Retailers shift their ad spending from TV, radio and print ads to digital ads.
Online all the time, shoppers put pressure on e-retailers to deliver deals and service.
Just more than a year ago, AccessoryGeeks.com began sending marketing e-mails to consumers who had left items in the site’s online shopping cart. The e-mails contained coupons meant to push shoppers to buy cell phone, iPod and iPad accessories.
Then came the addition of more coupons and deals to the site’s home page, many located via clicking on the ‘Coupon’ and ‘Sales & Deals’ tabs. The retailer, analyzing its monthly sales and checkout stats, came to realize that its customers—some nursing recession-era habits—were more likely to complete a purchase when an offer was spiced up.
AccessoryGeeks.com also has made change in customer service procedures in response to changes in consumer behavior. The retailer now responds to e-mails around the clock in order to serve the all-the-time shopper, and offers responses also by text; after all, more than 15% of consumers who shop the retailer do so via mobile devices.
“Customers online, they demand more and more and more as time goes along,” says David Byun, the e-retailer’s president. He won’t disclose the specific sales lifts from all the moves he made, but the changes undertaken over the last year by AccessoryGeeks.com illustrate how one e-retailer is striving to keep up with the changing behavior of the online shopper, one who is more empowered than ever before.
Fresh off a strong 2011—comScore Inc. says online sales increased 13% last year to $161.5 billion, boosted by the 10 holiday shopping days when consumers spent at least $1 billion in each 24-hour period—e-retailers have good reason to feel confident about their place in the retail jungle. After all, they again took market share from bricks-and-mortar competitors in 2011, as total retail sales grew only 7.9% according to the U.S. Census Bureau.
But online shoppers are more confident, too, forcing merchants to deliver better deals and service, and to master the art and science of both marketing via online social networks and listening to what consumers say about them on networks like Facebook and Twitter. They’re working hard to tailor shopping for a variety of web-enabled devices—devices that increasingly blur the boundaries between physical stores and the web. And, above all, they must deal with a consumer who has access to all kinds of information that enable her to find the best deal.
“One of the key shifts in behavior we’ve seen,” says Andrew Lipsman, comScore’s vice president, industry analysis, “is that people in every income group, they’ve learned the behavior to price shop and comparison shop—and they are doing it even as we’ve come out of a recession.”
One way e-retailers responded to those recession-hardened, smarter consumers is with free shipping offers: 52% of online transactions in the fourth quarter of 2011 charged nothing for shipping, compared with 49% for the same period in 2010, the previous record, according to comScore.
Free shipping has become so ingrained that some retailers must find other ways to entice sales. “Last year it was clear customers really expect some way to get free shipping,” says Bradley Rosen, partner at SportsWorldChicago.com. Winning the sale required the relatively small sports merchandise retailer to do more—for instance, offering rewards points to encourage repeat customers—and simplifying his checkout so it is only one page long.
Free shipping, though, tells only part of the story of how discount-hungry consumers are shopping online armed with more information. Nearly a third of online shoppers, or 31%, check out deal-of-the-day or group-buying sites such as Groupon, LivingSocial or their scores of imitators while shipping online, says e-commerce research firm Compete. And 27% visit shopping comparison sites to ensure they find the best prices.
Other data also suggest that consumers are almost always shopping with a future discount or deal in mind, says Charles Nicholls, founder and chief strategy officer of SeeWhy, which sells technology that helps retailers retarget consumers who leave items in online shopping carts. During the 2011 holiday shopping season, more than seven of every 10 items shoppers put into carts remained there without purchase. “Consumers like having permanent shopping carts” Nicholls says. “They use it almost as a wish list. Customers are getting more sophisticated and waiting for promotions.”
The spread of web-enabled smartphones and other mobile devices promises to make deal-hunting even easier for consumers. 41% of consumers who owned such devices had used them to check prices within the past three months, according to the Compete survey, which was conducted just prior to the 2011 holiday shopping season. And 39% of those consumers had downloaded bar code scanning apps that make it easy to check prices, usually inside stores; 20%, meanwhile, had downloaded comparison shopping apps.
The proliferation of mobile devices and shopping apps has big implications for the ongoing shift of consumer spending from physical stores to the web. ”It used to be that when bricks-and-mortar retailers had people inside stores, they had a really good chance of converting them into a buyer,” Lipsman says. “But now that consumers have smartphones, that is changing.”
Read much more about how e-retailers are responding to the changing online shopper in the March issue of Internet Retailer magazine.
Karen Kang, vice president, AccessoryGeeks.com, will speak at the Internet Retailer Conference & Exhibition 2012 in a session entitled “The idea exchange: Swapping tips on doing more with less.”