The Financial Times reported that Amazon is investing in new warehouses, operations and systems, in order to be able to offer same-day delivery. Subsequently, analysts (for instance, here) predicted that this would be the final nail in the coffin of local high-street retailers – i.e., that once customers are able to get their goods within a few hours of choosing them online, there will be no reason to go to a high-street store.
Don’t get me wrong. Same-day delivery is not good news for high-street retailers. But how many things do we buy on the high-street purely because we can not – or do not want to – wait one day or two to receive it at home?
Personally, when I purchase something on Amazon, I value the very wide choice, the availability and the extensive product information – both from the manufacturer / publisher, and from other users. And, yes, I like to know that it is usually cheaper than elsewhere. What’s more, I choose the product from the comfort of my house, at hours that suit me. IN other words, getting it quickly is nice, but not the deal breaker.
Take this example.
A few weeks ago we had to replace our microwave. We went to our local retailer, where an employee showed us the various options. While he was very, very nice, he wasn’t telling us much more than what was printed on the labels and boxes. At some point, we were all (salesman included!) huddled around the smartphone screen… looking at the product descriptions and the customer reviews on Amazon. We noticed and mentioned that the product was considerably cheaper on Amazon. To which the employee added, cheerfully, that if we bought it on the shop, we could also buy additional warranty for the microwave for just £2 a month. Really! That was his best offer.
By this point, the kids were getting impatient, and we decided to head home and do further research before buying the microwave. We checked what time the shop was closing and left.
It will not surprise you to read that we ended up buying the microwave online. To put it simply, there was no reason why we should drive back to the shop to get it – we had much more information and choice online than we could ever get in the shop, we did not have to worry about the children, we bought the microwave when we were ready rather than when the shop was open… and we did not have to drive to the shop again to get it.
The behaviour that I just described is called the ‘research-shopper’ phenomenon. It refers to customers gathering information about a product in one channel and buying it elsewhere, as illustrated in table 1.
Table 1. Research-shopping behaviours
|Channels Searched||Channel of Purchase||Shopper Type|
|Channel A of Firm 1||Channel A Firm 1||One-stop shopper|
|Channel A of Firm 1||Channel B of Firm 1||Loyal Research-shopper|
|Channel A of Firm 1||Channel B of Firm 2||Competitive Research-shopper|
Source: Neslin, S. A., and Shankar, V. (2009), Key Issues in Multichannel Customer Management: Current Knowledge and Future Directions, Journal of Interactive Marketing, 23(1), 70-81
As explained by Verhoef and colleagues (2007), this behaviour is driven by three factors that may reinforce each other:
- Attribute differences – the characteristics of the channel that make it particularly good for a task (e.g., obtain information)
- Customer lock-in – the scope for the channel to prevent the customer from leaving
- Cross-channel synergy – where the customer benefits from using various channels from the same firm.
So, if it is true that websites are good sources of information, choice, etc it is also true that high-street shops have advantages such as location and the human interaction. Indeed, it is this interface that makes shops so much better than websites at locking-in consumers.
Retailers need to look for ways of adding value to research-shoppers. Dealing with their pain points. Solving problems in creative ways.
Here is one example. Not long ago, I ordered something from Gap. It was not the right size and I had to return it. One of the options was a service whereby I dropped the package at one of a number of named local retailers – there were several possible outlets: a petrol station, a newsagent and, if I am not mistaken, a pub, to name just a few. So, on my way to work, I stopped by the petrol station (which I do not usually use), dropped the package… and also filled up the car’s tank, and bought some milk and other essential items.
As far as the microwave was concerned, I might have gone back to the high-street retailer if they offered something of value to me – not the insurance, mind you! For instance, if they had collected the old, faulty microwave and disposed of it for me. Certainly, disposing of microwaves is not their core business… but is a solution to a problem that customers have when they buy microwaves. Just like collecting packages is not a core business for the petrol station, but still got them extra sales.
What keeps you buying from local shops?