What spontaneous commerce teaches online retailers and payment providers

Original author: Karen Webster
  • Transfer
The author of the material demonstrates on the example of the US market how exactly online retailers and payment providers stimulate spontaneous purchases.

In January 1950, William Applebaum published material on consumer buying habits in retail stores in the Journal of Marketing. At that time, Applebaum was the director of marketing research for Boston's Stop & Shop supermarket chain. The study itself, however, was conducted by him more than ten years before publication - between 1932 and 1938, when Applebaum was a regular employee at Kroger.

Applebaum sought to get the most complete, detailed picture of consumer habits. The observations that he managed to make remain relevant to this day, remaining central elements of modern retail marketing, as well as promotion and marketing strategies.

For example, he revealed that representatives of the urban population make purchases differently than rural residents and the assortment and supply offered in stores should take this difference into account.

Applebaumalso found that every buyer makes certain purchases under the influence of other family members, including those who do not have purchasing power. According to his findings, the ability to predict consumer buying preferences largely depends on an understanding of the profiles and interests of just those influencing family members, including children and pets.

The researcher also came to the conclusion that customer loyalty to grocery stores is a fleeting phenomenon, often depending on prices. In addition, various additional benefits, such as the availability of parking and an open credit line for regular customers, play a role in choosing a store.

He also noted the low efficiency of attempts to influence customers ’time choices for essential purchases to unload stores during peak hours. He came to the conclusion that visitors prefer to stick to their schedule and expect that the store will adapt to them, and not vice versa.

Applebaum's study also revealed that consumers tend to shop at several grocery stores. Moreover, they often buy things and essential goods in one place, and vegetables and meat and dairy products in others, even when both of them are available in the same store. According to Applebaum, this behavior threatened stores with the loss of customers, who could at any time go to customers or niche suppliers (for example, dairymen), who at that time still occupied a very important place in the retail mix.

And today, the future predicted almost 70 years ago became a reality thanks to Amazon and Whole Foods .

In the final part of his work, Applebaum briefly outlined one important unfinished business. He urged researchers to better understand the impact of advertising and product promotion on buyers ’intentions to purchase those that weren’t on the shopping list when they entered the store.

Attempts to investigate the effectiveness of in-store signs and signs, presentations or stories about products, in his opinion, were unreliable, because their methodology contained natural flaws.

And at the same time, it was impossible to ignore this field of knowledge, since it plays too important a role in increasing sales.

What is a spontaneous purchase?

Researchers give such a phenomenon as spontaneous purchase, the following classic definition: this is an unplanned decision by the consumer to purchase something shortly before making the purchase. It is generally accepted that such episodes are an important source of additional sales.

Historically, spontaneous purchases were closely associated with relatively inexpensive, but profitable goods, located next to the cash desks directly in front of consumers waiting for their turn, the average time in which was six or seven minutes per person.

Source: assemblyman-eph.blogspot.com

Another classic element that contributes to unplanned purchases is attractive stands located at the ends of the product line.

And finally, for the same purposes, visitors are offered live culinary presentations, or grocery tests, when they walk in rows in search of food. This method is especially effective from the point of view of spontaneous sales both visually and from the point of view of impact on other senses.

Scientists say that such unplanned buying decisions occur when the frontal lobe of the brain, responsible for higher-order decisions, takes the lead and decides what needs to be done.

So our frontal lobes decide that you need to throw chewing gum, candies, a chocolate bar, lip balm or a magazine that you still didn’t even think about on the cash register tape about half a minute ago during the next trip to the store.

Digging even deeper, it turns out that the frontal lobes in stores work much harder than it seems at first glance.

According to some sources, such unplanned purchases account for 1% of all grocery purchases, or $ 6 billion in annual cash costs in the case of the United States.

However, the phenomenon that I call spontaneous commerce is relevant not only for grocery stores, and it is already beginning to influence what and how consumers buy.

According to a 2013 study , the average consumer in the United States spends a little more than $ 118 a year, or about $ 115 thousand for his whole life, on emotional, unplanned purchases in advance.

In addition to the typical list of snacks, sweets and magazines, consumers, they said, buy clothes, personal hygiene items and even shoes in this way. According to a Statista survey conducted this year among consumers taking part in Black Friday, 35% of them made unplanned purchases of clothes, and 24% made unplanned purchases of games during shopping trips.

Situations when spontaneous commerce makes itself felt are often caused by the same visual stimuli that provoke the frontal lobes: placing inexpensive or profitable or easily purchased goods near frequently visited places or store outlets.

However, the changes that have occurred over many years have affected not only the range of spontaneously purchased goods: the portrait of the average spontaneous buyer has also changed

. Understanding this difference can help retailers take their additional sales figures to a new level.

What are they, spontaneous buyers? And how do they make such purchases?

Modern researchers have already divided them into 4 different groups.

