Each month, Compete takes a look at the top 25 most-trafficked web sites within one of industry categories. Back-to-school shopping played a role in shaping the top 25 retail web sites for July.

Amazon Stays at Number One
Budget-conscious consumers seem to be finding a safe haven with the discount retailers, and this, in part, helped Amazon.com retain its number-one spot on the top 25 list. The site attracted 67.2 million unique visitors (UVs) in July, more than double the traffic of the next closest retailer Walmart. Amazon has benefited from consumer’s flight to value online, as well as growing consumer interest in its popular line of Kindle eBook readers. Compete’s analysis of Amazon’s Kindle success continues here.

Going Back to School
Despite doomsday predictions for the 2009 back-to-school shopping season, the number of back-to-school searches – including terms like “school supplies” and “back to school” – rose to 1.7 million in July 2009 (up from 1.2 million UVs in July 2008). Among the top ranked retail sites, sites catering to back-to-school shopping such as Staples, Target and Wal-Mart all experienced traffic growth during July. Bed, Bath & Beyond (now number 18 on the list) received the biggest month-over-month gain in July, however, increasing 21%. Compete’s analysis of back-to-school trends continues here.

CVS Pushes Walgreens Online
Both CVS.com and Walgreens.com saw their traffic rise month-over-month, but CVS.com’s growth outpaced that of its rival 15% versus 5%. Although Walgreens.com continues to maintain a sizeable online lead over CVS.com, the CVS.com has narrowed the gap of late. And, CVS.com traffic has risen 103% year-over-year since the site was re-launched last summer. Stay tuned for this ongoing competition for pharmacy visitors.

For more retail analysis go to www.blog.compete.com/retail.

Consumers looking for a great deal got the bargain of the summer thanks to Microsoft’s Bing Cashback program. The Bing Cashback program enables users to save money when shopping online by offering cash back on purchases made at participating retailer sites. For two and a half weeks in August, Bing Cashback featured a back-to-school campaign in which merchants offered up to double their typical rebates on select purchases. Several retailers even touted a whopping 50% cash back on purchases. Compared to the month prior, traffic to the Bing Cashback/Shopping portal during those 2+ weeks increased more than 30% as consumers flocked to the site searching for great deals. Participating retailers also saw surges in Bing driven traffic as millions of consumers clicked through to the participating merchants to shop.

• Not surprisingly, mass merchant and electronic retailers dominated both these lists. Students (and parents) in need of computers, dorm supplies, backpacks, books, and new clothes visited these retailers en masse.
• Even with some merchants offering 50% cashback, Overstock, Sears, and Buy.com could not be knocked from their top positions on the most visited list.
• Walmart fell short of the growth experienced by Overstock and Sears and actually declined in the Top Visited rankings.
• Eastbay benefited heavily from its 50% cashback offer; traffic sky rocked over 600% and the merchant edged its way into the Top 10 list.

And did the increased cash back actually lift sales? Definitely!

• For most of these retailers, conversion rate among Cashback users was more than double the rate of other shoppers.
• Eastbay, again, stands out with a staggering 22% purchase rate; apparently Cashback users can’t pass up half priced sneakers.
• Cashback users snatched up discount electronics. The purchase rate for Cashback visits at HP was 10X higher than the general purchase rate. Equally as impressive, 1 out of 5 times a Cashback user visited Newegg they purchased an item.
• Tigerdirect.com is the only retailer whose Cashback purchase rate is less than the general purchase rate. I guess when you are buying big ticket electronics, a few more percentage-points cash back in your pocket is worth shopping around for.

Bing’s back to school promotion effectively drove more sales at retailer sites. In fact, the promotion was such a hit that Microsoft ended the event several days earlier than originally announced. The success of this campaign indicates that back to school shoppers this year were prepared to shop, but were very price sensitive. Given shoppers’ tighter budgets, the extra savings probably prompted sales of items consumers were delaying purchasing or willing to forgo all together. Looking ahead to holiday shopping, it is promising that an extra sale is all consumers need to open their wallets a little bit wider.

