How product demos are helping shoppers kick the tires on the web
By Peter Lucas
Online shoppers love to talk up the convenience of shopping at home or work—and avoiding annoying crowds, especially during the holiday season. But ask them what they would most like to change about the online shopping experience and their answer is usually: “To be able to examine the product in hand before I make the decision to buy.”
In other words, a digital image of the product and a few lines of descriptive text are not enough to excite their senses. That is particularly true for high-touch items, such as apparel, jewelry and cutting edge technologies such as personal digital assistants—product that require a much higher level of sales support than books and CDs to satisfy consumers’ questions about the product and their desire to try them on for size.
After all, how a product looks, feels and performs is central to consumer buying decisions. One of the ways brick-and-mortar retailers cater to these criteria is through product demonstrations—paid for by the manufacturer—that allow customers to kick the tires. But replicating this level of presentation in the online world has eluded most Internet retailers.
That’s because flat screen images are two-dimensional and typically accompanied by limited information about the product and its performance characteristics. At the same time, manufacturers, which besides underwriting the cost of product demonstrations in the physical world also pay retailers to host such presentations, have been slow to push the concept of high-gloss, three-dimensional product demonstrations to Internet retailers.
Online retailers have been frustrated by the product manufacturers’ inertia, which many attribute to manufacturers’ desire to build meaningful web sites of their own and stock them with interactive product demonstrations. At the same time, most e-retailers lack resources to implement high-gloss product presentations en masse. To create and implement a single interactive product demonstration can cost more than $2,000. For Internet retailers dealing in low-margin items, such as electronics, recouping a return on investment for such an endeavor can be a losing proposition—especially if they want to stock their sites with many such demos.
“There are several online retailers, such as Value America, that tried high-gloss product presentations, but could not afford to support them and subsequently went out of business,” explains Scott Reedy, vice president of advertising sales and vendor marketing for Menlo Park, Calif.-based Egghead.com, a computer products retailer. “Supporting that kind of infrastructure is expensive and incredibly labor intensive. For an online retailer such as ourselves, it does not make sense.”
To help bridge the gap, a handful of companies are emerging that distribute to Internet retailers interactive product demonstrations created by manufacturers. Three such companies are San Francisco-based ProductPOP Inc., New York-based Impressia and Seattle-based Vendaria Inc. Each company serves as a content distributor that arranges for and pays Internet retailers to include interactive product demonstrations on their web sites. Interactive ad agencies usually create the demonstrations.
Who pays
Retailers—and the interactive ad agencies—argue that having vendors foot the bill for interactive demonstrations for multiple products is more cost-effective because manufacturers can spread the cost of doing so across dozens of Internet retailers.
They argue that that strategy can significantly increase vendor brand recognition and retail sales. But retailers themselves benefit because the demos provide them with a distinct marketing tool capable of generating a sales lift that does not include a link back to the vendor’s site. “I don’t have to worry that customers who seek a higher level of information about a specific product than what appears on my site will link to the vendor, get the information they want, then be directed by the vendor to another retailer’s site,” Reedy says.
Interactive product demonstrations use pop-up windows accessed through point-and-click icons to provide richer product descriptions, three-dimensional views and, sometimes, actual demonstrations of how the product works. ProductPOP and Impressia claim the demonstrations can deliver a substantial boost in sales. ProductPOP says a pilot it conducted beginning last June produced a 24% increase in browse-to-buy rates for Internet retailers carrying technology products. Participating retailers included PCmall.com, Egghead.com, and Macmall.com. Thirty-two technology vendors supplied the displays.
The pilot was comprised of 250,000 shoppers who randomly connected to the sites of the participating retailers. Seventy-five percent were shown pages featuring icons for ProductPOP displays and 25% were not. Between 5% and 19% of consumers who saw the icons clicked on them. ProductPOP was pleased with the results because consumers typically click through to three or four pages or icons to find the product data they desire before initiating a purchase. If consumers have to spend longer searching for data, they are apt to abandon the site. ProductPOP believes the demos help save many sales.
Up the browse-to-buy
ProductPOP also ran a pilot with CarSmart, a subsidiary of Autobytel.com. Eight automobile manufacturers, including Ford Motor Co. and Volvo North America, supplied content. More than 25,000 random customers were separated into control groups. Shoppers that were shown a ProductPOP icon and who clicked on the icon to view a product demo were eight times more likely to request a quote from a dealer than those who were not shown an icon.
Impressia also claims to deliver higher browse-to-buy rates, without being more specific. Impressia did not respond to requests for an interview.
