Logging into Net-Savvy Shoppers

The convenience of instant access to products sold over the Internet is attracting tens of millions of people to online stores every month. With its own brand of "bargain basement", the Internet is attracting all kinds of opportunists - good and bad - to take advantage of the multi-billion dollar online retail industry. Discerning the con artist from the real merchant is one of the biggest challenges facing today's online shopper. Confronting this, online shoppers are getting savvier in their Internet habits and they're demanding more from their online experience.

The online shopping market

Despite continued fears over rogue merchants, as well as identity and credit card theft, consumers still flock to the Internet to research and buy products. There's a gamut of research indicating the rise of online shopping. According to eMarketer, 85% of online shoppers will also be online buyers this year. JupiterResearch reports US online retail sales will grow by 16 percent in 2007 to reach $116 billion and over the next five years reach $171 billion. And it's not just the young net-savvy generation that's involved. A joint study by market researchers ThirdAge Inc and JWT Boom, US Third Agers - adults aged 45+ - like to shop online. In fact, 73% of respondents put shopping as their top online activity.

Millions also use the Internet to research products before they go to the local stores. A recent study by Accenture (May 2007) states 68% of survey respondents compare prices online. In January 2005, a survey by ShopLocal.com reports 88.7% of consumers regularly or occasionally examine products on the Internet before going to a local retailer to buy. Armed with product information found on the Internet, informed consumers are pushing local merchants to new levels of customer service and competitive pricing. That, however, is a topic for another time.

Getting back to the topic of the day. Let's take a look at those savvy online shoppers. What trends are they setting? Where do they go online to research the best products/services and best prices? Who do they trust online?

It's so easy

From the "box" in the corner of your living room you can now visit hundreds of thousands of stores, any time day or night, to compare products and prices. Just sit back and think about that for a moment. This kind of research isn't even remotely feasible in the brick and mortar world. Talk about power to the consumer.

The problem facing today's online shopper is, how do you find the online stores that have the product you are looking for? The majority of consumers are familiar with search engines, like google and yahoo. Most of that majority will use these search engines to find products online. Search engines accounted for one quarter of all visits to US shopping and classifieds Web sites in May 2007, according to Hitwise data, of which Google accounted for 15.6% of the visits. The issue with these engines is that they search for every web site that mentions the product in any way, shape and form - often bringing up millions of information sites, blogs, organizations and merchants - among those bogus and real.

And therein lies the problem. There really is too much "junk" on the Internet for a shopper to effectively search for products using a general search engine. Along comes a new category of search engines that focus on product search, the comparison shopping sites. The earliest of these sites were created in the mid-90s for general purpose shopping and the biggest, among them shopping.com, shopzilla.com and pricegrabber.com, attract tens of millions of visitors every month. Savvy shoppers are increasingly using these product only search engines to easily find the merchants that will sell a specific product online.

Setting the trend among today's savvy online shoppers are those that use a growing group of niche comparison shopping sites, such as HealthPricer for health products and kayak.com for travel. A trend set by giants Expedia and CNet, these are sites that provide the specific tools and product information shoppers need to make that key buying decision. We'll talk more about this later.

Who's afraid of the big bad wolf?

Trust on the Internet is a concern. Despite their best efforts to collect merchants and products in one place, most general comparison shopping sites struggle with two areas of worry to consumers - that of product naming conventions and denying access for bogus merchants to their sites.

There are no standardized naming conventions for products on the Internet and as a consequence merchants designate product names they deem appropriate. General comparison shopping sites either receive data feeds or crawl merchant sites for product data and transfer exact naming conventions used by merchants to their site. The result: shoppers are confused by up to 20 product names for a given search and have difficulty comparing prices.

The more serious concern for consumers is the "big bad wolf" lurking on the Internet. Bogus and illegal sellers are prowling the Internet looking for their next victims. Search engines, including general and general purpose comparison shopping sites, operate to categorize information for people. They cannot guarantee that the information and merchants displayed on their site are real or not.

So how do today's online shoppers safeguard themselves from bogus operators? They go to trusted sources, such as consumer review sites, niche comparison shopping sites that only represent trusted merchants and they trust each other - there's a growing trend of shopping traffic from social networking sites.

According to HitWise, the top 20 social networking web site grew as a source of traffic for shopping and classifieds web sites, accounting for 3.6% of upstream visits in May 2007 - an increase of 86.7% since May 2006. In the wonderful world of Web 2.0, shoppers are taking their consumer power online, sharing, reading and trusting each other's buying experiences.

People read reviews. According to Forrester, 71% of online shoppers read reviews; making it the most widely read consumer-generated content. Marketing Experiments Journal conduct a test of product conversion with and without product ratings by customers. Conversions nearly doubled, going from 0.44% to 1.04% after the same product displayed a five-star rating.

In the niche comparison shopping field, where consumers are looking for specific product information and merchants, trust also plays a larger role. In the field of health shopping for example, there's a growing trend of sites dedicated to delivering safe product comparisons from trusted merchants. vimo.com, PharmacyChecker.com and HealthPricer come to mind. With 55 million people in the US searching for health information online in the first quarter of 2007 alone (source: comScore), more and more are looking for health shopping solutions as well. In May 2007, HealthPricer.com received 284,000 visitors to its health products only comparison shopping site from shoppers looking to buy prescription and OTC drugs, supplements, contact lenses and beauty products.

Turning up the heat

In the competitive online retail world, everyone's turning up the heat. Online retailers and shopping sites are more concerned about getting savvy shoppers to return to their sites versus winning new customers. So they employ new technologies to enhance their sites. Today's savvy online shoppers are fickle, continually searching for the best avenues to look for the next feature that will help them more easily find the product or service they want.

One could say that savvy online shoppers are turning from occasional buyers into intention buyers. They will use the Internet to the best of their abilities to find the best time to buy a product - and they're willing to wait. This is particularly true in industries where prices fluctuate. The best shopping sites in these industries understand the demands of intention buyers and maximize their site functionalities to include flexible search terms and price alerts. Kayak.com with its flexible date search and HealthPricer with its flexible product dashboard and e-mail price alerts come to mind.

Net-savvy shoppers are more cautious about the sources they use for shopping online, looking to reviews and recommendations, as well as flexible search options that help them find the merchants that will deliver the products and services they want. For online retailers it's a matter of meeting the demands of these shoppers and partnering with the online sources consumers trust.

Asa Zanatta is a freelance writer based in Vancouver, BC. You can reach her at azanatta at spiritcommunications.ca