Tuesday, May 20, 2008

The Good News and the Bad News on the Internet

If you're reading this blog, then you are among the vast majority of the world's population that is using the internet. It's likely that you are among those who make purchases on the web as well. According to an article entitled "Retail E-Commerce and the Economy" at eMarketer.com, sales data released by the U.S. Department of Commerce shows that online sales grew by only 13.4% in the first quarter of this year vs the same period in 2007.

I know what most of you are thinking. There are a lot of retailers who would be ecstatic if their sales grew by only 13.4%. Considering that, for the most part, total U.S. retail sales in the first quarter were flat, that means the increase in online sales is coming at the expense of brick and mortar retailers. See the image below regarding the reduction in store purchases by online buyers.

What does this mean to store owners? Well, since only 3.4% of all retail sales come on the internet, there is still plenty of business left for shopkeepers. It's interesting, especially in light of our soft economy, to see the reasons why consumers are increasing their internet purchases.

A survey conducted by Piper Jaffray & Co (pictured here) says that the top reasons for purchasing on the internet are: convenience, saving gas money, lower prices and ease of finding merchandise. Notice that price is only the third most important factor in internet purchases and that convenience is the biggest reason people shop online.

With that in mind, all retailers, online and off, need to look at how convenient the shopping experience is in their stores and on their websites. Are we merchandising complimentary products together? Is it easy for our customers to reach us and find out information on our products? Do we offer convenient store hours? Even if we don't have an e-commerce website, can prospective customers find our store on the internet? If they find us, can they get directions and store hours? Or are we the best kept secret in our neighborhood?

At the very least, buyers should be able to find you on Google Local. In 2008, the internet is the first place buyers go to find uncommon merchandise and military and outdoor clothing and gear is not all that common. Most people don't know where the nearest army surplus or military fashion outlet is. So they go to the internet. Try it yourself. Go to Google and type in the kind of merchandise you sell and your city and state (i.e. army surplus, Springfield, OH) and see if your business comes up. If it doesn't, go to Google Local and make sure the information for your store is accurate and complete. By the way, this is all available at no charge.

With the internet becoming more and more important in terms of its influence over buying decisions online and off, savvy retailers should become more aware of how the internet effects their business and even consider a promotional online presence even if e-commerce is not for them. I'll certainly be writing more about this in future blog postings.

Have a happy and safe Memorial Day Weekend.

John Ottaviano

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