Improve your Customers’ Online Experiences by Knowing their Personality Traits

Everyone needs a personality. After all, your personality facilitates all the important moments in your life, and is what you are really remembered for suggested Matt OKeefe, a lifehacktivist. Although everyone has a unique personality, the characteristics or qualities we display can be grouped into personality traits, which we’ll get later to. But let’s first have a look at what a personality is…

So what is personality?

Your personality is the inner psychological characteristics that both determine and reflect how you respond to your environment 1.  Therefore can personality be defined as ‘the intrinsic organisation of an individual’s mental world that is stable over time and consistent over situations’ 2.

Personality also has three distinct properties 1:

  1. Personality reflects individual differences.
  2. It is consistent and enduring.
  3. Personality can change.

So why is it important for retailers to know about their customer’s personalities? The personalities of your customers tell you a lot of who they are. For that reason retailers can segment their customers according to their personality traits, which may be valuable in providing them a personalized online experience. Next we need to understand how your customers’ personalities work in the retail space.

Customer personality in the retail space

Experienced retailers can quickly recognize their customer’s personality traits when they enter the store and start shopping.  They do it by looking at their customer’s body languages or their mannerism. Additionally retailers take note what products interest their customers and how they socialize or interact with patrons and staff.

By knowing the personality trait of a customer, a store owner can now approach the customer in ways that she feels comfortable with herself in the store environment. Accordingly she may enjoy a positive shopping experience and becomes loyal to your brand.

And what about your online customers?

The major difference between the online and offline environment has to do with the consumer’s role 3. Thus, while the offline environment gives consumers a passive role, when they are online they become active explorers. For example, online customers may decide which messages they receive, the order in which they receive them, and for how long they will receive them. Importantly, retailers need to help their online customers to understand their roles – by allowing them in an environment that is according to their personality traits.

Although online retailers may not easily observe what their customers’ body language are, they have the opportunity to collect valuable data about their online behaviour. After all, online customer behaviors include a wide range of processes and activities related to sensory reactions, perceptions, attitude formation, preferences, decisions, satisfaction evaluation and loyalty formation 3. Most of these online activities by customers can be measured and analysed.

Once you are aware of your customers’ personality traits, you may use that knowledge to customize and manage their online environment to maximize their shopping experience. But what are the personality traits and what do they tell you about your customers?

The Big Five personality traits

The Big Five Model is one of the most widely used approaches to study and describe our personality traits 2.  It comprises of five dimensions: neuroticism, extroversion, agreeableness, openness, conscientiousness. These five dimensions are considered to be the underlying traits that make up an individual’s overall personality:

  1. Neuroticism – individuals who score high on neuroticism are more likely than average to be moody and to experience such feelings as anxiety, worry, fear, anger, frustration, envy, jealousy, guilt, depressed mood, and loneliness.
  2. Extroversion – these people tend to enjoy human interactions and to be enthusiastic, talkative, assertive, and gregarious. Extraverts are energized and thrive off being around other people.
  3. Agreeableness – people with behavioural characteristics that are perceived as kind, sympathetic, cooperative, warm, and considerate.
  4. Openness – these ‘open minded’ people involve the following dimensions: active imagination (fantasy), aesthetic sensitivity, attentiveness to inner feelings, preference for variety, and intellectual curiosity.
  5. Conscientiousness – a person scoring high in conscientiousness usually has a high level of self-discipline. These individuals prefer to follow a plan, rather than act spontaneously.

So, if you know which one of the five personality traits your online customers have, you may creative a hub for them on your website. Your customer will feel welcome in this hub because all the processes and activities will be customized to her personality trait. A great online customer experience may be the result!

Now we’re going to look how to manage each dimension of the Big Five Model.

The Big Five Model as a tool to enhance your customers’ online experiences

Your online customer is probably alone when she visits your website. There is no eye contact, and no body language to display or to observe. Furthermore, is the environment quiet with no outside influences (other people, noises and floor staff). She is probably now out of her comfort zone she’d grown into, the physical one in which she’d developed and evolved her personality in.

But now she is in a virtual world. Her personality traits from a physical environment may not be helpful online.  Unless you as the online retailer, can create an online environment that fits her personality trait. She will feel home again – and hopefully, for you, it will be business as usual.

Create an online environments that fit the personality traits of your customers

  1. Your Neurotic customers – they are likely to be your most difficult customers. So if a neurotic customer visits your site, she should be guided to an area where all her concerns are taking care off. Here a “Most frequent questions asked” link may help her. Also pages that will explain the products, processes and term and conditions in a concise understandable way. A live chat bot may also give her some peace of mind.
  2. The Extraverts – the noisy ones. These customers should be directed to your website’s social community, and then asked to be a group leader. Extraverts will enjoy the interaction and your website should offer them a platform to pronounce themselves. They will have a happy experience if they are fed with news about products and the industry and then have an opportunity say something about it.
  3. Agreeableness – the loyal ones. They are respectful, sociable, and trustworthy and good at listening to and forming relationships with others. These customers need also to join your business’s online communities where they most likely will defend your brand.
  4. Openness (open minded customers) – your creative customers that will challenge the status quo. These open-minded customers will most probably be your most valuable customers because they may come forward with brilliant ideas. Give them content that will stimulate their curiosity.
  5. Conscientiousness – perfectionists. For them, a good online experience will be in an environment where everything is organized and in place. They love to follow strict rules and procedures – so give that to them!

Concluding

Ever more of your customers are moving online to look for products, find answers or to interact in communities. Many times they may end up at a web page that does not match their personality traits. Most probably they will exit your site and search for an alternative – until they enjoy an online experience in an environment that is customized to suit their personality traits.

So, if you are collecting data about your customers and visitors to your website, you might as well find out what their personality traits are. Because, maybe your competitors are doing it already…

Read also: Hi, I’m your Emotional Customer. Can you please help me?

Notes

1 Schiffman, L.G. and Kanuk, L.L. 1997. Consumer behavior, 6th, New Jersey, Prentice Hall, 113-143.

2 Mulyanegara, R.C., Tsarenko, Y. and Anderson, A. 2009. The Big Five and brand personality: Investigating the impact of consumer personality on preferences towards particular brand personality, Journal of Brand Management, 16(4):234-247.

