The US National Retail Federation’s Shop.org arm, which concerns itself with matters ecommerce, tells us in a recent Smart Brief email update that:
- ‘One-third of retailers plan to add “buy online, pick up in store” capabilities in the next 18 months.’ [Source: Retail Horizons: Benchmarks for 2008, Forecasts for 2009]
Um, sorry to be rude, but what took you so long?
Forrester Research identified the trend as far back as 2004, slapped a label on it (’Cross Channel Shopping’) and issued their usual comprehensive report on the topic, in this case “The US Consumer 2004: Multichannel and In-Store Technology”.
Even back then, it was a pretty big deal to retailers. In 2004 cross-channel shoppers spent an average $458 on products they researched online and bought offline. Just as importantly, when they did hit the offline store, 47 percent ended up spending more, $154 on average for additional products. That’s a lot of money to leave on the table for five years.
The numbers have only grown since then. BIGresearch’s June 2006 Consumer Intentions and Actions Survey was reporting that “87% of consumers research products online before buying them in person or in a store.”
DO AS I DO, NOT AS I SAY
There’s something of a cognitive disconnect involved in this whole ‘research online, buy offline’ process, as exemplified by a May 2008 Nielsen Online MegaPanel survey.
According to the survey, consumers say they would rather buy a “high consideration” product like a consumer electronics product online than in a local store, primarily because of price. Over two-thirds of consumers say that they could get a better price online than in a local store and fully half believe it is easier to compare prices online. Other reasons cited include: getting convenient at-home delivery (45%), comparing retailers (41%), choosing from a much broader selection (40%), accessing more product information (40%), and reading consumer reviews (37%).
However the reality is somewhat different. When it comes to check-out, consumers are actually twice as likely to make a consumer electronics purchase in the local store (59%) rather than online (31%).
Reasons cited in the Nielsen Online Megapanel Survey:
- 58% wanted to physically evaluate the product before purchasing
- 52% didn’t want to wait for the product to ship
- 43% didn’t want to pay for shipping and handling
- 27% wanted to talk to a sales person in person, before purchasing
- 23% thought they could get a better price in store
- 14% weren’t sure anyone would be home when the item was to be delivered
- 11% wanted to support a local business
Nielsen’s conclusions from the Survey (as noted in their September 2008 Consumer Insights newsletter) make a whole lot of sense and are well worth repeating in full:
Whether consumers buy online or in-store, multi-channel shoppers are big spenders. In fact, Nielsen found that consumers who shop both online and offline are the most valuable. Looking across a mix of brick and mortar retail channels, multi-channel shoppers spend 57% more at CVS, 61% more at Walgreens and Costco, 38% more at Walmart and 37% more at Sam’s when compared with the average spending of consumers who exclusively shop online or only shop offline.
Nothing is quite like the actual in-store experience for some products—the ability to physically evaluate a product or speak to a knowledgeable salesperson can literally make or break a sale. On the other hand, the convenience of visiting a much broader selection of virtual retailers to compare and contrast pricing and capabilities without ever leaving home is, well, simply priceless.
Clearly in-store and Web channels complement each other—the combination of the two has absolutely become table stakes for successful retailers. In fact, Nielsen found that 80% of consumers actually purchased a consumer electronic product from a local store whose web site they visited as they were doing research online. Striking a balance between online and in-store can lead to a big payoff.
The source of choice
Perhaps for a “high-consideration” category like consumer electronics, it is no surprise that the Internet is the source of choice for 58% of consumers if they were only able to use one resource to support their next purchase. A visit to the local store trailed way behind as the singular option for 25% of consumers. However, in the case of a “low-consideration” category like pet food, where 44% of buyers visit the web site to learn about food or issues related to pet food, it is important for marketers to understand how to employ an active crossover strategy by engaging the consumer more successfully online.
And unlike consumer electronic buyers where price is the motivating factor for going online, 48% of pet lovers are more interested in learning about nutritional specifications. Learning about product ingredients and recalls were a close second for 45% of pet food buyers. Other factors include learning about safety issues and finding sales and promotions (40%), evaluating and comparing prices (36%), finding a local store (25%) and reading consumer reviews (16%).
Learn from the best
Some retailers are making the most of their web sites as a destination source to engage consumers. Best practices include Safeway’s printable recipes linked to shopping lists, Best Buy’s in-store inventory availability check, Walmart’s site-to-store free shipping option, Lowe’s “how-to” content information, and Kraft Foods’ recipe availability from six different downloadable platforms. Offering great product- and category-level content is the critical foundational element to make multichannel retailing most successful. Key pieces of content must be portable and enable easy printing.
Making it accessible via mobile and in-store devices is a plus. The bottom line is this: give consumers a multitude of ways to reach your product and remain agnostic regarding in which channel the ultimate purchase is made. In doing so, you not only build customer loyalty, but you boost the bottom line as well.