There is perhaps no other retail sector that takes better advantage of consumer behavior research and in-store optimization than grocery stores. From circular to layout, from shelf-space to checkout, supermarket marketers are masters of merchandizing.
How can you apply supermarketing psychotactics to your ecommerce experience?
Loss-leaders (popular, non-clearance items offered below cost in order to bring in foot traffic) can be profitable for brick-and-mortar stores, but not so much online. Loss leaders work in physical shops because shoppers tend to buy whatever else they need while in-store during that visit. It’s not the same online, where picking up extra items requires searching and browsing the website.
Amazon can afford to sell below cost because it turns over inventory well before it must pay suppliers. This “negative operating cycle” allows Amazon to make a return on cash flow. Most online retailers don’t run this business model.
The goal of loss leaders is to increase checkout total. Realistically, most online sellers will not succeed with product loss-leaders, rather with free shipping offers above a certain dollar amount. With 90% of consumers believing free shipping offers would entice them to spend more online, it’s no wonder so many e-tailers offer free shipping above $X year-round as a perpetual loss-leader (occasionally lowering the threshold during promotional periods).
Grocery aisle endcaps are premium space, and typically feature high margin products or brands that pay for this primo real-estate.
What are the ecommerce equivalents to these merchandising zones?
For example, Sephora bakes featured brands and products into its flyout menus and category results:
“Most stores move customers from right to left. Due to this flow and and the practice of driving on the right side of the road, the items you are most likely to buy tend to be on the right hand of the aisle.”
We read and view Web pages the opposite, left to right. While moving calls to action to the left of a page has paid off for some e-tailers, merchandising “endcap” content (including cross-sells and upsells) to the right of home, category and search pages may work on the same principle as grocery store navigation (it’s worth a test!)
Brian Dyches, chief experience officer of retail branding firm Ikonic Tonic studies retail shopping patterns, and says shoppers skip over up to 20% of a store’s merchandise in long, uninterrupted aisles.
Could eyes glaze over in long, uninterrupted search and category results pages? You bet.
Take a page from Wal-Mart and other big-box retailers: Create stopping points in the middle of long aisles, such as signs or displays that create a visual break. Dyches likes how clothing chain Anthropologie often repeats a design behind wall displays and then changes or ends the pattern to try to get customers to stop at a special display.
Online this can be accomplished by creating “breaks” in the design. Burton’s 13 Things feature does this crazy well, dropping humorous and lifestyle images into the experience.
A bit of text/content can also break up a page to renew attention.
Shoppers tend to subconsciously buy more when a store’s crowded to be “part of the group.”
Merchandisers can create a group mentality with social proof. Feature what’s currently trending socially, for example.
During sales periods, show what’s selling out to create social urgency. Flash-sale sites like HauteLook and BeyondTheRack do this well.
One way to promote this is through real-time email that continually updates what’s sold out.
To compete with Walmarts and other discounters, groceries “class it up” by bringing in “butchers who are skilled with the knife” or in-store seminars and events, like Whole Foods’ gluten free tours and kids craft days.
To compete with the Amazons of the ‘Web and other discounters, online retailers are becoming more like publishers, peppering content and other value-adds throughout the Web and mobile experience. Live “ask an expert” tools, product knowledge/shopping tools, and visual search.
“We’ll take an 89-cent can of tuna and mark it ‘ten for $10,’ and instead of buying six cans for 89 cents, people will buy ten for $10.”
While any non-grocery retailer can do the X for $X promotion (and many do), the idea here is to leverage pricing psychology. Round numbers can affect how consumers perceive cost and value.
For example, “when something costs $100, consumers tend to rely on their feelings, whereas when something has an irregular price—such as $98.67—consumers have to use reason to compute whether it’s a good price.”
If ten-for-ten feels good, customers will like it. So experiment with 2 for $20, $3 for 50, etc. And remember, when customers are working towards reaching a free shipping or loyalty points threshold, there’s incentive to spend more than what’s rational!
While it’s erroneously believed that grocery stores put the milk, cheese and eggs in the back so you have to walk through the store to get to them, that’s just a convenient side effect of the real reason. Dairy trucks load through the back of the store and milk needs to be refrigerated right away, thus the cases are in the back to be filled as quickly as possible.
Nevertheless, “best stuff in the back” became standard retail practice, even for stores like Staples. It wasn’t until Staples’ new (at the time) CMO Shira Goodman developed its “that was easy” positioning did the most popular items get moved to the front of the store.