After over a decade of caution, paired with a few false starts and missteps along the way, the world’s largest advertisers, namely consumer packaged goods manufacturers, are getting serious about selling their wares online. The makers of much of what fills the shelves of our nation’s grocery stores, drugstores and mass merchants are exploring new ways to use the web not just to promote their brands, but to finally sell their products directly to consumers.

Today, manufacturers of brands from Tide to Colgate to Huggies (and everything in between) derive a minuscule amount of their sales online. Inevitably, that will change as consumers look for additional ways to use technology to simplify their everyday shopping habits. Retailers like Drugstore.com, Walmart, CVS and Amazon.com hope the future is now. Amazon’s Subscribe and Save program, for example, has been around for a couple years now and attracts a slowly growing, albeit modest, base of shoppers. Under the program, consumers can save 15% on specific everyday products, such as diapers, if they sign-up for automatic reordering (Amazon also offers free shipping on orders over $30.) Subscribe and Save attracted 68,000 shoppers in July, up a 21% over last year. Judging by the fairly limited assortment of eligible products, however, the effort has yet to be fully embraced by manufacturers.

In June, a new venture dubbed “Alice” (yes, you guessed it, named after the Brady Bunch’s affable housekeeper) debuted offering consumers a slick new way to purchase everyday products online and have them shipped for free. Unlike past efforts, Alice is unique in that it is does not act as a retailer. Rather, Alice serves as a conduit through which manufacturers can sell directly to consumers. The manufacturers set their own prices and receive the sales proceeds. Alice handles order fulfillment, shipping and the customer experience. Anyone who has previously shopped online for household products knows that prices are generally higher (sometimes considerably) than those found in stores. By selling directly to consumers, manufacturers are able to price their products below those found on most online retailers and more competitively to those found in stores. Alice makes money by offering brands prominent, premium placement on the site and by providing manufacturers a means for marketing directly to consumers.

To put Alice to the test this past weekend, I went to my local club warehouse and noted the prices and quantities of ten products my family purchases frequently. I then went on Alice and compared the unit costs of each item. I found that while a couple items were more expensive on Alice, a few were about the same price, and a couple were even cheaper thanks in part to the coupons Alice found for me and automatically applied.

Although currently in beta mode, Alice has grown quickly since launching in June, with its traffic doubling in July to reach 387,000 unique visitors. Much of that growth has come through word-of-mouth, fueled by bloggers trumpeting the site to deal seekers—Blogger.com was the top source of referral traffic to Alice in July, accounting for 18% of all referrals. Alice users are able to select the items they often purchase and sign-up to receive automatic reminders when they are likely due for a reorder (Unlike Amazon’s Subscribe and Save program, Alice currently does not automatically send reorders to its customers, but plans to soon add the feature.)

So far consumers are looking at a wide assortment of products on Alice. For the month of July, the most often shopped for products included bar soap, laundry detergent, coffee and diapers. Not only are users of Alice coming to shop, but an increasing number are coming to actually make purchases: Alice’s conversion rate rose to respectful 3.5% in July. It’s worth noting, however, that Alice is helping to sway cautious first time users by waving its standard six item minimum order policy. Time will tell whether or not these buyers will return and make more sizable orders from the site.

While it remains to be seen whether or not users will stick with Alice, this venture is the clearest signal yet that a market exists for the online purchase of these products. Beyond the near-term financial impact of selling directly to consumers, sites like Alice offer manufacturers a platform from which they can finally build and foster direct relationships with their consumers. For these marketers, making sales is great, but creating direct links with consumers and having a wealth of consumer purchase data to analyze is priceless.

