

Hung Le Hong - Gartner Research

Hung Le Hong from Gartner Research was another of my anticipated talks, though it turned out not to be what I expected. "Disruptive Business Models for Web 2.0" was more about cross-channel selling that social networking, AJAX, or reflective logos. Then again, it's time we talk about something more substantial. Hong discussed online sales for local pickup, and identified a spectrum of implementations, from Wal-Marts 7-10 day-later pickup to higher cost but more efficient and productive models.

Hong also talked about the use of mobile technology for ecommerce and offered the following statistics:

• 25% of people use mobile technology to check prices
• 25% check store locations
• 22% look for promotions and deals
• 16% actually make a purchase
• 12% transmit payment

Another tactic Hong discussed was the use of Twitter and related tools for "short shelf life" promotions, the online equivalent of a K-Mart Blue Light Special.

My favorite quote came from this session: "The Web 2.0 customer will use Web 2.0 ways to spend less."

Panel Sessions

The day completed with 3 panel sessions. The first was "The eCommerce Platform of the Future" with Sally McKenzie of Ecommerce Consulting and Brian Walker from Forrester Research. They discussed platforms and the challenges of "re-platforming". Then was a great talk on "Focused Ecommerce Investing: Smartly Stretching Your E-commerce Dollars While Still Innovating for Differentiation" with Lauren Freedman of the e-taining group, Peter Cobb of eBags, Kevin Churchill from Patagonia, and Bradford Matson of Bluefly. The day ended with "How International Expansion Can Help Retailers in a Downturned Economy", moderated by Troy Brown from Demandware and featuring Michael Amar of AGORAD, Jake Bailey from Overstock.com, Jim Okamura of J.C. Williams Group, and Michael Ross from eCommera Limited.