Say ‘Hola’ to E-Commerce

Some maturing web sites are now looking outside the U.S. for expansion targets, but a handful of others have found a similar new market opportunity at home in the growing U.S. Hispanic population. Within the last year or so, U.S. Spanish speakers have gained their own Spanish-language web sites at Sears, Roebuck and Co., 1-800-Flowers.com and The Sharper Image. “This is a new market, and as a group they are big purchasers,” says a spokeswoman at The Sharper Image. “The Spanish-speaking market is a very large one that’s not really being captured by or getting a lot of attention from retailers.”

The Sharper Image has gained knowledge of its U.S. Hispanic customer through its stores in Florida, Texas and California, where the Spanish-speaking population has been more concentrated. Its Spanish language web site, launched last May, is accessible through the International button on the navigational bar on the company’s main web site. Similarly, Sears’ “Todo Para Ti” is listed on its home page menu and 1-800-Flowers.com’s 1-800-LasFlores is accessible through its home page.

According to the U.S. Census Bureau, the Hispanic population in the U.S. boomed between 1990 and 2001, rising from 21.9 million to 35.3 million to become the fastest-growing group in the country. By 2050, projects Miami-based Strategy Research Corp., the number of Hispanics in the country will triple to constitute an estimated 24% of the total U.S. population.

Those are tempting numbers for marketers, but hitting on the right online approach to this group remains a challenge, a function of language and cultural differences as well as competing priorities. Though portal Yahoo has a Spanish site and a few other Spanish-language portals offer shopping, few major U.S. retailers as yet have made specific efforts to target U.S. Hispanics online, and results so far are correspondingly small. 1-800-Flowers, for example, has released little information on the performance of 1-800-LasFlores.com and is currently reviewing its strategy. The Sharper Image hasn’t broken out results for its Spanish language site, other than to say its revenues are “quite small” in comparison to the annual revenue of some $60 million from its 5-year-old, primary web site.

The three groups

Retailers trying to gauge their opportunity with this group of online customers are faced with making a long-term bet on the future, weighing the costs and benefits of being early movers in the market now against the potential buying behavior of a more acculturated Hispanic population in the future. Marketing consultants say it’s key for retailers to understand that U.S. Hispanics are not a single demographic, but represent a number of sub-groups.

“There’s the traditional group, which are those who have either just arrived from another country or who have decided to keep to Hispanic traditions,” says Pablo Muniz, chief strategic officer of The Cartel Group, a marketing consulting firm. “There’s the bicultural group that has decided to blend both cultures, and then the group that’s very acculturated and similar to the Anglo market.”

The highly acculturated group is the group within the U.S. Hispanic population that has been first online. It switches back and forth between Spanish and English with ease, making use of a Spanish-language site versus an English one a matter of choice rather than necessity. “The Hispanics who are online are very acculturated. They’re going to places like Amazon.com. Only 13% of U.S. Hispanics with online access who bought something online during the previous three months in a survey we did last September had done so on a Spanish-language site,” says James Forrest, senior study director at Strategy Research Corp.

Statistics like that leave online marketers in the U.S. wrestling with the question: If the most likely prospects among the U.S. Hispanic population are logging onto English language web sites anyway, where’s the ROI in creating a separate Spanish language site and strategy?

J. Carlos Maya, vice president of research operations at the Roslow Research Group, which has conducted several studies on the use of media by U.S. Hispanics, says TV advertisers face the same dilemma. “You can reach a bilingual group in both Spanish and English,” he says. “So, many advertisers are asking why they should spend the money advertising separately in Spanish if they can reach the Hispanic consumer in English.”

One answer—at least to the extent that the experience of TV advertisers sheds light on the online direct market—is that outreach in Spanish is more effective with more people, even among bilinguals. A study from Roslow found that among bilingual U.S. Hispanics, TV ads in Spanish were 61% more effective in creating awareness than ads in English, 36% more effective in message communication, and more than three times as persuasive.

Other marketing consultants point to benefits of a Spanish language outreach that are more subtle but have potentially far-reaching implications. They say it’s a fallacy for marketers to believe that Hispanics in the U.S. will all eventually become—or even wish to become—so acculturated as to blend completely with the mainstream U.S. market.

