What spontaneous commerce teaches online retailers and payment providers
The author of the material demonstrates on the example of the US market exactly how online retailers and payment providers stimulate spontaneous purchases.
In January 1950, William Applebaum published in the Journal of Marketing a material about consumer spending habits in retail stores. At that time, Applebaum was the director of marketing research for the Boston supermarket chain Stop & Shop. The study itself, however, was conducted by him more than ten years before publication — in the period from 1932 to 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, while remaining central elements of modern retail marketing, as well as promotion and marketing strategies.
For example, he found that representatives of the urban population make purchases differently than the villagers and the assortment and supply in stores should take this difference into account.
Applebaum also found out that every buyer makes certain acquisitions under the influence of other family members, including those who do not have purchasing power. According to his conclusions, the ability to predict consumer preferences of consumers largely depends on understanding the profiles and interests of just such influencing members of the family, including children and pets.
The researcher also came to the conclusion that customer loyalty to groceries is a fleeting phenomenon, often dependent on prices. In addition, a variety of additional benefits, such as parking and an open credit line for regular customers, play a certain role in choosing a store.
He also noted the low effectiveness of attempts to influence the choice of buyers of time for making essential purchases with the aim of unloading stores in peak hours. He concluded that visitors prefer to stick to their schedule and expect the store to adapt to them, and not vice versa.
Applebaum’s research also revealed that consumers tend to shop at several grocery stores. At the same time, they often buy things and essential goods in the same places, and vegetables and meat and dairy products in others, even when both are available in the same store. According to Applebaum, this behavior threatened the stores with the loss of customers who could at any time leave to customers or niche suppliers (for example, milk jugs), who at that time still occupied a very important place in the retail mix.
And now 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 identified one important unfinished business. He urged researchers to better understand the impact of advertising and product promotion on the buyers' intention to purchase those that are not on the shopping list at the time they enter the store.
Attempts to investigate the effectiveness of in-store signs and indexes, presentations or stories about goods, in his opinion, were unreliable, since their methodology contained natural flaws.
And at the same time, it was impossible to ignore this area of ​​knowledge, since it plays an important role in increasing sales.
Researchers give such a phenomenon as a spontaneous purchase the following classical definition: it is an unplanned decision of the consumer to purchase something shortly before making the purchase itself. It is believed that such episodes are an important source of additional sales.
Historically, spontaneous purchases were closely associated with relatively inexpensive but profitable goods located near cash registers directly in front of consumers who waited their turn, the average time spent in which was six or seven minutes per person.
Source: assemblyman-eph.blogspot.com
Another classic element that contributes to making unplanned purchases is attractive stands located at the ends of the product lines.
And finally, for the same purpose, live culinary presentations, or food samples, are offered to visitors when they walk through the ranks in search of food. This method is especially effective in terms of spontaneous sales, both visually and in terms of the impact on other senses.
Scientists say that such unplanned purchasing decisions occur when the frontal lobe of the brain responsible for decisions of a higher order takes the initiative and decides that this is the way to go.
So our frontal lobes decide that you need to throw gum, candy, chocolate bar, lip balm or magazine, which you still half a minute ago did not even think about the cash register during the next trip to the store.
Still digging deeper, it turns out that the frontal lobes in the stores work much harder than it seems at first glance.
Such unplanned purchases, according to some sources, account for 1% of all grocery purchases, or $ 6 billion in annual expenditures in monetary terms 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 study conducted in 2013, the average consumer in the United States spends just over $ 118 a year, or about $ 115,000 dollars in his entire life, on emotional, unplanned pre-purchases.
In addition to the typical list of snacks, sweets and magazines, consumers, they said, thus buy clothes, personal hygiene items and even shoes. According to the Statista survey conducted this year among consumers who took part on Black Friday, 35% of them made unplanned apparel purchases, 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 work of the frontal lobes: the placement of inexpensive or profitable or easily purchased goods near the frequently visited places or cash registers of stores.
However, the changes that have occurred over many years affected not only the range of spontaneously purchased goods: the portrait of the average spontaneous buyer was different.
And understanding this difference can help retailers to bring their additional sales figures to a new level.
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 based on the price, discounts and other momentary motives. That is, he, for example, knows that he needs to buy a black sweater, but chooses one style or another and the place of purchase based on which store offers the best deal.
The buyer of the second group recalls important goods that he regularly purchased on site. This is one of those visitors who sees mozzarella in the dairy section on the way to the tomatoes and remembers that the cheese is also over.
The third group consists of people who have a tendency to acquire something that they have never used before, and who do it regardless of whether there is a need for this purchase or whether they are familiar with this type of goods. For example, a woman who buys a red lacquer with sparkles at the cash register of a cosmetic shop, but will never use it like that. The researchers note that buyers in this category often regret their purchases, because their habits are very different from the inclinations of the majority of visitors to the stores.
