When real life collides with Net life, it can really put things into perspective.
Here in Baltimore, Maryland, we just got a new megamall — the US$250 million Arundel Mills Mall, a huge “shoppertainment” complex complete with a 20-plus-screen movie theater, “themed” concourses (with giant pinball machines, huge bowling pins, and enormous lily pads), and more than 7,000 parking spaces. From most estimates, it ranks in the top 15 malls in the United States.
During its opening weekend two weeks ago, the place was a madhouse, with backups on the exit ramps leading to the mall that extended for miles as tens of thousands of cars jockeyed for too-few parking spaces. Police patrolled the highways to keep would-be shoppers from parking literally miles away on the shoulder and hoofing it to the mall.
And the traffic hasn’t let up — mall owners are now pouring gravel to create several thousand additional temporary parking spaces and are considering busing in the mall’s 3,000-plus employees to free up additional parking.
People are buying, too. The first few weeks have netted several million dollars for retailers, and this is just the beginning of the Christmas shopping season. The thing has had such an impact on the local economy and way of life that I had a hard time going anywhere over the Thanksgiving weekend without hearing people talking about it. The local media featured at least one story per day during the first couple of weeks. A huge success.
On the web, it seems like things are going pretty well, too. The U.S. Department of Commerce just released figures showing that online retail sales rose 15.3 percent to US$6.4 billion in 3Q 2000 — a pretty impressive figure.
At least I thought so, until Todd Weiss pointed out in The Industry Standard that Wal-Mart posted sales of US$17.3 billion for a period of five weeks between August and September 29 — 270 percent more than the entire online B2C sector for the whole quarter! Clearly, web retailers have a long way to go.
But why? Why do so many people spend so much money offline while the online sector is still creeping along? When I drove by the lines of cars going to my friendly neighborhood megamall, I thought long and hard about this question. Those people sitting in their cars (some for more than an hour!) clearly weren’t there for convenience. They weren’t there because they expected stellar customer service. Sure, many of them were there because this monster was new and different and something to gawk at, but many of them were spending money.
As I drove by, all I kept asking myself was “When was the last time anybody got this excited about a new e-commerce site? Is shopping online somehow fundamentally different than shopping offline?”
I’ve begun to think it is. And the implications of why shopping offline is different from shopping online can have a lot of implications toward how we build sites and how we market them.
One interesting statistic to come out of a recent Jupiter Media Metrix study of B2C e-commerce in Europe is that the longer people have been online, the more likely they are to buy.
Jupiter found that while only 11 percent of new Net users were shoppers, more than 41 percent of users who’ve used the Internet for more than two years shopped, and only 13 percent of them spent less than EUR100 (US$86) last year compared to more than one-third of the less-experienced shoppers. This statistic even held across countries — countries with more mature Internet markets (like Sweden) showing far higher spending per shopper than those with less-mature markets (like France).
So users’ comfort levels with the web seem to lead to more shopping. What makes them NOT buy?
An A.T. Kearney study found that four out of five shoppers had reported abandoning their shopping carts during purchase. When asked why, more than half said that sites required them to give up too much information, and 40 percent reported that web site glitches forced them to abandon their carts. Most others reported that poor design and functionality thwarted their efforts.
So how do these numbers translate into what e-tailers should be doing online? Interestingly enough, a new study by cPulse focusing on niche travel sites (reported in the E-Commerce Times) may hold a clue.
This study found that the travel sector with the highest levels of growth were the niche sites, enjoying 82 percent growth in 3Q 2000. More than 80 percent of visitors to these sites said they would visit them again. The study posits that the smaller sites targeting specific markets may be attracting so many users because they find the content to be more relevant to their needs. Visitors to these niche sites often reported that content found on these sites was more accurate and customer service was much better than on the big sites.
More experience online means more shopping. Bad service and faulty sites means less buying. And niche sites with relevant information lead to higher customer satisfaction. So how do all these numbers come together?
It all comes down to experience and intention. We’ve known for a while now that “surfing” behavior tends to decrease as people get more experience online. Users begin to see the web for what it is — an information resource — and become more goal-directed and less likely to stumble about. When asked about why they shop online, few people ever cite the “entertainment” value; look at the number of abandoned shopping carts due to malfunctions or over-the-top data-entry requirements. People shop online because it’s easier than going to the mall, it’s easier than braving the Big Box retailer, and it is generally more convenient… not because of a compelling experience.
Experiments that have failed such as boo.com (now resurrected) and Garden.com (currently shutting down) show that simply having a compelling “experience” online and loads of content doesn’t necessarily cut it with consumers. boo.com suffered from technical glitches, and Garden.com suffered from fulfillment problems — two things guaranteed to kill e-tailers.
On the other hand, companies like Dell, Costco, JCPenney, and Amazon.com continue to do well by focusing on the customer’s needs first, realizing that the online shopper is not there to be entertained but is, instead, there to buy stuff for a fair price and have it delivered on time. They’re not trying to duplicate some sort of analog world experience online. They’re performing a function that gets people in and out quickly… just what they want.
As my recent megamall experience proved to me, people in the real world are a lot more willing to put up with a lot of hassles in order to be immersed in an experience that may have shopping at its core, but also includes social and entertainment aspects. Online, it’s a different story. In the end, sites that concentrate on the basics of customer focus, relevance, support, service, fulfillment, and function are the ones that are going to win… not the ones that try to fight the megamalls.