While sales did drop a little due to less impulse buying, it strengthened the brand, and helped Staples successfully differentiate against competitors.
Moral of the story? Borrowing design conventions from other industries is not always the right move.
Online also has an advantage of tailoring the “front of the store” to the customer. Smart use of personalization means what’s “in the back” for one customer can be “in the front” for another. Take advantage.
The ecommerce equivalent to the impulse checkout aisle is cross-selling in the cart.
But online impulse shopping has a benefit – you can A/B test and personalize the heck out of it.
We all know why supermarkets have loyalty cards — data, data, data to optimize their merchandising and send you targeted offers.
For cross-channel retailers, loyalty cards are all the more valuable for personalization. Whether a physical card or simply tied to an email address, understanding online and offline behavior helps better target the online experience. And with emerging in-store digital like iBeacon, customers can do even more with their loyalty account, such as receive targeted offers by mobile, check account balances in-store, etc.
We complain about abandoned carts and half-finished checkouts, but supermarket shoppers commonly ditch stuff in the checkout line. That’s why checkout lines have been designed narrower and narrower with less space to dump items!
That’s the same idea behind enclosed checkouts and not providing cart summaries during the checkout process.
Literally. Call it the grossery store, but shopping carts are chock full of nasty germs and fecal matter and never get wiped out.
Online, carts get wiped clean regularly — as in wiping cart contents. We know many shoppers don’t check out in a single visit. Persistent shopping cart cookies help save sales. Use ‘em or lose ‘em.
November 18, 2014 1:36 PM
The Soft Bigotry of Low Expectations (for the Web)
By CHRISTOPHER MIMS
Yesterday, my column on why the Web is dying and how we’ll miss it inspired some especially thoughtful responses. Or I should say rejoinders; just about everyone who linked to the piece disagreed with both its thesis and particulars.
They’re provocative, and in the spirit of thoughtful debate it’s worth rounding them up as a sort of snapshot of both how we’re spending time with our (increasingly mobile) devices, and what it is we think of when we say “Web.” It’s an increasingly difficult term to define.
But before I get to the roundup, here’s a point I want to emphasize, which I think no one addressed in their responses to the column: The dream of the Web becoming a place for “apps” is imperiled, and it’s what I think endangers the Web long term, as it leads to a lack of investment by developers of both Web apps and the Web browsers that run them. And that, in turn, endangers the parts of the Web that are still very functional — the parts delivering information, documents, news and certain retail experiences.
One example: Google Maps. It’s available in at least three formats: a desktop Web app, a mobile Web app and a native mobile app. The first is functional, and the second nearly unusable compared to the last. The better apps become, the more users will demand them on every device they use, mobile or not. As those who build the technology we enjoy focus on the app experience, the “Web app” experience diminishes, and with it the drive by the world’s most powerful tech companies to push the Web forward.
Eventually, this will have consequences even for sites that are mostly just delivering documents (i.e. pages), which is what the Web has always been best at.
Now to the roundup:
“The web is alive and well” — Zach Seward at Quartz
“The assumption is that… the time when people are inside native apps doesn’t count as using the web.
To see the mistake here, just look at the most popular mobile app supposedly leading this turn away from the web: Facebook. A substantial portion of Facebook content offers links to other websites. Tapping them opens a browser within the app, and there you are, on the web.
“The Web Is Dying! Wait, How Are You Reading This?” — Will Oremus at Slate
“A closer look at the numbers reveals that the Web is still growing. Comscore finds that time spent on the mobile Web grew 17 percent between June 2013 and June 2014. True, app usage grew faster—52 percent, by Comscore’s reckoning. But as Quartz’s Seward points out, “the overall pie is growing,” and mobile apps have been “largely additive to the online experience.”
“Native Apps Are Part of the Web” — John Gruber at Daring Fireball
“How has the rise of native mobile apps been anything but a renaissance of innovation? […] The pre-mobile web was largely about consumption for most people: reading articles, watching videos, buying stuff. In today’s world, everyone is creating and sharing their own content — everything from photos to videos to their thoughts and observations. Mims claims native mobile apps are “bad for innovation and the consumer” while consumers around the world are doing remarkably innovative things using native mobile apps.”
