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PART IIevolving the Customer experience
Proprietary research conducted by the e-tailing group Sponsored by ATG
THE MERCHANT RULES
By lauren Freedman the e-tailing group
INTRODUCTION
Evolving the customer experience to suit both the brand and customers will be the focus for Part II
of The Merchant Rules series. The passion of retail merchants is unparalleled. More than ever before,
they are taking advantage of the science and tools made available through ecommerce. Merchants
are also making platform choices that should facilitate compelling category-centric merchandising,
as they strive for best-in-class execution and stellar shopping experiences. Seasoned and savvy
merchants will leverage both the tools and technology, applying the “art of merchandising” to serve
as the compass to guide their cross-channel business.
A. SEIZE THE DAY—MEET THE CUSTOMERS A truly rich online experience starts with a complete understanding of one’s customer base. As such
we inquired of our interviewees, “Do you believe that given all the existing science, retailers understand
their customers better today or did we know them better when we relied on store visits and customer
intercepts?” In Part I of this series, there was ample discussion of the tools and data available to
merchants. Despite such access to data, disparate opinions were shared where merchant insights
serve as an ideal transition to Part II of The Merchant Rules.
Most multi-channel merchants we spoke with believe that one can never replace human interaction.
In those scenarios they feel they know their customers better and will continue to rely on store visits
to connect and gain further customer insights.
Certainly, the size of one’s business matters and a seasoned department store veteran did wisely
emphasize that a retailer with a smaller footprint may know their customer better, but a larger
retailer would have difficulty establishing the same level of intimacy.
As a former buyer/retailer myself, I tend to side with those who relish the data, but give a slight edge
to the human element when it comes to knowledge of one’s customers. It’s not much different for
me in my role at the e-tailing group, as connecting with a client via conference call never quite
establishes the same connection, so I prefer face-to-face meetings. I fear most that e-tailers may
become complacent, believing that existing data provides sufficient input.
We should all heed the advice of an emphatic multi-channel retailer when speaking about the power of first hand experiences, “There isn’t a study that can make the impact of a first-hand experience”. Of course we should all utilize science but never walk away from customer visits and store interactions.”
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An interesting metaphor further sets the tone for this section, and comes from a 15-year veteran of
both multi-channel and pure-play merchandising, who sums it up, “We know our customers differently,
but it is still important to do store visits, as those interactions can’t be replicated, as casting out a big net
works similarly to a balance sheet or a single snapshot in time. Analytics do a better job of looking at a
period of time given their ability to aggregate data. Both together put merchants in a more powerful
position.”
Another merchant cautioned that the “science behind the desk is one dimensional.” While the web
merchant knows customers better in some ways, observing cross-channel behavior paints a more
complete picture. He emphasized that he visits every store at least once a year and that they also
keep a 250-person database for purposes of testing products and addressing other issues that may
arise. He shared a story about a jacket that had zipper problems which he couldn’t understand until
he saw the frustration on customers’ faces bringing to life what simply can’t be gleaned from bits and
bytes of data.
This mindset was supported by another individual who respects indicators seen via wish lists and
online behavior, but believes strongly that these are never the final answer, particularly as there is
only so much data one can absorb. Her ecommerce team still answers the 800# for two hours every
week in order to “touch” the customer and understand what makes them click. They also take
advantage of store visits to ask customers about their onsite experiences.
This sentiment was shared by another e-tailer who feels that merchants may have understood the
customer better when they could get closer to them. Spinning a familiar tale he stated, “Some parts
of the Internet are still a mystery to me after nearly 15 years.” His company made many changes to the
site from a visual and promotional point-of-view, then had their single busiest day, but could not fully
account for its success or truly pinpoint performance to specific initiatives. Despite all of the data, he
believes that it’s always better if you can be closer to the merchandise and talk to customers. Knowing
that this is not always possible, they continue to use catalog match-back capabilities and other means
to market most effectively.
Sophisticated Online Merchants Jumpstart Shopping Experiences
The final perception is that the best retailers have a better understanding of their customers.
Yet the question of what to do with the data and how to gauge the real intent of the customer
Online customers are not robots therefore any opportunity to get out from behind the website to talk to customers should be seized.
