Alibaba received a $192,000 penalty for pricing during the past two Singles’ Day sales.
Need evidence that the web is really becoming mainstream? Over-55s are one of the fastest growing segments of buyers.
Only a few years ago, the biggest shoppers on the web were 18- to 24-year-old males who were thought to be computer geeks and were going online to buy electronics, video games and CDs. Today, the biggest shoppers are moms aged 35 to 44 who want to best use the limited time they have to shop. Next up: senior citizens.
Well, at least senior citizens as defined in the broadest sense, those over 50. And while many observers believe this market is currently underserved and under-rated, the lack of service may have more to do with the online approach of retailers and marketers and less to do with the group’s supposed timid response to the Internet.
There is a lot of information that suggests that the older set could be a great e-retail opportunity. According to the Census Bureau, 73.3 million Americans are over 50, representing 27% of the population. That will grow to 85.3 million by 2005. This group represents the single longest life stage with an average of 29 years. It provides 42% of all consumer demand and is worth $900 billion. Moreover, according to seniorplanet.com, a web portal for those 50 and older, adults 55 and over represent the fastest-growing sector of the computer-buying public; 38% of senior computer owners use the Internet and e-mail.
And this group is starting to shop online. According to the Washington D.C.-based American Association of Retired Persons’ Profile of Older Americans in 1999, 51% of Internet users age 45 and older use the Internet for comparison shopping. Of this group, 39% ultimately purchase something over the Internet. A more recent study by technology consulting firm Accenture (formerly Andersen Consulting) and Internet research firm Online Insight reports that the older population makes up the heavy-spenders group shopping on the Internet. The companies’ eBranding study, released in late 2000, shows that Internet users age 35 to 44 spend $100 or more online per month and that the older subset of that group spends $250 or more online, a trend likely to continue as that group ages.
Patrick Moriarty, Online Insight’s director of customer research, says researchers were surprised by results that showed older users spending more online because the online marketing focus of advertisers has been at the 18-to-25 age range. “There is somewhat of a drop in usage after age 45 right now probably because many of those people are entering retirement or are not using the Internet as a core element in their lives and business,” Moriarty says. Even still, slightly less than 20% of consumers in the 45+ age group spend more than $100 online per month, he says.
One factor that may deter some older people from using the Internet to shop is that most web sites and technologies are not suited to them. Jeffrey Pepper, founder and CEO of ElderVision, a software and e-services company focusing on consumers 65 and older, says web and computer technology are not necessarily senior-friendly. For example, he says small graphics, small print, lots of flashing, dancing content and complex computer keyboards all inhibit seniors’ adoption of online shopping and Internet usage. His company, which he formed in 1998, is marketing an interactive shopping service called TouchTown to retirement communities in the U.S. The service provides personal web shoppers via telephone for seniors who may not be used to using computers or have trouble using them.
The company created an Internet device to connect to the Net via TouchTown service. The device uses high contrast screens, features large print on web sites, has a stripped-down keyboard and prominently features a telephone handset so users can call TouchTown. Consumers also can use the TouchTown service through a regular computer as long as it has a speaker and microphone. “The user talks to the TouchTown shopping agent, who then goes onto the web for them and cuts and pastes items onto the user’s screen with a brief description in large print. “It’s a natural outgrowth for these people to want to use a live person,” Pepper says. “Anything that puts a human being back into the loop is extremely helpful to seniors. It’s like the old general store. People may say it’s not efficient but if it works for the customer then it’s exactly the right thing to do.”
TouchTown hopes retirement and assisted-living facilities will pay for the service as a benefit for its residents. The company is backed by private financing, primarily provided by Pepper, and plans to seek venture funding to underwrite a marketing effort.
Pepper says most web sites do not aim to attract older people to shop. Even those that do, Pepper contends, are just copies of other portal web sites “with senior paint on them.”
ElderVision, which targets the older segment of the retired population, is testing TouchTown service with 200 individuals who mainly live in retirement facilities around the country. The TouchTown shopping service will initially begin with one live shopper but Pepper says that can be scaled up as necessary. Retirement facilities offering TouchTown pay $10 per month per resident and must have an ISP. Residents need to have a TouchTown tablet or a standard computer to use the service.
While creating a new approach to serving the older population, some web players are using a tried-and-true marketing approach: the prospect of saving money. To help promote online shopping among constituents who may not be directly targeted by retail marketers, one portal, Melville, N.Y.-based seniorplanet.com, has created its own system for getting its registered members deals online. The portal set up a shopping rebate program with 385 merchants, including 1800Flowers, Borders.com, Macys.com and Brooks Brothers. Most of the deals are single-digit percentage cash back offers.