Does Price or Convenience Rule Online?

Discussion
Nov 21, 2008

By George
Anderson

  1. The
    economy stinks.
  2. People
    are swearing off spending money. They are not even spending that much
    online anymore.
  3. If
    they decide they have to spend money then they darned better be getting
    a deal otherwise it’s right back to number two.

Now that
the stage has been set, it’s a bit odd to come across stories that, on
the face of it, appear to be at odds.

Number one
case in point is a piece in The New York Times that reported online
retailers are cutting prices as low as they can go to try and make something
out of the holiday selling season.

Point number
two comes from a piece in The Boston Globe on new research
from ChoiceStream showing that when it comes to buying online, consumers
put convenience and product selection above price.

So what is
going to get consumers to part with those dollars they’d rather not spend
this holiday?

Gian Fulgoni, chairman
of comScore, said online retailers have little choice but “to run
these deals because that’s what consumers are looking for this season.”

Toffer Winslow, executive
vice president of sales and marketing at ChoiceStream, said in a statement,
“Although the current economic climate is predicted to curb consumer
spending this holiday season, we were surprised to find that shoppers are
still more concerned with shopping convenience and finding the right gift
than they are with getting the best price. We believe that this presents
retailers with a unique opportunity to earn consumers’ limited shopping dollars
by improving the online customer experience instead of focusing on discounts
and margin-eroding promotions.”

Discussion Questions:
What factors do you think are most important to consumers shopping online
for the holidays this year?

Please practice The RetailWire Golden Rule when submitting your comments.

Join the Discussion!

15 Comments on "Does Price or Convenience Rule Online?"


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Doron Levy
Guest
Doron Levy
13 years 6 months ago

In my research on online shopping for a major telco here in Canada, I found out some interesting things about the online shopper. To answer the question, I say it’s the convenience factor and this is why: online shoppers associate low to no overhead for online retailers so they assume they are automatically getting the best price. For my group that I used, it was all about the transaction process and ease of buying. Pricing wasn’t even in the top five concerns. Online outfits that display competitor pricing are doing themselves a favor when it comes to customer interactions.

Susan Rider
Guest
Susan Rider
13 years 6 months ago

If I had answered this question two years ago or even a year ago, I would have said convenience. But not today. Online consumers are searching for the best price, then convenience. Look at the number of hits on blackfriday.info or bizrate.com or shopping.com. People are getting online to find the best price; convenience–this year–is second.

Don Delzell
Guest
Don Delzell
13 years 6 months ago

I agree with Gene’s comments. The definition of “convenience” was not clearly outlined in the Globe story. Gene’s definition works very well for some of the online shopping population…so let’s go with it.

Occam’s Razor works. Almost all the time. The simplest explanation is usually the best. Here, the simplest explanation is the price IS important, and that relative to brick and mortar, online has the advantage of convenience. It’s both!

Paula Rosenblum
Guest
13 years 6 months ago

The answer to the headline is “BOTH.” While price always matters, and we can say that the concept of value has taken center stage in retailing again, the customer STILL has a lot of options.

So–you’ve got to price sharply AND make it easy. Either one will not suffice. I would have liked to choose “All of the above”…because that’s the new reality.

Evan Schuman
Guest
Evan Schuman
13 years 6 months ago

Technically, it depends on the item and the pricepoint. But in general, price bots do a very good job at keeping most Web pricing relatively close. There are a few extremes, but an easy Web price search identifies them quickly.

So given that fact, it’s hard to differentiate too much on the Web with price. If you were able to beat your competition’s price by 40 percent or more, then you could absolutely compete on price. But with a more likely differentiation point in the 10 percent (and, quite often, closer to 5 percent) neighborhood, the difference is unlikely to help much. Therefore, yes, when the numbers are that close, customer service and convenience rule.

Gene Detroyer
Guest
13 years 6 months ago
Price and convenience are not mutually exclusive. Shoppers go online because it is a convenient way to shop. Online, it is very easy to compare prices and choose the item one wants from menu of online retailers with their prices published. So, where does convenience come in? You see the item you want advertised in the Sunday paper at a great price of $49.99. You next go to you computer and Google that item. You make your way to a menu of a handful of retailers. One of them is actually less expensive than the advertised price, but that retailer has an awful customer rating. Another with an excellent customer rating has the item at $5.00 more including shipping. So, do I save $5.00 to get in the car, go to the mall, fight the crowds and hope the product is still in stock? Do I buy from the cheapest guy who has an awful reputation? Or, do I click, spend $5 more and get one more present done and out of the way? I… Read more »
James Tenser
Guest
13 years 6 months ago

When is price ever not a factor? Clearly large convenience advantages may overwhelm small price differentials, but this has always been so. Nobody with any sense drives the gas guzzler clear across town to save $10 on a $1,000 TV.

