eCorner

eCorner
Secure eBusiness Solutions

Saturday, 24 November 2007

Online Channels to Market

More and more we are seeing the development of portals - online comparison shopping and online marketplaces in the Australian and New Zealand markets. This is not a new trend but one that started sometime back in Europe and North America.

Portals like Amazon and eBay have become huge multi-billion dollar businesses that attract all types of merchants with nearly anything for sale. Curiously Australia lags behind Europe and the USA in the development and availability of these types of marketplaces so the trend is new here.
So what place do portals have in an eCommerce strategy?



“85% of businesses that adopt an eCommerce strategy do so to take up new market trends.”





So going out and creating a website to represent and sell your products is a starting point. To be successful you need to define the channels that will work for you and implement those channels.

What could the channels be?


“79% of consumers look for products in search engines and comparison portals.”



Research by Nielsen’s has found that when consumers go looking for products 79% search in the major search engines and price comparison engines first. So you vastly improve the opportunity of being found if you list in multiple portals. Importantly the shopping comparison sites are far more likely to rank highly in a search due to the nature of what they do and how they market.

Today the method of shopping research has changed dramatically. No longer will consumers walk from store to store and talk to the sales representatives. This is not to say that consumers will not go to the physical mall or store but by the time they do the decision to buy has often been made. Online shopping comparison allows consumers to search a greater range of providers and a greater geographical area of providers. It can also happen any time of the day. Modern business trends put more pressure on the available time for personal activities and as a result consumers use any means to get back some of that time. Many consumers also round file their telephone books and use the internet as a fast and convenient method of locating goods, services and the providers.

Owners of physical stores often miss the point of a webstore. More often consumers will use online search and may not come to the store, but then again they may. If you have an online presence that is a sales window to your physical store you open a new channel and new opportunities.

So do you need to list all your products on these marketplaces?

In general the key comparison engines provide a very easy mechanism to provide product feed from your website. There are some organisations that use crawlers or spiders, there are automated systems that search your site and build up a product feed. Mostly the crawlers’ work but there is some that cause major problems by blocking your website to other visitors. Your hosting company may block these automated systems completely. If you are in doubt you should ask your hosting provider before signing up to such a program.

Shopping portals (marketplaces) and comparison engines have different costs associated. Some will charge a fee for each product listed, some charge a cost per click while others might charge a commission on the sale of your product. You need to look at the terms and conditions closely so that you are not locked in and also track the results using a good web analytics system like etracker (www.etracker.com) or at the free end Google Analytics (www.google.com/analytics/).

By way of some examples:

Getprice are free to setup and then charge a cost per click (CPC) with the fee level based on the category that you sell into. There is no minimum fee but that would also mean that you were not getting any clicks. Like Google Adwords you pay for the click and then your website has to handle the conversion or final sale. Getprice also offer merchants the ability to compete on criteria other than price, by allowing them to include USPs (Unique Selling Propositions) such as shipping, payment options, insurance, service and warranty.

As Getprice Managing Director Chris Hitchen explains, this is an important differentiator:

“We talk about comparison shopping rather than price comparison, to reflect the fact that it’s not always the cheapest price that sells a product. So whilst we recognise that price is a leading criterion for many consumers, factors such as trust, reputation, having a local manufacturer’s warranty and add-on services is also important in winning custom from savvy consumers. We try to reflect this by giving merchants the opportunity to compete on their strong points and we focus on creating a trusted shopping environment.”

Shopping.com is part of the eBay company and runs shopping comparison sites around the world. Like Getprice they operate on a CPC basis with free setup. The category costs range from $0.15 to $0.60 per click.

The price comparison engines go part of the way to fulfilling consumer need. The next levels are the marketplaces which have products from multiple sources, many categories and a shopping cart where you can buy products and pay online. You hear a lot about Gen-X and Gen-Y so let’s try for some definitions.

Gen-X (Generation X) refers in general to those people born between 1961 and 1981. We hear a lot about the Baby Boomers who were the group born between 1946 and 1960 these are becoming the Grey Nomads who have time and disposable money. Gen-X really powered the growth of the internet. These age groups have quite different characteristics when it comes to buying trends.

Gen-Y in general is seen as the group who were born in the period from 1981 until 1995. Gen-Y traits are all about wanting it NOW they want more flexibility in lifestyle. They are generally seen as driving the mobile revolution and social networking sites like Facebook, Flickr and MySpace. So when searching online they are far more likely to buy online and less likely to go to the store. Portals and web shops that have a shopping basket are more successful with the Gen-Y consumer.

When selling online (or off line for that matter) you have to understand the demographic that you are selling to and how best to attract them to your website and have them buy. Multi-channel strategies allow you to do just that. By presenting your products in different portals you can get to different demographics in the very best ways.

Virtual Worlds like Second Life (www.secondlife.com) are becoming a new channel for the Gen-Y and a new challenge for merchants. Businesses are now starting to open virtual stores and marketplaces in the virtual worlds. These virtual communities have a real economy and are now starting to allow their inhabitants to browse virtual stores to buy real products. Yes it is early days, but you must remember that the pace of change is rapid, so more on virtual worlds and Web 2.0 in the next article.

Some Gen-Y statistics:

· 97% own a computer
· 94% own a cell phone
· 76% use Instant Messaging.
· 15% of IM users are logged on 24 hours a day/7 days a week
· 34% use websites as their primary source of news
· 28% own a blog and 44% read blogs
· 49% download music using peer-to-peer file sharing
· 75% of students have a MySpace, Facebook or some social networking account
· 60% own some type of expensive portable music and/or video device such as an iPod.
Source: Reynol Junco and Jeanna Mastrodicasa (2007)