High Achievers: Fresh ideas make these Hot 100 retailers tops in this year's e-retail class

Among the fits and starts of this year's economic recovery, a couple of trends are clear: Consumers are shifting more of their spending online, and they're discovering that their increasingly sophisticated mobile phones can be handy shopping tools.

While mobile sales are still in their infancy, e-commerce is steadily becoming a bigger part of the retail industry. Consumer spending on the Internet during this year's holiday shopping season will hit $35.8 billion, up 14.3% over last year's holiday period, bringing total Internet retail sales this year to $162.4 billion, up 12.7% from 2009, predicts research firm eMarketer.

Jeffrey Grau, principal analyst at the market research firm, says he expects holiday shoppers this year will shift more of their spending from stores to the Internet, where they can get the kind of shopping convenience and product selection they can't find in the bricks-and-mortar world.

“Holiday shopping is ideally suited to the Internet,” he says. “Consumers appreciate the convenience and product selection online, as well as the abundance of resources available for finding good deals.”

Still, retail success on the Internet isn't a given. Some estimates put the total number of retail e-commerce sites at 500,000 or more. And along with the steady rise in sales is the ongoing development of sites ranging from mass merchant king and overall e-commerce leader Amazon.com to niche sites like Headsets.com and the family-owned HallWines.com.

Rising above the crowd

While those three sites are quite different from one another, one thing they have in common, along with the other 97 e-commerce sites and 10 mobile merchants that make up this year's Hot 100 and Mobile Top 10 is that they know how to use the Internet, both in its land-based and wireless forms, to stand out from the competition.

They've applied a mix of technology, design, merchandising and overall business smarts to engage existing and prospective customers through the Internet.

Rising above the Internet retailing crowd as a high achiever isn't easy, but the rewards are undeniable as Amazon showed with its 42% year-over-year rise in net sales through the first nine months of this year, to more than $21 billion. And a share of the rewards isn't just for the biggest and wealthiest of e-retailers. Substantial growth in sales and customer activity is available to any Internet merchant with the insight and skill to innovate in ways that give consumers a good reason to come, shop and come again.

This year's Hot 100 retailers provide many examples of such innovation. They range from a home page tab on ArmaniExchange.com that takes visitors to video interviews with the models featured in its merchandise displays, to an Answer Box on AbesofMain.com that lets shoppers pose questions and get answers about complicated consumer electronics products from other shoppers as well as from the retailer's staff of experts.

Innovation is a common Hot 100 trait among both the largest and best-known merchants and the relatively small niche players.

Innovating to please

Among the latter is ModCloth.com, which effectively uses the web to connect with its customers. Those customers can partake in a Be the Buyer feature to help choose the retailer's mix of vintage and retro-style apparel, accessories and home decor products. “Supplying you with the opportunities to have your voice heard is what keeps our company fresh and growing,” ModCloth says.

And innovation in retailing doesn't wear out among Hot 100 merchants as they mature.

“We're trying hard to be innovative and get better for our customers,” says Cam Fortin, director of business development for Wine.com, an early Internet player which has been selling online since 1998. Among the fruits of that policy: wine connoisseurs can pre-purchase hard-to-get vintages just after the grapes are picked; and a new iPad app is being designed to let shoppers zoom into a map of a featured winery and find recipes to go with a favorite wine.

Even century-old retail chains are using the Internet to stay close to their customers. A good example is Walgreen Co., which is revitalizing its Walgreens brand through e-commerce and mobile commerce tightly integrated with its chain of more than 7,500 stores.

“We're establishing ourselves in our customers' minds as a health and wellness destination,” says Sona Chawla, senior vice president of e-commerce at Walgreens, one of three retailers featured in the Hot 100 issue this year, along with Amazon and Barnes & Noble, for both e-commerce and mobile commerce. A Walgreens shopper, for example, can automatically re-order a prescription by scanning a label with her Android mobile phone, and she can get advice from a member of the retailer's pharmacy staff through a live chat service available 24/7.

