In its second-largest acquisition, Amazon buys the company for $970 million.
The gabby sock puppet, extreme sportsters, all the trending young images aimed at creating brand awareness for e-commerce companies may be multi-million dollar mistakes for beleaguered Internet retailers, according to Stephen Dull, a partner in Andersen Consulting’s e-branding practice in New York.
In a recent study-“Beyond the Blur: Correcting the Vision of Internet Brands”-of 2,000 online buyers at e-retail sites, the consulting giant learned that 10% of the population accounts for 70% of online purchases-but that 10% is not “the scooter and belly-ring set,” as Dull puts it, but people over 35. Moreover, most online consumers come to a site as a result of a search, not because an ad has attracted them or because of brand loyalty.
Yet, Dull says, retail sites are still throwing serious bucks at advertising and marketing.
Rather than mass marketing, sites should be honing their efforts to attract certain groups of core shoppers who are appropriate to their sites. Dull says web buyers can be grouped into five categories. Netizens are not particularly price sensitive and are attracted by tight privacy and security measures and a well designed, fast experience. Variety Seekers want lots of brands and categories. Those two account for 30% of online users. Brand Reliance shoppers respond to known quantities. Cherry Pickers value low price, but want a wide selection of brands for that price. Time Savers value speed and want sales and service at the same location.
In the future, companies should focus on a single one of those segments. Or they can create multiple brands (Procter & Gamble, Dull points out, has 72 web sites) to attract the various segments. As a third option, companies could create a single umbrella brand with sub-brands underneath it. “The future of e-branding is going to be a lot different,” Dull predicts. “We are where Ford was with the Model T-you can have any color so long as it’s black.”