3 Dobre, C. and Milovan-Ciuta, A.M.  2015. Personality influences on online stores customers behavior, Ecoforum Journal, 4(1):69-76.

Images

  1.  wikipedia.org
  2.  Pexcels.com

Influencer Marketing for Retailers

Influencer marketing (IM), the process of identifying, engaging and supporting individuals who create conversations with a brand’s customers, is now used by many retailers to get people to buy their products. Indeed, influencer marketing is growing faster than organic search and is responsible for 28% of customer acquisition, according to Aj Agrawal in Entrepreneur.com.

So, is influencer marketing the new “silver bullet” for online retailers that struggle to sell their products in a highly congested and competitive virtual market place?

What is influencer marketing?

Although IM is now  the new “buzzword” in the digital marketing world, it’s not a new thing. It’s a term that refers to leveraging the influence of key people and businesses to support your brand and spread the word about your products and services through their own social channels 1. Subsequently, IM is similar to the well-known word-of-mouth marketing.

Beyonce doing her thing for Pepsi – image oppmax.com

To use influencers to help promote your brand makes a lot of sense. Indeed, “Influencer marketing presents a glaring opportunity for brands to leverage the power of word-of-mouth at scale through personalities that consumers already follow and admire” according to a guest writer in ADWEEK.

Why is influencer marketing now in the news?

Retailers are now confronted with maturing digital marketing channels in which similar content for mostly commodity-like products are having a losing battle to get customer to click on their brand.

Indeed, Nicole Dieker, The Content Strategist (2016), said this on the amount of content we are consuming each minute: “In the first 60 seconds of your day, Facebook receives over 4 million likes. More than 2 million Instagram hearts turn red. Nearly 350,000 tweets join the birds singing outside your window.” Yes, quite ridiculous – now where are your brands out there?

Then along comes influencer marketing. Influencer marketing circumvents these frustrations by delivering a highly-visible and relevant message from a trusted and welcome source.

Carter Hallett, Digital Marketing Strategist from R2iNSIGHTS proposed five reasons why influencer marketing is right for your brand.

5 Reasons why influencer marketing is right for your brand

  1. Builds consumer trust – 92 percent of people trust recommendations from individuals (even if they don’t know them) over brands. IM allows brands to break into that circle of trust in a way that feels organic and welcomed because it is relevant, reliable, and relatable.
  2. Circumvents ad blockers – The average American is exposed to 5,000 ads per day and can’t possibly process them all, leading to lower recall of marketing messages. In 2015, 47% of online customers used ad block technology, in response to dissatisfaction with digital advertising. Influencer marketing circumvents these frustrations by delivering a highly-visible and relevant message from a trusted and welcome source.
  3. Meets marketing goals effectively and affordably – Influencer marketing can easily be analysed using web tracking and focusing on deeper engagements, such as engagement rates, comments, and sentiment, as well as clicks and conversions. It also generates more than twice the sales than that of display advertising. As a result, those customers have a 37% higher retention rate than other acquisition channels.
  4. Targets audiences accurately – A well-crafted influencer identification strategy will yield the strongest return. Different product categories have different influencers, usually with an overlap of less than 15%. So it’s important to select influencers accurately and appropriately.
  5. Boosts SEO – Beyond meeting immediate marketing goals, an influencer marketing strategy can significantly boost your brand’s search rankings. Customers who seek information on social media will also use search engines during their decision making process.

Now let’s have a look at some recent results from empirical studies regarding IM.

What value does influencer marketing offers to the retailer?

“Word-of-mouth recommendations from influencers effectively turn prospects into customers, who trust the people they interact with on a daily basis” said Eileen Brown recently in ZDNET.com.

Here are some results from a survey done with retailers last year by Linqua regarding the state of influencer marketing:

Respondents indicated the following benefits they enjoyed using influencer marketing:

 Benefits% Respondents
Create authentic content about my brand89
Drive engagement around my product/brand77
Drive traffic to my website/landing page56
Generate content cost-effectively43
Reach younger generations not trusting traditional ads43
Generate authentic, easily dicoverable product reviews36
Drive online and in-store product sales34
Grow my email database with qualified customers8

As shown in the table above, retailers experienced greater brand authenticity when using influencer marketing. This may explain more customer engagement (77%) and traffic (56%) to their websites. Hence, only 34% of the retailers indicated more product sales when using IM.

However not everyone is convinced IM makes a difference in their marketing efforts. Results from a more recent study done by the Association of National Advertisers (ANA), showed that only 36% of 158 marketers surveyed felt that their influencer marketing efforts are effective (Minda Smiley, THEDRUM).  While 44% said they were neutral about the effectiveness of their influencer marketing, 19% deemed it ineffective, reported Minda.

Concluding

Influencer marketing may give retailers focused alternatives with product promotion in the digital channel. However, influencers – especially celebrities, may charge retailers high fees to link their faces to their brands. Sadly, this has caused the advent of  “fake influencers”.

So, retailers need to do a lot of homework before contracting and using influencers.

Read also: Word of Mouth Marketing for Better or for Worse

Note

1 Pophal, L. 2016. Best Practices in Influencer Marketing, Insights from Digital Marketing Experts, Copyright 2016 Linda Pophal.

Images

  1. wikipedia.org
  2. oppmax.com

Online Retailing – How Profitable are Impulsive Shoppers?

Impulsive shoppers are customers of online retailers that don’t think twice to buy a product online. For that reason they are targeted by most online retailers. However, the same characteristics that make behaviour of certain customers impulsive, may also affect their post purchase behaviour.

So let’s have a look at impulsive shoppers. Who they are? What motivate then? And how online retailers should manage them?

What is impulsive shopping?

Impulse shopping occurs when a consumer experiences a sudden, often powerful and persistent urge to buy something immediately 1. Impulsive shopping is part of the consumer buying behaviour process. Yet it differs from the traditional model, because impulsive shopping in contrast with ‘normal’ shopping is usually unplanned.

Who are impulsive shoppers?

How many times have you returned from the shopping center with products you don’t need or didn’t intent to buy. Similarly, when the doorbell rings and you receive a packet, and shockingly only remember then that you’ve bought something online only a couple of weeks ago.

Don’t stress, you’re not alone. It is estimated that impulsive shopping in the USA accounts for 80% in sales of certain product categories 2. Also that impulsive buying is more prevalent with new products. Here are more facts about impulse shoppers 2:

  • Gender – women tend to be more impulse shoppers than men;
  • Age – people under 35 years are more impulsive shoppers than older persons;
  • Culture – individualistic people are more impulsive shoppers than people living in collectivist cultures.