Vendaria Inc. is another newcomer to the online product demonstration business. The company, which launched in November 2000, is primarily focused on creating and distributing product demos for toy and game manufacturers, such as Hasbro Inc.
Vendaria has deals with 10 Internet retailers including eToys.com, KBkids.com, Macys.com, ZainyBrainy.com and Starbucks.com. Vendaria expects product demos to be running on all those sites this year. Starbucks uses demos for housewares. Vendaria is also talking to sporting goods vendors about creating demos that highlight performance features of outdoor wear.
Vendaria is focusing on the toy market because toys tend to be contextually challenged when displayed on the Internet. “It is hard to understand the size, action features and scale of a toy or game with a flat screen image,” explains Vendaria President and CEO Scott Ferris. “Toys require more feature-rich presentation when displayed online.”
One of the key selling points Vendaria uses to pitch Internet retailers is that its demos can be viewed by consumers using at least a 35K modem, which significantly broadens the base of personal computers that can use its technology. “This gets our product demos to 96 million desktop units,” Ferris says. Consumers using modems with speeds slower than 35K see a slide show with streaming audio to explain product features.
Upon further review ...
Like other distributors of product demos Vendaria charges manufacturers to create the demo, then distributes it free to Internet retailers. Tests have shown that Internet retailers using demos get 26.9% of customers to watch the demos. Of that group 7.2% click to buy, adds Ferris.
“Interactive displays get people who are actually shopping online to examine a product, which is more likely to lead to a buying decision,” says Bill Brown, CEO and co-founder of ProductPOP. By contrast, he notes: “Banner ads usually attract people to a product in a different context. For example, they might be searching for investment information when they see the banner ad, so they are not necessarily in a shopping mode.”
A cut of the deal
Currently, only a few Internet retailers are using interactive product demonstrations. Egghead rolled out
ProductPOP’s service in December; CarSmart rolled it out in January. Brown says ProductPOP, which is focusing initial efforts on the technology market, expects to finalize deals with about six other online retailers, most likely in the technology sector, early this year.
In addition, the company had signed deals as of last December with two technology vendors, Palo Alto-Calif.-based Hewlett-Packard Co. and Melville, N.Y.-based NEC U.S.A. Inc., to supply product demonstrations to Internet technology retailers.
To entice Internet retailers to include interactive product demonstrations on their web sites, ProductPOP pays them a percentage of the revenue it earns from vendors to distribute the material in the retail channel. The percentage paid varies by retailer, according to Brown, who declines to discuss in detail retailer payouts and what the company charges vendors. “This is similar to the promotional money manufacturers pay to retailers to do in-store product demonstrations,” he adds.
Paying Internet retailers promotional money to run interactive product demonstrations is a key selling point, since online retailers see no reason to incur the cost of creating brand recognition campaigns for manufacturers. “Retailers in the physical world do not pay to demonstrate a product in their store, so why should we?” Reedy asks. “Any model that says we pay to present information from the manufacturer will not work.”
To keep Internet retailers from focusing exclusively on the opportunity to earn promotional fees, ProductPOP pitches its ability to capture data that shows how effective online product demonstrations are in delivering a sales boost. Once a consumer clicks onto the product demonstration, ProductPOP tracks what information is viewed and how soon after viewing the information the customer makes a purchase or moves to another page. The data also help identify what types of information and visual content resonate with customers, data vendors can use to build more effective product demonstrations.
Eventually, Internet marketing experts believe that interactive product demonstrations will spread beyond the technology and auto industries. Three markets with a need for such technology are apparel, home decor and beauty.
The difficulty facing online retailers in these markets is that they sell high-touch items that customers want to try out before buying. “Fashion sellers struggle online to compensate for lack of touch and feel,” Evie Black Dykema, analyst with Cambridge, Mass.-based Forrester Research Inc., says in a report about online apparel, furniture and beauty product retailing. “Today’s online retail selling process does not meet fashion consumers’ needs.”
Limping along
It’s a safe bet that product demos will work when selling high-tech products, not only because the subject lends itself to such demos but also because buyers of those products are likely to have the technology to run the demos on their computers. But it’s not such a safe bet when it comes to mass-market products like apparel, home decor or beauty.
The sticking point is that many consumers lack high-speed modems or broadband Internet connections neccessary to accommodate graphically rich product demonstrations.
“Lots of consumers lack a fast Internet connection and only about 70% of PC owners have a 56k modem,” declares Egghead.com’s Reedy. “These demonstrations do not work in an environment with slow Internet access, because people get too frustrated.”
