Shopping Play Needed for Web '99 Game Plan

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By: Steve Outing (This is the first of a two-column series.)

In the several years that I've been writing this column, around the new year I've taken the opportunity to gaze at the year ahead and predict what the environment will look like for the online news industry. For this and my next column, I'll take a slightly different approach. Herewith, allow me to suggest some of the things that online news operations should and will be focusing on during 1999.

Today's column focuses mostly on online shopping and news sites' role in facilitating -- and benefitting from -- the cyber revolution in retailing. My next column, on Wednesday, December 30, will cast a wider net.

Focus on the money

Clearly, online news managers in 1999 will be focused on turning a profit. It's still early in the Internet publishing game, and I would not suggest that a major news company that's yet to turn a profit online by the turn of the century should panic. But as you've read about on Editor & Publisher Interactive in recent weeks, some of America's largest newspaper and media companies have tallied up Internet losses in the many millions of dollars. In 1999, the pressure will be on those who run new media divisions of media companies to stop bleeding money and start finding a way to turn it around.

Facilitating online shopping

There's little doubt in my mind that 1999 will be the year of online transactions, and news sites also will be in on that action in a big way. The motivation is obvious: Web banner ads are performing dismally, with clickthrough rates for the average banner down around 1% and, it seems, perpetually falling. You can't float your boat on banner ads. Online transactions, by contrast, hold considerable potential -- for increasing the response to retailers' Web ads, and bringing in a healthier revenue stream to news Web sites.

Local and regional news Web sites need to devote some serious thought and resources this coming year to developing an online shopping strategy. Here are a few ideas:

Create a regional shopping directory. If you go to a sampling of news Web sites today, it's rare to see a "Shopping" button. On those news sites that do have a Shopping area, there's seldom much of substance within. So get to work in 1999 on building a regional or metro-wide shopping directory, containing information about every mall (including downtown shopping districts) and every store in them in your area. (Some of this information already is available from online retailing services vendors, including detail such as what brand names chain retailers in malls carry. See my previous column for information about a company that provides such a service.)

Within the shopping directory, build a database for information about sales, so that consumers will consult the Web directory before heading to the mall. Invite retailers (or mall managers on behalf of individual stores) to submit the information via self-publishing tools. Some vendors offer systems to create such a retail sales database. (See NeverMissaSale for an example of this.)

Some local news sites already operate online yellow pages directories, and those need only add online shopping capabilities, allowing retailers who pay for premium listings in the directory to include sale and coupon information in the related shopping directory and retail sale database, or actually sell some merchandise via online forms.

Coupons. Within the shopping directory, develop a strategy for online discount coupons for retailers. This could entail working with an online couponing technology company, then offering coupon creation features to retailers at the same time they submit sale information. Again, self-publishing tools to create online coupons can make it easy for the retailer or mall manager to submit the data, or the news site's advertising staff can develop online coupon creatives for a fee.

Gift recommendation centers. For major gift-giving holidays, create a recommendation engine that returns suggestions of gifts from participating retailers, and supports direct online purchase of the items. Merchants can participate even if they are not e-commerce-enabled, because the news site can use its online transactions system to accept the credit card order then pass it on to the store for fulfillment. (This is a stop-gap measure until more retailers are able to take cyber orders on their own Web sites.)

Check out your local malls' Web situation. If they don't have a strong Web presence yet, a major local news site may be the obvious choice to design and build an online shopping site for the mall. News sites, especially those of newspapers, have a strong advantage, in that they can package contextual editorial content with a shopping Web site. For example, a shopping mall directory page about clothing can contain not only retailers' listings but recent editorial articles about fashion trends.

Develop a strategy for small retailers that don't have the resources or inclination to participate in the e-commerce revolution directly. A news site can host online communities for niche retailers (cigar afficionados for a smoke shop; local amateur golfers for a golf specialty retailer; kids soccer team players, coaches and parents for a sporting goods shop, etc.), and manage opt-in e-mail lists that deliver sales information to the stores' customers. Or allow small retailers to sell selected items directly online, using the news site's e-commerce capabilities.

Sell niche products online. Partnerships with merchandise manufacturers can be lucrative when selling items of interest to niche audiences online. For instance, readers of a college sports news site can buy school logo t-shirts and clothing items online, where the clothing manufacturer fulfills orders and the news site takes a percentage of the sale. The newspaper-operated auto racing news site can sell souvenirs in partnership with the company that produces them. And so on.

Contextual e-commerce. News sites can take the approach of selling items online related to the editorial content on particular Web pages. Particularly for popular niche content sites, this can be lucrative. Some examples: The book or music review that contains a link to purchase the reviewed book or CD online (either at a national music or book retailer, or a local store that wants to experiment with e-commerce); the football news section containing sporting goods store links to purchase team logo clothing; the weather pages containing links to purchase items that appear in the context of the current weather forecasts (advance-purchase tickets to Swim World for 90-degree days; advance-purchase ski lift tickets following a major snow storm; etc.); the Seniors section that contains a drug store's advertising form to order non-prescription drugs online for home delivery.

Sale search. Shopping probably always will remain a human need that's best fulfilled at a brick-and-mortar store or mall, although online purchases will build to be a large and lucrative business, just as did the direct-mail catalog industry. News Web sites should think not just about making online sales directly for retailers, but also in supporting in-person sales. The news Web site ideally will support a search function, where consumers can enter in their desired merchandise and get returned a listing of what stores carry it, which of those stores have sales running currently, and which ones have discount coupons available. In time, the database ideally might allow for price comparison shopping, though some local retailers will resist that notion even though the technology exists to execute it. Obviously, some of the suggestions above raise serious ethical issues. The possibility is there for online shopping advertising when linked contextually to editorial content of Web sites to influence editorial integrity. That's a separate topic for another day. What I have done with this column, and will do with the next, is explore some ideas for making news Web sites profitable. Facilitating and benefitting from online retail transactions in the future may be one of the best revenue producers in the Web news publisher's strategy bag.

In my next column, we'll look at some other areas that news sites can look at during 1999 to get them on the road to profitability.

Department store strategy overlooked

Debbie Riggins, classified interactive product specialist for the Hartford Courant (Connecticut), sent in an interesting comment to follow up on my last column about online shopping, department stores and online newspapers:

"I always believed that the national department stores earned big revenues from cosmetics, skin care and fragrances. I've often thought that they should offer an online/e-mail based service to order these types of items because it's a pain to go to the mall to get something you've run out of. The department store would then have the opportunity to collect your preferences, send reminder notices, suggest companion products, etc. While I agree that clothing for the non-LLBean, J Crew type of retailer is not going to be a money-maker, consumables like cosmetics, hosiery, etc. could be a hit."

Your help sought

For an upcoming presentation at Editor & Publisher's Interactive Newspapers conference, Ed Scott, new media director for the Fayetteville Observer-Times (North Carolina), is looking for "entertaining and informative" Web sites produced by newspapers. His presentation is called "Six Fun Sites in Sixty Minutes," and he's asking for nominations of sites that contain original content. Send your nominations to escott1@fayettevillenc.com.

Also, I will be doing a presentation on online transactions at that same conference. I'm looking for examples of news Web sites that facilitate online sales. If your site has an innovative e-commerce application, please let me know about it. Send your nominations to steve@planetarynews.com.

Thank you!

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Got a tip? Let me know about it

If you have a newsworthy item about the online news/interactive news media business, please send me a note.

This column is written by Steve Outing for Editor & Publisher Interactive. Tips, letters and feedback can be sent to Steve at steve@planetarynews.com

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