The e-retailer heads into the holiday shopping season behind a 30% increase in fulfillment spending and a widening net loss. North American sales increased ...
Online consumers don't do much comparison shopping before they buy, despite "apparently limitless" electronic shopping opportunities, says a new study, "On the Depth & Dynamics of World Wide Web Shopping Behavior," conducted jointly by Wharton and Columbia business schools. The study found that households that were active in the book category searched just 1.1 Web-based book sites per month on average, and for CDs, the average was 1.3 sites per month for active shoppers. Even buyers of travel services, who spend considerably more than buyers of books and CDs, searched only 1.8 different sites in an average active month. Researchers found that 70% of book and CD shoppers appeared to be loyal to a single site during the entire study period.
"It is hard to do comparison shopping if you only go to one store," says Professor Eric Johnson of Columbia. The researchers also found no evidence that shoppers expand the size of their "consideration set" as they become more experienced with online shopping. In fact, one of the three categories studied, travel, tended to shrink slightly over time when the data are viewed at the individual household level.
"The study underscores that brand identification is more important than ever," says Associate Professor Pete Fader of Wharton. "Even though there is unlimited access to information, this study shows that people flock to those sites and products that they know, have used and liked."
Researchers concluded that online customers stick to the same sites because it is "too much trouble" to find their way around a new site. This conclusion is supported by another study conducted jointly at Columbia and Wharton, which found that while physical search costs are almost nonexistent online, the "cognitive costs" are just as high as with traditional retail. Like in a physical supermarket, learning the layout of a virtual store saves valuable time and effort. Researchers also found that the more a sight is visited, the easier it is to navigate the store and more likely visitors are to buy. Customers tend to become locked into their favorite Web sites, even if they pay a higher price for not shopping around.
Improvements in intelligent agent software and other advances may lead to an increase in searching as it becomes easier to do comparison shopping, say the researchers.
The study is based on analysis of actual clickstreams collected by Media Metrix from more than 10,000 households per month for a year.