Online vendors who want to reel in big bucks should target convenience-driven and luxury-item buyers because they are generally willing to pay higher prices-and they spend a lot money, according to a study released yesterday by Forrester Research, Inc.'s e-commerce expert Sucharita Mulpuru.
These two segments, the high-ticket and convenience-seeking shoppers, are responsible for close to one-third of the total amount spent online, the report states. Furthermore, they are particularly desirable because they are "frequent shoppers who buy from a variety of retailers, often purchase gifts, are influential within their communities, and best of all, they are critical to margin-focused managers because they are generally price-insensitive."
Mulpuru's study, "Online Shopping Habits of the Price-Insensitive," defines a convenience-driven customer as one who values convenience over price, while luxury purchasers are defined as consumers who spend a higher proportion of their discretionary income on designer brands. Strategies recommended for Web store owners who want to attract this demographic include:
Offering value-added features to address convenience, such as a "first look" at new arrivals or "longer saved" shopping carts.
Creating tiered and attentive customer service options, for instance, a preferred customer toll-free line and real-time order tracking.
Involving preferred customers in promotions by nurturing "brand evangelists," forming a "customer advisory panel" or having these customers write about your site in blogs.
Capitalizing on the segment's proclivity for online gift-buying by creating links for "suggested gifts" and such.
Up, Up and Away…Surveys Say Sales Remain Strong Meanwhile, if you need a pep talk to get you motivated to start planning for the upcoming holiday push while your thoughts are more focused on the beach, here it is: industry watchers just released spending figures showing that online retail is thriving, undaunted by high energy prices, shrinking personal savings and higher credit debts experienced by the average consumer.
"Despite the sluggishness of retail growth in general, online consumer spending remains strong," said ComScore Networks Inc. Chairman Gian Fulgoni. "Growth in non-travel online spending continues at a rate of 25 percent year over year, which suggests that consumers' online purchase behavior has been relatively unaffected by the general economic trends."
ComScore reports that during the first six months of the year, online spending reached $80.8 billion, a 20-percent increase over the same period in 2005. Retail spending on the Internet, excluding travel, rose by 24.6 percent to $46.1 billion.
Overall, ComScore said it expects total online spending in 2006 to reach approximately $170 billion, with non-travel e-commerce spending reaching approximately $102 billion this year. Approximately $24 billion is expected to be spent on non-travel purchases during the 2006 holiday season between Nov. 1 and Dec. 31. (Note that annual figures vary, with other research groups pegging the amount much higher. For instance, Forrester cites $170 billion total online sales for 2005 and Shop.org estimates $200 billion for this year.)
The categories showing significant growth, according to ComScore, in the first half of the year compared to last year include office supplies, up 54 percent; sports and fitness, up 38 percent; home and garden, up 36 percent; and toys and hobbies, up 33 percent.
Other sectors doing well this year, according to "The 2006 State of Retailing Online," the Shop.org study conducted by Forrester, include pet supplies, cosmetics and fragrances, expecting to sustain growth rates of 30 percent, more than any of the other categories.
Multi-Channel Strategies Pay Off The State of Retailing study says Web sites are also being used to boost sales at brick-and-mortar stores with almost half (46 percent) of the merchants surveyed allowing customers to buy and redeem gift cards both online and in stores. Additionally, a notable number of companies give customers the ability to accrue loyalty program points across channels (33 percent) and offer in-store product information online (26 percent).
In fact, Shop.org says retailers reported that 22 percent of offline sales are influenced by the Web. Websites can also give retailers an opportunity to reach out to an entire new customer base, as more 38 percent of online customers are new to a company's business.
Meanwhile, the Census Bureau of the Department of Commerce reports that e-commerce sales in the second quarter of this year increased 23-percent compared to the same period last year, with total retail sales showed only a 6.6-percent gain.
The numbers are even going up for this year, as DoC says online sales this quarter are up 4.6-percent, compared to the first four months of 2006.
Michelle Megna is managing editor of ECommerce-Guide.com.
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