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remains. They imply, like many others, that data doesn’t always mean more in-depth insight,
since merchants must make time to properly massage the data. Interpretation coupled with the
appropriate actions matter most.
Taking advantage of this information for deployment in CRM programs should be a huge differential,
particularly for retention purposes. As one children’s brand with a few powerful stores noted, “We can
now see how deep our customer buying really is by looking at multi-channel patterns. Understanding
the similarities and variances between our direct business and retail channel is instructive; from there
we can optimize our merchandising and personalize customer experiences accordingly.”
Most honestly discussed the customer knowledge gap, sharing that while online numbers are interesting,
it is difficult to “visualize” these individuals. “The data doesn’t truly help us know individuals better,
but can be effective in understanding clusters of people in order to better bucket and target customer
types, thus directing more relevant merchandising strategies.” Retailers need to form mental images of
their customers, so it’s more about a point-of-view rather than a single data-point. That said, single
data-points have proven to be incredibly valuable, when secured via buy online/pickup in-store, as
this information is a real indicator of true multi-channel behavior.
As always, the devil is in the details. To truly know one’s customers, a discussion beyond just an
evaluation of channels is important. One merchant cited an exemplary cross-channel experience
with a specialty retailer where she is a frequent customer across all channels. She receives superior
service stemming from their full knowledge of her buying behavior, accessible as a result of robust
systems and a sophisticated database. Without such infrastructure, a multi-channel view would not
be possible. When properly optimized, this scenario is a win-win for all concerned.
Knowing these limitations, perhaps the real opportunity is to marry the best of personal service
currently being executed at retail via “clienteling” with technology that better facilitates connecting
with one’s customers. The adoption of such one-to-one outreach was cited by several retailers
referencing Brooks Brothers and others whose in-store personnel now use technology to better stay
in touch with their customers.
Multi-channel retailers have a unique chance of knowing their customers better given access to both store-based and online information, but work must be done to bring this information into a single dataset to best serve their needs.
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Online Information is Invaluable when Shared with Offline Counterparts
Significant discussion took place regarding the extended value of online information, specifically as it
is shared within the buying organization. From footwear merchants where searches indicate a need
for more extended sizes onsite, to search data that supports color requests for retail-only product,
this knowledge can serve up powerful clues to grow the business for the entire enterprise. A home
retailer added that insights gained regarding how customers are purchasing products not only impact
associated merchandising online, but also customers’ choices are already influencing in-store visual
merchandising.
A Contrary Viewpoint — Web Absolutely Knows Customers Better
One sophisticated retailer bluntly stated that most cross-channel merchants today should know their
customers better, given the improvements in available technology. His sentiment was a warning
retailers should probably heed.
Another merchant, in full agreement, echoed that “20% knowledge is still light years ahead of what
we knew at retail.” They, like others, have leveraged insights from surveys, user-generated content,
live chat logs, and email to find that all are providing statistically quantifiable information where
every product has a scientific story behind it. An added ecommerce channel upside is that they hear
from customers more often through email, and as such, are able to service them in a timelier manner,
contrary to delayed responses that stem from brick-and-mortar encounters. Web tools uniquely give
merchants the ability to pinpoint the exact behavior of their customers, including when they may be
confused and need more help. Discerning similar insights at retail would involve associates “trailing”
the customer which never provides a complete picture of their behavior.
Recent trends in technology have given us new vantage points from which to learn more about our
customers from a “behind the scenes” perspective by gathering information through social media
interactions on Facebook and/or Twitter. In the past, we relied heavily on word-of-mouth to gather
such knowledge. Of course, the website functions as a 24-hour suggestion box, adeptly assisting
merchants to better understand product needs and merchandising requirements that customers
hope to see from any given brand.
Despite all of these points of potential information, no matter the source, the challenge remains the
same. We must be careful not to generalize about our customers and to intelligently determine how
to optimize performance expanding relationships with each and every one.
“If you don’t know your customers better online, you as a retailer are behind the times and will likely become irrelevant to your customer.”
