Steve talks about the challenges of multi-channel retailing, especially for a well-known brand in the fashion sector and one that has both wholesale and retail businesses to think about.
Can you summarise where Guess is in terms of multi-channel retail?
In terms of multi-channel, we’re really in a good place from a merchandising and inventory perspective, because of the way we are set up.
We’re set up with virtual inventory that is tied to our e-commerce site and retail stores, so we get an initial allocation that’s strictly for e-commerce and can pull from a reserve in our North American warehouse.
The warehouse ships out about 80% of its merchandise to the stores and holds back around 20% for replenishment. E-commerce can pull from that 20% for hot selling items and quickly push out to our stores any not so hot selling items that may have been included in the initial e-commerce-only allocation.
In our US stores, we also have a store portal or merchandise locator, which store personnel can use to order from the website in the store. If a store does not have a particular size or colour, we can accommodate that customer’s order through the e-commerce site, from the store register.
So in terms of inventory, we’re in a solid position to accommodate the customer from a multi-channel perspective.
From a broader, assortment perspective, we have a debate going on about whether the e-commerce site should represent ‘Guess – the brand’ or ‘Guess – the retail stores.’
If you go to Guess.com and want to buy shoes, do you expect to see all the shoes that Guess as a company markets through its wholesale, licensee and retail businesses or just the shoes we are currently selling in our retail stores? It’s a question of strategy really.
How does that affect how you market products online? Have you set up your site primarily as a place for consumers to research products, before buying in-stores?
Sure. Our website is a shop window for the latest and greatest products that we have available in our North American retail stores.
We use a company called Foresee Results, which creates custom online visitor surveys and matches up the data with the American Consumer Satisfaction Index to compare our visitors’ satisfaction with that of the satisfaction of visitors to other websites. We continually rank near the top in terms of multi-channel satisfaction scores.
From the surveys, we have visibility – we know that 69% of the people browsing on our site have made two or more purchases in our stores during the last year and 37% have made five or more. They view our site as an online catalogue to see what the new items are, and then go to the store to try it on and purchase.
Have you found affiliate marketing and other performance-based online marketing techniques difficult to reconcile with your branding aims?
We’ve just ventured into the affiliate world, launching an affiliate programme this summer. It’s a bit too early to speak about the results from that, but it’s a huge branding challenge for us.
Guess is such a well known brand and we have to be very selective when picking our affiliate partners. We don’t want the Guess name appearing just anywhere on the internet.
We are keeping it to affiliates that we feel are brand-appropriate and are covering the right demographic. We could be less selective, of course – picking affiliate partners and getting short term incremental sales, but only at the expense we feel of long term company success.
We’re using them for traffic more than anything – and making sure we protect the brand always.
We have a Guess Factory division and e-commerce site and we are being less selective with affiliate partners for that.
You’ve yet to add transactional functionality to your UK and European sites. Is there any plan to?
At some point, yes. As a company, we have moved in the last few years from a wholesaler to a global retailer with a wholesale operation as well. So it’s all part and parcel of that.
The relationships and infrastructure are not yet ready for us to sell online in the UK or other countries. That’s not to say it won’t happen in the next few years – it’s just getting the structure right. We are looking at the opportunities.
We noticed you were running a free shipping offer on gbyguess.com. Could you talk through the financial thinking behind that?
On our websites, we don’t really offer discounts or promote sale items – that’s because we want to elevate the brand. Free shipping really becomes the only way for us to offer a discount, in a way.
We find that it really does work, and all the research we see suggests that it’s the main thing customers want and that it really drives sales. Customers respond to it time and again. Of course, the other school of thought is that for many years customers have been expected to pay shipping, even with catalogue retailing, so why not turn it into a profit centre whenever you can? Everything is a balancing act.
We’ve done tests and found that our customers often respond better to free shipping than a discount offer – even if you give them percentage discounts much larger than the actual value of the free shipping.
You use Flash quite extensively on your site. Is it a must in the fashion sector, despite usability/accessibility issues?
It’s another ongoing debate. There are sites that are fun to shop on and are interactive, but they aren’t necessarily the best to shop on. More and more apparel e-commerce sites are definitely adding interactive elements.
Why don’t you display shipping costs and payment options on the product listing page? If people have to visit the checkout to see this information then isn’t it artificially ‘boosting’ dropout rates?
We’ve actually found that not doing that is unfavourable. Some decisions are more guided by branding and aesthetics than ‘shop-ability.’
You keep items in the basket across multiple visits. What observations do you have on this as a driver of sales?
It is a deliberate ploy and a best practice, although I’m afraid I don’t have the results to share as we have never conducted tests with a control group to truly understand the effects.
Steve will be speaking at Internet Retailing 2007, on 2 October in London.