Gotta Have It

Despite occasionally worrying about overspending or maxing out her credit card, Heidi Himes isn’t going to quit impulse buying over the Internet. Almost every day, Himes, a 19-year-old college student and ardent Web shopper, can’t wait to click on Delias.com and see what kind of close-out deals the site has going. Himes tells herself she’s only after one item. But instead of spending $10 for a skirt, she’ll drop $70 because she can’t live without a dress and sneakers.

“I like the prices and the site makes it easy and convenient to order,” says Himes, who buys from Delias.com at least three times per month.

Himes is the kind of impulse shopper every Web merchant dreams of. Young adults are highly coveted by online retailers because they’re more likely to make instant buying decisions. And with more than $300 billion in annual disposable income, they’re spending it on everything from clothes to cosmetics.

ITurf, the newly launched New York direct marketing company that operates Discountdomain.com and six other youth-oriented e-commerce sites including Delia’s, estimates that impulse purchases account for a substantial share of its first-quarter sales of $2.6 million.

But while iTurf is successful in getting frequent impulse buyers, most Internet retailers aren’t. Despite the fact that almost two million teenagers are buying consumer goods online, the vast majority of Web shoppers are affluent people in their 30s or 40s. They know before going online what they want to buy and they don’t mind spending time to comparison shop before making any final decisions.

“Figuring out how to attract and keep impulse shoppers is one of the biggest challenges any online retailer is going to face,” says Steven Sibulkin, managing director of online retailing at Mainspring Communications Inc., an e-commerce research firm in Cambridge, Mass. “They are a tough nut to crack.”

In the offline world, retailers, especially grocers, know exactly what buttons to push to entice shoppers to take home merchandise they probably had no intention of buying when they walked in. Impulse purchases account for a whopping 60% of all grocery store sales because grocers are masters at strategically placing promotional items by checkout counters or at the end of highly trafficked aisles. But there’s no way to create the same kind of merchandising environment on the Web.

A typical shopper only spends about 30 seconds visiting an e-commerce site before clicking away or deciding to linger to view the merchandise.

Getting shoppers to impulse buy means that Web merchants can’t just offer products they think the online public may purchase on a whim. Nor can they rely solely on rock-bottom pricing.

Instead Web merchants who are hooking shoppers and enticing them to spend freely are using a variety of strategies. They’re constantly upgrading their Web stores with interactive applications technology such as personalization software. They’re also using an innovative mix of in-depth merchandise information, brand name products and daily specials.

For instance, Eve.com, a San Francisco-based online beauty products store, relies on a sophisticated database of integrated product information to encourage its customers (professional women aged 25-34) to impulse shop. Each time a shopper clicks on a particular item, the database automatically serves up coordinating products the customer may also want.

It took three months to write the detailed computer coding that Eve.com needed to integrate its inventory, pricing and product descriptions into one centralized database. But so far the hard work is paying off with customers doing more spontaneous buying, especially in makeup and lipstick categories. Eve.com’s average minimum order is about $40. But because the database offers shoppers extensive product information and instant links to complementary lotions and potions, more customers aren’t buying just one item. They’re typically snapping up several lipstick tubes or makeup bottles each time they shop and spending about 20% more.

“Creating an impulse buying strategy means that you must know exactly who your customers are,” says Mariam Naficy, Eve.com co-founder.

Web merchants such as Eve.com and, more notably, Amazon.com, Bn.com and CDnow, are experts at using personalization applications to entice shoppers to buy merchandise on the spot. If a shopper clicks on the Amazon site and selects one book by a particular author, the retailer’s internally developed advanced personalization function immediately brings up numerous other books by the same author, complete with reader reviews and sample chapters to browse.

But technology can only accomplish so much. Most Internet retailers still aren’t attracting impulse buyers because they’re not thinking their pricing and merchandising strategies all the way through. Shoppers are most likely to make spontaneous purchases if they know they’re getting a great deal on brand name merchandise they like or recognize. That’s why if Internet retailers want to attract spontaneous shoppers they have to offer them a broad array of brand name merchandise that’s priced to sell.