The mood and personality traits of people also affect their urge to do impulsive shopping. People with positive moods love impulsive shopping. In the same way, people with negative moods may use impulsive shopping to feel better 2. Also, people who enjoy a pleasant experience whilst shopping, tend to be impulsive shoppers 2.

A study to investigate the relationship between personality traits and compulsive shopping indicated the following 3:

  • There is a positive relationship between people with emotional instability (anxiety, moodiness, irritability, and sadness) and impulsive shopping;
  • People that are more imaginative, cultured, curious, original, broad minded, intelligent and artistically sensitive are more likely to display Impulsive-buying behaviours;

So that’s your impulsive shopper. No let’s do business with them!

Targeting and managing impulsive shoppers

If you take into consideration the traits of impulsive shoppers that were discussed under the previous heading, you may match your product, brand and content with you customer’s gender, age, culture, mood and personality.

However, to target and manage impulsive shoppers successfully, you need to know their shopping behaviour. It’s therefore very important to gather and analyse your customer’s data. Or, if you are a start-up, buy external data (customer lists) to analyse and use.

You can create a profile of your impulsive shoppers using the answers that the data provide. So, you need to communicate brands, products and content to the customers you target to trigger their urge to shop. Also important is to find out where they hang out online (social groups, Facebook pages, etc) to publish your content there.

How profitable are impulsive shoppers?

“As of now, e-commerce has already become a part of our online agenda, mainly because of how easy and hassle-free it is to go shopping online”, said Catalin Zorzini from Ecommerce Platforms.

The internet has made it easier for people to shop. Everything is so simple. You’ve got large variety products to choose from and it’s easy to compare prices.  After all, the sale is just a click away. Retailers have never had is so good…

But, there is the other side. Now the customer has received the stuff he bought online, it’s a week later, and he decided the buy was a bad decision. So, after reading the retailer’s return policy, he just do that – return the product.

And now your impulsive buyers that you’ve spend many dollars to find on Facebook, is costing your money. The solution – rather build a solid relationship with loyal customers. Loyal customers that are impulsive shoppers are profitable.

Conclusion

Every shopper is unique and therefore behaves differently under similar conditions. Nevertheless, the internet gives us the opportunity with big data and web analytics to know each customer personally and how he behaves when he is shopping.

Best is to make every impulse shopper a loyal shopper by personalizing their content and product offering.

Read also: Hi I’m you emotional customer. Can you please help me?

Notes

1 Verplanken, B. and Sato, A. 2011. The psychology of impulse buying: An integrative self-regulation approach, Journal of Consumer Policy, 34(2):197-210.

2 Kacen, J.J. and Lee, J.A. 2002. The influence of culture on consumer impulsive buying behaviour, Journal of Consumer Psychology, 12(2):163-176.

3 Shahjehan, A., Qureshi, J.A., Zeb, F. and Saifullah, K. 2012. The effect of personality on impulsive and compulsive buying behaviors, African Journal of Business Management, 6(6):2187.

Image

Pixabay

 

Targeting a Niche Market is a Way for Small Online Retailers to Sidestep Big Competition

The market dominance of the online retail giant Amazon.com and multi-channel retailer Walmart is a huge barrier for anyone who wants to start selling products online.  As a result, the big retailers can be found anywhere online. They offer a large variety of products at ridiculous low prices. Moreover, they promise to deliver products within a couple of days of ordering. And they take the return of products in their stride. So, how on earth can you, as an owner of a Shopify or Woo Commerce website, compete with Amazon and Walmart? The answer is to develop a niche market for your business.

What is a niche market?

A niche market is a small market segment with customers that have specific interests or needs 1. Contrast that with a mass market where retailers such as Amazon and Walmart target as many people as possible. As a result their product offerings are wide and deep and they target generic audiences all over the world. These large retailers that compete in mass markets seem to have unlimited financial resources to enjoy a sustainable competitive advantage with all aspects of the retail mix.

But, you don’t want to compete with Amazon or Walmart, do you?  Therefore it may be worthwhile to consider a niche market.

The characteristics of a niche market are as follow: 2

  1. The customers in the niche have a distinct set of needs;
  2. They will pay a premium price to the firm that best satisfies their needs;
  3. A niche is not likely to attract competitors;
  4. The niche marketer gains certain economies through specialization; and
  5. The niche has size, profit, and growth potential.

So, it’s looking good thus far! But how can you develop a niche market for your business?

How to develop a niche market for you retail business

Although niche marketing and market segmentation seems like the same thing, there is a fundamental difference. Market segmentation is a top-down approach, stating that it is “the process of breaking a large market into smaller and more manageable sub-markets.” By contrast is niche marketing a bottom-up approach, meaning that “the marketer starts from the needs of a few customers and gradually builds up a larger customer base.” 2

Five important elements of a niche market are: 2

  1. Positioning – offer a product that satisfy a unique need with the segment;
  2. Profitability – customers in the segment must be willing to pay a premium for your product or solution;
  3. Distinct competence – you should quickly be seen as an expert by the customers in the niche market;
  4. Small market segments – means that you can focus on the customers’ needs and pickup more quickly on developing trends;
  5. Adherence to the marketing concept – the philosophy that firms should analyze the needs of their customers and then make decisions to satisfy those needs, better than the competition.

Next you must communicate with customers in you market niche.

Niche marketing

Many small and new retailers choose to operate in niche markets. They deal mostly in specialized or unusual products which cannot be found easily elsewhere like departmental outlet or supermarkets. These retailers need to be found in places where it is easy for customers to seek them out.

One of the places where customers can search for special products is the internet. Astute marketers in a niche market can, by using the right digital marketing tools, get right in the faces of their target audience.

The ability of online retailers to help customers locate, evaluate, and purchase a far wider variety of products than they can via traditional brick and mortar channels is an important characteristic of the internet channel. Active search tools allow customers to easily locate products they know they are interested in. Even more, they can help them to identify products they weren’t previously aware of. 3

Customers that are seeking unusual products are more likely to join online communities on social media sites with relevant topics. As a result, retailers may not only find and learn from customers in on social media, but positive feedback about their brand may lead to more site visits.

