The Upside Down World of eCommerce. 
What should you be doing online?

By Vik Murty, Vice President of SellPath, Channel Intelligence

It might appear as if the consumer electronics marketing industry has been turned upside down online.

Customers today often bypass retailers and start their product research directly with the manufacturer. Retailers package goods online for sale in the form of web pages. And consumers now are advocates – educating themselves, each other, and marketers, publishing their research and feedback for the world to see.

Consumer electronics marketer, it’s time to take back control.

The “Initiation Point” of Commerce

Not long ago (in an age before the World Wide Web), when a consumer decided to buy a cell phone or camera, they would check out the options at a local store first. The consumer relied upon the staff to answer questions and to point out solutions and offer suggestions.

Now consumers typically begin their search online. And more often than not, by going straight to the manufacturer’s web site. Retailers might be completely ignored until the model has been decided, and it’s time to find the best deal. Along the way, customers may consult with hundreds of other consumers who’ve purchased the product before by simply researching on the Internet.

The transparency of the online medium has put the consumer firmly in control of the purchase process.

To those on the other side, the marketers vying for the sale, “control” has taken on a new meaning. It’s more about empowering consumers and giving them the tools and information they need to make the right purchase decisions. Those CE marketers (manufacturers and retailers) who engage consumers with transparent, complete information can take back control of sales performance in this upside down online world.

 

The Search for Information

Consumer electronics purchases inherently require the consumer do a bit of research.

But shoppers often are left to piece together the information needed to help them feel comfortable in making a decision. CEA reports that the Internet influences 77 percent of all CE purchases, and that CE shoppers use an average of six different sources to guide their purchase decision. (Citation?) 

This quest for information clearly has driven consumers online in droves.

Word of mouth has always played an important role in consumers’ buying decisions. The Internet takes “asking your neighbor” to a whole new level. In times gone by, you might have leaned over the fence and asked your neighbor Bob about his TV. Now, you’re more likely to read what Bob, and the rest of the world, are saying about different flat-screen models online.

“Though a consumer may not have heard of blogs, they now are finding blogs and other independent authority sites as they are mentioned in magazine articles or show up in Google searches,” says e-commerce analyst for eMarketer Jeffrey Grau. “More people are writing blogs to address niche areas, so it’s becoming easier to find blog posts on a specific interest, such as MP3 players for example.” 

They’re also leaving their knowledge behind in the form of product reviews and comments to help others fill the information gap. As in-store experts have disappeared along with high margins, CE consumers often say nowadays they feel they know more about a product than the sales reps they speak to at retail outlets, notes Bill Mathies, president of market research-based consultancy Coyote Insight.

 

Knocking on the Manufacturer’s Door

So how is the consumer becoming the expert? One of the first stops a consumer makes is a manufacturer’s web site. In a recent study by Channel Intelligence and Forrester Research, “58 percent of survey respondents (online shoppers) stated that they began their entire research process on manufacturer web sites.”

The manufacturer’s site is an important step in the information-gathering stage, but there’s more work to be done. “While consumers may feel they are coming away with some good information, it’s still not a complete picture. Often the content is not oriented toward the consumers’ needs and contains lingo that is too technical,” says Mathies.

Audits of six manufacturer web sites. reflective of the larger manufacturer landscape in the Forrester-Channel Intelligence report “Must-Haves for Manufacturer Web Sites” found that among other shortcomings, “While the sites were clear to showcase the breadth of their product assortment, they provided little help in the form of guided navigation tools or comparison charts to assist customers in evaluating the offerings.”

What about Retailers?

In the traditional retail world, the manufacturer typically provides the packaging and branding materials to retailers. But the paradigm online has evolved to where online retail stores are merchandised and goods are packaged by retailers.

“It would be absurd to think of a traditional offline retailer taking those materials provided by the manufacturer, redoing graphics and wording, essentially repackaging the product, and then putting them up for shoppers to view, but that is what is essentially happening online,” says Rob Wight, CEO of Channel Intelligence, which specializes in Web-initiated commerce solutions.

“You also must consider the role the manufacturer’s site plays in the trade channel and balance this with how information is provided to consumers,” says Wight. “While only eight to ten percent of shoppers may buy direct from a manufacturer’s online store, the amount of commerce that touches the Web is several times as much, you can maximize your multi-channel performance with up-to-date stock information for your authorized online retailers as well as local outlets. This allows you to give the consumer more of the choice they want to complete the purchase where, when and how they prefer,” Wight adds.

It comes down to providing information and choices. “Consumer electronics retailers can differentiate themselves by providing more accurate and complete product information beyond what other retailers are providing to consumers and gain an advantage,” says Mathies.