Earlier this summer, there were several reports that Dell has made $3M thanks to its use of Twitter, mainly to notify people about outlet deals on dell.com. The microblogging service that garnered media attention with reports on things as trivial as celebrity feuds and as serious as protest of the Iranian election results also had a tangible dollar amount associated with its use. The Dell announcement also provided a benchmark of sorts for marketers looking to measure the monetary impact of their social media use.

But where does Dell stand when it comes to getting referral traffic from Twitter, relative to other sites that sell products to customers? To find out, I looked Compete’s referral analytics data, which shows us what site people went to right after they were on Twitter. Although this doesn’t include referrals from mobile devices or Twitter clients (e.g. Tweetdeck, Tweetie, and Twitterific), it does give us an idea of how traffic from the site is flowing to other parts of the web.

To do this analysis, I compared Dell.com to the sites that sell products to consumers online (let’s call them “selling sites”) that got the biggest percentage of referrals from twitter.com. I also looked at the percentage of each site’s overall traffic that was made up of referrals from twitter.com, to gauge how big of an impact the microblogging site was having for them in the grand scheme of things.

The data is shown in the chart below. Each site’s rank in terms of getting referral traffic from Twitter’s website is in brackets, which you would read as “across all sites on the web, eBay ranked 15th in getting share of referral traffic from twitter.com.” The bars show the percentage of each site’s referral traffic that comes from Twitter referrals, which you would read as, “a tenth of one percent of craigslist’s referral traffic is made up of referrals from twitter.com.”

A couple of interesting points to note here:

• Among these selling sites, eBay is getting the largest percentage of the referral traffic from Twitter.com, even though those referrals make up about the same proportion of eBay.com’s overall traffic as they do for Dell’s site
• Etsy, a site where people can sell handmade and vintage items, saw the largest percentage of their traffic from Twitter.com in this group, at just over 2%
• In terms of getting Twitter referral share, Dell ranks 205th, and only about 0.1% of its site traffic comes from twitter.com

What does this mean? A couple of implications come to mind.

First, there is still an opportunity for these selling sites to increase their traffic from Twitter.com to make up a larger portion of their traffic, and take advantage of Twitter’s strength of delivering simple information quickly to a designated audience.

Second, a little seems to go a long way. Dell was able to make money using Twitter without garnering a large percentage of twitter.com referral traffic, and without a big chunk of their overall traffic coming from Twitter. Again, this data doesn’t include traffic that came from Twitter clients or mobile devices, but it does give us an insight into the traffic patterns from the website.

Third, a couple of the sites ahead of Dell in this analysis are places where people can buy, but also post their own items. It could be that people are using Twitter to promote what they are personally trying to sell. Although sites like Dell probably won’t (and shouldn’t) enable the average person to sell on its site, encouraging the audience’s participation through retweets could help boost traffic.

Twitter may be enigmatic, but it has potential for marketers. Typing 140 characters isn’t hard, but figuring out how much, and how to tap into it, is the true challenge.

As a child, I remember the final weeks of summer meant only one thing: the first day of school was near. Students across the country will soon be forced to say goodbye to their carefree days of summer and return to the classroom. While children typically dread this time of the year, parents may be anxious for an entirely different reason: the expenses of back-to-school shopping. In these tough economic times, parents must stretch their dollar to cover the cost of new clothes, shoes, school supplies, and much more. Given the doomsday predictions about this year’s back-to-school spending, I decided to take a look at the online behavior of back-to-school (BTS) shoppers for the month of July, and see how their actions compared to this time last year.

First of all, I tracked some popular back-to-school search terms. I saw significant increases in the number of these searches this year, and many websites saw a jump in traffic based on these searches. I focused on five sites that cater to school shopping needs: Office Depot, Office Max, Staples, Target, and Walmart.

Based on the search data, it’s clear that consumers are spending more time this year researching their back-to-school needs on the web. But I wanted to know more. How did this increase in search translate into on-site activity? Were people buying more online, or simply finding out information? To answer this question, I looked at how many people performed three key actions on these sites: finding a store, reading the weekly ad flyer, and making a purchase.

