The e-retailer reports a $126 million net loss, stemming from a $640 million year-over-year increase in spending in the quarter on technology and content ...
Newegg, an electronics e-retailer, has made subtle changes to appeal to older shoppers.
As part of a site redesign, electronics e-retailer Newegg.com last year took a hard look at its customer base and saw it broadening beyond its core audience tech-savvy gearheads. In particular, the company saw it was gaining ground with older online shoppers, a quickly growing demographic group of whom more than two-thirds shop online, according to the Pew Internet and American Life Project. Newegg made sure to incorporate changes into the site design that answered older consumers’ online shopping needs, and also changed the tone of its online marketing to help draw more older shoppers in, says Bernard Luthi, vice president of marketing at Newegg.com.
Consumers aged 55 and older represented 16% of Newegg’s audience in 2008. In 2010, they represented 18% of the audience, according to Compete Inc., a research firm that tracks online traffic. Finding a way to make more sales to those consumers is important because consumers between the ages of 55 and 64 are among the highest retail spenders. For example, consumers aged 50 and above spend the most money, about $1,353, on gifts each year, according to the U.S. Bureau of Labor Statistics.
“We recognized the audience in a grander scale than before and learned that the age group coming to Newegg is inching up,” Luthi says. “In order to create an experience that had a further reaching appeal we understood that we needed to make changes.”
To attract older shoppers, Newegg added customer testimonials on its home page, more details about the company on the About Us page and product ratings and reviews. Luthi says those changes have helped to build consumers’ confidence that they are shopping with a reputable company, which he says was a primary concern older consumers expressed when they called the company prior to purchase.
“Older consumers called more often than other age groups in advance of a purchase. They’d say: ‘I want to understand more about the organization. Let me know who you are and what your return policy is’,” he says. “They’re still not as comfortable as a person in his mid-20s about shopping on the web, but they are a smarter shopper. They ask for a lot more information up front.” Luthi says those types of customer calls decreased after Newegg, No. 12 on Internet Retailer’s Top 500 Guide, added the information and testimonials.
Newegg also has taken a new approach to advertising that places less emphasis on price and more on brand attributes and available merchandise. “We recognize the business opportunity older shoppers represent from an expendable income standpoint. We have to send the right message to them,” he says. With search, the company has incorporated branding content that resounds with older customers. “Instead of saying ‘Two terabyte external hard drive for $299,’ we’re saying ‘External hard drive, shop with confidence at Newegg,’” he says. “We’re pushing a brand message harder than simply looking at product price.”
Newegg.com also changed its formula that determines which products appear on its home page so it features more items that appeal to casual shoppers while still satisfying its core audience of tech shoppers.
“We mix it up. Today you’ll see a point-and-shoot camera and a Flip video camera next to advanced power supply cords. It makes it more accessible to more consumers,” he says. Luthi says the company also expanded beyond electronics to appeal to shoppers more broadly. The site now stocks appliances and cookware, while its two-year-old marketplace division lets other sellers market products like jewelry and apparel.