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The Emerging Online-Offline Paradigm
Greg Sterling, Program Director, Interactive Local Media
• 2004 Q4 e-commerce was $21.4 billion (22% increase over 2003 Q4)
• A big number but only 2.2% of U.S. total retail sales
• Total 2004 e-commerce was valued at $69.2 billion
• That was still only 1.9% of U.S. total retail salesSource: U.S. Commerce Dept.
E-Commerce: Big Yet Small
• 39% of U.S. consumers have made a local purchase after Web research (Dieringer Research Group for ShopLocal, 2005)
• 92% of purchases influenced by SE usage in the Consumer Electronics/Computers category were made offline (comScore, 2004)
• 74% of 7,300 survey respondents say they research online then buy offline (BIGresearch, 2005)
• 62% of U.S. online consumers prefer to buy offline (Forrester Research, 2005)
• Majority of 61 million U.S. car buyers in 2004 used the Internet as part of the process (Borrell Associates, 2005)
Internet Having Larger Influence on Offline Buying
• Among media consulted for local shopping, the Internet is now equal to or greater than traditional newspapers and Yellow Pages
• Internet now rated higher on 10-pt excellence scale than traditional, offline media
• Search is the dominant category among Internet media used for local shopping
• For purchases over $500, 34% of survey respondents started product research online but 90% transacted offline
• Why: 57% of U.S. home Internet users now have broadbandTKG-ConStat: March, 2005 (n=501)
New TKG Findings: Local Internet Growing, Esp. Search
The New Consumer: ‘Anatomy of a Purchase’
• Want to illustrate in a concrete way• Actual purchase-process example• Anecdotal but representative• Consumer: We’ll call him Doug
Purchase of Mac Mini Triggers Need for a New Printer
Step 1: Research with a Trusted Source
The Lucky Product:Ready for E-Commerce?
Click:From CR to Yahoo! Shopping
It’s Simple Now, Right?
Compares Shipping Costs and Merchant Ratings
Lack of Confidence:Back to the Internet
• Doug clicked on several merchant sites• Found what he considered inaccurate or
manipulated price information (using rebates)
• Decided to look for alternative vendors
Product Name Search on Google for ‘Canon Pixma iP4000’
Click: Organic Search ResultPC Magazine Review
Confirms CR Rating, Back to Looking for a Vendor
• Returns to Google search results• Clicks on sponsored links (he knows
they’re ads and isn’t troubled because he wants to buy the product)
• Clicks on 6th link (PriceGrabber) = $0.24 (4/17 YSM)
PriceGrabber 6th of 8 Links: ‘Intrigued by the Name’
Locates a Potential Vendor
• Uses PriceGrabber to calculate total cost
• Selects a low-price vendor: Digital1234.com
Digital1234: Ready to Buy but Return Policy a Problem
• Doug traverses the shopping cart screens
• Credit card information input, ready to click/place order . . .
• Notices restrictive return policy• Abandons cart
Multiple Clicks Ensue
• Returns to process later that day• Conducts same product-name search on
Google to duplicate results• Clicks several of the paid links, including
Amazon (3) and BizRate (4) • Finds what he considers more
misleading price information
Revises Plan: Looking for a Local Store
• Wants the ability to return product locally rather than shipping it back if defective
• Wants the printer sooner; doesn’t want to wait for delivery or pay higher shipping costs to accelerate
• Decides that paying $20 - $30 more is worth convenience and confidence
Goes Directly to Familiar Retailer Web Site
Google Search: ‘Best Buy Coupons’
Climax: The Transaction!
• DealCatcher site sends Doug to deep link w/in Best Buy site
• Need to create account for discount• Creates account: difficult process• Makes online purchase ($152 vs. $122
online) and selects “in store” pick up• Convoluted e-mail confirmation process
compels wait
Endgame: In-Store Pick Up
• Inventory not available at first choice store
• Calls toll-free number and speaks with operator after local store closed (9pm)
• Receives e-mail confirmation of in-store availability next day (at second-choice location)
• Drives and obtains printer
• Internet being integrated heavily into consumer research/buying behavior, incl. Local
• BB users relying on Internet as a powerful and often primary shopping tool, depending on category
• Local consumer behaviors are now more complex, creating new complexity for marketers – esp. local SMEs
• Question: Where to put ad dollars online to engage consumers at strategic points in the buying cycle
What Does This All Mean?