From this information, I noticed that consumers engaged with these sites at higher levels than they had in July 2008. However, these three actions increased at vastly different rates. While back-to-school shoppers did make more purchases online than they had at this time last year, this jump was much lower than the others. It seems as though visitors to these sites were more focused on gathering information, as seen by the significant growth in store locater and weekly ad use.

Some retailers fared better than others in terms of engaging customers. For example, Staples saw a 95% increase in weekly ad views, while Office Depot only increased by 18%. However, Office Depot saw the largest spike in engagement with the store locator, going from 2% of visits in 2008 to 7.1% of visits in 2009—close to a 250% increase. And the highly coveted purchase rate? Office Depot’s purchase rate grew 47% whereas Staples experienced a 30% drop compared to last year.

So what can we take away from this data?

• First, this back-to-school season appears busier on the web than it was at this time last year. Either shoppers are turning to the internet in greater numbers, or people are starting earlier this year in hopes of finding the best deals.
• Secondly, the increased frenzy around back-to-school shopping on the internet does not necessarily imply a significant increase in online purchases. Instead, people may be using these sites to find coupons or to prepare for an in-store shopping trip. For instance, Staples saw much higher rates of engagement compared to last year (including a significant spike in weekly ad views), but its purchase rate actually went down.

No matter what, it’s clear that the back-to-school rush has kicked off and it’s only just beginning. Shopping will continue to heat up throughout the month of August, right up until the first school bell rings.

There has been a lot written recently about cross-channel retail in terms of the value to the retailer and importance to consumers. Aside from survey results, few hard facts have been published. Possibly this is because it’s hard to gather data and measure it, let alone do this for multiple retailers to make an apples to apples comparison. Even the definition is not immediately obvious to many industry folks. Some often think of cross-channel as being synonymous with the term “multi-channel” but it is far more involved than simply having multiple channels.

The idea behind cross-channel retail is that a consumer should have a consistent experience with a retailer across all channels made available by the retailer. That means having the same marketing message, pricing, and customer service everywhere – in store, print, mobile, email, online, catalog or call center.

Sounds complicated? Expensive? Hard to quantify? Yes, yes and yes. But what’s really going on at the customer level? Is anyone succeeding?

At Compete we have lots and lots of online behavioral data on US consumers. So I started my quest by looking at a few of the top brick and mortar retailers to understand what this group was doing from an online commerce perspective:

After marveling at JC Penney’s industry leading conversion rate, I then looked at the sites and their functionality specifically related to anything that would drive cross channel behavior. After a few passes through the shopping funnel I found some significant differences. Best Buy and Sears lead the pack with buy on-line, pick-up in store options with an order typically available in store within an hour. Walmart has been pushing “Site-to-Store,” which provides free shipping to a store or a fee based membership program with faster shipping than the standard option. JC Penny’s is fourth with a ship to store option that saves you a whopping $3-4 on average compared to shipping to your home (does that even cover the gas?) as well as a limited store inventory look up. And then there’s Target; no functionality that drives customers to the store but at least they have some free shipping options. Nice for conversion, but nothing that impacts cross-channel behavior.

So then the big question remaining is how are the significant cross-channel retail initiatives performing at Best Buy, Sears and Walmart? Do customers care? Do they use it? I then looked at all online orders in June to see what’s going on from a consumer perspective.

For these three leading retailers, this translates to a lot more foot traffic in-store and likely a lower cart abandoned rate. While I’m not quantifying ROI here, it seems to me that from what customers are actually doing with cross-channel retail (from the buy online, pick-up in store perspective), it is very much in demand and gives customers a service they obviously want and use today. In today’s climate, that’s an investment that’s hard not to make. The question now is no longer should a retailer do cross-channel integration on their site, but rather how best can a they optimize these activities based on their business model, customer base and assortment.