A department store online

Gene Domecus, SVP/CFO at Macys.com
Summary: Overview of history and strategy for an on-line part of a company that pursues a differentiated strategy, with only parts of the assortment of the regular stores available online. Good experience observations on what it takes to build a solid and popular web online store.
(notes for this posting were taken by Mats Flatland)

Macy’s launched a transactional website in 1998, as a separate division. Macys.com has experienced an annual sales growth of 300 % the last three years. In contrast to, say, Gap, Macy’s carries only basic products online, focusing on gifts and customer replenishments. The average sale online is $120-130.
The typical online customers live in urban areas, are well educated and affluent. The possibility of returning products bought online in stores is thought to be one of the main reasons for customers choosing Macys.com rather than other online competitors. The return rate is very low, however.
Gene presented the must haves of Multi-channel integration:
– Easy returns across channels
– Order status available at check-out
– Club Macy’s – Preferred customers
– Online credits – bill payment
– Store locator online
– Site features: guided search, wish lists, email products, product compares
– Furniture delivery
Gene observed that when online customers visit a specific site they use the search engine more often than just surf the site. Macys.com therefore focuses on parametric search to a large degree. Another focus area is a virtual model that has increased sales significantly; 75 % of customers use this site feature when shopping online. The virtual model includes, among other features, a zoom option that allows you to zoom in on the product 300 times.
Macys.com has 3 million email addresses which they on average send an email twice a week. The company has also built a system to understand shopping behaviour patterns and customer response which make it possible to recommend products based on previous behaviour, Š la Amazon.com.