Less marketing jaded

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And Hispanics are particularly loyal customers, Muniz believes. “Once you win the trust of Hispanic consumers, unless you really screw it up, you’re going to have them for life,” he says. Furthermore, because U.S. Hispanics currently receive only about one piece of direct-mail advertising to every 10 pieces received by mainstream America, “Hispanics are not so cynical about advertising,” says Maya. “When a company makes the effort to communicate with them in Spanish, the effect is very positive.”

But not everyone within the Hispanic marketing community is of the opinion that online success with the bilingual Hispanic population rides on whether a site is in Spanish. In fact, given that it’s often easier to read a new language before speaking or understanding it in speech, the text and graphic format of the web may have advantages in that regard over marketing efforts that depend on audio or video media, or even face-to-face exchanges in stores. Shopping on an English language web site, points out Muniz, doesn’t actually require the consumer to converse in English. “My wife isn’t as comfortable speaking English, but it’s easier online. You have to know the basics, you have to know how to find a pathway, but you don’t have to talk to anybody; you’re just clicking,” he says.

While consultants say U.S. marketers would benefit long-term by efforts to meet the U. S. Hispanic population on its own turf, they also recognize the pressure to invest in what produces results now. “In retail, you put the money behind where the sales are,” says Muniz, who adds that his company has advised retailer J.C. Penney Co. Inc. against pursuing a Spanish language site for now. “If you can do a site in Spanish, that’s great. But you have to understand whether the investment is going to get you the return you’re looking for.”

Older users

Yet a Roslow Research study suggests that the long-term bet might just pay off sooner rather than later. The study shows that more U.S. Hispanics as a whole are speaking Spanish rather than English online. In March 2001, the Hispanics it surveyed used Spanish versus English 39% of the time they were online. By the fall, the use of Spanish had risen to 55%. The researchers note that the numbers have changed as the typical Hispanic user profile has changed. Gradually, the online Hispanic population is expanding to include a larger number of older and more Spanish-dominant users.

But while the debate over the merits and economics of Spanish versus English on web sites continues, it’s over a still relatively small piece of the pie. The penetration of Hispanics online overall in either language falls behind other ethnic groups in the U.S. Census Bureau data show that about 60% of Anglo-European and Asian Americans had Internet access as of last fall vs. 32% of Hispanics, though a Roslow study places the incidence of Internet usage among U.S. Hispanics higher, at about 50% of the population. About half of that number are bilingual.

Low shopping numbers

Equally pertinent to online marketers as the data on Internet penetration and language usage among U.S. Hispanics is another fact turned up by Roslow. While 75% of the U.S. Hispanics it surveyed last fall used the web for e-mail, 61% used it for research and 48% to get news, only 17% used it to shop.

When they did make online purchases, CDs and consumer electronics were the top category; though the numbers weren’t huge. 11% of users surveyed said they’d purchased CDs or electronics online at least once.

Books, a leading category online in the mainstream audience, had been purchased by only 7% of the consumers surveyed, trailing clothing at 8%. Interestingly, only 2% said they’d ever purchased flowers online. The numbers may shed light on gadget- heavy retailer Sharper Image’s active pursuit of the U.S. Hispanic market online, as well as 1-800-Flowers.com’s current review of its online Hispanic market strategy.

Only 48% of U.S. Hispanics have a credit card, according to Muniz, another barrier to the wider use of the Internet for shopping among that population. That’s expected to change as credit card providers reach out to Spanish speakers in their own language with educational and sales efforts on the use of credit both on and offline. Muniz is working with card provider Capital One Financial Corp. on one such initiative.

But while such efforts are still taking root, online marketers must make the tough call now on how much to invest in reaching this market, which format will have the greatest chance of paying off and how soon.

For now, international retailers with brick-and-mortar stores in Latin America may have the advantage over U.S. retailers. Many new U.S. arrivals have already met those retailers on their home turf and in their own language, adding a degree of comfort when dealing with the same stores online. And as in the mainstream retail market, the multi-channel presence can use the web to drive offline sales. “If the Hispanic consumer goes online at J.C. Penney, he has be able to see what is at the J.C. Penney store a few blocks from his home. Whoever does that first will do well,” says Muniz. In other words, retailers will succeed by treating the Hispanic market just like the rest of the market.

mary@verticalwebmedia.com