E-Tailers Send Shoppers Back to the Mall

Online shopping has revved up, and Internet advertising has shown it’s got legs, but there’s been a sea change in how retailers use them. The multi-channel, integrated advertising and selling machine is becoming a reality, and the e-commerce Web site is being used as much to drive traffic to physical stores as to sell directly.

Sears has offered what it calls “fusion retailing” for several years, letting customers shop online and have the product delivered or pick it up in the store, according to Chuck Cebuhar, vice president of hard lines and customer direct for Sears.com. “We have categories like sporting goods and lawn and garden — big ticket areas — where 60 percent is buy online and pick up in store,” he says. In fact, 40 percent of Sears’ total business is done this way. Cebuhar calls this “the perfect multi-channel operation. We pass the order to the store, it confirms that it’s in stock, it’s set aside, and the customer can come in to pick it up within an hour.”

It turns out that the place of purchase isn’t an either/or decision. Jupiter Research’s 2003 Holiday eSpending Report study showed that the average person surveyed expects to spend 23 percent of his or her shopping budget online, as compared to the estimated 19 percent spent online in 2002. (Jupiter Research shares a parent company with this publication.) But more and more consumers expect to be able to buy something online, then pick it up at a physical location, thereby getting the best of both worlds: the deep product information available online and the immediacy of getting the item in hand the same day.

“Consumers are using the Internet to learn more about products and to figure out what is the right price,” says online marketing consultant Rex Briggs. “Then they go into the retail channel, where they can see it, touch it and get it today. The Web site takes them from 15 percent of the way to wanting the product to 99 percent, then the retail experience takes them that last one percent.”

In its 2003 Study for Customer Focused Excellence, Web marketing consultancy Future Now found that only 11 of the 60 e-commerce sites it studied allowed customers to shop online and pick up in the store; however, not all the sites had physical stores.

Plenty of those shoppers end up spending more money once they get to the store to pick up the online purchase. “A lot of retailers have noticed that the Web is not cannibalizing sales,” says Bryan Eisenberg, Future Now’s chief persuasion officer. Moreover, he says, people who shop multi-channel tend to have a higher lifetime customer value.

That’s certainly true for Sears. “We’ve found that the more channels customers use, the more they spend,” said Sears Cebuhar.

The great unknown for multi-channel retailers, according to Eisenberg, is metrics. “The integration of the different computer systems is very doable,” he says. “But trying to figure out where your customers are coming from originally, or which kind of marketing was effective, is a much bigger challenge.”

Briggs says there are a couple of ways marketers can get burned in the multi-channel approach. “The big mistake,” he says, “is advertising that’s not well-branded.” For example, retailers like to promote specific brands and products or online sales. But the retailer’s logo and brand should be prominent in the ads; otherwise consumers might look elsewhere for the product. The other big boo-boo is failing to truly marry the online and offline operations, so that neither has incentive to encourage people to shop cross-channel.

Candace Corlett, principal in consulting firm WSL Strategic Retail, suggests providing tons of information with different ways of accessing it. For example, designer clothing e-tailer Bluefly’s opening page lets you browse by designer, by gender and by several other categories; it also lets you check out what’s new on the site.

According to a survey conducted by WSL, 63 percent of Internet shoppers view their Internet shopping as another layer in their shopping life. The Internet doesn’t replace the shopping they do in the stores — it adds to it. While 74 percent said the Internet gives them the big selection of merchandise they like, 63 percent said retailers need to give them the choice of a store, a catalog or a Web site.

Corwin says retailers should go a lot further in giving shoppers information. The Internet is a great place to create an in-depth learning center, she says. Retailers aren’t doing this much, but that’s because it’s difficult to coordinate with the products’ manufacturers. “The manufacturer has to be broadminded enough to share the information with the retailer,” she says. “The last thing a shopper wants to do is go to BestBuy.com to research washing machines and then be forwarded to the manufacturer’s Web site.” While creating such online learning centers, filled with helpful information written in plain English, would require some resources, Corwin thinks that’s money well spent. “You could call it another layer of work — or the 21st century selling tool. It’s a question of attitude.” And that quality product information is far more likely to reach the hands of the shopper than some of the other advertising messages retailers spend so much money on.

Then, instead of forcing consumers to print out the results of their online research, she asks, why not provide Internet stations in-store at the actual point of purchase? “This is all about advertising frequency,” she says. “Put it in front of the shopper again and again.”