Online stores offering tailor-made services

For the retail industry, online shopping is a growing segment.

San Jose Mercury News

SAN JOSE, Calif. — Online retailers never meant to offer highly customized service when virtual stores were a new concept. But a decade later, it’s that personalization that sets some sites apart from the thousands of others selling clothes, shoes and gifts.

An increasing number of retailers have distinguished themselves from the pack by giving users a little something extra beyond intuitive navigation and easy checkout.

One shopping service, for example, sends periodic e-mails alerting customers to sales of brands they pre-select as favorites. Another retailer offers an “online stylist” who can answer questions before a purchase.

A Web site specializing in gifts is toying with a Facebook application that lets “friends” see your wish list for ideas of what to give that person on birthdays and holidays.

“Retailers have always struggled with the fact that the Internet is not a personal channel for selling certain goods,” said Ellen Davis, senior director for the National Retail Federation. At the same time, an online presence is a must to maintain a competitive edge.

Online shopping continues to be a growing segment of the retail industry: Revenues reached $260 billion in 2007, up from $220 billion in 2006.

But that represents only 5 percent to 7 percent of total retail sales. Analysts call it a sure but slow evolution.

“It’s been around for more than 10 years, but it still has a long way to go,” said Sucharita Mulpuru, a retail analyst for Forrester Research, an independent technology and market research company.

While the definition of what constitutes a good online shopping experience is debatable, many experts say it’s all about customization.

“The customer has very high expectations, and the merchant has to figure out how to meet them,” said Lauren Freedman, president of the e-tailing group and author of “It’s Just Shopping,” (Direct Marketing Association, 350 pages, 2002) a look at the evolution of different ways of selling.

“It’s not that they don’t want to have more customized features, it’s that in some cases, there has to be more advances in the technology for it to be effective.”

Adds Forrester’s Mulpuru: “The personalization engine is getting a lot of funding because a lot of data supports it as an area that can drive online sales.”

The concept for San Francisco-based ShopItToMe came to Charlie Graham when he got frustrated searching the Web for sales of his favorite brands. It was a cumbersome process to surf every store’s site.

In 2005, he came up with a personalized free shopping service that sends e-mails to those who sign up and specify favorite apparel brands.

When those labels for men and women — Tommy Hilfiger, Prada, Juicy Couture among them — go on sale, the users are notified. Clicking on the photo sends them to the store’s sale site.

For the retailer, it’s a potential customer who may not otherwise come to them and for ShopItToMe, the click means revenue, said Graham, founder and president of ShopItToMe.

“Right now, it’s making sure the customer has a really good experience when they get that e-mail from us,” he said of the 100,000 subscribers. “As the technology advances, it will allow us to do more.”

Graham’s service takes some users to tobi.com, an online shopping portal co-founded by Catherine Chow, who also owns popular San Francisco boutique Azalea. Among the personalized services the Web site provides is an online stylist.

“Our basic philosophy is to give customers a boutique shopping experience online,” she said.

While experts agree that customization keeps a user interested, it’s not a sure thing, and many sites have yet to show a profit. Red Envelope, one of the best-known sites for finding girly gifts — it went public in 2003 — filed for Chapter 11 protection in April after 11 years in business.

“Very few pure e-commerce sites will be successful over the long term,” said Greg Sterling of Sterling Market Intelligence, a Bay Area consulting and research firm focused on the Internet’s impact on local consumer and advertiser behavior. “But it’s smart for brands and retailers to go the way of the Internet to engage their customers.”

Violet.com is a gift concierge of sorts in that the site helps users narrow down a choice by recipient (mom, husband), occasion (wedding, birthday) and category (home, travel).

Co-founder Bonnie Cohen launched the start-up in 1999, but when venture capital funding disappeared, so did the site. It re-launched last year with more focus and fewer employees.

Cohen is one e-retailer thinking ahead; her side project is a Facebook application called Finders Keepers that “scouts the Web for cool stuff” and lets you recommend a gift, hint to your social network pals that you’d like it, or buy it yourself.

Some of the gifts, obviously, come from Violet.com.