A great idea for retailers is to create discussion groups on their own websites. Get a couple of known influencers to publish or interact with your audience. This may give your brand an ‘expert’ states in the niche market. Equally important is regular and informed communication (a newsletter via email) to keep the attention of your special group customers.

Benefits of Niche Marketing

Kirsten McCormick in TriveHive lists the following benefits of niche marketing:

  1. Enhanced Customer Relationships. A small customer base has its benefits. So, when you are engaging with fewer people, you can focus on the quality of those engagements and on nurturing your relationships.
  2. Reduced Competition. When you have a highly specific product or service, there will be less companies out there with the exact same offering.
  3. Increased Visibility. Increased visibility is a benefit of niche marketing that not only leads to more customers but can also improve your online presence.
  4. Word of Mouth Growth. Another benefit of niche marketing is that it is very word-of-mouth-friendly. Indeed, people in a niche tend to be in frequent contact with others in that niche, which means more opportunities to get the word out about your business.
  5. Honed Expertise. Niche marketing requires more concentrated practice in one area, so it can really fine tune your expertise in a shorter time period. Hence the benefit of niche marketing is that it enables you to become an expert or thought leader in your niche.
  6. Less Resources. One important part of effective digital marketing is identifying and understanding your audience, which requires an investment of time and money on data and analytics tools. The benefit of niche marketing is that because you are confined to a specific person and a specific need, less focus is required on digging into your data to understand and keep up with their needs.
  7. More Fun. Businesses don’t always pick their niche and pursue it. Oftentimes, they accidentally find their niche in the process of serving their target audience.

Disadvantage of niche marketing

Because the customer base of a niche market may be small, the potential for the retailer to grow her business can be limited. However, says Ash Ome in DigitalDevelop.net “Despite a few disadvantages, the niche marketing with drop ship has so many advantages that will surely take your small business towards success.”

Concluding

The retail industry is in the midst of disrupting events that are shaping its future. Most Brick and Mortar retailers are adding the online channel to their business. At the same time are Pure Play online retailers adding physical stores to the business.

And then there is Amazon.com. But the answer remains to get a niche market for your business. That’s especially true for the millions of Shopify and Woo Commerce drop shipping retailers trying to make money in the online channel…

Read more: Thinking About Competing With Amazon.com? Think Again…

Notes

1 Choudhary, S. 2014. Rooting by niche marketing, International Journal of Advanced Research in Management and Social Sciences, 3(10):84-91.Contrast

2 Parrish, E.D., Cassill, N.L. and Oxenham, W. 2006. Niche market strategy for a mature marketplace, Marketing Intelligence & Planning, 24(7):694-707.

3 Brynjolfsson, E., Hu, Y.J. and Smith, M.D. 2006. From Niches to Riches: Anatomy of the Long Tail, MIT Sloan Management Review, 47(4):67-71.

Images

Pixabay.com

Flickr.com

self-actualization

Taking Care of your Online Customer’s Self-Actualization Needs

Customers seeking to satisfy their self-actualization needs online do so to fulfil their total potential. Self-actualization represents the need for growth that people constantly strive for as they reach toward fulfilling their highest level needs.

Yes, if you’ve guessed that I’m talking about Maslow’s 1 hierarchy of needs, you’ve guessed correct. So, what can your online business offer to someone that already has battled through most of the layers of Maslow’s pyramid?

Let’s first have a look at how the pyramid is structured.

Maslow’s hierarchy of needs

self-actualization

Maslow’s Hierarchy of Needs

Looking at the pyramid, you’ll see that the need for self-actualization is right at the top. On the other hand, can the physiological needs of you customers be found at the bottom of the pyramid. Your customer’s most basic needs start at the bottom of the pyramid. As the needs are satisfied, your customer is motivated to seek the next level of need fulfillment. The need for safety and love/belonging and esteem make out the remainder of the hierarchy.

But will your customer satisfy her need for self-actualization when visiting your website? Maybe you should first recognise who the customers are that seek self-actualization needs…

Characteristics of customers seeking self-actualization (SA)

According to a study by Maslow, people who are looking to find self-actualization can be recognized as follows:

  • Realistic – SA persons have a more efficient perception of reality, they have comfortable relations with it. They are un-threatened and un-frightened by the unknown and have a superior ability to reason, to see the truth. Moreover, they are logical and efficient.
  • Acceptance – they accept themselves, others and the natural world the way they are. Furthermore do they see human nature as is, have a lack of crippling guilt or shame, and enjoy themselves without regret or apology. Also, they have no unnecessary inhibitions.
  • Spontaneity, Simplicity, Naturalness – spontaneous in their inner life, thoughts and impulses, they are unhampered by convention. Their ethics is autonomous, they are individuals, and are motivated to continual growth.
  • Problem Centring – they focus on problems outside themselves, centred on others. They have a mission in life requiring much energy, their mission is their reason for existence. And, they are serene, characterized by a lack of worry, and are devoted to duty.
  • Detachment: The Need for Privacy – SA people are alone but not lonely, unflappable, retain dignity amid confusion and personal misfortunes, objective. They are self-starters, responsible for themselves, own their behaviour.
  • Autonomy: Independent of Culture and Environment – SA’s rely on inner self for satisfaction. Stable in the face of hard knocks, they are self-contained, independent from love and respect.
  • Continued Freshness of Appreciation – they have a fresh rather than stereotyped appreciation of people and things. Appreciation of the basic good in life, moment to moment living is thrilling, transcending and spiritual. They live the present moment to the fullest.

According to Saul McLeod (Simply Psychology), Maslow estimated that only about two percent of people reaches self-actualization.

Concluding

Gratefully, it’s not everyone that seeks and reaches self-actualization. However, if self-actualization seeking people subscribe to your website, or follow your business on social networks, then you may possess a niche audience.

All that’s left is to keep their attention and monetize their loyalty.

Note

1 Maslow, A.H. 1943. A theory of human motivation, Psychological Review, 50(4):370.

Images

  1. Wikipidia.org
  2. Pixabay

Making Money Online Requires Analysis, Planning, Effort and Lots of Patience

It seems that right now is the best time for making money online. According to Statista.com, retail e-commerce sales worldwide amounted to 1.86 trillion US dollars during 2016 and online retail revenues are projected to grow to 4.48 trillion US dollars in 2021.

