Groupon says its focus is on the bottom line, rather than top-line growth.
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.