“The internet didn’t get invented on its own. Government research created the internet so that all the companies could make money off the internet. The point is, is that when we succeed, we succeed because of our individual initiative, but also because we do things together.” – Barack Obama
I was fascinated recently to observe the average online conversion rates coming from the US top 500 retailers report showing average conversion to actual sales across 15 retail categories of 3.46 per cent.
These categories ranged from apparel/accessories through to toys and hobbies. (Please call me if you wish to compare your category.) Perhaps a slightly less charitable perspective might be that 96.54 per cent of us don’t actually buy online at present on average across the year, that is, convert the research to an actual online purchase.
Perhaps the point can be made by comparison to our current physical store conversion rates where we see an average of between 15 to 25 per cent conversion (in some cases skewing significantly lower and higher depending upon individual circumstances).
Despite this marked difference in conversion, I hear that many more millions of dollars are being invested into online growth projections above the recapitalisation so urgently required in some of our physical store networks. Yet does the business case, based purely on conversions actually cut the mustard?
Candidly, in the short run, we might argue that this investment is not justified on this basis, although the broader view would be that there is no more powerful advertising and consumer touch point than online.
What is primarily relevant to the online business case, aside from acquisition cost per unit sale, is that we see that more than 80 per cent of big ticket items are pre-researched online and interestingly, according to Google, we find that currently 40 per cent of shopping related searches originate from smart phones or tablets.
So although we are still seeing comparably lower conversion, internet/online/virtual retail or whatever we may call it has a very dominant role as a predominately research and convenience tool. Number of unique visits/hits etc is interesting and important primarily for understanding the power of the brand site to attracting people to the site but these do little to explain anything about the customers actual behavior with regards to conversion to sale.
Of course this online research plays a significant role in the path of purchase to the physical store sale and therefore further supports the power of having an intergrated cross channel offer.
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