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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. 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

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  1. The Emerging Online-Offline Paradigm Greg Sterling, Program Director, Interactive Local Media

  2. 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.

  3. 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)

  4. 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)

  5. 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

  6. Purchase of Mac Mini Triggers Need for a New Printer

  7. Step 1: Research with a Trusted Source

  8. The Lucky Product:Ready for E-Commerce?

  9. Click:From CR to Yahoo! Shopping

  10. It’s Simple Now, Right?

  11. Compares Shipping Costs and Merchant Ratings

  12. 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

  13. Product Name Search on Google for ‘Canon Pixma iP4000’

  14. Click: Organic Search ResultPC Magazine Review

  15. 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)

  16. PriceGrabber 6th of 8 Links: ‘Intrigued by the Name’

  17. Locates a Potential Vendor • Uses PriceGrabber to calculate total cost • Selects a low-price vendor: Digital1234.com

  18. 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

  19. 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

  20. 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

  21. Goes Directly to Familiar Retailer Web Site

  22. Google Search: ‘Best Buy Coupons’

  23. 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

  24. 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

  25. 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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