Ashwin Ramasamy writing for PipeCandy estimates that there are between two and three million eCommerce websites, excluding websites from China, on the web. So, if you do the calculation, taking the numbers of 2016, the average annual revenue per eCommerce website could be around 740,000 US dollars.

And with an online retail revenue of 4.48 trillion US dollars projected for 2021, there seems to be a lot of spare capacity to take up. Is making money online that easy? Not really…

“eCommerce has about an 80% failure rate. Other researchers claim it’s as high as 97%. One of the reasons the failure rate is so high is because an eCommerce business can be easy to set up, for a small amount of money. Creating a store front is easy. Making it successful, on the other hand, not so much”, says Dianna Labriem in Tech.co.

So, the Trillions of US dollar revenue generated each year by online retailers is shared by a handful of eCommerce websites.

Making money online the hard way

From the moment that you’ve activated your ecommerce website, you need already to know what value you’re offering your customers. In other words, what is your competitive advantage in the online market you’re targeting?

A sustainable competitive advantage may be defined as ‘the ability to deliver superior value to the market for a protracted period of time’ 1. Here, superior value refers to the fact that the consumers of a product or service must be convinced that they are getting something of value for their money. The value proposal for Bricks and Clicks retailers was previously discussed in this blog.

The hard way of making money online starts with analyzing your online market.

Analyzing your online marketplace

To make money successfully online, you need to know everything about your market. Your market consist of your customers, suppliers and intermediaries and your competitors.

Analyzing your customers:

  • Who are your biggest customers?
  • Who are the most profitable?
  • Where can you find your customers online?
  • Do your customers have any unmet needs?
  • What are the benefits they seek from your products?
  • And what price are they willing to pay for your products?

Analyse your intermediaries:

Intermediaries have captured a significant proportion of the profits available in the online retail market 2.  Therefore, their impact on your business’s marketing mix should be analysed.

  • The place (delivery) – most online retailers are dependent on logistic service providers to do the ‘last mile of delivery’ to their customers. Retailers should analyse the different service providers and choose one that is the most reliable at the best price;
  • Your product – only source products of the highest quality at reasonable prices from reliable suppliers;
  • Your promotion – which marketing intermediary will deliver your marketing messages the best? Google’s AdWords or social networks such as Facebook or Twitter?
  • The price that intermediaries charge – analyse the offerings and choose those who deliver the best service at reasonable prices.

Analyse your intermediaries

Analyse your competitors:

You need to find out how to satisfy customers better than the competition. By doing a competitor analysis you may begin to understand the level of competition that exists in your target market and it will help you to make the right pricing decisions.

The strategies and actions of your competitors may well determine if you will be making money online:

  • Who are our present and potential competitors?
  • What are the positions that they have established in the market?
  • What are their strategic objectives and thrusts?
  • What are their present and future strategies?
  • What are their strengths and weaknesses?

The next step to do to get your online business on its way, is incorporating all the data you’ve generated with your analysis into a strategic plan.

A strategic plan to make money online

By now you should know who your customers are; who the intermediaries are that you’re going to use; and whom you’ll be competing against. Now you should develop a competitive strategy.

The competitive strategies available for online retailers to obtain and maintain a sustainable competitive advantage are 1:

  1. The differentiation strategy – value is added to the product or service through differentiation to make it different from competitors’ products and services.
  2. The low-cost strategy or overall cost leadership – this implies that an organisation will supply a product or service more cost-effectively than competitors.
  3. The focus strategy – here you can focus on a special product/market niche that you may later monopolise.
  4. The pre-emptive move or first-mover advantage – this strategy can be pursued by an online retailer who takes a calculated risk by being the first to enter a market with a new product or service.
  5. Synergy – this means that all the components of an organisation are working together and so creating a sustainable competitive advantage. For example a physical retailer that adds the online channel to its business.

It takes a lot of effort to make money online

Mostly, money doesn’t just start flowing in because you have an ecommerce website. You may need to spend many hours a day to monitor the happenings on your, (and your competitor’s) website. You need to follow the trends in your market, negotiate with intermediaries and confront your competitors. You definitely need to create quality content for your website and also get a presence on social media networks.

Furthermore, you should manage the finance of your business and identify the risks of the business. Your online customers demand a 24/7 service – and that is what you need to deliver. For your customers, the alternative is a click away…

Concluding

Although the internet offers us billions of potential customers, anywhere at any time, it will take some time for your online business to show substantial profits. That is especially true for small retailers with a limited marketing budget…

However, if you do the right thing and do that right, with lots of patience and belief, you’re online business may be part of the 3% that make money online.

Notes:

1 Du Plessis, P.J., Jooste, C.J. and Strydom, J.W. 2001. Applied strategic marketing, Heinemann.

2 Laseter, T.M. and Rabinovich, E.  2011. Internet retail operations: integrating theory and practice for managers, CRC Press.

Images

  1.  Featured image: Pixabay
  2. Image in body: Pixabay

Instagram Marketing – Telling Stories about Your Brand with Pictures and Videos

Instagram is the fastest growing social network site and is expected to have one billion active users this year (Mediakix, November 2017). As a result, Instagram marketing has really become “essential” when it comes creating a following for your brand.

People love Instagram. They find gratification by posting photos and videos for their friends to see and react to. Also, users consume photos and videos mostly by viewing a core page showing a “stream” of the latest photos and videos from all their friends, listed in reverse chronological order 4. They can also ‘like’ or comment on these posts.

Instagram marketing is valuable tool for retailers. This is evident because retail brands are prominent users of Instagram. They frequently use persuasion, self-efficacy, relational, emotion and symbolism strategies to get users to interact with the brand by ‘liking’ or commenting on the content 3.

The more ‘likes’ and followers a retail brand achieve on Instagram, the more will users become aware of the brand. However, in order to secure online sales, retailers should make the user’s journey from ‘awareness’ to ‘purchasing’ as smooth as possible.

About Instagram

Instagram is an online, mobile phone photo-sharing, video-sharing, and social network service (SNS) that enables its users to take pictures and videos, and then share them on other platforms 1. It also allows users to add hashtags and geotags, graphical stickers, Augmented Reality objects, as well as apply multiple graphical filters to alter photos. Instagram quickly became popular because it’s not only a handy photo-sharing app, but also a social network.