The buyer of the first group , for example, usually knows what he needs to buy, but makes the final decision on the basis of price, discounts and other momentary motives. That is, he, for example, knows that he needs to buy a black sweater, but he chooses this or that style and place of purchase based on which store will offer the best deal.

The buyer of the second group recalls important goods that he regularly acquires on the spot. This is one of those visitors who sees mozzarella in the dairy section on the way to the tomatoes and recalls that the cheese is also over.

Third group- people who have a tendency to purchase something that they usually never use, and do it regardless of whether there is a need for this purchase or whether they are familiar with this type of product. For example, a woman who buys red varnish with sparkles at the checkout of a cosmetic shop, but will never use it. Researchers note that buyers in this category most often regret their purchases, as their habits are very different from the tendencies of the majority of visitors to stores.

And finally, the fourth group- consumers who, seeing the product for the first time, imagine its potential usefulness and buy it. For example, a guy who went into a building materials store behind drills for a drill and grabbed a jewelry cleaner in pursuit so that his bride could always keep her wedding ring in a proper radiant state.

Please note that all of the above examples occur in physical stores, and this is not an accident.

Approximately 80% of all spontaneous purchases occur there. Retailers use a whole range of tools, technologies and data to improve the efficiency of placing the right products in the right places, which in turn increases the likelihood that a visitor will pay attention to them.

But retailers also strive to apply their knowledge of the categories and behavior of spontaneous customers to online channels and mobile applications, and for this they use a number of approaches.

Retargeting is one of these approaches that gives retailers the opportunity to push the buyers of the 1st group to purchase things that they have already viewed. As a rule, this is achieved by offering discounts in any of their manifestations.

Recommendations - an approach that encourages consumers to think about purchasing products that they did not even consider, by reminding them that they are in good demand among other buyers.

Retailers are also well aware that more than half of consumers buy morewhen they come to pick up their orders, and very often these purchases turn out to be unplanned. Therefore, the availability of pre-order options with payment provokes the habits of the first and third groups of spontaneous buyers.

As for the spontaneous buyers of the second group, in their case the offer of the possibility of regular subscription to goods with delivery is very good .

Another important and relatively new phenomenon in the world of e-commerce is contextual shopping.. It is expressed in the ability to purchase goods directly from the Facebook news feed, Instagram ads, products with green labels in Houzz, inside messengers or directly from the blog link. Thus, a whole galaxy of ecosystems was born, allowing consumers to learn and buy something that has never been on their shopping list.

A key role in each of the described approaches is played by payments, which make it possible to simplify the purchase of these things as much as possible.

A new study in this direction emphasizes the importance of timely notification of consumers about the payment method available to them.

A few months ago, MIT professors Drazin Prelitz and Derek Danfield published a paper aimed at exploring the habits of online shoppers. Like Applebaum decades ago, they wanted to better understand the connection between payments, the buyer's intention to make a purchase, and the additional sales of retailers.

In the process, they created an Amazon-like marketplace with millions of selectable products and gave consumers access to them. Buyers participating in the study spent the most real money on these purchases.

Prelich and Danfield had already conducted a study of consumer habits, which focused on what they called the “pain of shopping,” and the ability of credit products to help make those purchases. Perhaps the very expected result of this study was the confirmation of the fact that access to a credit card rather than a debit card eliminates the “pain from the purchase”, since it reduces doubts about the availability of funds on the account for making an electronic purchase.

But the most intriguing was precisely their findings regarding spontaneous commerce and unplanned purchases.

In the course of the study, they concluded that the difference between whether the buyer makes a particular unplanned purchase or not depends on when he is shown the payment methods available to her.

If at the moment that the researchers called the “completely reversible” intention, the visitor of the online store understood that he could use a credit card for an unplanned purchase, then he made this purchase. If this method of payment was not shown before the “moment of irreversibility of the decision”, then, according to the results of the study, buyers abandoned their intention.

That is, a signal about the possibility of buying on credit using one or another method simultaneously with showing the buyer online analogs of the very pleasant little things that are placed at the cash desk or at the ends of shopping malls in ordinary stores, seriously affects the positive outcome of a spontaneous purchase.

We also came to the same observation when compiling our purchase conversion index . Our researchers found that the sooner customers found out that they had the opportunity to use the digital way to place and pay for an order, the better it affected conversion rates.

As often happens in the areas of payments, commerce and retail, everything new is a well-forgotten old with new tools and technologies added to it.

As William Applebaum noted back in 1932, understanding one who and for whom makes a particular purchase is one of the basic knowledge for any retailer. He also considered the ability to convince consumers to leave the store, making purchases that were not originally on the list, the holy grail of retail.

And almost 70 years later, we finally began to understand the role of payments in this process using the fastest growing retail channel as an example.

As it turned out, the main nuance in this process is to inform the consumer in time that he can use the payment method that eliminates the “pain from the purchase” by doing this before he has already decided that he will not make the purchase.


Also popular now: