Target Site Snafus Sink Sales, Says Target CEO

Target.com's ongoing teething problems are showing up in the bottom line. On a February 23 earnings call, Target CEO Gregg Steinhafel said that during the critical holiday selling season in November and December 2011, the site's weaknesses hurt comparable store sales—even though the site was no longer crashing the way it did during September's Missoni Tuesday.

That suggests the fallout from all that lost learning during Target's Amazon years goes a lot deeper than it earlier appeared. And any advantage in Target's latecomer-to-E-tail status may have been lost in the struggle just to get the site working properly.

During the earnings call, Steinhafel confirmed that comparable-store sales were down 1 percent in early December, in part due to online problems. Was that because Target.com hurt those numbers, or did it help but not as much as hoped, asked one analyst. "Well, it hurt," Steinhafel said. "It hurt the comp in the quarter, and the primary timeframe where it hurt the most was really in the November, first couple of weeks of December timeframe."

He added, "Our traffic on the site continues to be very, very good. So we're very encouraged about the fact that the guests still love coming to the Web site. What we were disappointed in was the experience once they got there, and so our conversion rates were not to where they had been in the past."

A retail site that disappoints visitors once they're in the virtual door, that can't convert them to paying customers, is a site that has failed at its most basic job. And the fact that Target.com didn't fall over during the crush of Black Friday traffic means that, by late November, the retailer had clearly gotten the basics right when it came to handling huge numbers of visitors.

It just wasn't selling as well as it should have been.

Steinhafel didn't drill down into specific problems—he just said during the call that Target was continuing to work on site stability, along with "navigation, speed, page loading, waiting and the overall experience." That's not quite everything (apparently everyone is still happy with the typeface and color scheme), but it's close.

And whether Target has really solved the site's selling problems still isn't clear—there's a whiff of misplaced optimism here. The E-Commerce learning curve that Target abandoned in 2002, when it turned over online operations to Amazon, hasn't gotten any easier. Amazon doubtless seemed like a good idea at the time, but the price in lost learning has turned out to be very high.

Unfortunately, these are not just technical issues, any more than operating a brick-and-mortar store is just a matter of good lighting and air conditioning, printing shelf labels accurately and making sure POS systems work. That's all necessary, just as Target had to learn what capacity management meant for online retail.

But more servers, better exception handling and bulletproof code will only keep the site up. There are still problems in Target.com's site design that even perfect execution on the technical site can't overcome.

For example, Target.com's homepage still contains product images that might be clickable—or they might not be.For example, Target.com's homepage still contains product images that might be clickable—or they might not be. Sometimes one product in a cluster of product images isn't clickable, but everything else in the group is. In other cases, one corner of a large product image is clickable, but the rest isn't.

That type of thing drives customers nuts. Spend enough time on the site and you'll probably realize that the little red-and-white plus signs are the things to click on when you can find them. Sometimes a plus sign appears when you mouse over an image; sometimes not. Sometimes clicking an image opens a small product-information box; other times it's a conventional link to a new page.

Those are all interesting ideas for an E-tail site's design. Any one of them would make site navigation easier. (OK, things that only appear when you mouse over them aren't quite as useful on a phone or tablet, where a touch is a click. Still, any of these ideas is worth considering.)

But using all of them means customers never know what to expect. And no matter how well the technology performs, not all customers will enjoy discovering how each image behaves. Some people just want to shop, and those frustrated shoppers aren't going to be as likely to buy.

Other ideas that must have sounded clever continue to dog the site, too. Google ads still pop up when customers do a search. Think maybe it's not helping conversion rates to have an ad for Ann Taylor pop up on a search for scarves or Nextag show up in a search for iPads? Even if Target's prices are competitive, why invite customers to leave your site?

That felt like a rookie mistake when the site launched. It still seems like a rookie mistake, but it's clearly something that Target is committed to as part of the site's design. And it's apparently going to take a lot more E-tail experience for Target to understand that this just isn't how to keep visitors on the path to checkout at your online store.

When Target announced in 2009 that it was taking back Target Direct from Amazon, it looked like Target had a big advantage: It didn't have to make all the mistakes that other E-tailers had suffered through over the previous decade. All that knowledge, experience and wisdom could go into a site that would let Target leapfrog over its rivals. And it had two years to get everything working right.

Things didn't work out quite that way. It turns out that E-tailing isn't just retailing plus IT. It's more like chess: There's a reason grandmasters know thousands of openings and endgames, along with how to move every piece. Rookie mistakes aside, there's more to catching up with a decade's worth of competitors' experience than building a Web site. And whether being a latecomer will ever be an advantage is still unclear.

At least Target.com's technical group knows the CEO is paying attention—close attention. Yeah, that'll make everyone feel nice and comfortable as they try to close a decade-sized experience gap over the next year, when Steinhafel says he expects that Target.com "will be a positive contributor to our same-store sales increase, instead of the other way around."

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