What is most powerful about Instagram is that it is geared entirely towards mobile use, allowing users a simple interface to upload photos that they have just taken or captured in the past. “It’s like Twitter with followers, only instead of real-time text updates, you provide photo updates” explained Zohra Ashpari for PC World in 2012.

Instagram user statistics (Hootsuit)

  1. Instagram has over 800 million active users.
  2. 80% of Instagram users come from outside of the U.S.
  3. Instagram is used by 38% of women in the U.S. and 26% of men.
  4. 59% of Instagrammers in the U.S. are under 30.
  5. Teenagers love Instagram.
  6. Facebook and Pinterest are Instagrammers’ other favourite networks.
  7. A lot of Instagram users have pretty deep pockets.

It took Facebook not long to purchase Instagram in 2012 for one billion US$. Maybe they did it because Instagram was potentially a threat to their other business (Facebook) 2. Furthermore, Facebook  owns the social media apps WhatsApp, and Facebook Messenger. The parallel that Zohra draw between the two social media apps then is happening even more today, as was pointed out in Redcode.

Kurt Wagner and Rani Molla write in Recode “The world’s most popular social apps are starting to look a little … similar. As companies like Facebook, Instagram, Twitter and Snap have evolved, they’ve started to borrow product ideas from each other in the hope of building an all-in-one experience.”

So if Facebook is similar to Instagram, and all the other social media apps appear similar to each other, how on earth can retailers decide what social media app to advertise their products with?

However, with more pictures and videos that are used to share stories and experience, retailers may first consider “how to market” rather than “where to market” on these social media apps.

Cadbury’s use of Instagram

Developing an Instagram marketing strategy

Instagram marketing is derived from social media marketing. Therefore social media marketing can formally be defined as “The utilization of social media technologies, channels, and software to create, communicate, deliver, and exchange offerings that have vale for an organization’s stakeholders.” 5

Alicia Johnson writing in SproutSocial.com suggests the following to create an Instagram marketing strategy:

Step 1: Determine Your Objectives

  1. What will Instagram allow you to do that other platforms don’t?
  2. Who is your target audience and which members of your audience are active on Instagram?
  3. How will Instagram integrate with the other networks in your social media strategy?

Step 2: Develop an Instagram Content Strategy

Content is the foundation of your Instagram presence. For that reason, many B2C businesses use Instagram to make their product the star of the show.

  1. Build content themes – review your objectives and determine what aspects of your brand to showcase in your Instagram content.
  2. Determine content medium and ratio – consider a balance of content types that will work best for the resources you have and the engagement you want from your audience.
  3. Set a (flexible) content calendar – to establish and maintain an active presence on Instagram, determine the frequency with which you will post.
  4. Curate user-generated content – it allows you to foster audience engagement and create an incentive for your audience to share posts.

Step 3: Establish Clear Team Guidelines: Style, Publishing and Workflow

On a visual platform, the need for a clearly defined aesthetic is key.

  1. Maintain a brand aesthetic – review the existing visual representations of your brand: your logo, website, graphics, stock photography and other collateral.
  2. Understand your brand’s composition – to create a sense of visual harmony when a user looks at your profile.

Step 4: Foster engagement and set guidelines for community management

Instagram offers huge potential for engagement.

  1. Optimize your bio and link – focus on what’s important about your brand. Your bio is also a good place to educate.
  2. Follow industry accounts and Instagram influencers – what kind of content do you want to keep a pulse on through Instagram?
  3. Use Instagram stories to test content – make this content easy to read, view and understand so users don’t skip you the next time you publish a story.

Step 5: Analyze Your Results

Tracking how well your content performs and your follower growth will allow you to adapt your Instagram marketing strategy over time. For that reason it allows you to deliver more content that your audience will respond to while helping you optimize for future campaigns.

Concluding

As digital communication technology improves, and we can communicate with speed and download quality images while moving, the visual content will become more import for retail brands. For that reason Facebook and Twitter are moving towards the business model of Instagram by incorporating more pictures and videos on the sites.

But we need to be reminded about the value of text: “Whereas a single picture may convey a thousand words, a single word may stimulate vivid images that may move consumers to attend, prefer, or buy 6.”

Notes

1 Sheldon, P. and Bryant, K. 2016. Instagram: Motives for its use and relationship to narcissism and contextual age, Computers in Human Behavior, 58:89-97.

2 Andrew Apostola and Simon Goodrich, 2013. Taking Back Retail, Transforming Traditional Retailers Into Digital Retailers, ©Portable Australia Pty Ltd.

3 Hassan, A. 2014. Do brands targeting women use instamarketing differently: a content analysis, In Marketing Management Association 2014 Annual Spring Conference Proceedings, 62-64.

4 Hu, Y., Manikonda, L. and Kambhampati, S. 2014, June. What We Instagram: A First Analysis of Instagram Photo Content and User Types, In Icwsm.

5 Tuten, T.L. and Solomon, M.R. 2014. Social Media Marketing, SAGE.

6 Wedel, M. and Pieters, R. eds. 2012. Visual marketing: From attention to action, Psychology Press, Taylor & Francis Group, LLC.

Images

Pixabay.com

Flickr.com (Ell R Brown)

How the Fourth Industrial Revolution Shapes the Retail Industry

It seems to almost happen overnight, the Fourth Industrial Revolution. “Something’s coming. It’s picking up speed and will overtake most of us in the coming years. Industries will be disrupted, lifestyles will be altered, economics will be shattered as this revolution takes hold”, according to a press release by the Digital Journal.

The revolution started almost unnoticed, very quiet and extremely swiftly. It’s also clean, unlike the first industrial revolution that was noisy, dirty and very slowly – just imagine the coal gobbling steam engines, 3 centuries ago…

Don’t make any mistake. The 4th Industrial Revolution wouldn’t have happened without the 1st (coal); the 2nd (oil and electricity) and the 3rd (internet technology and clean energy) Industrial Revolutions.

However, the Fourth Industrial Revolution is busy happening right now and it’s having a profound effect on our businesses and our lives. Indeed, the Fourth Industrial Revolution and the future of core technology trend are expected to result in an all-new era of automated industries 1.

Also, the retail industry and its customers are already part and parcel of this revolution.

So what is the Fourth Industrial Revolution?