Online shoppers’ short attention spans are another factor to consider. “The instant access to information on the Internet has created the expectation that everything should be rapidly available – from complete product guides to images and reviews. Shoppers additionally expect that prices and points-of-sale can be easily compared,” comments Wight.

 

The Skeptical Consumer

As consumers draw together pieces of the picture from different places, you can bet they notice inconsistencies.

“Consumers today are better informed, better armed to resist superfluous marketing, and more skeptical than ever. With thousands of messages bombarding them everyday, buyers just want brands they can believe in from companies they can trust,” says Lynn Upshaw, principal of Upshaw Marketing and member of marketing faculty at Haas School of Business, in his book, Truth: New Rules for Marketing in a Skeptical World.

Maintaining consistency of brand messaging throughout your channels, from manufacturer web sites. to retailer web sites., comparison shopping engines, and vertical search engine listings can help contribute to the perception of brand trustworthiness.

Most CE marketers have yet to find the right fit for their organizations to take advantage of the transparency demanded by consumers online. Still, there are a few making efforts to meet this challenge, from running blogs that help consumers feel connected to a brand and show its human face, to ensuring consumers can find the information they need and giving them more choices in how and where they can buy a product.

 

Handing Over Control of the Sale

Giving consumers choice about what, when and how they want to buy is critical. Consumers want to be able to buy online or offline, with in-store pickup or home delivery.

While they conduct much of their research online, many shoppers still buy offline. For purchases completed online, though growing but still accounting for less than a

quarter of sales according to the CEA <does the CEA’s research support this?>, the prevalence of user-generated content helps level the playing field, because relatively unknown retailers and manufacturers can gain credibility through user ratings.

“Small or unknown brands benefit from consumers' willingness to consider a range of brands beyond just the market leaders, a situation that may not exist without the many product research options readily available to shoppers,” said Tim Herbert in an article titled Buying CE on the Web, published in CE Vision earlier this year.

But when consumers are left to piece together the information they need, a lack of easy access to complete, objective information can lead to the purchase of a product that falls short of expectations. Left in charge of educating themselves, consumers have no way to know how a higher priced model may actually fit with their lifestyle better. If they don’t buy the right product, regardless of the price, it’s a recipe for dissatisfaction.

“Industry wide, product returns are high and 30% of the time nothing is found to be wrong with the product,” according to Accenture’s Global Digital Home Study spring 2007. Those companies who can offer the easiest to find, most comprehensive and relevant information can help the consumer best self-qualify for the right product.

“If consumers can understand why the $2300 product is a better choice for their needs than the $1500 product, they will buy it - and experience a greater level of satisfaction,” says Mathies. A 2006 survey by Channel Intelligence backs this up. Sixty-five percent of survey respondents agreed they would pay more for products that save them time and hassle and better meets their needs.

The trouble seems to be that manufacturers and retailers have yet to completely replace the role of those in-store experts with their online information. In the end, those marketers that engage in speaking to the customer in the language they understand through a variety of channels to help empower smart purchase decisions can expect to see their performance metrics soon follow, while those that impede the free flow of relevant information are sure to perish!

 

Sidebar

Finally, the Truth in Advertising: Tying Marketing Dollars to Sales

Increasingly savvy electronics consumers leapfrog among multiple touch points as they piece together the complete picture that finally results in a purchase. They may ask opinions of friends, assess product features on a manufacturer's site, click on a timely email promotion or banner ad, compare brand pricing on a shopping engine and visit a store for a demo.

For marketers assessing the performance of their advertising campaigns, this presents a conundrum: How can you know with any certainty the role each marketing channel or advertisement played in a sale?

Evaluating performance of marketing efforts is more important than ever as CE marketers reach out to consumers in new and innovative ways. But typically online marketing efforts suffer from two breakpoints in essential data: where leads come from and which of those leads eventually convert to sales.

Now those answers may be available in a new end-to end tracking and analytics tool unveiled in late 2007 by Channel Intelligence, a technology company focused on Web-initiated commerce.

Named TrueTag Analytics, the tool offers the ability to attach online sales to online marketing dollars in a manner previously unavailable, providing insight into buyer behavior across the entire online medium to help marketers make more effective campaign and channel management decisions.

"With TrueTag Analytics, both Brand and Retail marketers can now follow traffic from their online initiation point right through to the sale," says Rob Wight, Channel Intelligence president and CEO. "From the time a consumer engages online advertising, whether clicking a link in an email, comparing features of models on a manufacturer's site or visiting online retail partners, marketers can see which campaigns ultimately contributed to what sales."

One thing is certain in the competitive CE playing field. Marketers who can provide the right touch at the right time and in the right place to consumers are sure to gain an edge. Is that finally within reach as analytics evolve to capture the elusive behavior of consumers and expose the truth in advertising?

CE Vision
eCommerce Feature
January/February 2008

 

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