Price Still Most Important Factor for Retail Success, But Losing Ground
Monday, May 21st, 2007;
-- Greg Howlett |
Traditionally, the website selling a particular product at the lowest price has a huge advantage over the competition. However, according to a recent study from Shopzilla, that may be changing.
The survey of about 2,000 online shoppers revealed that 49% of shoppers considered the price to be most important factor in making a buying decision. That is down from 59% in 2003.
So what factor is taking the pace of price? The answer may surprise you–18% of shoppers said that customer feedback is the most important factor. Only 7% picked customer feedback in 2003.
As the web becomes more and more dominated by user generated content, it is obvious that customer feedback about companies and products will continue to grow in importance. This trend especially gives hope to small online retailers that cannot compete on price, because smaller companies should normally have an advantage in customer satisfaction.
Two of my greatest fears about the future of online retailing have been monopolization of industries and commodization of products. We have seen that trend in recent years as large companies are beginning to dominate, making it practically impossible for small online retailers to sell at competitive prices and get any kind of momentum.
Because of this, I currently view the Internet very differently from when I started my first company in 1999. At that point, a startup company could be competitive and profitable immediately. As the landscape has changed, that is no longer the case. In fact, it requires significant capital and expertise to start a successful company today, and success rates in many industries are low even for well-capitalized companies.
If price continues to lose ground to other factors, this trend toward monopolization could reverse and open up new opportunities for online retailers. Let’s hope that happens soon.
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May 22nd, 2007 at 3:45 am
I think this is probably the market getting more mature. Price may seem an important differentiator at first, especially as online retailers are perceived to have a lower cost base than bricks and mortat ones. However cost is a short-term win for the customer and he/she may end up buying things off eBay, from a garage someone in the middle of Malaysia or off one-man and his dog who was changing tyres yesterday .. and the after-sales experience is nowhere near what the client expects and is used to.
Customer feedback is one way to start gaining customer confidence, however there is a always going to be a question of credibility around these comments. How does a reader know that these are fair and unbiased ?
May 22nd, 2007 at 6:22 pm
More reason to take advantage of newer trends revolving around user and customer feedback. Social media opens up a lot of doors in this realm and could prove to be a useful tool when targeting buyers who purchase based on feedback rather than price.
Get into your closest network and gather reviews like crazy, build your profile and link to your popular items. Of course, it also helps to list in the normal places like search engines and shopping engines such as Shopzilla or Google Product Search.
May 23rd, 2007 at 11:39 am
[...] Shopzilla research shows customer reviews are of increased importance to online shoppers - figures double since 2003, with 18% of consumers ranking UGC reviews as a top priority [...]
September 14th, 2007 at 3:32 am
The study is correct, i agree in two think, 1. nowadays is much more difficult than 1999, I was online also at that year.
2. costumer are getting mature, a website need to verification either by customer or by third party in its industry.