Small Biz: Online Sales Lessons from Nike, Netflix


CHICAGO (TheStreet) -- What does it take to make a sale these days?

Low prices help, which is why Wal-Mart (Stock Quote: WMT) has survived the recession better than other big-box stores. Government-funded incentives like Cash for Clunkers have also made a difference for companies like Ford and GM.

But a few companies have managed to boost their bottom line by focusing on a specific retail channel: online sales. Whether it's sport-equipment giant Nike (Stock Quote: NKE) offering a one-of-a-kind shopping experience, or the movie rental company Netflix (Stock Quote: NFLX) honing its feedback system to increase customer satisfaction, the right Web site can build brand loyalty and translate that loyalty into higher revenue.

The downside is that it's not easy. Just about every company, big and small, has a Web site, and the vast majority of them are seeing the same slowdown as brick-and-mortar stores. What sets apart the success stories are their relentless focus on customer service, education and customization.

Does your Web site offer detailed products specs, reviews and other need-to-know information? Can shoppers find what they want quickly and conveniently? Can they customize your products to meet their specific needs? If not, it only takes a few seconds for browsers to click to another site that does.

While online sales in general boomed over the past decade, the current economic situation put the brakes on that growth. According to comScore, which tracks consumer spending, e-commerce sales were flat in the first quarter of 2009 and down 1% in the second quarter.

The U.S Commerce Department, which surveys retailers, declared the situation even worse: A report released this week showed online retail sales down 4.5% in the second quarter, compared with the same period last year.

But that doesn't mean people have stopped shopping online (just as they haven't abandoned the mall completely). They've just become more discriminating: researching and thinking over purchases before they spend money. If you're selling online -- or even just using a site to promote your business -- you have to make a convincing case for why buyers should choose you.

The Internet makes it easier than ever to analyze customers' needs, says Scott Silverman, executive director of, the National Retail Federation's digital division. "Look at the log of search terms, and you'll see what they're most interested in, and what they're having trouble finding," he says. The Google Optimizer program allows you to post two versions of your home page, then see which produces better results.

You can also draw in shoppers by letting them create products on your site that they could never get anywhere else. That's the path taken by Nike with its iD Web site, where shoe lovers can design their own personalized sneakers. While Nike's revenues fell 7% in its fiscal fourth quarter, which ended in May, Chief Executive Mark Parker has said online sales have seen a "dramatic increase."

Speaking on a panel in Davos, Switzerland, earlier this year, Parker noted, "Consumers are much more selective and spending more time editing their choices, focusing on the fewer things that really matter the most."

Athletic shoes can be a major investment (especially Nike models with price tags of $100 and up). It's a little easier to persuade shoppers to shell out that money if you can assure them they're getting exclusive, one-of-a-kind footwear.

The 10-year-old movie-rental service Netflix may seem to have little in common with a global marketing giant like Nike. But Netflix has also seen a jump in its online business this year, with revenue up 21% in the second quarter compared with last year. The total number of subscribers shot up 26%.

And, like Nike, Netflix has made it a mission to create an ultra-personalized customer experience. The company has been expanding the ways movies are delivered, making more titles available instantly via computer or DVR. Every time a subscriber logs on, they're shown lists of recommended movies and TV shows based on their past rental history. User reviews show up prominently to help narrow choices.

"Product reviews are very popular," Silverman says. "Shoppers trust other shoppers. By allowing that feedback, customers can get information they might not have otherwise." Another bonus? The more reviews you post with specific product names, the more likely it is that the major search engines will pick them up and direct traffic to your site.

We all know consumers are skittish. A Web site that's informative, personalized and easy-to-use can help gain their trust and turn them into loyal, long-time customers.

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