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B. TECHNIQUES FOR DIFFERENITATION All of this knowledge sets the stage for elevating our site experiences. Techniques for maintaining
parity start with relentless scrutiny of one’s own site experience, and much of this kind of review
simply cannot be automated. Retail 101 implies continuous competitive benchmarking, including
shopping the competition and best-in-class retail merchants from a merchandising point-of-view,
along with ensuring that one’s technology department stay abreast of ever-changing tools.
Interviewed merchants also advised looking beyond one’s own niche to observe winning strategies
across the industry. Those that are part of a bigger company are in a luxurious position as the parent
firm often shares information on best practices among all of their brands. An interesting twist on
the parity issue was revealed by an office supply chain, “Our enterprise brand has a huge influence on
us, which can be good and bad. Competition keeps changing, forcing us to be more agile, yet internal
controls make this extremely difficult given existing protocol and processes.”
Getting Tactical
Many merchants mentioned monitoring their competition’s sites. One even referenced a once-a-year
“deep dive” that has now been adopted by other parts of the organization. As part of that effort,
a merchant should have clarity around who they want to be. This determines who they should
compare themselves to and benchmark. For instance, this company feels confident they understand
their web model and can stay true to that positioning, although their financial model is based on
catalog roots. Other wisdom came via an understanding of the role of each medium or channel,
where rather than being first-to-market the focus centers on doing what is right for the brand. This
understanding of the landscape will help ensure that messaging via all channels within the company
supports the brand’s true differential. Especially for manufacturers, the brand voice must be carried
through and constantly monitored from wholesale to retail. “Such exercises are hard work,” as one
retailer acknowledged, “but all this information affords us an opportunity to force the issues with our
CEOs and we hope to remain vigilant in monitoring all of our marketing efforts.”
It is a competitive marketplace for merchants where “keeping up with the Joneses” and accelerating beyond the competition is a requirement to not only survive, but thrive.
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Avoid the Shiny Object Syndrome
It is critical to understand when your customer is ready to embrace a more evolved site experience,
so avoiding the bells and whistles is wise.
While delivering the latest functionality is always tempting to consider, discerning what you really
need is what counts, as customers can leave with a mere click. On the other hand, knowing they have
to convince their customers to pay a premium for what can typically be a commodity product, one
specialty retailer believes they need such an elevated experience to effectively compete.
The last piece of advice I heard from a footwear retailer was that “evolving the customer experience
must be a gradual effort.” While they are certainly interested in embracing more advanced merchandising
elements, they do not want to alienate existing customers. As a company they tend to be “fast
followers,” yet try hard not to adopt technology just because it is an industry standard. They ease their
devoted female customer more slowly online, having learned from past mistakes (such as eliminating
quick access to extended widths via navigation) that listening to their customers’ needs delivers the
right experience.
A Delicate Balancing Act
A balance must be struck as there is not one silver bullet or magic formula. For example, Anthropologie
may deliver a lighter experience than one might expect from a more conservative retailer such as Talbots.
Following along the lines of the KISS (keep it simple, stupid) mindset, it is more about value-based
execution that works and does not require a sophisticated interface, than about the fanciest technology.
A non-promotional retailer emphasized that they were reacting counter to competitive trends with
only a small window for a 5-7 day clearance. They have to plan sales and margins accordingly and
rather than feeling external pressure are actually more reactive to internal business needs.
Smart retail principles should be in place, with quality merchandise at fair values the standard. A
two-channel merchant and former luxury store buyer clearly understands the competitive challenge,
“Beyond offering one-stop shopping for fun products without forcing shoppers to seek multiple sources
for uncommon products, the best possible customer service must be present and customers should
always be treated with dignity and respect. Ideally the package should arrive in a timely fashion and
standing behind one’s product is a given. This all needs to be accomplished within the framework of a
profitable P&L.” She concluded the discussion by reinforcing that running a business today is difficult,
but still possible despite the many obstacles.
Differentiation is important yet merchants cautioned not to become enamored by “shiny objects” and to make certain that they work towards a goal of engagement and the right customer experience for the brand.
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C. THE COMPLEXITY OF CREATING RICH CUSTOMER EXPERIENCES Recognizing the challenges and complexity of competing, we asked each of the merchants to talk
about what makes for a truly rich customer experience online and many of the answers shared
support current site evolution strategies. One seasoned merchant glibly shared, “All retailers promise
richer experiences but the differential for the customer is what they feel when they first come to the
site.” Consistency and familiarity, no matter what medium you touch, with appropriate execution
by channel will be embraced by consumers. Of course, as another merchant suggested, “It’s easier to
begin with a solid brand as a foundation from which to build a great web experience, subsequently
capitalizing on one’s heritage.”
Customer-Centricity
Customers should be the focal point, with their needs paramount. It is imperative that you understand
who you are servicing and establish credibility in order to sell to them.
A veteran multi-channel merchant spoke of his own personal shopping, saying that trust is the
starting criteria for the stores he selects, after which many other elements become non-factors. He
shared that he would be willing to pay a few more dollars based on that trust, as adverse circumstances
were not worth any minimal cost-savings. Such trust should emulate from an understanding of your
customers’ mindset, factoring in merchandising that addresses both the novice and the expert, while
taking advantage of the opportunity to better connect with customers in a really relevant way.
A mentality that reassures shoppers by letting them know you will take care of them is also part of
the trust factor and should not be discounted. The merchant sets the tone for any and all customer
communications; from the customer service department to outbound communication around the
order, including the use of live chat. One interviewee explained that they conduct accelerated training
with the call center to guarantee that the customer is supplied with the right information in whatever
means customers choose to interact with the brand. By addressing immediate questions, they hope
to build lasting relationships.
Tactical Selection Starts with the Audience
Knowing your customer should also set the tone for evolutionary merchandising decisions.
A seasoned merchant who is responsible for merchandising across a variety of different brands,
with a cross-section of audiences, was clear that tactics must be addressed at the audience level. One
Trust was a word emphasized by a handful of retailers reminding all of us that when the customer truly trusts a company, there is never a doubt about consummating the transaction due to that merchant’s integrity.
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merchant suggested their conversion rate is acceptable at 5% but they are looking for 100%
engagement and that has meant the development of richer content. A hip brand targeting a younger
demographic, they have added music, videos, and editorial to create just such an experience. While
this younger audience may seek a fast-paced experience that embraces current social elements,
conversely a brand targeting the 50+ market may find those individuals do not respond to innova-
tions in video and interactivity in the same way. Additionally, the older customer may be surer of
their needs and more seasoned when shopping the category so recommendations may not have
the same impact, although the younger audience may readily covet what the community suggests.
For the younger market their experience with video on the product page shows conversion at four
times those pages where it is not present. This engagement is core to the value proposition, while on
sites with older demographics, the interest level was significantly lower. One brand went so far as to
discuss their investment in a media gallery to better deliver this kind of rich content, appreciating it
generates confidence that results in conversion.
Paying Attention to the User Experience
Savvy sellers know that the experience is what will ultimately help or hurt one’s brand. Several mentioned
putting teams in place to address usability for their customers, while educating from within the value
it delivers for the organization at large. A candid retailer acknowledged that in the past they had been
heavily store-centric, but now the user experience is finally an important priority. With new executive
leadership on board, changes are being seen. She does not believe it is the store’s job to fully
understand the web, but has learned that putting the right functionality in place online will reap
rewards for all channels, as well as respect from counterparts. Another multi-channel retailer
reinforced the importance of parity among channels by sharing an example of how Saturday delivery
is available at retail but not online. Such discrepancies cause concern for customers who increasingly
shop across all channels. Among those who are multi-channel, once the web reaches parity with the
retail stores, they take advantage of each channel’s uniqueness to evolve their customers’ experience
even further. In furniture retailing this can include custom upholstery and draping tools that are both
interactive and integrated. By monitoring their customers’ use of mobile phones in the retail
environment, merchants are also exploring how mobile can be a bridge between stores and the web.
The opportunity for retailers, as one cleverly stated is “to lead not follow whereby they beautifully use
technology to show product in an innovative way that will inspire.” Another merchant emphasized
that when she encounters such experiences she never misses a chance to make a purchase, citing
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Merchant-driven organizations lead with product and merchandising, subsequently wrapping brand around that powerful package.
the creative nature of a favorite specialty retailer’s gift guide encountered over the holidays, and as a
result spending significant dollars with that company.
