Understanding the Empowered E-Consumer

The Internet has empowered consumers. No longer can merchants simply push merchandise or messages to mass audiences. Instead, consumers use rapidly evolving technology to act on personal tastes, interests and choices.

According to Forrester Research, Cambridge, MA, 17.4 million U.S. households will shop online in 1999 to the tune of $20.3 billion in revenues. Of those households, 41 percent will make their first online purchase this year. All projections for future growth of online shoppers, both in the United States and globally, and the average value of their purchases point north.

The psychology of shopping remains much the same. Consumers seek the optimal balance of price and value. Technology facilitates almost immediate price comparison (see www.clickthebutton.com or www.dealtime.com), which puts the burden of establishing instantaneous value and differentiation squarely on the brand and the merchant.

Cheskin Research, Redwood Shores, CA, found that six fundamental elements are critical to establish online trustworthiness: brand awareness, clear navigation, understandable fulfillment, engaging presentation, up-to-date technology and the guarantee of security. The list applies equally to traditional and cyber retailers. The difference is the time – measured in nanoseconds – that online shoppers take to form an initial impression.

In addition to these elements, consider 13 new shopping modalities that illustrate how consumers use technology to quickly evaluate products, service, price, promotions and value.

• Opt-in e-mail. Consumers receive information about products and services that correspond to their stated interests. Most messages include embedded Web links to facilitate one-click shopping. HTML e-mail allows marketers to deliver robust graphics and photos without the cost of printing. Consumers grant merchants incremental permission to follow-up and contact them with messages about merchandise or subsequent offers.

• Personalization and filtering. You register once and subsequently are greeted by name. The merchant remembers what you like, what you looked at and what you purchased. Collaborative filters compare you with your peers and make recommendations for new products based on your stated interests or on the interests of those with like profiles. The site continually learns what you like and makes subsequent offers more appealing.

• Dynamic ad serving. The use of third-party servers to transmit ads to surfers allows sites to track individual behavior and serve messages in specific sequences based on how surfers viewed a site or where they previously surfed. New technology called “domain-name identification” will allow retailers to block out certain people based on the server they are coming from or carefully direct the sequence of messages or pages they are shown.

• Bots. The use of robots or Web spiders makes every shopper a competitive price buyer. Sites such as bookpricer.com scan up to 50 competitive merchants in a few seconds, displaying comparative prices with one-click access to ordering. But the ease of comparing prices masks the differences in useability of sites, availability of products and retail terms and conditions. Sites such as pricewonders.com offer price comparisons, while sister site ratingswonder.com ranks online retail stores.

• Immediate incentives. Shoppers are offered points for viewing, reading, sampling, responding and buying by sites allied with mypoints.com. Sites such as iwon.com up the ante by offering cash rewards for similar behaviors.

Instant coupon access and application is an adjunct to instant incentives. Sites such as hotcoupons.com and coolsavings.com offer the promise of scan, clip and print savings. In the next iteration, customers’ preferences will be noted, stored and accessed, and immediate savings will be automatically applied, much like they are at grocery checkout counters.

• Auctions. Ebay.com and its competitors present shopping as a series of time-sensitive bids. For both bidders and observers, the process is entertaining and money-saving. By making price information available anytime, this process can create a dynamic market for virtually any product where prices are fluid and can be set according to demand or according to whatever the market will bear. Many sites are incorporating auctions.

• Shopping specifications. Respond.com, mygeek.com and similar sites allow users to identify desired products, often at different levels of specificity, and ask allied merchants to make offers directly to prospects by e-mail. A request for “marine-quality binoculars” yielded e-mails from six retailers, each with an imbedded link to their sites. Five of the responses also included an “act now” discount or rebate offer. The sites also feature links to allied retailers sorted by merchandise category.

• Sales assistance on demand. Unlike a retail store where sales help is too pushy or too absent, many sites offer professional advice or the opportunity to simultaneously shop and chat with a salesperson using software provided by LivePerson or one of its competitors. For example, etown.com offers Ida, a question-and-answer tool to help customers specify wanted product features and benefits, which it then matches to products and prices.

• Bulk shopping. Sites such as mercata.com and accompany.com gather groups of people interested in buying the same product and strike bulk purchase discounts. Potential customers have a direct incentive to help market these sites since the size of the group dictates the depth of the discount.

• Registry shopping. Certain retailers, wedding sites and universal registries offer tools to list desired merchandise. Some add incentives to tell friends and family where they can find the lists. Others connect merchants to self-identified leads.

• Viral marketing. Part ad, part chain letter, part personal referral, merchants send e-mails to prospects and offer them rewards for acting or forwarding the e-mail to friends and family. The second prospect gets the merchant’s offer as a personal e-mail.

• Product and site reviews. Technology introduced by thirdvoice.com allows site visitors to review merchandise and post reviews on sites which subsequent visitors – using the same software – can read. The messages appear like Post-it notes and give consumers the option to interact with, review, supplement or comment on your site, your product mix, your pricing strategy or your company image.

In the struggle between retailers and customers for advantage, @Watch has introduced new software to alert merchants to these notes posted on their sites. Sites such as checkout.com and ebags.com have created customer review areas believing that shoppers’ opinions will help others make informed buying decisions and add credibility to the merchant’s positioning. A study by Forrester Research found that 65 percent of community members rate the opinion of others as important, or somewhat important, influences on purchasing decisions.

• Simultaneous shopping. “Buddy” software – now available on AOL, MSN, and several other networks – allows consumers to communicate with friends or family members globally in real time. This opens the prospect of virtual group shopping trips where sites, products and offers are evaluated by several customers simultaneously. Instead of a noon trip to the mall, co-workers can eat at their desks and surf the same store simultaneously without sacrificing their time together. The result can be multiple or zero sales.

The implications of a growing cadre of empowered consumers online will force many retailers to rethink their marketing and messaging approach.

Given these newly empowered customers, merchants must follow new requirements to keep them happy.

They expect a deal. Shopping online eliminates the middleman. Consumers know this and expect to realize the savings.

Shoppers expect to see your merchandise quickly, easily toggle between products, find ancillary information intuitively, and not have your site crash their Internet connection or freeze their computer. Two-thirds of all items put in online shopping carts never get bought because the process is too cumbersome, too slow, has too many steps or is too unforgiving of human nature. E-commerce is all about keeping it simple.

Use information as a bargaining chip. If you ask consumers to register or answer questions, they expect value in return. If you ask their opinion, they expect you to address their concerns. Invest in the technology to personalize customer contacts, segment customer cohorts and predict likely product purchase sequences.

Confirm. Confirm. Confirm. The Internet makes everyone anxious. Confirm each click. Reassure consumers the order went through. Show them what’s in stock. Display delivery times and schedules. Make your shipping and return policy clear. Thank customers by e-mail. Confirm information and orders with e-mail. Build confirmation screens to reinforce each action.

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