Brick & Mortars Lagging in Search Engine Optimization
By Tom Ryan
New research finds e-tailers
like Amazon are the champs at search engine optimization. In looking at
the search results of companies over the last three holiday shopping seasons,
the study found online retailers received about three times the listings
on Google, Yahoo and MSN Live than brick & mortar merchants.
The study came from Internet
Engine, a search-engine optimization provider. It found online retailers
claimed 38 percent of the listings in 2006, 30 percent in 2007 and 35 percent
in 2008. The next biggest category was shopping comparison sites at 25
percent in 2006, 26 percent in 2007, and 19 percent in 2008. Brick-and-mortar
retailers lagged at 8 percent in 2006, and 12 percent in both 2007 and
2008.
Manufacturers and media & hobby
also ranked higher than brick & mortar retailers.
Internet-Engine CEO Thom Disch said
brick & mortar retailers know how to place PPC (pay per click) ads,
but haven’t really started to use search engine optimization tools.
"Traditional retailers
may not be keeping up with changes in consumer behavior since they are
relying on a brand-push marketing strategy while the on-line retailers
using search marketing present a consumer-pull strategy, meaning the product
is presented to the consumer by the search engines when the consumer is
looking for information about that specific product, when they are ready
to buy,"
said Mr. Disch in a statement.
Steven Rogers, professor
of entrepreneurship at Northwestern University, called the study a "classic
example" of how more nimble entrepreneurs often better exploit new
technology and innovation.
"Traditional retailers
are relying on brand awareness to drive their internet marketing programs,
while these start-up online retailers are reaching consumers in new and
creative ways," Mr. Rogers said.
Discussion Question:
Why do you think brick & mortar retailers are so slow in adopting online
marketing techniques, such as search engine optimization? Is it lack of
technical expertise, funds, or more of a cultural divide with online retailers?
All in agreement here, I think–it’s the DNA–and it takes a significant mutation for the bricks-and-clicks guys to get as slick online as the pure-play e-commerce companies.
However, the study does show a steadily improving share of search listings on the part of the bricks and mortar retailers the last three years. It would be interesting to see whether the pressures of the market will push them to get more aggressive and strategic with their online presence to show a marked improvement in share in 2009.
Here’s one theory: If online-only merchants like Amazon don’t get the fundamentals of their business right (like search engine optimization), they might as well close up shop. Meanwhile, brick & mortar retailers (who also may operate their own e-commerce sites) are still driving the large majority of their sales inside their physical locations.
The capital investment and systems development is more likely to be spent on the areas that drive the most business, especially when most retailers are forced to make tough decisions about which expenses should be deferred. I’m sure there is a cultural aspect to the difference, but a lot of the issue comes down to short-term dollars and cents.
They’re slow because mastering online marketing tools is not critical to their business. Having a big sign in the parking lot is. This is one area where bricks & mortar retailers SHOULD follow online pure-plays, as much as possible–because for online retailers, online marketing techniques are their only foot traffic. If you build it, like with a physical store, they will not necessarily find you online. But these tools will increasingly impact the physical world–mobile search being one way it will cross boundaries–and so bricks retailers had better get on that online marketing learning curve sooner rather than later.
Well, it’s all 3: lack of funds, lack of technical expertise and a cultural difference. It’s not the heritage of brick and mortar, and their main focus remains on their core competency. Not surprising. It’s slowly changing, but it’s hard to throw more money at IT when there are fires burning everywhere in a tough economy. We’ve also seen a lot of expensive failures by the brick and mortar crowd in online efforts, so if they’re a little gun-shy it doesn’t necessarily mean they’re Luddites.
Traditional retailers or businesses have always lagged behind entrepreneurial retailers or businesses. They are under less immediate pressure to adopt new ways of engaging consumers and have means to do business that does not involve new media.
In the long term, traditional retailers can catch up by making an aggressive, ongoing commitment to adopt the new technologies or by buying the newer retailers.
Brick & mortar retailers are so slow in adopting online marketing techniques, such as search engine optimization simply because they have lived in a different culture than online retailers. Having worked in a different culture, brick & mortar retailers (people) are limited in what possibilities they see for online business potential compared to what online retailers see. For brick & mortar retailers, online business is “adjunct” to the physical stores, while for online retailers, online retail is THE business!
I also think it is the nature of the business. Bricks and mortar retailers are dealing primarily with feet coming in the door and walking down the aisles touching merchandise. The focus is entirely different from the soft retailers. Sure we can criticize the retail stores but their highest priority has to be in serving the customers they do have. Frankly I’d be more worried if the headline read, “Bricks & Mortars Lagging in Getting Merchandise on the Shelves and into Customers’ Hands.”
Nikki Baird said it best above: “They’re slow because mastering online marketing tools is not critical to their business. Having a big sign in the parking lot is.” In other words, it ISN’T merely a culture difference; it’s a difference in how the economics of the business work.
The interesting thing is that this is changing. Recently, I’ve been working with retailers to test the impact of online advertising on brick-and-mortar sales. In many cases, the impact is significant and the ROI exceeds traditional media.
Many retailers are figuring out that a lot of their circular, radio, and TV budgets are less effective than they (or their media mix modelers) think. As that happens, online ads are likely to become a bigger part of brick-and-mortar retailers’ media portfolio–not just because online is new or “cool,” but because it drives demonstrable incremental profit.
The CMO has to fight that fight and right now, fuhgetaboutit. Retail brands are managed by three folks: CMO, COO and Chief Merchant. The COO wants local to drive traffic and the lead merchant wants pre-print pages to show product. Both of them have a p&l and the CMO does not. That leaves the CMO roaming the halls with a tin cup in search of budget dollars.
In a brick and mortar retail world of slipping topline, the A:S ratio rules and SEO is a low priority. Pity.
That’s why we say: “retail ain’t for sissies!”
I think a brilliant example of using the Internet to bolster sales of a traditional, iconic brand is Great A&P and its online sales of Jane Parker fruit cakes. For the second straight year, A&P has been offering Jane Parker fruit cake online, and have seen sales world wide of its most famous brand. Great A&P knows the value of the internet to generate sales. While a seasonal product, this proves that brick and mortar companies such as Great A&P can impact sales and hits on Google searches when they empower the internet to “advertise” the availability of a specific product.
B&M retailers operate in a cyclical world, with the sales wheel turning inexorably with the seasons and repeating over and over. It tends to lull and mesmerize. Pursuing an online marketing presence is the equivalent of adding a spoke to this great wheel while it’s still moving, because it never stops. And with the volatility of all kinds of sales today, expending effort and treasure to become proficient in online marketing suggests the old story about the difficulty in remembering that the goal is to drain the swamp when you’re up to your derrière in alligators.
B&M stores are taking their time, most likely because there is still a large market for just walking into a store and checking out the product. While many consumers will research their items online, many will still go to the store to buy the product just to make sure it’s the right one, negating the possibility of having the wrong item and then dealing with returns.