Study: Catalogers Watch Out, the Net Is Eating SalesThe Internet is cannibalizing traditional sales channels, and catalogers have the most to fear, according to a study of Internet shoppers to be released today.
While 32 percent of consumers and 18 percent of businesses in a survey of online buyers said they spend more overall as a result of the Internet's emergence, 19 percent of consumers and 16 percent of business buyers report buying less from catalogs as a result of Web shopping, according to the Pulse of the Customer survey conducted by consulting firm Cognitiative Inc.
"Clearly, traditional channels are being cannibalized, and catalogs are the most vulnerable," said Laurie Windham, president/CEO of Cognitiative, San Francisco. The reason? "The benefits people report getting from shopping online vs. from a catalog are nearly identical, except the benefits online are more intense."
Indeed, about 150 respondents -- who qualified for the survey by having made at least three purchases on the Internet including one within the previous 30 days -- identified the top three benefits of shopping online and from catalogs:
* 92 percent cited convenience as the top benefit to shopping online vs. 70 percent for catalogs.
* 83 percent reported time savings as a benefit of Internet buying vs. 49 percent for catalogs.
* 69 percent cited the availability of product information on Web sites as a channel benefit vs. 49 percent for catalogs.
"Switching from catalog shopping to online shopping delivers the same benefits, but more of them," Windham said.
Another virtual black cloud for catalogers: 54 percent of the respondents said they think they save money online. "People feel they're getting a better deal there," Windham said.
One reason catalogers are vulnerable to the Internet is that many of them mistakenly think their main strength lies in merchandising, Windham said. "Many of them don't understand their value proposition in the minds of the consumer."
But the game isn't over for catalogers by any stretch. For one thing, graphics online are still lacking. Also, many catalogers have long-established brand loyalty and trust, leaving their online competitors playing a game of brand catch-up.
"There's a lot of value in existing brands that could be leveraged if catalogers would get with the program," Windham said. "[They] are going to have to step into the abyss and get smart while they're doing it."
Conversely, e-businesses need to spend more time building brand awareness.
Meanwhile, the Internet also is having an impact on brick-and-mortar retailers, according to the Cognitiative survey. Thirteen percent of consumers and 21 percent of businesses reported buying less from brick-and-mortar stores as a result of e-commerce.
Still, offline retailers have the advantage of being able to offer a more personal touch. Survey respondents said the top four benefits of brick-and-mortar shopping are physical contact with products (69 percent), selection (45 percent), service (36 percent) and available information (36 percent).
As a result, brick-and-mortar retailers should plan to sell fewer commodity products and focus more on high-ticket items, service and the rest of the shopping experience, Windham said.
Her advice for merchants of all ilks: "People want to be able to have a choice in where they buy. You should think of yourself as a brand, not just a way to buy."
In other results from the study, products and services most frequently bought online by consumers were: travel (75 percent), books (69 percent), computer software (63 percent), and music (48 percent). Products and services most frequently bought online by businesses were computer software (71 percent), books (60 percent), computer hardware (54 percent), office supplies (47 percent) and travel (40 percent).