August 07, 2006

Branding verses Selling: Gap vs. Zappos

Sometimes, Database Marketers get caught in the crossfire of the age-old discussion between branding and selling.

Visit www.gap.com. Notice how the homepage is merchandised. Or notice how the homepage is not necessarily merchandised. Gap advertises a theme, a reason to purchase, during the dog days of summer. Even more interesting, Gap chooses to dedicate eight lines of valuable homepage real estate to the terms and conditions of various promotions. Internet Retailer estimates that Gap converts 2.92% of homepage visitors to purchasers at an average order size of $85, yielding $2.48 per visitor.

Now visit www.zappos.com, an online shoe retailer. Zappos views home page real estate as being essential to capturing customer interest. No square inch of the homepage is ignored. Internet Retailer estimates that Zappos converts 5.20% of their visitors to a purchase at an average order size of $100, yielding $5.20 per visitor.

Given Gap's "brand recognition" and "brand heritage", it is surprising to see that Zappos, with just seven years of history, is twice as efficient at converting visitors into buyers than Gap. Now Gap may lose some sales to their retail stores, thereby cannibalizing online potential. Still, the difference is staggering.

If you are a marketer, which of these two approaches do you think is more effective at driving sales? If you are a brand marketer, how do you defend Gap's homepage strategy against Zappos? If you are a marketer who believes that each square inch of the homepage is valuable real estate, how do you defend the potpourri of merchandise on Zappos, compared with the clean presentation of Gap?

2 comments:

  1. Hi,

    I would also add that besides the homepage, Zappos offers superior customer service when compared to the Gap. This excellent service builds word of mouth promotion. Word of mouth promotion is clearly more effective that traditional print or TV advertising -- This type of promotion creates a reputation that builds trust, and therefore makes a new user feel more comfortable in using the service. I think this has to add to the conversion rate as well

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  2. Kevin H.10:23 PM

    There's no question that Zappos is experiencing exponential growth, with almost no "traditional" advertising whatsoever.

    Thanks for the comment.
    Kevin

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