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Web Discounts Convert Browsers Into Buyers

Online research firm Jupiter Communications released a study last week saying that most Web consumers think lower prices will spur buying on the Net. However, one retailer who claims to be on track to do more than $50 million in Internet sales this year warns marketers not to be too price focused.

“There's always a question of price in retailing. Sure, a one-day sale may do great that day, but then the retailer has to measure it against margin and opportunity,” said Stuart Spiegel, vice president and general manager of iQVC, the online arm of television shopping's QVC, Westchester, PA.

Jupiter's study, Defining the Internet Shopper: Attitudes, Objectives and Behavior, divided online consumers who haven't made purchases into browsers who visit e-commerce sites but don't buy and nonshoppers who don't visit commerce sites.

Forty-five percent of browsers and 84 percent of nonshoppers said they probably won't buy anything online within the next year, according to Jupiter, New York. However, more than 77 percent of browsers and 64 percent of nonshoppers said greater discounts will spur buying. Also, browsers cited lower prices as the most important “change driver.”

“Aggressive pricing on select items will get customers in the door and is a crucial step to win the next phase of the customer acquisition battle,” said Evan Cohen, group director of data research at Jupiter. “Vendors shouldn't slash pricing across the board, but strategic discounting will help commerce players convert nonbuyers to online purchasers.”

But price cutting may work only as a short-term strategy.

“At the end of the day, service and the good old retail values that people put into their stores end up winning,” Spiegel said. “Price is always a factor and value is always a factor, but it's really important that the added value [of shopping] online come through.”

Spiegel also said he doesn't think the Net will be the great price equalizer that many pundits say it will be.

“I think that there will be niches of retailing [on the Internet] that will be commoditized and price driven, but there's plenty of retailing out there and a lot of room left over for good service, good value and good product,” he said. “Not everybody shops at a Sam's Club. There are places where people will price compare and there are places where they won't.”

As for what iQVC customers are buying online, Spiegel said, “if you merchandise it right, they're buying it.”

Jupiter's study also concluded that people are increasingly relying on the Internet for information to drive offline purchases. Online consumers ranked “researching products and services” as their third most popular online activity.

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