Salmat Pre-Shop® News | October 2008

Welcome to the October issue of Salmat Digital's Pre-Shop® News.

Christmas is fast approaching. Forecasts show there will be over half a billion searches in November/December from Australians who are pre-shopping. How many will find the products and offers you are advertising? It is certainly not too late to get your site and off-site advertising ready to maximise your exposure to this information-hungry audience of shoppers. For some advice in this area please call.

Kind regards

Paul Marshall
Executive Director
Salmat Digital

Pros and cons of ecommerce

The various advantages and disadvantages of shopping online as opposed to shopping in a traditional bricks-and-mortar store have been discussed ad nauseam over the past decade – and continue to be hotly debated today. Common pros and cons we hear include:

Pros:

    * Lower overheads and operating costs mean lower prices can be passed onto the consumer
    * Many people who work in offices spend hours each day on the Internet and can be shopping at any time
    * Similarly, consumers make purchases from online stores at any time of the day and night on any day of the year
    * Access to international customers
    * Customers can have instant access to reviews and ratings of products on the site, which has been shown to increase sales (more on that later)
    * Ability to track online marketing effectiveness all the way to a sales conversion.

Cons:

    * Trust issues still exist – many consumers are still hesitant to use credit card or bank details online
    * Similarly, many consumers still want to “try it on” before they buy – particularly for items like shoes and clothing
    * Harder to establish a one-on-one relationship with the customer to close a sale
    * Distribution of products must be very efficient or you risk losing return customers; or margin
    * Staying current with the latest technology and updates required to keep your website running efficiently is a big investment.

In any case, with various reports indicating that today’s consumer wants the option of being able to shop across various channels, the most successful retailers are working towards offering an online shopfront as well as a traditional bricks-and-mortar presence. Bricks-and-mortar retailers still face a unique logistic challenge in trying to offer a unified customer experience when trying to sell online and offline simultaneously – perhaps differentiating between product information in store and those available on the web would be a good strategic play initially.

However the key to ecommerce is about responding to the changing customer. More and more customers want to seek information online (this is now over half of all shoppers) and more and more customers want to buy online (currently about 6% in Australia, but growing). The need to make your product and offer information discoverable is an indisputable fact that cannot be argued against rationally.

Ecommerce is more difficult because it is a decision that requires significant investment. However if the consumer is turning to online to buy, a decision not to respond will decrease your market share, as competitors, online-only retailers and international retailers take this business. The question is one of economics, strategy and timing.


More on ratings and reviews

As mentioned above, one of the most powerful features to boost sales in the online world is user-generated reviews and ratings of products. Studies confirm that such reviews are a major influence on purchasing decisions – a recent study by Deloitte found that 62% of Internet users read consumer-written product reviews online, with 82% of those saying reviews directly influence their buying decisions.

If you have confidence in the products you are selling, you have nothing to fear from user reviews. If you know that bad reviews are inevitable… then you need to re-evaluate your product catalogue, rather than hide inferior products from open consumer discussion. Bad reviews are good for you however; consumers will buy from you a product that is reviewed more favourably leading to less returns and higher satisfactions. Consumers trust retailers more when they offer a transparent view of the products they sell.

A recent study in the US by Vovici for Internet Retailer found that consumer reviews and ratings are currently the top spending priority for ecommerce sites and store-based retailers alike. 58.3% of store-based retailers rates customer reviews and rating as a priority, followed by 57.1% of web-only retailers.

“Shoppers that view videos and read customer ratings and reviews spend more,” according to Internet Retailer’s Corbin de Rubertis.

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Sound bites…


37% of consumers in the US would like to see web kiosks in store to conduct product research before buying.


- Opinion Research Corporation for Sterling Commerce



38% of shoppers claim to spend about the same amount online as they do in stores.


- PriceGrabber.com