Two big factors in wooing customers to impulse buy are a brand name that a shopper trusts or knowing there won’t be a problem returning merchandise they don’t like, points out Susan Bratton, vice president of market development for Enliven, the online advertising and marketing arm of Excite@Home in Redwood Shores, Calif. Those rules apply whether a merchant is selling online or offline.

Impulse buys account for about one-third of all sales in a typical department store. But in the cosmetics department, those spontaneous purchases can mushroom to up to two-thirds of sales because clerks are constantly stopping customers, pitching them the latest scent from Calvin Klein.

Miami-based Perfumania Inc., a specialty fragrance discounter with 280 stores in 36 states, estimates that impulse buying accounts for about one-third of its annual sales of $175 million. To entice shoppers, Perfumania uses a mix of daily specials, positions brand name merchandise in high volume traffic areas and offers free samples.

Potpourri of persuasion

And that’s precisely the same merchandising strategy, Rachmil Lekach, CEO of Perfumania.com Inc., the company’s e-commerce subsidiary, is using to get his Internet shoppers to impulse buy. A visit to the site is hardly a subtle shopping experience. And with good reason.

Lekach doesn’t want just the occasional impulse shopper. He’s out to attract them in droves. In fact, almost every facet of Perfumania.com screams at the customer: “Buy this now.”

Each time a shopper logs onto the site, which was designed by Annapolis, Md.-based U.S. Internet Working, she is immediately greeted with daily “red tag” sales specials. These deals promise 70% off the regular price and free gifts for purchases over $35—if the merchandise is bought right away.

Shoppers are also never more than a click away from pages of merchandise that give them detailed product photos, information on related items, a comparison between full and discounted prices and a large red “buy now” button.

The average customer spends about $48 each time she visits Perfumania.com. But impulse buyers spend about $20 more, accounting for about 20% of revenues. That leads Lekach to believe he’s doing all the right things to attract spontaneous shoppers. “We want temptation on every single page,” stresses Lekach.

So far, the most successful merchants at online impulse selling are specialty stores in established categories such as books, music, beauty items, gourmet foods or kitchenwares. They’re also targeting specific marketing niches including young people. ITurf, for instance, has more than 15,000 registered users paying $60 per year for the chance to check out the daily specials at Discountdomain.

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The site targets young spontaneous shoppers with an array of flashing headlines that invites customers to join Discountdomain today and buy a $110 Minolta camera for $49. Revolving headlines such as “want one?” also entice shoppers to click on the deal of the day, which may include a $26 halter top marked down to $14.99.

“Getting Generations X and Y to impulse buy means we are constantly mixing merchandise on the e-commerce sites to keep up with the current culture,” says Stephen I. Kahn, iTurf’s CEO.

But given the fact that spur-of-the-moment sales can have a big impact on any merchant’s bottom line, large chains and catalogers with e-commerce sites certainly aren’t ignoring online impulse buyers—they’re just trying to implement merchandising strategies that work.

For example, Seattle-based Nordstrom Inc. rotates a feature on its Web store that offers shoppers a chance to impulse buy. On a recent day a $67 leather wallet was featured on the Web store’s front page under the headline “Impulse Buy Of The Day.” Shoppers could click on the wallet, read a product description, zoom in closer to examine the item’s features and then browse through a list of accessories.

Offline retailers are constantly experimenting with product placement, eye-catching merchandise displays and other tactics to entice spontaneous shopping. But on the Internet some are trying a different approach and sticking with one main strategy: rock-bottom pricing.

The nearly 80 merchants that belong to the Impulse Buy Network, an online merchandise software developer and shopping service acquired by San Mateo, Calif.-based Inktomi Corp. in June, aren’t really interested in fancy graphics and deep site content for their excess inventory and about-to-be liquidated merchandise. They want to entice shoppers who already know in advance what they want by offering sale items at rock-bottom prices.

