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Heads or tails? Italian or Mexican? Leno or Letterman? Every day we face decisions, big and small, that will have some
effect on our lives. We choose a spouse, we choose a college or we simply go shopping at the mall. As the world evolves
and technology makes it smaller and smaller, our options begin to multiply. As retailers, it’s important to take notice of
this phenomenon and understand how it affects our customers’ shopping behavior and—ultimately—our business.
The Paradox of Choice
In his book, The Paradox of Choice, Professor Barry Schwartz examines the concept of “choice overload” and how facing
an overwhelming number of options actually hinders and can even paralyze our ability to make a decision. He discusses
human nature and the level of risk we’re willing to take in making choices. The fear of making the wrong choice is very
real. What might you be losing out on? What other choice might have been better? At some point, you might be better
off just waiting and not making a decision at all—at least you won’t regret it later.
It’s this basic human fear of regret that we as retailers need to overcome. We need to give our customers a sense of
security while they’re shopping and make them feel comfortable making a purchase—and make them confident that
they won’t regret it.
Looking at what influences shopping decisions—family, friends, product-information sources, expert advice, salespeople
and more—it’s clear that there is a gap in the online world. As online merchants, taking on the role of “influencer” is
challenging at best. We aren’t necessarily privy to our customers’ lives and budgets, so we should focus on helping them
identify products that meet their needs, evaluate these products and ultimately choose. In the absence of human contact,
how can we do this? One way is to develop “silent salespeople” on our sites—decision-making tools that take our
customers from browsing to buying. As we surveyed leading web sites and their e-commerce practices,
we identified five winners: |
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These tools suit the needs of three
types of online shoppers:
• Peer-influenced “I want to leverage the wisdom of my peers and the community of shoppers online who know
what they’re talking about and are honest.”
(Customer Reviews and Top Sellers)
• Self-assured “I want to do the research myself.” (Side-by-Side Comparisons and Parametric Navigation)
• Retailer-influenced “I want you to do it for me: what’s my best option?” (Recommendations)
From everything we’ve experienced and read, our top five tools have increased conversion across many industries
and many companies and are rated by consumers as highly valuable. Of course, not all shopping tools will work in every
category. Attribute-driven products are more easily sorted and make more sense to compare side by side.
Whereas purchase decisions on style-driven products, like apparel, might be influenced more by seeing what others
are buying—or seeing what merchants recommend. It’s important to take a close look at your business, your target
customers and your assortment to determine which decision tools are right for you.
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The idea of community and peer interaction online continues to grow at a rapid speed. Blogs, forums and other social
networks are popping up all over. People want to hear what others are saying. Customer reviews are an interesting
(yet simple) implementation of this idea. An idea that is by no means new! We’ve been reading Consumer Reports for
years and tuning in for reviews of the latest blockbuster movie or book. We learn to trust our favorite sources and tend
to go back to them over and over.
So why not take advantage of this for your brand? Provide your customers with unfiltered, unbiased feedback from
people who actually own products, and your site will become the trusted source for information. 78% of customers surveyed
in a BuySafe study said they were more likely to trust sites that publish reviews, and results have shown business to
improve as well. In one case study, J.C. Whitney.com, an online automotive marketer, reported that reviews had a
profound impact on sales, showing up to a 16% lift in revenue for products with good reviews (5 out of 5). And most
reviews are good—Forrester evaluated 4,000 reviews on Amazon.com and found that more than 80% were actually
positive and the 20% that weren’t were still seen as very helpful to their customers.
So what’s the downside? Bad reviews do have some minuses, including potentially damaging sensitive vendor
relationships and causing low-rated products to sit on the shelf. But the good far outweighs the bad, as Circuit City
found with customer reviews receiving top scores on customer satisfaction surveys. And vendor relationships can actually
improve: JC Whitney.com reported that over time, they were able to identify why the reviews were poor and address
issues like missing parts or defective functionality with their vendors. Quality control coming straight from customers! |
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Customer reviews are currently available on only about 25% of retail sites, but customers are actively seeking them out.