A survey by Forrester Research of 40 Internet retailers carrying fashion-related products shows that 13% cite bandwidth constraints as a limitation in their ability to deliver high-gloss product presentations. That issue ties back to their inability to create product displays that provide consumers with the same sense of touch and interaction with a product they get when shopping in the physical world. The inability to create such an environment was cited by 38% of respondents as the number one challenge facing their business.
Online fashion retailers are “pessimistic about the value of interactive tools in a narrow bandwidth world and reluctant to incorporate them into their sites,” Dykema says in her report. “More than half offer zoom and/or pan technologies and 25% use swatch substitution, but bandwidth-intensive features—animation, video and virtual models—are far less popular.”
To compensate for lack of high bandwidth Internet access among consumers, ProductPOP and Impressia are initially distributing product demonstrations that feature zoom and three-dimensional views, capabilities that can be quickly downloaded by consumers with low bandwidth Internet access.
Zoom lets consumers more closely inspect the appearance of the product and three-dimensional views create the sense of actually holding it in hand. The demonstrations also include detailed text about features and functionality and even streaming video with narratives that provide an overview of the product, much like a television commercial.
200 demos
Eventually, Internet retailers that want to present more sophisticated product demonstrations will have to offer high and low bandwidth paths to their sites and direct customers accessing their sites accordingly, says Dykema. Only 3% of the Internet retailers surveyed by Forrester currently offer high and low bandwidth access, about 38% say they plan to offer high and low bandwidth pathways, 58% do not offer both pathways and the rest were uncertain about what type of pathway they offered to their site.
Despite the high percentage of Internet retailers contemplating separate pathways to their sites for broadband and narrowband users, broadband will first have to achieve critical mass before thoughts are turned into actions, a process that could take several years. “Broadband strategies are top of mind, but at the bottom of to-dos,” Dykema says in her report. “Rearchitecting for broadband remains a distant dream.”
Nevertheless, Egghead.com’s Reedy is bullish that Internet retailers will embrace interactive demonstrations, especially for products that represent the majority of their sales. “Rich product information is the number one customer need when shopping online,” he contends.
Fly or flop?
Using interactive product demonstrations for the least popular items, however, does not make sense, because those items do not attract significant traffic, which limits the opportunity for incremental sales.
“In technology, there are only a handful of product types, such as PCs and software, that generate about 80% of sales,” continues Reedy, who adds Egghead.com began running interactive demos from Hewlett-Packard late last year. Egghead’s goal is to incorporate about 200 online demonstrations into its site for its most popular product lines. The online retailer intends to conduct a study in a few months to determine the effectiveness of those product demonstrations.
As attractive as interactive product demonstrations appear at first glance, they are so new the jury remains out on whether they can live up to their hype. That means that the industry will be watching pioneers such as Egghead.com closely for clues as to whether interactive product demonstrations fly or flop.
A demo of the demo
At first, consumers logging on to an Internet retailer’s site featuring interactive product demonstrations will not notice anything different about how the product is displayed—that is, until they click on the product demo icon.
To draw consumers into its product demonstrations, Impressia’s POP-i service shows an enlarged image of the demo icon that makes a popping noise. A consumer who clicks the icon will see an image of the product. A menu in the upper left corner allows consumers to zoom in on a frontal image of the product and move the image back and forth and get a side view.
A video clip that presents an overview of the product uses Flash, a sophisticated graphical software. A stream of taglines and slogans appears and dissolves around an image of the product as an audio soundtrack describes key features. A text window detailing the main features of the product is also available.
ProductPOP grabs the consumer’s attention with a flashing icon that says “Product Preview.” After clicking on the icon, consumers are presented with a 360-degree, three-dimensional view of the product. A control panel allows the consumer to spin the product right or left or to let the program do so automatically.
A sample of the product’s functionality is included in the menu. For example, a demonstration of the Palm Pilot Vx lets consumers use a mouse to scrawl on the PDA’s window to demonstrate how the graffiti character recognition feature works. Detailed text windows describe the size and weight of the product and the product’s benefits. (A ProductPOP sample demo is available at ProductPOP.com.)
Implementing an interactive product demonstration is relatively painless. ProductPOP says an interactive demonstration can be implemented in about 15 hours.
“With vendors focusing on creating their own web presence and Internet retailers focused on creating a consumer-friendly shopping environment, there is an opening for companies like ours to bring the concept of product demonstrations to the online world,” says Bill Brown, CEO and co-founder of ProductPOP. “It’s all about delivering more information to the customer to make the buying decision easier.”
Peter Lucas is a Chicago-based freelance business writer.
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