SEMA eNews Vol. 12, No. 22, June 4, 2009

Trends in eCommerce: Importance of Consumer Behavior and Perceptions

  Online Shopping Behavior
 Consumers use multi-channel shopping as a package (use both) and need to see consistency in both content and customer service.

SEMA recently launched its annual Membership Satisfaction survey to engage members about the resources available to them and inquire about the services, news items and topics that they would like to see more regularly. The survey is still open and available to all employees of member companies, but from the responses given so far, some research topics are already rising to the surface.

Consumer online behavior and eCommerce strategies are very popular. Manufacturers, retailers and those along the distribution channels want more information about Internet-related topics and, as a result from the feedback, SEMA will work with members of the industry to provide the content its members have requested.

As highlighted in “Selling Out,” an article from customer-service-centric publication Customer Relationships Management (CRM), some retailers have abandoned the techniques that earned them customers the first time around. Economic conditions are driving customers to become more critical, and merchants might be changing their behavior incorrectly.

Retailers need to understand the current consumer psyche as it evolves within the framework of the economic environment. Not only have disposable incomes decreased as consumers face higher levels of unemployment, tightened credit and budget cuts, but people are discouraged socially from excessive spending, even those capable of staving off economic troubles.

Carl Prindle, CEO of Furniture.com, outlined the hesitations to CRM.

“Consumers are reluctant to spend," he said. "In fact, many feel guilty if they do. They’re being told not to buy. They need some excuse to push them, to do something they’re being told not to do.”

Much of the apprehension is tied to long-term perspectives. Seventy percent of consumers fear the recession will last three years or more. There are solutions to these problems, however.

Technology has enabled a shift in power. Consumers are in more control of their choices than ever before and are seeking products on their terms. In years past, people would rely heavily on local sources—close friends, newspapers—for information. Now they are more empowered and practically forced by economic conditions to use every resource available to understand their complete range of choices.

The need for manufacturers and retailers to guide consumer perception will be paramount for companies to survive. Today, it is not uncommon for peer-driven media, such as blogs and online rating websites, to influence opinions, much to the chagrin of marketers, some of whom have million-dollar commercials that are being supplanted by these venues.

Studies, expert testimonials and historical examples all lead to the same conclusion: consumers like reviews. From expert advice to peer feedback of like-minded consumers, shoppers are embracing and relying on product reviews prior to making decisions. Sam Decker, chief marketing officer of social commerce technology Bazaarvoice, claims that his company's research shows that 97% of consumers trust product reviews on the whole.

PowerReviews, a similar company that offers online review software and a “verified buyer” identification to ward off illegitimate tampering, warns companies of the pitfalls inherent in cheating the system. Companies that interfere in the process are often sniffed out. The best approach is to be informative and transparent.

“It’s a smart crowd," Darby Williams, vice president of product management at PowerReviews, told CRM. "They trust critical reviews more than they do five stars and infinite praise. They’re the biggest protection against fraud.”

Additionally, small businesses are in a position to benefit the most from this swelling phenomenon since their brand recognition could be amplified cheaply and quickly. PowerReview reports that nearly half (46%) of consumers believe between four and seven reviews are ample enough to make a confident decision about whether or not to buy a product. About 95% need 15 reviews or fewer.

Consumers use multichannel shopping as a package and need to see consistency in both content and customer service. Aside from considering a product-review program or service, small businesses need to understand the value in having a multichannel presence. Consumers are online and businesses need to be where the buyers are—not necessarily where they make purchases, but where they focus their attention.

The debate should not boil down to a decision between a brick-and-mortal or virtual storefront, because companies need both. They also need to be consistent between each venue.

“A good retailer wants to be involved in as many conversations as possible," said David Fry, president of Fry, Inc.

The rewards may not be explicit, but ultimately significant. He asserts that the most successful retailers may only see 10 percent of their sales online, but 70 percent of the revenue was created by their web presence. This may be especially true in the automotive landscape since enthusiasts still enjoy having a tactile, hands-on shopping experience.

Manufacturers and retailers need to have a consistent message in all channels and they are best served by presenting their information clearly, quickly and among a broad range of venues. — SEMA Research & Information Center

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