In the newest installment of our Q&A series, we invited Kurt Peters to share his thoughts on the state of Web retailing today. Kurt is the editor in chief of Internet Retailer and is also the executive vice president of Vertical Web Media LLC, the magazine’s publisher. In addition to overseeing editorial content for Internet Retailer and InternetRetailer.com, he works closely with many of the biggest and brightest stars in Web retail, managing the Internet Retailer Conference & Exhibition each year as well as two special publications that are considered “go – to” sources: the Internet Retailer Top 500 Guide and the Guide to E – Commerce Technology.

ATG: What do you see as the “next big thing” in online retail? Is there anything you view as over – hyped or not quite ready for primetime?

Peters: The next big thing will be something we’ve seen developing already, though it is not very common: the breaking of the linear approach to navigating a web site. Until now, moving through a Web site has been a lot like looking through a book, magazine or catalog (which is natural, given how long humans have interacted in that fashion with a vehicle that contains content, i.e., scrolls, books, etc.). But the development of Web 2.0 approaches and technologies breaks that navigation open and allows the Web experience to become something completely different from what we’re all used to. In retail, that means shoppers will be able to view details about a product, compare products, match one product up with another, view reviews, and see what’s in the shopping cart, all without having to toggle back and forth between pages. That will make the experience more interesting and gratifying than what it is today.

The other next big thing: E – commerce everywhere. That has two aspects to it: E – commerce that does not take place on a computer, such as on mobile devices and TV. And e – commerce that takes place on Web sites other than retail sites – social networking sites, other content sites, and so on. Retailers will have to get used to – and figure out how to make the most of – the fact that consumers can and will buy when they’re in the mood.

Over – hyped: the notion that online retailers can maintain an infinite depth of product. That may be true for digital products (music, movies, books, software) but it is far from the case in hard products. There is a cost to maintaining hard inventory and retailers would be well served to correctly analyze the costs of storing, finding, packing and shipping hard products that result in only a few sales a year. It’s one thing to have episodes of the Mickey Mouse Club on a server to download to a consumer or written to a DVD on demand; it’s a completely different issue to have the Annette Funicello angora sweater in stock just for the person or two who might want to buy it each year.

ATG: What is the biggest challenge facing e – tailers today? The biggest opportunity for them?

Peters: The biggest challenge facing online retailers is the state of the economy. Online retailing has had a good ride so far, carried along first by the novelty, then by the convenience. The novelty is gone; the convenience remains. But as the economy gets worse, online retailing will face the same pressures that offline retailing faces: consumers looking for good prices. E – retailers will have to be hyper aware of their prices in relation to their competitors’ and make sure that the price they charge reflects value – value either in absolute terms (i.e., price) or in relation to whatever additional value a consumer gets from buying at that particular site. They also are going to face increasing competition from big chains who will be looking to online for sales. When they finally start to bring their big resources to bear, the nature of the game will change and everyone will need to be ready for competition to move to a whole new level.

ATG: Do you think that most retailers are in tune with what their customers want and/or expect?

Peters: It’s hard to generalize on this one. Numbers tell the story. The percentage of sales to repeat customers is a good indication of whether a retailer is in tune with its customers, as is overall sales growth. A couple of things that online retailers could be doing better and that indicate that they are out of tune with customer needs:

1) Site search. For all the attention that effective site search has received over the years – and it’s been a topic for a long time – a lot of site search is still really bad. For instance, I was looking for a dehumidifier for my basement recently, and when I searched at a certain site, I got room humidifiers along with dehumidifiers. At another site, when I searched on refrigerator, the first result was a small wine cooler – that seems like a mighty specialized result for the first listing on a broad term like refrigerator.

2) More responsive customer service. Some retailers take 24 hours after you’ve submitted an e – mail to answer it and some never reply at all. Some keep their 800 numbers hidden.

3) Better product descriptions. When I was in the market for a digital camera, I narrowed my search down to a few, and then did a Google search to find out more about each camera from the sites that were selling them. All the sites used the exact same language – obviously, the manufacturer’s wording – to describe the cameras. No site gave any indication that their people had any actual knowledge of the cameras. What’s the incentive for me to buy from any particular site? Such an approach provides no additional value to consumers and forces all decisions to be made on the basis of price.

ATG: What will be the hottest topic in Web retail in the next 6 months? The next year? The next five years?

Peters: 6 months: the economy; 1 year: the economy; 5 years: I hope not the economy, rather, how to create an experience compelling enough to move shoppers out of stores. That will require big leaps in helping the shopper find the product fast, giving the shopper enough information to replicate the touch – and – feel experience of the store and make the shopper comfortable buying ever more things online, and stellar execution of the order, including accurate, super – fast (by that I mean one day, maybe even less) delivery.

ATG: Given the current U.S. economy, and projections about the retail industry in general, should e – tailers expect a strong or weak holiday season?

Peters: Weak relative to previous years, but still stronger than offline. If the first half was any indication, consumer spending will grow much more slowly than in recent years – but online sales will outstrip offline sales and that will mean gains for online at the cost of offline. In the first half, total retail sales were up 2.8% while online sales were up 13.6% compared to a year earlier. We will probably see much the same pattern during the holidays, meaning Web – only retailers need to gear up for competition from huge offline competitors and offline retailers better get their online act together if they are going to capture any of those sales.

ATG: Anything else you’d like to add or comment on?

Peters: Retail chains need to gain a better understanding of the role of the Web. Most do not include Web site sales in same – store sales, but they should because doing so creates a fuller picture of the retailer’s operations and can paint a much different picture of a company’s financial status. In addition, the Web accounts for much of the growth at some chains. When chains fail to take that into account, they risk investing where the return is lower (stores) just because that’s what they’ve always done, and ceding the future of retailing to competitors who understand the importance of the Web.

[tags] Internet Retailer, online shopping, eCommerce, Ecommerce, economy, retail [/tags]