The internet and Information Communication Technology (ICT) have facilitated the advent of cyber-physical Internet-based systems.  These systems offer innovative capacities that can benefit industry and other economic sectors. This phenomenon is happening now and is known as the 4th Industrial Revolution.

The Fourth Industrial Revolution is a fusion of all current technologies to create a cyber-physical system 1.

Floridi 3 (2014) explains the 4th Industrial Revolution as a space where smart and autonomous agents no longer need to be human.  Therefore, a society that’s fully dependent on third-order technologies and thus are human-independent. Here, learned machines that communicate with each other, are taking over the thinking and doing of humans…

Or, as Oosthuizen 2 (2016) recently described it: “Consider the possibilities of mobile devices connecting billions of people driving unparalleled processing power, storage capabilities and access to knowledge. In addition, the overwhelming convergence of emergent technology such as, among others, artificial intelligence (AI), robotics, the internet of things (IoT), autonomous vehicles, 3D printing, nanotechnology, biotechnology, materials science, energy storage and quantum computing.”

The retail industry is one of the spaces in business that the 4th Industrial Revolution is seen working and it is experienced by many.

How the Fourth Industrial Revolution shapes the retail industry

The World Economic Forum 4 (2015) identified six software and services mega-trends which are shaping society:

People and the internet

How people connect with others, information and the world around them is being transformed through a combination of technologies. Wearable and implantable technologies will enhance people’s “digital presence”, allowing them to interact with objects and one another in new ways.

Bricks2Clicks recently discussed how the multi-purposed smartphones of customers that are AI empowered can help them to connect, communicate, recognize and experience the digital world of the 4th Industrial revolution.

Computing, communications and storage everywhere

The continued rapid decline in the size and cost of computing and connectivity technologies is driving an exponential growth in the potential to access and leverage the internet. This will lead to ubiquitous computing power being available, where everyone has access to a supercomputer in their pocket, with nearly unlimited storage capacity.

The use of the mobile smartphone has grown exponentially since its introduction a decade ago. In fact, just over 36 percent of the world’s population is projected to use a smartphone by 2018, up from about 10 percent in 2011, according to Statista. For retailers the growth in use of smartphones by their customers may result in opportunities and threats. Read more: Bricks and Mortar Retailers Need To Be Smart With Smartphone Customers.

The Internet of Things (IOT)

Smaller, cheaper and smarter sensors are being introduced – in homes, clothes and accessories, cities, transport and energy networks, as well as manufacturing processes.

“Connected devices and products provide retailers with the opportunity to help optimize operations in the face of a more complex supply chain. That’s  increasingly important for digital channels, and a more demanding customers.  By utilizing the IOT, managers can track inventory more easily, and adjusting pricing in real time using smart tags”, says Douw G Steyn (Bricks2Clicks).

Artificial intelligence (AI) and big data

Exponential digitization creates exponentially more data – about everything and everyone. In parallel, the sophistication of the problems software can address, and the ability for software to learn and evolve itself, is advancing rapidly. This is built on the rise of big data for decision-making, and the influence that AI and robotics are starting to have on decision-making and jobs.

Retailers will have to decide where and when Artificial Intelligence has the potential to replace human intelligence. Cost and scale will drive these decisions. Future decisions about AI by retailers will probably be about the ethics of using the technology and the effect it may have on society. Further reading: Artificial Intelligence – Digital Outcomes or Digital Disruptions for Retailers?

The sharing economy and distributed trust

The internet is driving a shift towards networks and platform-based social and economic models. As a result, assets can be shared, creating not just new efficiencies but also whole new business models and opportunities for social self-organization. The Blockchain, an emerging technology, replaces the need for third-party institutions to provide trust for financial, contract and voting activities.

Here we are talking about crypto-currencies such as Bitcoin. “There is the potential for a lot of demand for crypto-currencies from a consumer perspective. But right now it’s a pretty complex process to set up a digital wallet, gain access to a crypto-currency exchange, and start buying up coins”, according to Nikki Baird (Forbes).

The digitization of matter

Physical objects are “printed” from raw materials via additive, or 3D, printing, a process that transforms industrial manufacturing. Consequently it allows for printing products at home and creates a whole set of human health opportunities.

3D printing technology for retailers is now emerging as an outcome for small localized retailers that are facing closure. However, as it is with most disruptive technologies, the advantages that 3D printing offer for retailers should be weighed against its potential pitfalls. Read more: 3D Printing Technology for Retailers – An Opportunity or a Waste of Money?

Conclusion

The 4th Industrial Revolution is not only about digital technology and gadgets, but also about us. How should we prepare ourselves and our children to survive and prosper in this digital, robotic and information rich space? And what about retail? Not only need the structure, operations and organisational cultures change at retailers, but retailers also need extraordinary leaders (Read: Success in the Digital Age Requires Extraordinary Retail Leaders).

The last words are from Albert Einstein: “The distinction between the past, present and future is only a stubbornly persistent illusion.”

Notes

1 Chung, M. and Kim, J. 2016. The Internet Information and Technology Research Directions based on the Fourth Industrial Revolution, KSII Transactions on Internet & Information Systems, 10(3):1311-1320.

2 Oosthuizen, J.H. 2016. Entrepreneurial intelligence: expanding Schwab’s four-type intelligence proposition to meaningfully address the challenges of the fourth industrial revolution. In proceedings of 28th Annual Conference of the Southern African Institute of Management Scientists, University of Pretoria, South Africa.

3 Luciano Floridi 2014. The Fourth Revolution, How the Infosphere is Reshaping Human Reality, Oxford University Press, USA.

4 World Economic Forum 2015. Deep Shift: Technology Tipping Points and Societal Impact, Global Agenda Council on the Future of Software & Society, Survey Report, World Economic Forum, Geneva, Switzerland.

Images

c1.staticflickr.com and pixabay.com

Product Returns may Destroy Small Online Retailers

Product returns is getting unaffordable for most small online retailers. However, online retailers who don’t accept product returns will hardly sell any products – especially if it is clothing. That is because retailers need to accommodate the risk of their customers for buying their products online.

A reasonable return policy will give online customers ‘peace of mind’ since they can return products that they don’t like or can’t use.  Yet, this reassurance that retailers give their customers usually comes at a high price.

Retailers spend big money to get unwanted products back from their customers because the “last mile” of fulfillment needed to be reversed. As a result retailers must arrange for the collection of unwanted products from customers.

