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Bentley College E-Commerce Index finds the Train has Left the Station
December 14, 1999
WALTHAM, MA- A new, independent benchmark survey by Bentley College reveals that despite cutting-edge technology and millions of dollars thrown into radical advertising campaigns, e-retailers this holiday shopping season are faced with a traditional marketing challenge: first to market is an overwhelming advantage.
The Bentley College E-Commerce Index, a benchmark survey on why people do or do not shop online, focuses on buyer behavior and consumer satisfaction with web shopping. Conducted by Bentley College, the largest business school in New England, the survey is the first in a series planned to track changes in online buying behavior. Quarterly updates will gauge trends in consumer satisfaction, barriers to trial, repeat purchase patterns, and how the heavy users of online shopping differ from the average buyer.
"The train has left the station," said Perry Lowe, professor of Marketing at Bentley College, who conducted the benchmark research using facilities in Bentley's new Marketing Technologies Showcase. "This holiday season all the new entries to the dot.com world of retailing, and the millions of dollars being spent on promoting their sites, are designed to attract first-time web shoppers.
"This strategy is successful, more people are shopping on the web. But its not benefiting the new entrants," said Lowe. "The winning approach: be an early entrant; own a product category, like CDs or books; and then broaden the product line. Success stories in e-commerce belong to those that have made a pre-emptive strike. Like ebay owning auctions and amazon.com and Barnes & Noble owning books. Consumers reduce risk by sticking with what's familiar. This enables a virtual retailer to establish credibility in one category and then broaden their product lines to establish consumers' brand loyalty. The bottom line in e-commerce this holiday season is it's too little, too late, for all the last minute entrants even though they launched efforts at the right time, the busiest shopping months of the year." Major findings, based on 1999 holiday shopping attitudes and usage, include:
Only a small percentage of total shoppers will purchase holiday items exclusively online, but half of those virtual shoppers will buy "half to most" of their total purchases over the web.
Customer satisfaction with online shopping is high. Prior barriers to trial such as credit card fraud no longer exist. Repeat purchase and depth of repeat purchase behavior indicates substantial consumer per capita volume opportunities in both current and future categories of purchases. First mover advantage and the emergence of brand/site loyalty are becoming the top two strategic marketing issues in web retailing. New retail web sites, even those heavily promoted and advertised this holiday season, may be too late to attract a meaningful number of shoppers given the "noise level" in the marketplace.
Convenience, product choices, and price are the priority benefits for consumers shopping online. Customer service was considered less important.
Initial trial for web purchases is based on ease of purchase and assortment. Online retailers must provide sufficient product choices and seamless navigation to switch buyers away from catalogues and malls. Although price may be an important stimulant in bricks and mortar purchases, consumers are willing to trade "time saved" for "lowest price" online. Repeat purchase behavior is likely to change consumer priorities, with importance of customer service increasing. Heavy users of virtual shopping are not price motivated. Although a distinct segment of "bargain shoppers" does exist on the web, heavy users favor convenience over all other benefits.
Although web retailers are focusing on first-time buyers rather than competition amongst themselves, clear preferences for one web site over another has emerged and consumer reasons for these choices has been expressed.
Of the 11 web sites analyzed in the Bentley E-Commerce Index, three sites were overall winners and one site was clearly preferred to all of the others during December 1999. Consumer interest in rewards programs and alternative order entry techniques was low. "Halo effects" in the areas of site security, site attractiveness, one-stop shopping, and independent product reviews have emerged.
Findings are based on the responses of more than 150 men and women during the second week in December. All are college graduates working as professionals primarily in New England. All respondents qualified as e-mail users with credit cards or debit cards and 85% reported household incomes of $50,000 or more. Among them, 70% have separate e-mail addresses at home and at work. Future surveys for the Bentley College E-Commerce Index will cover an international sample and will reflect future demographic and psychographic trends in online shoppers.
BENTLEY UNIVERSITY is one of the nation’s leading business schools, dedicated to preparing a new kind of business leader – one with the deep technical skills, broad global perspective, and high ethical standards required to make a difference in an ever-changing world. Our rich, diverse arts and sciences program, combined with an advanced business curriculum, prepares informed professionals who make an impact in their chosen fields. Located on a classic New England campus minutes from Boston, Bentley is a dynamic community of leaders, scholars and creative thinkers. The Graduate School emphasizes the impact of technology on business practice, in offerings that include MBA and Master of Science programs, PhD programs in accountancy and in business, and customized executive education programs. The university enrolls approximately 4,100 full-time undergraduate, 140 adult part-time undergraduate, 1,430 graduate, and 43 doctoral students. Bentley is accredited by the New England Association of Schools and Colleges; AACSB International – The Association to Advance Collegiate Schools of Business; and the European Quality Improvement System, which benchmarks quality in management and business education. For more information, please visit www.bentley.edu.
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