According to Forrester data, e-commerce sites that offer product reviews are seeing 76% of their shoppers using them.
And they continue to be at the top of customers’ “favorite features” surveys. GSI partner, Toys “R” Us, presents ratings
prominently on product detail pages, with links to read reviews associated with each product.
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Site navigation is a broad topic that deserves a deeper examination, but merits a mention here in the context of
product parameters. Shopping online or offline, customers try to create buckets of information—lumping together
similar objects as they narrow down options. Parametric Navigation is the online way to help them do that by allowing
refinement by product attributes. Retail sites have done this for years—for example “men’s versus women’s” apparel.
We build taxonomies that bunch products together the way we see it makes the most sense.
But a true parametric experience allows a deeper examination of products and puts the choices into the hands of the
customers—they can pick and choose which attributes they want in a product and then see only products that match
their choices. GSI partner, RadioShack spoke last year at a GSI summit about their implementation, and they shared
that 63% of customers use the tool on RadioShack’s category pages vs. 37% opting to “see all” products.
And Overstock.com shows a great presentation in its softer categories, for example, bedding and dresses.
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A quick hit and a big win, especially for spec-intense categories, comparisons allow customers to look at their choices
side by side and see how the attributes line up. It’s an easy way for shoppers to see what they’re getting and what
they’re giving up as they choose between products.
In an Internet Retailer ’07 study, Williams Group, an e-commerce consultancy, found that 64% of online shoppers look
to product comparisons to aid in their purchase decisions. And the ever-growing landscape of comparison-shopping
sites like Pricegrabber.com and Shopping.com backs that up. These companies are realizing that customers aren’t just
comparing for price.
They want to see specs and what the subtle differences are between similar products that might suit their needs.
PriceGrabber.com reports that “…eight years ago, you could see all the tech products and gadgets were always pretty
far ahead …. One of the interesting trends we’ve seen is the shift in the amount of users becoming more comfortable
with the soft (home and apparel) channels.”
Comparison tools are becoming more and more popular with our partners. And we are seeing good results across the
board, with GSI partners showing conversion increases that range from 50% to more than 200% among customers
using the comparison tools. Customers who are comparing are ripe for the purchase—they already know the types
of product they want! They just need some help figuring out the perfect one. Take a look at how GSI partner, Zales,
makes great use of the tool by prominently presenting comparison functionality and giving customers the option
to print the page.
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Providing a list of what’s selling best on your site is an easy way to get into the “peer pressure” game. Customers want
to know what other people are buying. As opposed to choosing what’s hot for business reasons—margin, inventory,
etc.— merchants should be showing what’s actually selling. No one wants to miss out on a hot product that’s flying
off the shelves.
And the benefits aren’t just for the customer: smart business decisions can be made by knowing on a daily basis
what’s selling best on your site. Plus, shopping sites like DealTime.com and coupon hunters like Fatwallet.com’s
customers take note when items are selling extremely well. The effect can be viral. It’s a good way to stir up some
buzz on your site and create loyal customers who want to come back and see what’s hot today or sort the products by
popularity. Plus, you can take advantage of RSS technology and send out feeds to subscribing customers to give them a
reason to return.
We’re seeing more and more of these “quick-look” top-seller lists showing up in easy-to-find places—it’s not just
important to have the feature, but to make it easy to find and use. Circuit City is even showing them up front
on their home page! |
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Across almost all sites, we see product and category recommendations. They come in the form of “new
arrivals” and “featured items.” Forrester data estimates that between 10% and 30% of online sales come
from products that were suggested. So getting this right is very important.
