800.416.4959/CODE: 693666

1. 800.416.4959/CODE: 693666

2. Today’s Speakers

3. Housekeeping… • How to get “The Executive Guide to Captivating Customers” White Paper • All attendees will receive via email • Available to download on the MyBuys website • This Webinar will be recorded and available for viewing on the MyBuys website

4. MyBuys – The Personalization Experts

5. Why MyBuys Commissioned This Research To uncover the gapbetween consumer demand for personalization and current merchant execution

6. About the e-tailing group • 14 years e-commerce consulting • Author, It’s Just Shopping • 50+ years traditional retail and catalog experience • Fortune 500 client projects ranging from strategic planning, merchandising, marketing, to technology development and messaging • Proprietary research studies on mystery shopping and merchandising, marketing and EMC (Evolving Multi-Channel Consumer), In-Store Pickup and Gift Registry • e-Commerce expert and frequent speaker at industry events, trade associations

7. Today’s Agenda • The Consumer Point-of-View • The Merchant Perspective • The e-tailing group Personalized Product Recommendations Checklist

8. I. The Consumer Point-of-View

9. Consumer Survey Objectives • To understand how consumers value personalized shopping across channels • To learn how purchases are impacted when there is a personalized shopping experience • To see how email can be effective as both customer service and promotional when personalized based on past purchases and/or preferences

10. Methodology – Demographics Online survey of 1,345 adults who shop online 4+ time annually,spending $500 or more via the Internet Gender 63% Female 37% Male Age range 12% 25-3428% 35-44 30% 45-54 30% 54+ HH with or w/o Children 62% None 38% Presence of Children HH Income • 4% Under $25,000 • 4% $25,000 - $35,000 • 10% $35,001 - $50,000 • 23% $50,001 - $75,000 • 21% $75,001 - $100,000 • 5% More than $100,000 • 5% Prefer not to respond Education • 8% High school graduate • 23% Some college; no degree • 35% College graduate • 9% Some graduate school • 25% Post-graduate degree

11. Overview of Consumer Feedback • Shoppers want - and expect - more personalized online shopping experiences based on past purchases and behavior • Personalized product recommendations areconvenient, save time and help shoppers make better choices • Shoppers perceive that the Internet is the channel where they are best known and receive personalized recommendations yet merchants do not know shoppers as well as they should • Shoppers are “significantly to somewhat” more loyal to a retailer that provides them with a personalized online experience • Personalized product recommendations are valuedthroughout the online shopping experience • By improving the personal relevance of related products shown, merchants have an opportunity to gain incremental sales

12. For greater convenience and time savings, shoppers want - and expect - more personalized online shopping experiences based onpast purchases andbehavior The Consumer Point-of-View

13. 75% will trade privacy for personalization. 40% of shoppers have no privacy concerns; 35% enjoy receiving personalized recommendations although they consider them somewhat invasive but still enjoy PPR The Consumer Point-of-View

14. Merchants do not know shoppers as well as they should as 39% scored favorite merchants 5 or less on a “ten-scale” The Consumer Point-of-View

15. Shoppers perceive that the Internet is the channel where they are best known and receive personalized recommendations The Consumer Point-of-View

16. 81% of these shoppers find value in truly personalized products on a site because they are convenient,save time and help them make better choices The Consumer Point-of-View

17. 77% of the timea merchant’s personalized recommendations result in additional product purchases The Consumer Point-of-View

18. Over 1/3 (36%) of shoppers are “significantly to somewhat” more loyal to a retailer that provides them with a personalized online experience The Consumer Point-of-View

19. 89% of these shoppers feel that products suggestedon a site are specifically tailored for them only some of the time or once in while The Consumer Point-of-View

20. Shoppers indicate it is ”very to somewhat valuable”to receive personalized product recommendationin each of these website locations The Consumer Point-of-View

21. By improving the personal relevance of related products shown, merchants have an opportunity to gain incremental sales The Consumer Point-of-View

22. Placement – Personal Home Page Amazon Educated Shoppers About Personalized Product Recommendations

23. Placement–Product Detail Page • “More Great Finds” • You may also like • Top sellers • New • Great choice

24. Placement - Category Page Captivate customers immediately in the category page

25. Placement - Brand Page Customized selection of branded goods

26. Placement - The Shopping Cart Fuel last-minute impulse buys This Season’s Essentials You Might Like/Deal of the Day

27. Post-order, shipping and order confirmations are where shoppers most value receiving personalized recommendations The Consumer Point-of-View

28. Placement - Order Confirmation and Thank You Page Merchandised for incremental sales

29. Placement - Shipping Confirmations Sell and support opportunity

30. Placement – Post-Order Merchandising Specific coordinating product sent via email

31. Personalized email alerts are powerful toolsthat can broaden perceptions and increase sales The Consumer Point-of-View