Right between the eyes

“When it comes to impulse buying, sometimes shoppers have to be hit right between the eyes,” says Stuart M. Spiegel, vice president and general manager, e-commerce services, Inktomi. “The retailer has to make the shopper think ‘Hey, I want one of those.’ ”

That strategy appears to be working for the merchant members of Impulse Buy.

Last year, Lands’ End Inc., Wal-Mart Stores Inc. and other major retailers used Impulse Buy and Inktomi to offer more than two million products at reduced prices.

But not all successful impulse buying strategies have to be as hard sell as hooking shoppers with the lowest possible price. Sometimes a soft sales approach can be just as effective. For example, Berkeley, Calif.-based Time for Wine.com, which went live on the Web in September, has teamed up with Brightware Inc., an Internet customer assistance software developer in Novato, Calif., to build an online question/answer customer dialogue program that subtly nudges shoppers to impulse buy.

Instead of making shoppers fill out a series of electronic forms, The Time for Wine program will use artificial intelligence to obtain information. These applications will engage the customer in a low-key interactive exchange that the retailer believes will pay off with frequent impulse buys.

I’ve got a question

For instance, once a shopper has clicked on the site and selects a particular wine category, the interactive program will ask the customer a series of questions: What price did you have in mind? What vintage are you looking for? What wine-growing region do you prefer? Once the questions are answered, the shopper is immediately supplied with information such as storage and serving tips and shown a series of related wine merchandise, including openers, corks, stemware and certain gourmet foods.

The dialogue program isn’t an inexpensive feature to add to the Web store. (Time for Wine is spending more than $50,000 on the software.) But Time for Wine founder and CEO Catrine Fraser believes the software investment is worth it. Not only is she counting on impulse sales to be a big part of her business, but she needs a competitive edge in a category already populated by Virtual Vineyard and merchants. “The wine business is very personal and retailers must talk the customer through to find out exactly what they’re looking for and then make recommendations on stemware or a special cheese that goes well with a particular burgundy,” Fraser says. “This is how impulse buying happens in a wine shop and it’s the kind of environment we’re creating on the Web.”

Creating an aura of personal service is critical if merchants expect to capture the most coveted of online impulse shoppers: the customer such as Himes who buys multiple times each month.

And that’s precisely the kind of shopper Eve.com wants to attract. In addition to its product database created by San Francisco-based Fort Point Inc., Eve.com is also carrying merchandise from such well-known companies as Elizabeth Arden and Calvin Klein and creating personalized beauty profiles for its frequent customers.

When a registered shopper clicks on the Eve.com, the shopper is greeted by name and instantly surrounded with product choices and beauty advice tailored to their specific tastes and lifestyle. “Impulse buying is all about making sure that each and every spontaneous purchase is just right for that customer,” says Varsha Rao, Eve.com co-founder. “Knowing who they are and what they like is the key to making an impulse buying strategy work.”

Getting to know all about you

It’s certainly more refined than looking into a crystal ball and guessing the future, but more Web retailers are relying on sophisticated personalization software integrated with the right databases to predict what items shoppers will buy impulsively.

Personalization software uses sophisticated mathematical models linked to an Internet retailer’s inventory, merchandising and transaction history databases to predict what products a shopper may buy on the spur-of-the-moment. Some personalization applications ask the shopper to fill out a series of electronic forms to create a customer profile. The next time the shopper visits the site and clicks on a particular merchandise category, the retailer’s “frequent customer program” calls up the profile and begins offering them products they’re likely to buy—perhaps a new CD from a favorite artist.

But this product recommendation technology, which uses collaborative filtering, goes far beyond just individual profiling. It also considers what item a shopper is looking at, searches through integrated databases for profiles of other customers who’ve bought that particular product, identifies other items those people purchased and then uses that information to make other suggestions to the original customer.