Manually generated recommendations are widespread. Across categories we see merchants highlighting
products and featuring “hot” items. It’s the online way of building an end cap or window display, and
getting customers to notice products in our store. Interestingly, they really do notice. It’s our culture now
to be “in the know.” Things as simple as what’s new are a definite draw for customers surfing the web—
a phenomenon that we’ve seen often in web site usability testing. It’s important to choose your product
recommendations carefully and present them in a way that engages customers quickly.
Computer-generated recommendations (also known as algorithms) are a little trickier. Web site technologies
that monitor customers’ click habits offer up samples of what customers might like. Take a look at Netflix.
How do they know you like romantic comedies? You may find it’s handy, but others find it bothersome.
For example, if you rented one sappy movie — you may not want sappy flicks offered up to you every time
you shop! But “collaborative filtering,” as it’s been called to date, is evolving. Several companies are working
diligently to perfect this technology. With these new recommendation engines, the hope is that customers will no
longer be plagued by irrelevant recommendations.
At GSI, we’re using recommendation technology in the shopping cart on sites like Dick’s Sporting Goods
(add-ons and cross-sells), and we’re assessing other options in the product roadmap personalization initiative.
Coming soon! |
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Professor Schwartz is right: too much choice is a paradox. In the book, he ventures out to buy a pair of jeans and is
bewildered to find his options have multiplied drastically since his last purchase. He isn’t sure why he needs to know
his body type (baggy, loose or low-rise) to get a 32 regular. Luckily, he had a great salesperson to explain it all to him,
and he went home happy with the right pair of jeans.
Online retailers need to find that great salesperson, whether it means implementing some simple tools or delving into
more complex web 2.0 technologies like decision wizards. We need to find ways to create a sense of security for our
customers and become as trustworthy as friends or seasoned salespeople.
Here’s your topline to-do: Take a few minutes to evaluate the decision tools that you provide to your consumers. If you
have all five that we’ve listed, congratulations, you’re ahead of the curve! If you don’t, ask yourself if you should?
We’re here to help. Reach out to your GSI online business manager—or any of us—and we’ll assess your business needs
and help you determine which tools you need, when you need them and how you can get them implemented to start
improving your site’s topline! |
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Sources
1. Sucharita Mulpuru, (with Carrie A. Johnson, Peter Hult) “How Damaging Are Negative Customer Reviews?” Forrester, January 10, 2007
2. Maris Daugherty, “Using Trends to Influence Purchasing Decisions,” Williams Group Internet Retailer Conference 2007
3. Decker, Sam, CMO Bazaar Voice, “78% of Online Consumers Have More Trust for Brands with Reviews” Bazaarblog.com, June 26, 2007.
4. “Five Immediate Opportunities for eCommerce Improvement,” Forrester, May 11, 2007
5. Brohan, Mark, “State of the Industry: Digging Deeper,” Internet Retailer, July 2007.
6. “Comparison Shopping Sites Expand and Narrow,” Internet Retailer, July 2007
7. Shaw, Hollie, “Converting Retail Browsers into Buyers,” National Post, June 2007
8. Robertson, Geoffrey, VP Ecommerce, JC Whitney, “ Product Reviews: The Power of Opinion,” Internet Retailer
9. GSI Business Planning and Analysis: Stats based on data from clickstream analysis, July 2007
10. Karen S. Howard, Mgr. Online User Experience, Home Depot Direct, “Utilizing Rich Media To Drive Conversion” October, 2006
11. Patti Freeman Evans, Jupiter Research Analyst “ Retail Marketing: Driving Sales Through Consumer-Created Content,” August 2006 |
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If you have any questions, suggestions, or topics that you'd like us to research,
please contact Fiona at diasf@gsicommerce.com.
Copyright © 2008 GSI Commerce. All Rights Reserved.
GSI Commerce® and the gsi commerce® logo are trademarks, service marks,
registered trademarks, or registered service marks of GSI Commerce, Inc. or its subsidiaries or affiliates.
Other trademarks contained in this presentation are the property of the respective
companies with which they are associated.
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