Dressing up information

Applying fresh ideas takes a different approach, of course, depending on a retailer's category. While Walgreens is about convenience in buying everyday items, a fashion apparel retailer needs to provide a mixture of fun and helpful information. In addition to featuring video interviews with its models, ArmaniExchange.com offers a Dressing Room tool that lets shoppers mix and match colors and fashions to build their personal styles.

Bluefly.com, the retailer of off-price designer apparel and accessories, treats its customers to an ambitious online video program that has included “Closet Confessions” video interviews with celebrities that offer a look inside their clothes closets to see what makes up their personal styles. Bluefly also features videos and photographs focused on the fashion guidance provided by everyday shoppers.

At jewelry retailer James Allen, shoppers can use an online jeweler's loupe to view the fine details of a diamond, then look at high-resolution 3-D images to see how a diamond or other item will appear in person.

“Find a Headset in Just Seconds,” a product-finder crafted by Headsets.com, helps shoppers quickly find the right headset for their personal needs while they also learn about the complex details of different versions.

Blinds.com opens a window of curiosity for shoppers. Its Blind-Finder tool poses six basic questions, such as how important is insulation from heat or cold, to help shoppers make the best choices. Helping to smooth out the learning process are instructions via an interactive three-dimensional video.

Social play

With social media a hot button for engaging and learning about consumers, several Hot 100 retailers are stepping lively and seriously into the social game. Igigi.com assigns a customer service representative to monitor its more than 15,000 followers on Facebook and respond to inquiries.

LillyPulitzer.com features a blog and a link to its Lilly Lovers photo gallery, where customers submit photos of themselves wearing their favorite designs. Lilly receives more than 1,000 submissions weekly, and 53,000 young shoppers downloaded selected fabric patterns from the e-retail site to use as computer desktop patterns, the retailer says.

Apple Inc.'s iTunes offers a new social network, Ping, that lets music fans follow one another and their favorite artists, see what they are listening to and discover new songs, albums and bands. Musician's Friend hosts Harmony Central, an online community where musicians swap tips and share ideas.

What's special

Hot 100 merchants know how to use the Internet to get across to consumers what's special about their business.

Hall Wines, a family-owned and operated vineyard and winery in California's Napa Valley, not only uses its web site to feature enchanting imagery and educational content about its wines and beautiful, visitor-friendly grounds, but to also let visitors learn through online video content why and how it became California's first LEED Gold-certified winery for its use of environmentally friendly buildings and practices.

“These certifications can be difficult to understand, so we use video to help tell this story,” says Bronwyn Ney, director of marketing and e-commerce.

When Abe's of Maine suggests optional accessories for its consumer electronics products, it provides a link that answers the common question, “Why do I need this?”

Customers as champions

As Hot 100 retailers better engage and serve their customers, their customers in turn often become their strongest champions. At cosmetics site Bare Escentuals, where extensive educational content helps shoppers address such thorny issues as wrinkles or acne, one customer in a video testimonial refers to the retailer as “my new best friend.”

ReallyGoodStuff.com, which specializes in selling teaching materials to elementary and middle-school teachers, provides a blog where the retailer and its customers can share ideas about how to improve the teaching experience.

As new technologies raise consumer expectations, successful merchants realize they must cater to customers however they choose to shop. At TV retailer QVC.com, shoppers can watch the retailer's television programs live in high-definition while also browsing and shopping on the e-commerce site. “We want our customers to be able to shop with us however they want,” says Meg Armstrong, general manager of e-commerce.

Maximizing how an Internet presence wins over customers and turns them into long-time loyal champions will serve leading e-retailers well as Internet commerce conquers new heights. Recent figures underscore the opportunity: The expected strong holiday season follows four consecutive quarters of double-digit growth, as third-quarter Internet retail sales, at a seasonally adjusted total of $41.53 billion, accounted for 4.2% of total retail sales, a new record for Internet retail commerce, according to figures released last month by the U.S. Department of Commerce.