Also they need to dispose of the products or, alternatively, refurbish, restock and resell them through their own channels or through an inventory liquidator. And they’re losing lots of money and time in the process.

Moreover, there are criminals that can use your lenient product returns policy to their advantage. The costs are sadly for your account…

The cost and occurrence of product returns for online retailers

The occurrence of product returns is indeed a big headache for online retailers. Adam Minter, a columnist at Bloomberg reported recently that about 25% of all the products that are sold online are returned. And, continues Adam, 50% of these returned products are clothing.

In fact, online retailers have little choice but to offer lenient return policies to their customers. They can’t expect buyers to take the risk of buying clothes or shoes online that doesn’t fit. Moreover, the shape and color of clothing looks sometimes much different in real life as what it appear on a computer screen.

Therefore some online retailers receive as little as 15 c to a Dollar spent back on returned good (Bloomberg).

Reasons for product returns

So why is the incident of product returns so high with online retailers?

  1. Customers aren’t happy with the merchandise because it looks and feels different as what they have expected;
  2. With clothing, it may be the wrong size or colour;
  3. It may be an unwanted gift from somebody;
  4. Or it may be that a wrong product has been send;
  5. Or, more sinisterly:
    1. The customers are wardrobing – they purchase the product, use the item once only to return it again to the retailer (e.g. an expensive evening gown);
    2. Sometimes criminals return stolen goods to retailers that are willing to accept goods without a receipt.

How can online retailers solve the product returns problem?

The occurrence of product returns can impose substantial costs on online retailers. If the returns are getting out of hand, it may even cause the closure of the retailer. Here are some suggestions to tackle the problem:

  • Get a physical store – if you are a pure play online retailer or if you plan to include the online channel in your retail start-up. A Bricks and Mortar store can serve as a place where online customers can return their purchases and gives them a chance to try and buy other product in the store.
  • Use outsourced drop-off spots – it’s a service that most Logistic Service Providers offer;
  • Identify those customers who tend to abuse your return policies. Don’t sell anything to them. However, make sure you don’t penalize customers who have legit reasons to return their products.
  • Make your return policies more stringent. You will most probably have fewer returns and unfortunately also fewer sales. Your customers won’t take the risk of buying your products online if they can’t return it.
  • Charge for returns. It seems the logical answer to all your product return problems. However, one comment read the following “Unless amazon takes away free returns I doubt anybody else will be able to.” And that says it all…
  • Incorporate the cost of your returns into your pricing. You can do it only if you run your business cost-effectively. If you price your products too high, your customers will find the same product at a better price online.

Concluding

Much has been said about how the advent and growth of online retailing have caused the demise of Brick and Mortar retailers. The huge cost of product returns may however prove to be the greatest leveler in the retail industry.

It’s no surprise that pure play online retailers, for example Amazon, are now acquiring physical stores.  They’d realized that their customers need to feel and fit their products and a Brick and Mortar store may at the same time serve as a collection hub for returned products.

Lastly, if your competitor doesn’t charge for product returns, so should you.

Read also: Order Fulfilment in Omni-Channel Retail – the “Last Mile Delivery” most Retailers Fail to Complete

Note:

Laseter, T.M. and Rabinovich, E.  2011. Internet retail operations: integrating theory and practice for managers, CRC Press.

Image:

GetThatWholesale.com

AI-smartphones

Very Clever AI-Powered Smartphones Empower Customers

AI-powered smartphones is the latest attempt by phone manufactures to differentiate themselves from their competitors. They argue that customers will ultimately only buy the smartest phones. But how will the retail industry react to this new gadget?

AI-powered smartphones involves machine learning – the ability for a system to learn outside of its original programming. Furthermore encompasses AI-powered smartphones deep learning, which is a type of machine learning that tries to mimic the human brain with many layers of computation (David Nield, contributor to The Field Guide).

IT-Onlne reported research results by Gartner that identify 10 high-impact uses for AI-powered smartphones.

10 High-impact uses for AI-powered smartphones

  1. ‘Digital Me’ sitting on the device – smartphones will be an extension of the user, capable of recognizing them and predicting their next move. They will understand who you are, what you want, when you want it, how you want it done and execute tasks upon your authority.
  2. User authentication – security technology combined with machine learning, biometrics and user behaviour will improve usability and self-service capabilities.
  3. Emotion recognition – emotion sensing systems and affective computing allow smartphones to detect, analyse, process and respond to people’s emotional states and moods.
  4. Natural-language understanding – continuous training and deep learning on smartphones will improve the accuracy of speech recognition, while better understanding the user’s specific intentions.
  5. Augmented reality (AR) and AI vision – one example of how AR can be used is in apps that help to collect user data and detect illnesses such as skin cancer or pancreatic cancer.
  6. Device management – machine learning will improve device performance and standby time. For example, with many sensors, smartphones can better understand and learn user’s behaviour, such as when to use which app.
  7. Personal profiling – smartphones are able to collect data for behavioural and personal profiling. Users can receive protection and assistance dynamically, depending on the activity that is being carried out.
  8. Content censorship/detection – restricted content can be automatically detected. Objectionable images, videos or text can be flagged and various notification alarms can be enabled.
  9. Personal photographing – personal photographing includes smartphones that are able to automatically produce beautified photos based on a user’s individual aesthetic preferences.
  10. Audio analytic – the smartphone’s microphone is able to continuously listen to real-world sounds. AI capability on device is able to tell those sounds, and instruct users or trigger events.

What implications will AI-powered smartphones have for retailers?

Retail customers with AI-powered smartphones may now connect with AI-enabled stores and online eCommerce sites from anywhere. That may cause the already mobile customers to demand enhanced shopping experiences in every store they visit. Customers with these phones may change their buying behaviour towards retailers that are AI-enabled.

However, the high prices of AI-powered smartphones may see a gradual adoption of the technology and so give retailers enough time to adapt to the phenomenon.

Concluding

Some commentators has labelled 2018 as the year of Artificial Intelligence. So does this means the end of the small local retailer? I don’t think so. Indeed, it may provide an opportunity for smaller retailers to start a digital free retail niche. A niche where you still can use your own senses and decide for yourself when, what and why you want to buy something…

Read also: Webrooming and Showrooming – Buying Behaviors of Retail Customers in Virtual and Physical Environments 

Image:

maxpixel.freegreatpicture.com