“The Web, Still Dying After All These Years” — MG Siegler at Medium
“So the problem most people seem to have is that they either can’t wrap their heads around this concept: you are using the web, you’re just using it in an app. Or they worry about the app model being destructive to the open nature of the web. Maybe. I just think it’s cyclical. AOL begets World Wide Web begets Facebook and so on.”
“Why the Web Still Matters for Writing” — Matt Mullenweg of WordPress, writing in April and quoted yesterday by Mathew Ingram of Gigaom
“There is no question that apps are here to stay, and are a superior interaction model for some uses. But the web is like water: it fills in all the gaps between things like gaming and social with exactly what any one particular user wants. […] Let the water flow to exactly where it’s needed! That’s the power of the web, and now that a computer is with us in so many more places, we need that flexibility more than ever.”
But one other issue is worth emphasizing: Many wrote that the Web is simply turning into apps, as if that were a values-neutral phenomenon. But apps don’t run in any browser, on any device, as Web services must. Handing control over what can appear on our phones is an enormous tax on developer time and companies’ resources, at best, thanks to the necessity of creating apps for every platform. At worst it’s a concession that the democratizing force that is the Web should now give way to walled gardens that threatened it in the past. That the Web won in the era of Firefox vs. Microsoft, or AOL vs. openness, is no guarantee it will win today.
Amazon.com has enlisted taxis in Los Angeles and San Francisco to deliver packages, reported the Wall Street Journal.
The online retail giant used a taxi-hailing app called Flywheel, based in Redwood City, which is competing with Uber and Lyft.
Taxis go to mini Amazon distribution centers to be crammed with packages all going to the same ZIP code. Drivers make as much as $5 per package, with taxis carrying as many as 10 packages within one hour, the Journal said.
Amazon is competing with others like eBay and Google in the same-day delivery arena, although it is unclear how many customers are willing to pay for the faster service.
Another possible reason to use taxis: The company’s delivery costs have been growing as a percent of sale, up to “8.9% last year from 7.2% in 2009,” the Journal said.
Meanwhile, Amazon has begun for the first time to extend some of the perks of its Amazon Prime service to customers who shop at other retail sites, Recode reported. The British fashion retailer, AllSaints.com, began offering Amazon Prime customers free, next-day shipping on purchases.
The deal underscores how important Amazon Prime, a $99 annual membership that gives customers two-day shipping among other perks, has become to the company.
“Prime members spend double the amount that non-Prime members do on Amazon in a year, according to research studies conducted by various industry analysts,” Recode sad.
Above: Photo by Paul Sakuma/Associated Press archives
Michelle Quinn is a Business Columnist at the San Jose Mercury News. Prior to her current role, she was the Silicon Valley correspondent at Politico covering tech policy and politics. She has also covered the tech industry at the Los Angeles Times and the San Francisco Chronicle. She was a blogger for the New York Times.
Some interesting insights that pertain to mobile commerce came out of today’s Mobile Insider Summit.
In the opening keynote, JWT Executive Creative Director Eric Weisberg said: “If you don’t have a mobile strategy in 2013, you don’t have a strategy at all.”
Though he was referring to mobile in general, this view and others can easily be applied specifically to commerce.
For example, if a retailer or brand does not have a path on how to interact with mobile shoppers in the future, they have a great chance to fall behind or totally fail.
Weisberg’s general advice to marketers was to build on what people are doing rather than interrupt what they’re doing.
This could easily apply to in-aisle shoppers. Rather than sending ‘interrupting’ ad messages, markets could send more thoughtful and useful service-oriented messages.
The hypothetical example Intel has used in the past is that when a shopper is in a store trying to decide which computer chip is best, to send a signal to illuminate each computer with a certain chip.
An example at the summit was in grocery shopping, to highlight specific products in-aisle that pertain to someone with specific dietary requirements. Rather than an irrelevant ad message at the moment, the mobile shopper could be sent advice helping them do what they are in the process of doing, in this case shopping and searching for specific foods.
At one of the roundtable sessions entitled “What Does a Mobile Strategy Look Like” yesterday, there also was more a less a consensus that a mobile strategy should be more accurately viewed as a strategy, inferring that mobile is core to any overall business strategy.
The very thoughtful participants at the summit who are grappling with the complex and nitty-gritty strategies and tactics for moving mobile forward totally get this.
But when they leave after the end of the three-day summit tomorrow, some will return to face the realities of under-resourced mobile efforts.
However, it could be worse. They could be in one of those companies that does not have a strategy at all.