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Local Store And Inventory Data Poised To Transform “Online Shopping”
The neglected part of the local story is about products. Often local search is discussed exclusively in terms of finding service businesses or small businesses in one’s own area. But an equally important, if less obvious, part of the “local search” phenomenon is shopping in the more traditional sense. I’ve written previous Locals Only columns about the widespread — indeed dominant — consumer phenomenon of research online-buy offline. Now a new study by Krillion and the E-Tailing Group sheds more light on this complex and important trend.
The expressed purpose of the study, completed in February 2008, was to “better understand the mindset of consumers who research online products that lend themselves to purchase at a local store.” One thousand consumers participated in the study; half were male and half were female US adults. All spend at least $500 online annually and said that they made online purchases at least four times per year. This was a group of self-professed online buyers.
Overall, the study found that these consumers spent large amounts of time researching products online using a range of information sources (including search engines), then typically bought at local stores. In addition, the survey found that “as the complexity of the product increases, consumers are more likely to research online/offline and then complete their purchase at a local store.”
Roughly two-thirds of these respondents spent at least 30 percent of their total shopping time conducting online research, with just over 40 percent spending half or more of their time researching products online. The study revealed that search engines were among the top three online resources rated “most essential” for consumers in their product research:
Manufacturer websites — 61 percent
Retailer websites — 54 percent
Search engines — 53 percent
Shopping comparison sites — 39 percent
Consumer magazines online — 37 percent
Portals and other directories — 25 percent
Blogs — 10 percent
By the same token, consumers in the study used multiple information sources during their product research. These included:
Visiting the manufacturer’s website – 72 percent
Branded retailer websites – 54 percent
Comparison shopping engines (for price information) – 50 percent
Search engines (re specific product queries) – 47 percent
Visiting stores to “preview products” and then going online for more info – 38 percent
Search engines (local search) for brands, product pricing and availability – 30 percent
These data mirror earlier studies (from comScore and Yahoo) reflecting consumer usage of a range of resources prior to purchase. They also show that a third of product purchasers are conducting what amount to local searches online for in-store product availability. In a way this is a profound finding, given that inventory information is still very difficult to locate (though getting easier) and reflects pent up demand for information that helps consumers make the online-offline connection.
The Krillion-E-Tailing findings also reflect complex consumer purchase behavior in which search and the internet more generally sit in the middle of a process that includes traditional media and other influences. The survey asked, “What are the leading media and other influencers that typically trigger your search for product information online?” Respondents said:
To solve an immediate need – 58 percent
Word of mouth – 56 percent
TV commercial – 50 percent
Prior visit to a store – 49 percent
Catalogs/Direct mail – 44 percent
Magazine or newspaper ads – 44 percent
Article about the product – 42 percent
Newspaper circulars – 38 percent
Consumer Reports Magazine – 38 percent
Online promotion or banner ad – 28 percent
Email – 26 percent
Compare that to earlier, similar findings from iProspect on traditional media influences on search behavior. Here’s how consumers responded when asked, “Which of the following prompted you to go to a search engine to look for information on a particular company, product, service or slogan?”
TV – 37 percent
Word of mouth — 36 percent
Mag/newspaper ad — 30 percent
Company’s store — 20 percent
Radio ad — 17 percent
Billboard/other signage — 9 percent
Ad/name on corp. vehicle — 7 percent
Ad on train, taxi, bus — 3 percent
Source: iProspect (6/07) n=2,123
Thus, neither search nor internet marketing in general should be seen as a silo or in isolation from other media – online or off. This is a point that Yahoo in particular has been making for several years through its Searchlight Award and consumer research. However, connecting all the dots (read: tracking) has been difficult, especially when consumers “disappear” from view online and reappear somewhat later in stores to make product purchases.
Over the past three years, however, an increasing number of studies from Yahoo, BIGResearch, comScore, TMP Directional Marketing, and others have documented the online-offline connection, which has been historically “invisible” to marketers. These studies have shown that between 80 to 90+ percent of in-store purchases in key retail categories are influenced by search and/or the Internet more generally. And more recently, both JupiterResearch and Forrester have made projections that more than a trillion dollars in offline/local US retail sales will be influenced by the Internet within the next four to five years.
The increasingly clear picture that emerges from all this is of the internet’s growing influence on offline consumer purchase behavior. By contrast, e-commerce is still growing but enjoys a tiny piece of the retail pie (4 percent).
However, sitting between e-commerce and offline purchase is the fast-developing phenomenon of “buy online, pick up in store.” Krillion CEO Joel Toledano reported at SMX West that 40 percent of Wal-Mart’s online sales and 55 percent of Circuit City’s e-commerce transactions in 2007 resulted in in-store pickup. And the Krillion-E-Tailing Group survey found that 55 percent of respondents had taken advantage of this option, which is being added by more and more US retailers. The top three responses given as the “primary motivation” for utilizing in-store pickup were:
Save shipping expense — 50 percent
Convenience — 22 percent
Immediate need — 18 percent
A secondary benefit of the “back end” and inventory management systems required to support this capability also allow for real-time inventory data distribution online. As this information becomes more widely available, you can expect to see the consumer patterns reflected in the Krillion-E-Tailing Group study reinforced. You can also expect to see a brighter and more direct line between online shopping and offline buying, with profound implications for search and other online marketers.
Greg Sterling is the founding principal of Sterling Market Intelligence and a senior analyst at Opus Research’s Local Mobile Search program. He publishes Screenwerk, a blog focusing on the relationship between the Internet and traditional media, with an emphasis on the local search marketplace. The Locals Only column appears on Mondays at Search Engine Land.