Les Jones

E-commerce > Tuesday E-commerce Report #9

Amazon has entered the jewelry business. That's a huge market, with big players like Blue Nile and The Jewelry Network, as well as smaller, mom-and-pop e-tailers.

jwz describes troubles taking credits for online ticket sales at the DNA Lounge. The problem will be familiar to a lot of people: the customers give addresses that aren't registered with their credit card, so address verification fails.

Virginia Postrel's latest New York Times piece extols the virtues of expanded choice - rather than low prices - in online shopping.

Jakob Nielsen's latest is B2B: Help Your Fans Convince Their Bosses.

Marketing 101 - the Three-Stage Purchasing Model

This is one model of the purchasing process. It has some limitations (which we'll cover at the end), but if it applies to your business you can't afford to ignore it.

Stage 1
The person becomes aware of a product and determines whether or not they would benefit from it.

"A lot of people are buying DVD players. Why would I want to buy a DVD player if I already have a VCR?" (Customers at this stage are too clueless to actually spend money, and a good salesperson can sense it.)

What the customer searches for: general keywords such as dvd, dvd player, dvd movies

Stage 2
The person is convinced of the advantages of a product, so they need to educate themselves about costs, brands and features. Their research progresses from general guides to reviews of specific products.

What the customer says:

"How much does a DVD player cost? What's the difference between a $100 model and a $300 model? What features do I need and what's a good brand?"

What the customer searches for: general keywords, as well as more sophisticated searches such as dvd pros and cons, dvd player reviews, dvd faq

Stage 3
The person narrows their choices to one or a few brands, or a price range and a set of features, and seeks out a reseller who can shepherd them through the rest of the decision-making process and offer a competitive price.

What the customer says:

"I want a Sony or Pioneer 5-disc DVD changer with component video output and DTS sound, and I don't want to spend more than $300."

What the customer searches for: brand names (sony dvd), trademarked product names, specific model numbers or part numbers

As a reseller, you want to reach out to customers in the third stage who are seeking the brands you sell. They've decided they need the product (stage 1) and they've decided on a brand (stage 2). You just have to close the sale and convince them to buy from you. Your only competition is other resellers who carry the same brand.

Customers in stage 3 are the low-hanging fruit. They want to buy what you've got to sell. Market to people in other stages if you must, but unless you're a masochist or secretly want to fail you should make marketing to people in stage 3 your first priority at all times.

Marketing to people in stage 2 is tricky. They may choose a brand that you don't carry. The manufacturer (Sony, Pioneer, etc.) should be responsible for people in this group in order to drives sales to their resellers. I don't recommend advertising to people in stage 2, because at this stage your competition is every brand of DVD player that you don't carry. If you do decide to market to stage 2, you should use co-op funds from the manufacturer.

Marketing to people in stage 1 is an extreme long-shot. These people may never even buy a DVD player. Even manufacturers avoid this group. Sony could market DVD players to these people, but the extra sales are about as likely to go to RCA or Philips as Sony. If anything, Philips, RCA, Sony and other manufacturers should go in together and form the DVD Industry Council or some such to promote DVD purchases. At this stage your competition is whatever else the person might decide to spend their money on instead of a DVD player. As a reseller you have no business marketing at this level.

Limits to the Model

The three stage model assumes a significant cost for the item. Low-cost items like books and movies are more likely to be bought on impulse. The model also doesn't work for commodity items that are bought frequently and don't require research, and that are instead based primarily on price, convenience, or relationship selling.

The e-commerce site I manage sells enterprise network security products. These are costly items purchased by businesses and government agencies. I've found that this model describes our customer's purchasing process almost exactly.

Customers in late stage 2 and early stage 3 need help. They'll appreciate complete descriptions, FAQs, buying guides, reviews, and datasheets. They're generally more likely to buy from sites with helpful email and phone sales assistance. (But once they reach the end of stage 3 they're still likely to shop on price. Salespeople can tell you war stories of spending hours helping a customer with a complicated order or obscure question, only to have the customer get three quotes.)

Les Jones is an e-commerce manager living in Knoxville, Tennessee. He offers consulting in Web design and site promotion, and programming in JavaScript, Web+ Markup Language, and the Web+Shop shopping cart system.

Posted by lesjones