32. Asking Customers What They Want • Favorites by • Category • Sub-category • Brand

33. Personalized Email Alerts Taking advantage of profiling by promoting new products based on preferences “Beauty Bye-Byes” online-only clearance

34. Ratings and Reviews Email Rate This Product ***** Bring them back to buy more

35. Shoppers want personalized experiences acrosschannels, yet 78% are only encountering them“some of the time” or “once in a while” The Consumer Point-of-View Q14

36. The consumers have clearly set a high bar for the merchant community To exceed their customer’s expectations merchants must decide how to tackle the challenge of providing best-of-breed personalization

37. II. The Merchant Perspective

38. Over half the merchants still do not know how much up-sells and cross-sells contribute to overall revenue; for the most part known contributions remain under 7% The Merchant Perspective e-tailing group 7th Annual Merchant Survey

39. Cross-sell/Up-sell and Personalization Have Not Yet Reached Top Priority Status the e-tailing group 7th Annual Merchant Survey Q3 * New metric

40. Merchant Survey & Objectives 24 merchants completed a10-question survey;facilitated through personal interviews Goal • To explore the merchant perspective on personalized product recommendations: • Implementation • Current methodologies • Outsourced technologies • Retention • Budgets • Techniques • Performance rankings

41. 24 Participating Merchants A cross-section those who scored high in cross-sell/ up-sell contribution* as well as successfully demonstrated personalization efforts online • ABT Electronics • Barneys • Boston Proper • Coach • Cost Plus – World Market • Danskin • Decorative Product Source • GSI • HP Home & Home Office • Intermix • Lucy • Massey’s • Orvis • Palm Beach Jewelry • Patagonia • Pendleton • Petco • Rugs Direct • Stacks and Stacks • Staples • Wine Enthusiast • Wirefly * The e-tailing group 7th Annual Merchant Survey, 1Q ‘08

42. Overview of Our Merchant Findings A large, unrecognized potential exists for merchants who captivate customers by employing technology to close this personalization gap • Highawareness levels coupled with resource-strapped merchants make the opportunity one merchants must research and understand thoroughly • Merchants perceive there has been an evolution and maturity to the software solutions available in today’s competitive marketplace • Current personalization strategies center on manual efforts where processes accommodate unique merchant requirements • The most significant benefits from mimicking the in-store experience in the online realm are increased sales, increased customer loyalty and improved overall customer satisfaction • Merchants are more open to solutions that would be easy totest on a small scale and then quickly “flip the switch” to full-scale implementation • Merchants want assurances that the personalization technology they adopt goes beyond merely helping with customer acquisition, but rather ensures long-term retention of the customer

43. “We desired a plug and play approach…prior to testing one of these tools we were doing everything manually and it was a huge drain on resources.” “A great deal of expertise is required to deliver optimal levels of personalization and leveraging the expertise of partners is often a preferred practice.” “For us it’s like a spy book on the site where we can pick up on customer interests, including past history and current behavior.” Times are Changing Personalized product recommendations are more feasible with technology serving as an efficiency model

44. The Technology Has Matured “While these tools have been around for several years, I feel that they have only started to mature in the past 12-18 months. I strongly believe that they can affect the end user experience by directing more relevant product.” “At the end of the day, the data is there, those who execute will monetize” Optimal Merchant Criteria • Larger SKU counts • Broad assortment • High turn

45. Better Customer Experience & Increased AOV “I like the idea of technology helping us increase the average order size while simultaneously creating a better customer experience. An accessory may make the difference in our low margin business and we need a service in place.” The Bottom-Line • Larger basket size • Overall site revenue • Customer loyalty

46. Higher Open Rates with Personalization Techniques for alerts • Back-in-stock • On sale • New

47. 79% of Personalization is Done Manually “We take a manual approach where recommendations are hand-selected by the merchant team for each product; applying our own business rules to these merchandising efforts based on internal know-how. Despite such a manual approach, we have good success with average orders containing 3-4 units.” “Our process is to load product until the next season, which is typically six to eight weeks. We don’t really go in and make adjustments because for us there’s a point of no return.”

48. Obstacles and Challenges “It is difficult to manage our assortment manually; we have tested automated versus manual and automated wins out and could even get better if we weren’t constrained by our vendor and category rules. “ • In-house mindset • Significant technology investment • Belief that such efforts can be • accomplished with existing technology

49. Top Retention Tactics • Email • Catalog and direct mail • Customer service as a differentiator • Assortment • Promotions • Loyalty programs • Paid search • Affiliate programs

50. IV. Personalized Product Recommendations Checklist