The Boston Globe article seems to represent the calculus being applied by people who still have a little money to spend. If you’re concerned about keeping that salary secure, you might not take long lunches for holiday shopping this year. For these people, ordering online is a time-saving convenience that contributes some value to the overall price-value equation.

I once heard it put succinctly: “Time is more valuable than money for people who have more money than time.”

Anne Bieler
Guest
Anne Bieler
13 years 6 months ago

Shoppers will continue to search for value–online shopping comparisons just add another level to the equation. Online shoppers now can spend just a few more minutes and check prices, then choose the online retailer that makes it easy. Particularly for holiday gifts sent to family and friends, busy shoppers are looking for e-retailers to deliver the goods.

Phil Rubin
Guest
Phil Rubin
13 years 6 months ago

It goes beyond price, even in an economic climate like today, making it easier for customers and giving them a reason to shop you is one of the most effective strategies there is to maintain and drive business. Online retailers are infinitely better positioned to “know” their customers (i.e., they have more data!) and create relevant messages to connect them with their merchandise.

Bernice Hurst
Guest
13 years 6 months ago

Let’s face it, lifestyle is the issue here along with income. People are just too busy to hit the shops–even when they know there won’t be mobs to fight because ain’t nobody else goin’ out either. Online has the obvious advantage of fitting into those oh so busy lives. You can get someone else to compare prices, send you inspiration and then click to have them schleppe it for you and deliver right to the door–either your own or your chosen recipient. Consumers go to stores because????

M. Jericho Banks PhD
Guest
M. Jericho Banks PhD
13 years 6 months ago

At one of my online ecommerce sites we have no competitors and full shipping costs are always charged to the customer. They have no alternatives and bidness is good. I shop personally online more than elsewhere and my lookouts are price (including shipping) and vendor reliability. Naturally, convenience is part of my personal value equation because I choose to shop online. I just wish I could buy haircuts online.

I believe that delivery options will still rule the roost as a deciding factor in this year’s online holiday sales for shoppers. To the store for pickup? To your home for wrapping and delivery? Or, to the giftee’s home? As a second deciding factor I see availability. There are so many more SKUs available online than in brick & mortar stores that the comparison becomes ridiculous. Foreign items, boutique items, and items too expensive for stores to stock (these could be both expensive and inexpensive items, depending on their sales velocity).

Mark Burr
Guest
13 years 6 months ago

A large amount of online shopping from my view still has to be ‘pre-shopping’ sales that are transferred to brick and mortar. Nevertheless, regardless of the final purchase point, when it comes to gifts, it’s got to be a complete value equation including all the components that are discussed–product, availability, price, shipping, and convenience. In the end, I think all have to work. If any one of these are out of balance, there is no quotient.

It is also true that Christmas will occur exactly on December 25th, regardless. I predict that with surety.

Carol Spieckerman
Guest
Carol Spieckerman
13 years 6 months ago

100% of my holiday purchases happen online and they are primarily driven by convenience and innovation, usually at full price. I want it wrapped and don’t want to sacrifice execution in order to save a few bucks. The “endless aisle” of the Internet combined with customer ratings, reviews and more sophisticated suggestion capabilities makes it easier for me to find innovative/creative options; so much so, that the edited assortments in brick and mortar stores have most their gift-giving appeal for me.

However, for PERSONAL purchases, online shopping is about convenience and hunting for specific items in every category (full price), and conducting price comparisons on more widely available high-ticket items. Stores are for everyday food purchases and the occasional impulse buy.

Anna Murray
Guest
Anna Murray
13 years 6 months ago

I am a veteran online shopper–ALL because of convenience. I have to say, though, that recently two things have happened. (1) I am noticing the brick and mortar stores in my neighborhood are undercutting even the best prices I see online. (2) Since the economy has been so bad, I am looking very carefully at shipping charges.

Odonna Mathews
Guest
Odonna Mathews
13 years 5 months ago

It seems that convenience and price drive sales for sure.

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