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MORE FOR LESS; ONLINE SHOPPERS WANT IT ALL

Posted on March 12, 2000

      Internet users want it all - low prices, convenience, excellent service, and a wide selection. A recent survey indicates that while low prices lure online shoppers, e-retailers must differentiate themselves beyond price to keep them coming back.

      "Online shoppers want it all and they want it all for less. Low prices are an expectation among consumers today regardless of whether they shop online or 'on land' - forcing e-retailers to differentiate themselves in other ways," said Mary Brett Whitfield, Principal Consultant and Director of PricewaterhouseCoopers' E-Retail Intelligence System(R). "The most successful e-retailers will combine low price points with a site that is easy to shop, features a wide selection of merchandise, and offers superior customer service and fulfillment capabilities."

Online vs. On Land

      Consumers' perception of online prices compared to store prices is greatly influenced by shipping and handling charges. Survey results indicate that online prices are perceived to be higher than store prices when shipping and handling is part of the formula. In fact, when shipping and handling is not considered, nearly half of Internet shoppers perceive online prices as lower than store prices, however, this drops to 25 percent when shipping and handling is included.

      When online is compared to catalog, prices are perceived to be the same by slightly more than half of Internet users (shipping and handling charges excluded). Online retailers have a significant edge as only 6 percent of Internet users perceive online prices as higher than catalog prices while nearly 40 percent feel online prices are lower.

Low Prices Are Expected

      Internet users have high expectations with regard to online prices. Survey results show that over half of all Internet users expect online prices to be lower than prices in stores and catalog. The survey also indicates that pricing issues are an important consideration with regard to online shopping behavior. Between four and five out of every ten Internet users usually shop online because of price promotions, or shop online to get low prices. Low prices are clearly an incentive for online shopping. In fact, three-quarters of respondents would shop online more if prices were lower.

      Price isn't everything. How important are factors such as product brand, delivery time, selection, service and ease of use to today's online shopper?

      Survey results indicate that while it isn't everything, price is the most important consideration for online shoppers. More than half of all Internet users ranked price as the most important factor when shopping for media products, big-ticket electronics, apparel and groceries. Brand of product held a steady second place as the most important factor for online shoppers (except in media products, where product brand is not relevant). For media products, selection was the second most important factor. Ease of shopping the site, delivery time and service were seldom ranked as the most important factor for online shopping.

      While price is key, and consumers want more for less online, survey results also indicate that the majority of Internet users are unaware of shopping bots or comparison shopping sites. In fact, just 14 percent of Internet purchasers have ever used a shopping bot and only 5 percent used one during their last online purchase.

      "While pricing issues clearly dictate consumer shopping behavior, online retailers must know their core customers and carefully formulate their market positioning based on this group's wants and needs," Ms. Whitfield said.

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