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The Emerging Online-Offline Paradigm. Greg Sterling , Program Director, Interactive Local Media. E-Commerce: Big Yet Small. 2004 Q4 e-commerce was $21.4 billion (22% increase over 2003 Q4) A big number but only 2.2% of U.S. total retail sales Total 2004 e-commerce was valued at $69.2 billion

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The emerging online offline paradigm

The Emerging Online-Offline Paradigm

Greg Sterling, Program Director, Interactive Local Media


E commerce big yet small
E-Commerce: Big Yet Small

  • 2004 Q4 e-commerce was $21.4 billion (22% increase over 2003 Q4)

  • A big number but only 2.2% of U.S. total retail sales

  • Total 2004 e-commerce was valued at $69.2 billion

  • That was still only 1.9% of U.S. total retail sales

    Source: U.S. Commerce Dept.


Internet having larger influence on offline buying
Internet Having Larger Influence on Offline Buying

  • 39% of U.S. consumers have made a local purchase after Web research(Dieringer Research Group for ShopLocal, 2005)

  • 92% of purchases influenced by SE usage in the Consumer Electronics/Computers category were made offline(comScore, 2004)

  • 74% of 7,300 survey respondents say they research online then buy offline(BIGresearch, 2005)

  • 62% of U.S. online consumers prefer to buy offline(Forrester Research, 2005)

  • Majority of 61 million U.S. car buyers in 2004 used the Internet as part of the process(Borrell Associates, 2005)


New tkg findings local internet growing esp search
New TKG Findings: Local Internet Growing, Esp. Search

  • Among media consulted for local shopping, the Internet is now equal to or greater than traditional newspapers and Yellow Pages

  • Internet now rated higher on 10-pt excellence scale than traditional, offline media

  • Search is the dominant category among Internet media used for local shopping

  • For purchases over $500, 34% of survey respondents started product research online but 90% transacted offline

  • Why: 57% of U.S. home Internet users now have broadband

    TKG-ConStat: March, 2005 (n=501)


The new consumer anatomy of a purchase
The New Consumer: ‘Anatomy of a Purchase’

  • Want to illustrate in a concrete way

  • Actual purchase-process example

  • Anecdotal but representative

  • Consumer: We’ll call him Doug



Step 1 research with a trusted source
Step 1: Research with a Trusted Source


The lucky product ready for e commerce
The Lucky Product:Ready for E-Commerce?


Click from cr to yahoo shopping
Click:From CR to Yahoo! Shopping




Lack of confidence back to the internet
Lack of Confidence:Back to the Internet

  • Doug clicked on several merchant sites

  • Found what he considered inaccurate or manipulated price information (using rebates)

  • Decided to look for alternative vendors


Product name search on google for canon pixma ip4000
Product Name Search on Google for ‘Canon Pixma iP4000’


Click organic search result pc magazine review
Click: Organic Search ResultPC Magazine Review


Confirms cr rating back to looking for a vendor
Confirms CR Rating, Back to Looking for a Vendor

  • Returns to Google search results

  • Clicks on sponsored links (he knows they’re ads and isn’t troubled because he wants to buy the product)

  • Clicks on 6th link (PriceGrabber) = $0.24 (4/17 YSM)


Pricegrabber 6 th of 8 links intrigued by the name
PriceGrabber 6th of 8 Links: ‘Intrigued by the Name’


Locates a potential vendor
Locates a Potential Vendor

  • Uses PriceGrabber to calculate total cost

  • Selects a low-price vendor: Digital1234.com


Digital1234 ready to buy but return policy a problem
Digital1234: Ready to Buy but Return Policy a Problem

  • Doug traverses the shopping cart screens

  • Credit card information input, ready to click/place order . . .

  • Notices restrictive return policy

  • Abandons cart


Multiple clicks ensue
Multiple Clicks Ensue

  • Returns to process later that day

  • Conducts same product-name search on Google to duplicate results

  • Clicks several of the paid links, including Amazon (3) and BizRate (4)

  • Finds what he considers more misleading price information


Revises plan looking for a local store
Revises Plan: Looking for a Local Store

  • Wants the ability to return product locally rather than shipping it back if defective

  • Wants the printer sooner; doesn’t want to wait for delivery or pay higher shipping costs to accelerate

  • Decides that paying $20 - $30 more is worth convenience and confidence


Goes directly to familiar retailer web site
Goes Directly to Familiar Retailer Web Site



Climax the transaction
Climax: The Transaction!

  • DealCatcher site sends Doug to deep link w/in Best Buy site

  • Need to create account for discount

  • Creates account: difficult process

  • Makes online purchase ($152 vs. $122 online) and selects “in store” pick up

  • Convoluted e-mail confirmation process compels wait


Endgame in store pick up
Endgame: In-Store Pick Up

  • Inventory not available at first choice store

  • Calls toll-free number and speaks with operator after local store closed (9pm)

  • Receives e-mail confirmation of in-store availability next day (at second-choice location)

  • Drives and obtains printer


What does this all mean
What Does This All Mean?

  • Internet being integrated heavily into consumer research/buying behavior, incl. Local

  • BB users relying on Internet as a powerful and often primary shopping tool, depending on category

  • Local consumer behaviors are now more complex, creating new complexity for marketers – esp. local SMEs

  • Question: Where to put ad dollars online to engage consumers at strategic points in the buying cycle


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