Shoppers Dropping Into Their Chairs
By George Anderson
The rallying cry for uber-shoppers used to be ‘shop till you drop’ but, with the growing number of people sitting down in front of their computer to go shopping, a new expression
may be needed.
Perhaps, ‘shop till your CPU stops’ or ‘buy with ease until your Windows freeze.’ Okay, the new phrase is going to require some more work but one thing is clear, more people
are buying more stuff without ever walking into a store.
According to the latest report from the Census Bureau of the Department of Commerce, e-commerce sales were up 22.3 percent for the fourth quarter of 2004 compared to the year
before. Total sales climbed to $21.4 billion or 2.2 percent of total retail sales during the period.
For the year, e-commerce sales were up 23.5 percent to $69.2 billion, representing 1.9 percent of retail sales.
Moderator’s Comment: What do the Department of Commerce numbers mean for retailers engaged in or considering selling online? What is the next big e-commerce
thing, e-tailers and other online marketers will use to bring consumer shopping dollars online? –
George Anderson – Moderator
I don’t think there needs to be a next big thing as such. Good service, an intuitive website, prompt delivery, impressive prices and, as I say in many discussions, CHOICE and RELIABILITY. I’m still one of the multichannel shopping advocates and a firm believer that people want to shop in different ways on different days. There are now many retailers offering an excellent online service; anyone considering a new launch has any number of examples that they can follow and lots of good practice from which to learn.
I think that e-commerce sales will continue to grow as more people become comfortable with the format, but will reach a natural plateau in many categories. The advantages in commodity categories are easier to predict where there is a savings and convenience and the consumer knows exactly what they want. And some people love to shop, but many hate it. E-commerce would seem to be much more appealing to people who hate to shop and want to get it over with as quickly and effortlessly as possible.
The biggest disadvantages are not being able to see and inspect the item and having to wait for it to be delivered. I personally enjoy shopping for many types of things and when purchasing an impulse item, I usually want it as soon as possible after making the decision of what to purchase. I am struggling right now with a decision regarding a new digital camera, about whether to order it on-line and save or to pick it up locally and not have to wait. I am trying to determine what the number is that will force me to order on-line and wait.
We have become so much more aware of variety in our lives and the internet provides a venue for learning more about them and acquiring things that may not be readily accessible – or are offered in only a limited selection locally.
Here’s a classic example: I recently purchased a thermopedic mattress topper online. I did not know 2 years ago why I might want one or even what one was. I searched locally and found two different styles available through retail with no supporting information. Online, I found hundreds at a variety of price points and with a wealth of information about the differences between thickness, density, etc. for $100 less than the comparable one at retail.
This is true across a variety of product categories. I have been exposed to gourmet peppers that are hard to find at retail. They are all available online in greater variety than I can find locally. As more and more people are exposed to all these products, it is impossible for brick and mortar retailers to satisfy this desire for variety.
Art, apart from the issue of deferred gratification – will you find the same variety of camera available through any local retailer? I know the answer, as do you. The only question is whether you desire the breadth of selection. I think we are getting spoiled and internet shopping will, ultimately, become the norm.
We will see continued growth, and above 10% sooner than later! Why? Because consumers are convenience focused and the trust level around the e-tailing experience is up. I think more traditional retailers need to be very concerned, and in a lot of the cases they should create an e-tailing component to their offering. Convenience and time compression are not going away!
To George’s question of “The next big thing”: Reducing Art’s problem of “instant gratification” by cutting the time and cost factors of delivery might be one. For example: Online orders fulfilled by local third party logistics providers who inventory and distribute for multiple online retailers for a margin. (Ooops! Does that sound like a grocery wholesaler?) Consumers could choose same/next day home delivery or maybe even pick up at the facility ala the old “cash and carry” model. Maybe even an innovative three-way where FedEx/UPS/USPS (or PeaPod?) supply the delivery service?
Of course e-tailing will someday exceed 10%. Let’s get some perspective on this…it’s still in its infancy. Most of the growth, thus far, has been limited by web development technology, broad-band adoption rates and security issues. Once these barriers are breached, we’ll really see some progress.
During the first few years, you had to be a true believer to shop online: waiting minutes for each product image to download; wondering where your credit card number really went once you click “submit.” With high-speed internet, we’re getting something more workable, but in 10 years, what we have now will seem laughable.
I see most of the innovation coming in consumer control over the shopping process. Shoppers will have intuitive management tools that will allow them to blast through product comparisons based on their own purchase histories and defined preferences. At the moment, e-tailing sites hardly take advantage of the fact that consumers are using a computer. The shopper who orders a product is almost completely generic. As computers become more and more integrated into consumer lifestyles, all the data collected from various applications they use every day — work/leisure schedules; fashion preferences; food preferences; travel preferences; family demographics; geography — all will be packaged into a consumer profile used to customize product searches. (Imagine picking three recipes from FoodNetwork.com for your family meals and pressing the “Buy These Ingredients” button. Or planning out your wardrobe for the winter season on a lifestyles Web site and having the entire selection fulfilled by a consortium of vendors.)
Once you get to that level of sophistication, how can a brick and mortar store associate compete?
I think the next big thing will have to do with service, execution and delivery. That is to say, making the experience more interactive and life-like. This will further enhance the ability to expand the e-tailing growth even further.
As a frequent shopper online, the development of an easy to use interface is what drives me away from or to shopping this way. Sites which give you 360 degree views and maybe a live person you can talk to about features are the best. The worst are those with limited or no views of the item, and treat you like you are trying to rip them off by placing an order with them.
You know, it seems like these are the same things brick and mortar stores deal with, doesn’t it? Thinking like a customer, and how you would like to be dealt with.
The advantages physical retailing has is that it really comes in contact with customers. If you listen to what they are saying, they have the keys to success.
P.S. I find the internet a great way to do research on an item I’m interested in, and buy it at my local retailer.