Case Study: How The Web Is Driving More In Store Sales --> Laptop Comptures

In an article in last week's Wall Street Journal entitled PC Shopping: Online vs. In The Store, the author points to an interesting case study of multi-channel shopping behavior around the purchase habits of laptop computers. One such quote that sums this up was...

All this has taken a big bite out of online PC sales. During the first five months of this year, 60% of PCs sold to consumers were bought in a store -- the highest share this decade -- up from just under 53% two years ago, according to NPD Group Inc.

This trend is really being powered by the web's growing influence over in-store sales, most specifically how the empowerment of product information, reviews and research is affecting consumer's buying habits. Another quote from the article said...

In revamping their sites, online vendors are trying to take advantage of the fact that many consumers research their PC purchases online. According to a May study from Forrester Research, 66% of PC sales in stores are influenced by online research.

Now this trend on in-store purchasing could be related back to the simple fact that some items are best purchased in-store. The classic examples are of furniture and appliances. I never thought laptops were in this same category, but the data seems to support this fact. Here is a sound byte from an industry expert that was referenced in the article...

While user reviews and online videos may appeal to consumers who are purchasing their second or third PCs, novice tech buyers have more reasons to shop at retail stores, says Richard Shim, an analyst for research firm IDC. First-time PC buyers typically learn more through a tactile experience at a store -- for instance, when choosing between a 12-inch or 17-inch screen. Also, retailers can often help set up the computer, for example, in a home's wireless network, through specialized services.

So it appears the brick and mortar guys are taking heed to this new trend. To close, here are a new real examples that were offered up in this article...

Retailers are working hard to continue increasing their share of PC purchases. Many are increasing their selection of notebook computers and beefing up accessories such as software and carrying cases. H-P and Dell are now also working with retailers to build exclusive PC designs or configurations for their customers. Over the past year, Office Depot Inc. has shifted to instant rebates from mail-in rebates for certain PC models, making it simpler and less confusing for customers to buy PCs.

How Many People Are Using Online Catalogs & Circulars?

A client of ShopLocal just asked this question, so we all did some digging. It had been awhile since we aggregated all of the unique visits that occur across the many online catalog/circular sites that ShopLocal hosts. Currently (July '07), we are seeing about 18 million unique visits to this localized, in- store promotional content per month. Now during the busy season (holiday shopping period), this number will grow to about 40 million unique visits per month, with much of this spike happening over a very short period of time (talking about capacity planning being important!)

These figures are of course not fully representative of the entire marketplace as they only take into account the traffic and visitors that ShopLocal hosts (yes, unfortunately there are a few other competitors out there that do something similar - although light years behind as far as reach, distribution models and user experience)

Which Are The Fastest Growing Market Segments For Multi-Channel Shopping?

A colleague here was recently pouring over the much talked about multi-channel Forrester report. Below is a graph of the exact data from this report (minus the automotive category since it completely dwarfs the rest as it currently is, and will remain at over 50% of the market for the next five years).

What he found was that there was an unexpected category with a high growth rate. Home Décor/Appliances. In only 2.5 years, it will surpass Consumer Electronics and become the #1 category (aside from automotive). This is fairly shocking considering the strangle hold that CE and computers have online and cross-channel (ex. the electronics retailers were and still arguable are the farthest along with buying online, picking up in store).

Grocery is a little more hockey stick and won’t catch the Home Décor/Appliances category for another 6-7 years, but this is old news for you regular readers as I have already posted about this exact topic.

Finally when looking at this data, the Tools/Hardware/Garden and Apparel categories also look like good mid term growth markets for bringing multi-channel solutions to.

(figures are in thousands)

What The Real Industry Folks Have To Say About Multi-Channel Marketing

Recently, ShopLocal (the company I work for) just hosted a really great webinar, with the help of Mediaweek. During this webinar that had about 200 people participating so we thought it would be fun to run a few interactive polls that I found particularly insightful. Keep in mind that the audience answering these questions were online marketing and advertising industry folks, so the data is pretty meaningful and telling. The biggest news flash that I can see is that people are not yet putting their money in what research and consumers are telling them.

Q: What % of your/your client's media budget is spent online to drive offline sales?

• 12% responded - None of the budget is spent on this type of marketing
• 41% responded - 1% to 5% of the budget is spent on this type of marketing
  
• 18% responded - 6% to 10% of the budget is spent on this type of marketing
• 29% responded - greater than 15% of the budget is spent on this type of marketing

Q: What Is The Biggest Challenge You Face in Leveraging The Internet To Drive Offline Sales?

• Reallocation of budgets / spending - 32%
• Challenges associated with putting local offers online - 18%
• Measurement of results / effectiveness - 34%
• Other - 16%
  

Q: Which Online Methods Do You Use Most Often To Drive Offline Sales?

• Email - 28%
• Search Engine Marketing (SEM) - 22%
• Online Catalogs / Circulars - 8%
• Online Advertising Featuring Offline Offers - 42%

If you are interested in downloading the presentation from this webinar, click here

Coupons, Web Site Visits, Catalogs & Online Circulars Are The Most Influencial Ad Vechicles For Driving Multi-Channel Shoppers In-Store

Here is some very recent data released (eg aggregated) by eMarketer. Of particular interest was the influence that online newspaper ads had on in store purchases. Notice that it is one of the strongest drivers of multi-channel shopping. Also interesting, but not surprising, was the ever declining affect that newspaper print ads have



Along with the same study, eMartker also tried to shed some light on whom exactly these multi-channel consumers are. It appears that it is the typical online user - male, younger with a higher income.

(Yawn) - Yet Another Study That Shows How Online Research Impacts Offline Sales

This was a clip from a press release that went out on 7/10/07. Within it are a number of data points that exactly line up with other studies. The interesting thing to me is, as more research is done and released it all tells the same exact story. That to me is powerful, as often times research can widely vary. Having so many reputable sources all tell the same story and predict the same impact and growth rates is amazing.

According to new research from Yahoo! and ChannelForce, consumers who search online for televisions and digital cameras spend ten percent more when making their purchase in-store than those who did not use a search engine. The survey also found that a vast majority research products online prior to making in-store purchases, and that online research is helping consumers make key purchasing decisions before they enter a store.

Key findings include:

• Seventy five percent who researched their purchases before visiting a retail location used the Internet as their primary source of information. The leading online resources were retail Web sites (73 percent), manufacturer websites (68 percent) and search engines (49 percent).
• Those who search spend an average of $31 more on digital cameras and $46 more on digital camera packages; and an average of $139 more on TVs and $190 on TV packages.
• More than 80 percent of consumers who research before making a purchase end up buying a brand from their original consideration set. The remaining 20 percent said the in-store sales person was highly influential in their decision.
• About 75 percent of people did not know the model they wanted when they walked into a retail store.

David Rubinstein, senior director, Yahoo! Search Marketing, says "This study confirms and quantifies that a more informed consumer is a more valuable consumer... "

Kurt Higgins, president, ChannelForce, noted "... the brand experience begins well before the shopper walks into the store, and this study confirms how critical the in-store experience is to the consumer's decision..."