Monthly Archives: March 2018

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