Monthly Archives: June 2013

Evolving the e-commerce by creating impulsive buying in an online world

To some extent it must be rather devastating for Ernst Malmsten, Kajsa Leander and Patrik Hedelin, who founded Boo.com back in the late 1990s, to see what currently is happening within e-commerce. Why? Because for several of their ideas they were actually rather spot, however they were just over a decade to early. Their vision was to provide some of the best and most vital parts and benefits of offline shopping in an online shopping world. And you know what, that is actually currently the next thing to do to evolve the e-commerce industry to the next level.

Initially e-commerce focused on low prices and mostly had cost-saving people in mind. Rather soon, after the first wave of e-commerce stores, price-comparing sites were launched. The main focus for e-commerce store became to provide the lowest price. This since it was the easiest way to get visitors and buyers, due to the amount of visitors the price-comparing sites provided. However, since then things have changed a bit. After a while the buyers have learned that price is not always the most important factor. Instead additional focus has been put into providing great product descriptions, an enhanced shopping experience and improved customer service such as express deliveries and free returns.

The next boom for e-commerce was initialized by those living in smaller towns, villages and rural areas. Thanks to e-commerce the availability of products and brands were suddenly heavily increased. What the previously only had possibilities to reach out to and pick up perhaps a few times a year were now available every day only a couple of clicks away. In this case circumstances such as the initially uncertainty of using credit cards online were negligible, compared to what could be a several hour trip to the nearest bigger city. Or in some cases only were available in the three major cities in Sweden; Stockholm, Gothenburg and Malmö – which could be a day-trip away at least.

This even further reduced the impact of price as the most important factor. In this case price was not always that important, at least if the online store provided stuff that in either way was not available for the customer within its area.

Nowadays e-commerce is a big player within more or less every part of the retail industry. It is nearly impossible to find a spot that has not a least a couple of e-commerce competitors. And since e-commerce now is a regular part for a lot of people, the regular stores have been forced to adapt. E-commerce and regular commerce have moved toward each other, and multi-channel commerce is now by a lot of people seen as necessary to be able to truly compete in the market.

Several players within different sectors have realized the impact and benefits of multi-channel commerce. Regular stores have complemented their business with e-commerce and companies originated as e-commerce players have opened regular stores or show-rooms. Grocery stores provide pre-packed grocery bags that could be ordered over the Internet, side by side with their original concept.

Addnature, a Swedish retailer within sports equipment, combines their e-commerce with physical stores. The prices are the same regardless if the customers place their order on Internet or if they visit the physical stores, the main difference is the larger assortment in the online version. However, people can order products in the e-commerce to be delivered to the store were the can actually try the real product before they make their decision. This is done free of charge and they actually suggest people to, if they are unsure about the size for that new shell jacket, to place and order on two sizes and then choose the best one in the store. This is a great example of how e-commerce and regular physical stores can enhance each other. The physical stores does not need to have the whole assortment, still the buyers can access the benefits of it.

Apart from the obvious benefits for the customer Addnature as well get the benefits of a physical store compared to the online version. Let me explain. One of the largest benefits for a physical store compared to an online version is the opportunities for impulsive buying. Great examples of this are the smell of fresh-baked bread in the Supermarket and the socks and accessories within the counter area at H&M. E-commerce stores have of course tried to translate and copy this into their environment, with functionality such as “Others who bought this also picked up these items” and similar. Still, the conversation rate for this is rather low and it is rather hard to create an environment online that supports impulsive buying in the same way as in physical stores. However in the Addnature case described above, they actually get the customer to visit their physical store and the have the possibility to achieve this impulsive buying through the personal contact with the customer as well as the regular factors. The loss related to the delivery of two shell jackets, even though only one of them is finally bought, is low compared to the benefits achieved.

To further enhance the e-commerce business, and increase the revenues, impulsive buying should be one of the great focus areas. Airports stores is a great example of a business mainly focused on impulsive buying, and e-commerce stores can learn a lot from this. In the airport case people have an hour or two with nothing to do and that is how and when their attention is caught by the stores. In an online world we need to find similar events when we can catch someone that is actually doing something else and convert their action to an impulsive buying.

One example of this could be to use and benefit of all that time people spend on looking for a new apartment or home on Hemnet (the major real estate brokers site in Sweden). In this case the visitors spend a lot of time looking at different pictures with usually great looking furniture and equipment, canvases and so forth. It is rather common that you might find yourself looking at a couch or similar that you actually could want to have yourself, however it is usually pretty hard to find out which brand it is or where you can buy it. A great tool in this case would be to provide a tag or note about its brand and a link to where it could be bought.

This is just one opportunity of how impulsive buying could be generated in an online world. People spend tremendous time online; on web pages, blogs and social media sites. This is done at home during the commercials, at the bus and while waiting to meet up with that friend who always is late. All this time can be converted into impulsive buying, and the players who lead this race will have a great opportunity to have a competitive edge against their competitors.