Finding those things that surprise and excite your customers or wielding the wow factor can be
a result of technology’s ability to deliver a delightful, enjoyable experience. It is this kind of
execution that universally wins the heart of today’s time-starved consumer. One merchant cited an
example from Benjamin Moore where shoppers can take a picture of a pillow at home, upload it to
a mobile site, and color match in-store for the perfect paint. Their simple and powerful execution
served as a problem solver for her crazy life and forever differentiated that brand in her mind. This
level of execution is where today’s cross-channel leaders are headed, and such solutions pose real
opportunities for the merchant community.
Efficiency Empowers Shoppers
Concurrently “no hassle” customer service and clear communication are expected from today’s
demanding shoppers. Customers have little time to spare and coupled with a very short attention
span, both become tough to overcome. They will wait for almost nothing, so if pages load slowly or
image quality is poor, you should expect customers to abandon your site.
From the outset, the web shopper has been surgical in their shopping behavior. In most organizations
it is up to the merchant to be certain that customer tasks are completed as swiftly as possible. By
keeping abreast of new technologies, most merchants are able to create a more welcoming and
streamlined user experience. One pure-play focused on organizational products reflected, “It’s all
about doing work for the customer, making it easier to find product.” Their solutions included expanding
“shop by” capabilities, such as organize by color. On another front, the web team at a footwear brand
found themselves adding web-only attributes for height and calf, even though they were not readily
available from their parent organization.
Everyone stressed efficiency. Efforts toward seamless checkout were highlighted by one merchant,
where today, visitors can receive an estimate of shipping costs prior to final checkout, always a cause
of customer consternation. Following a growing online trend, they also added the ability to apply
promotion codes via one’s mini cart to immediately see the lower price. Lastly, several cited the need
to enable alternative payments with PayPal and Bill Me Later, seeing stronger adoption across the
retail landscape.
Despite the diversity of scenarios, every experience starts with the basics. In this report, we cannot emphasize enough that this means the right product, at the right price, and it must be in-stock.
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In regard to the stock situation, an in-stock position can be a challenge for merchants with a fashion
orientation, or for those with high inventory turns. Overcoming these challenges, one retailer turned
an in-stock position into a competitive advantage. By simply being in-stock, they were able to
consistently convert at a higher rate. This was feasible as a result of improved drop-ship turnaround
times, achieved via vendor partners. The CEO reported handling after-hour calls, where many customers’
first question concerned the stock status of a given product. Once he was able to confirm availability,
his close rate grew significantly, otherwise out-of-stocks account for 25% of their business.
Product Information Courts Confidence
Confidence builders were universally suggested as supporting online evolvement. Merchant-centric
information coupled with user-generated content is optimal for building a rich customer experience.
Holistic thinking can set merchants on the right course. When executed properly, it is engaging for
the customer as they have been served up all of the associated information to help them succeed
in making their purchase. It almost functions as a subliminal guide, directing shoppers based on
behavioral needs, just as a well-designed store delivers in-store inspiration. At the same time,
customers must always have choices that are easy and convenient. One merchant equated those
choices to, “peeling back an onion in any way they desire. It’s not just rich media and videos, but
something greater, that starts with clarity and consistency of presentation.”
Rich copy and robust content that supports picking the right product starts with comprehensive
product information and extends to more product views, view in a room, etc. where the presentation
provides the information that shoppers need to mitigate any risk in shopping online. A merchant
must accurately describe the product and provide a myriad of angles from which to view the product
(360°, alternative views; zoom). Everything from increasing the image size to properly styled
photography came into play for those we interviewed along with customer voices that share their
point-of-view from basic reviews to rich community participation.
Along these lines, one merchant struggled to emulate retail store selling that was grounded in building
outfits for the customer. While the AOV is very high at retail, they are finding it difficult to achieve
such strong results online, despite their buy-the-look tool. Better execution tops their list of future
road-mapped features.
Commerce/Content Integration
One of the early promises of the web was the blending of content and commerce in order to drive a
richer shopping experience. The challenge is mixing and blending that content for an appropriate
shopping experience, where ingredients may include everything from decision-making tools to
cross-selling product recommendations. It requires a combination of manual merchant labor coupled
with behind-the-scenes technology to support such efforts. Some of this content is created internally;
some is purchased from third parties or even better authentically secured via the merchant’s broader
community.
