E-Retailing Benefits Both Consumers and Marketers

Electronic retailing is a powerful marketing technique for the right product with the right message to the right person. But what makes for the right combination? Why do consumers respond to TV offers or shop online?

The short answer is that the consumer benefits. People respond to electronic retailing messages because it is to their advantage to do so. It addresses their needs, either practical or psychological.

Electronic retailing, whether on TV or the Internet, is about motivation. How do you influence someone to do something – to pick up the phone or log on to a Web site and then make a purchase? Consumers will buy a product or service through an electronic retailing campaign because they perceive its value or because it makes them look better or feel better about themselves. They do this even though they cannot examine the product in person and may have to wait four to six weeks to receive the product.

They accept these drawbacks for various reasons, including:

Convenience. For people who are pressed for time and do not enjoy shopping, an electronic retailing product may take on added value because the buying transaction can be completed without hassle, quickly and at hours when traditional retailing is unavailable. It saves them time and energy.

Early access. While many electronic retailing products are available in retail stores at some future date, the spot, infomercial or Web site offers the product now. An electronic retailing campaign may be the only place where it is available immediately. If the product solves a difficult problem or offers an important improvement, consumers who buy from the electronic retailer can have the product in their hands sooner.

Innovative or unique products. Getting a new, innovative product to market through traditional channels is expensive and time-consuming, and it requires some luck on the part of the product’s developer. Electronic retailing allows a product’s developer to bypass this process and sell directly to end-users. Consumers who see or hear an electronic retailing campaign get access to products that may never show up in a retail store because the developer lacked the resources to take on the massive retail industry.

Better salesmanship. Let’s face it: Most products are not well-merchandised. Key sales messages are poorly communicated or may be missing entirely. Electronic retailing often overcomes these problems, because the medium itself – television or the Internet – allows the person to be sold the product. They understand how it works and why. The benefits are presented clearly and convincingly. And make no mistake about it: People enjoy being sold to.

So what’s in it for marketers? Perhaps the scales are tipped in favor of consumers, particularly in today’s e-commerce environment. But for a marketer with a new product, electronic retailing can be a cost-effective method of testing a product’s viability in the marketplace. A successful electronic retailing campaign not only generates revenue but also builds brand awareness and paves the way for broader distribution.

That’s not to say that electronic retailing does not have its pitfalls. While the cost of entry is low compared with the cost of mounting a traditional retail strategy, a poorly executed electronic retailing campaign can cost hundreds of thousands of dollars. And once launched, a product can be “knocked off” by an unscrupulous competitor.

For many marketers unfamiliar with electronic retailing and how it works, it is easy to hook up with inexperienced partners and vendors that do not know how to develop and manage a campaign effectively. That’s scary.

Overall, though, the benefits outweigh the risks for many marketers. An electronic retailing campaign is a low-overhead operation without the network of wholesalers and retailers between the seller and the consumer. It is almost exclusively a cash business, in that electronic retailing marketers do not have to extend credit to their buyers the way traditional manufacturers do to wholesalers and retailers.

Most important is the control an electronic retailing campaign gives the seller. The timing and terms of an offer, the price of a product and the content of the message all are under the direct control of the marketer and can be adjusted quickly as conditions warrant.

The rapid growth of electronic retailing is a testament to a fundamental truth: People on both sides of the equation benefit in tangible and meaningful ways. And that is a powerful formula for success.

• Lee Frederiksen is founder and chairman of The Frederiksen Group, Falls Church, VA. His e-mail address is [email protected]

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