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The goal of all this remarkable technology is to facilitate an experience that might be received from
a knowledgeable and attentive salesperson at retail. Examples of such engagement in the selling
process were discussed including:
• bookmerchandisingwherepop-upsshowcasethefirstthreepages
• gardeningsolutionthatincorporatesakitchengardenplannerandother interactive tools
• privatesaleorinvitationonlymodels
Personalization is Poised for Growth
Those who have participated in ecommerce over the past ten years have seen initial efforts shift from
simply getting product in front of customers to a focus on customer intent and desire. Each category
has an obligation to try and deliver richer experiences and further merchandising evolution should
then be forthcoming. However, some we spoke with believe that this is certainly an area that has
seen fits and starts, where it has now hit its stride with penetration and performance realistic. In the
e-tailing group’s 2010 Annual Merchant Survey we asked, “What initiatives are being planned to
improve website performance?” Personalization/customization saw long-awaited attention for 52%
of the responding merchants versus 41% the year prior.
More evolved retailers have tackled or are looking to embrace relevance from a variety of perspectives
including product, messaging, and positioning. As part of those initiatives some merchants are
personalizing the experience based on the customer’s point-of-entry where the sophistication of
their selling accommodates such advanced capabilities. Someone who came direct to the URL does
not require significant branding, while those who searched for a product via Google should receive a
much different brand experience. At the same time, a number of more evolved merchants, who were
skeptical of opportunities in their early days, touched on personalization recommendations that are
being enjoyed by customers and bolstering their bottom-lines. An evolution of marketing efforts also
includes both onsite and email segmentation for more targeted selling, as well as triggered email
launched in response to abandoned carts.
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relevancy may ultimately become even more important than richness of presentation.
Admin Tools Give Merchants Desired Control
Now that merchants have a greater understanding of onsite consumer behavior, they are looking to
constantly merchandise their stores, using all available data to find the right placement to optimize
product assortments and sales. Tools have become a merchant’s best friend. One apparel retailer
cited recently evolved click-and-drag technologies that facilitate the merchant being able to re-assort
the website in 15 minutes versus what used to take a day to accomplish. Advancements in admin
tools can quickly impact sales and enable merchants to keep changing retail dynamics to better
personalize the shopping experience.
Social and Mobile Spark Latest Evolution
The last evolutionary area that was cited related to social and mobile which will comprise the third
and final part of this report. Both were seen as giving merchants a broader canvas and extended
customer reach. From iPhone apps and mobile commerce to Twitter and Facebook, these opportunities
are certainly on the minds of merchants and being embraced by shoppers in record numbers.
The implications of this new chapter imply that merchants today need a sweeping cross-channel lens.
Their expanded role as company communicator across channels must delicately deliver against a one
brand, one message proposition. While each channel has different technologies and strategies to
be merchandised it is up to the merchants to determine when and how to synchronize tactics or
alternatively take advantage of the unique qualities of a given channel to best serve today’s anywhere,
anytime customers.
ClICk heRe FORPART III - SOCIAL AND MOBILE SPARK LATEST EVOLUTION
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ABOUT US
the e-tailing group is a niche e-commerce consultancy that helps
merchants deliver the right customer experience on their websites
and across all of their channels while adeptly assisting technology
companies to create and execute go-to-market strategies that
simultaneously educate the retail community and deliver cost-
effective thought leadership and lead generation.
For more background about this research study or additional
information on the e-tailing group, inc. please contact Lauren
Freedman via email to [email protected] or visit the e-tailing group
website www.e-tailing.com.
A trusted, global specialist in e-commerce, ATG (Art Technology
Group, Inc., NASDAQ: ARTG) has spent the last decade focused
on helping the world’s premier brands maximize the success of
their online businesses. The ATG Commerce application suite is
the top-rated platform by industry analysts for powering highly
personalized, efficient and effective e-commerce sites. The
company’s platform-neutral e-commerce optimization services can
be easily added to any Web site to increase conversions and reduce
abandonment. These services include ATG Recommendations and
eStara Connections.
For more information, please visit http://www.atg.com.