And finally, the fourth group - consumers who, seeing the product for the first time, imagine its potential utility and buy it. For example, the guy who came to the building materials store for drills for a drill and picked up a jewelry cleaner after him so that his bride could always keep her wedding ring in a proper radiant condition.
Please note that all the above examples occur in physical stores, and this is not an accident.
Approximately 80% of all spontaneous purchases take place 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 the visitor will pay attention to them.
But retailers are also striving to apply their knowledge about 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 such approaches, which gives retailers the opportunity to push 1st group buyers to acquire things that they have already seen. As a rule, this is achieved by offering discounts in any form.
Recommendations - an approach that encourages consumers to think about purchasing goods that they did not even consider, by reminding them that they are in good demand from other buyers.
Retailers are also well aware that more than half of consumers buy more when they come to pick up their orders, and very often these purchases turn out to be unplanned. Therefore, the presence of the option of pre-order 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 a regular subscription for goods with delivery shows itself very well.
Another important and relatively new phenomenon in the e-commerce world is contextual shopping . It is expressed in the ability to purchase goods directly from Facebook news feed, advertising on Instagram, products with green labels in Houzz, inside instant messengers or directly from a link in a blog. Thus, a whole galaxy of ecosystems came into being, allowing consumers to learn and buy something that was never on their shopping list.
The 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 available method of payment.
A few months ago, MIT professors Drazen Prelitz and Derek Dunfield published a paper aimed at exploring the habits of online shoppers. Like Applebaum a decade ago, they wanted to better understand the connection between payments, the buyer's intention to make a purchase, and additional sales by retailers.
In the course of their work, they created an Amazon-like marketplace with millions of selectable products and gave consumers access to them. The buyers participating in the research spent their own real money on these purchases.
Prelich and Danfield have previously conducted a study aimed at studying consumer habits, and devoted to the phenomenon, which they called the "pain of buying", and the ability of credit products to help in making these purchases. Probably, the quite expected result of this study was the confirmation of the fact that access to credit, rather than debit card eliminates the “pain of purchase”, since it reduces doubts about the availability of the necessary funds in the account for making an electronic purchase.
But the most intriguing were precisely their findings regarding spontaneous commerce and unplanned purchases.
During the study, they concluded that the difference between whether the buyer will make this or that unplanned purchase or not depends on when the available methods of payment are shown to him.
If at the time that the researchers called the “fully reversible” intention, the visitor of the online store knew that he could use a credit card for an unplanned purchase, then he made this purchase. If this method of payment was not shown until “the moment of irreversibility of the decision made”, then, according to the results of the study, the buyers refused their intention.
That is, a signal about the possibility of buying on credit using one method or another simultaneously with showing the buyer online analogues of the most pleasant little things that are placed at the checkout or at the ends of the malls in regular stores seriously affects the positive outcome of a spontaneous purchase.
We also came to the same observation during the compilation of our purchase conversion index . Our researchers found that the earlier the customers learned that they had the opportunity to use the digital method of processing and paying for the order, the better it would affect the conversion rates.
As is often the case in the areas of payments, commerce and retail sales, everything new is well forgotten old with new tools and technologies added to it.
As William Applebaum noted back in 1932, an understanding of who makes this or that purchase and for whom is one of the basic knowledge for any retailer. He also considered the ability to convince consumers to leave the store by making purchases, which were not originally on the list, as the holy grail of retail.
And almost 70 years later, we finally began to understand the role of payments in this process on the example of the fastest growing retail sales channel.
As it turned out, the main point in this process is to inform the consumer in time that he can use the payment method that eliminates the “pain of the purchase” by doing this before he has already decided that he will not make the purchase.
In January 1950, William Applebaum published in the Journal of Marketing a material about consumer spending habits in retail stores. At that time, Applebaum was the director of marketing research for the Boston supermarket chain Stop & Shop. The study itself, however, was conducted by him more than ten years before publication — in the period from 1932 to 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, while remaining central elements of modern retail marketing, as well as promotion and marketing strategies.
For example, he found that representatives of the urban population make purchases differently than the villagers and the assortment and supply in stores should take this difference into account.
Applebaum also found out that every buyer makes certain acquisitions under the influence of other family members, including those who do not have purchasing power. According to his conclusions, the ability to predict consumer preferences of consumers largely depends on understanding the profiles and interests of just such influencing members of the family, including children and pets.
The researcher also came to the conclusion that customer loyalty to groceries is a fleeting phenomenon, often dependent on prices. In addition, a variety of additional benefits, such as parking and an open credit line for regular customers, play a certain role in choosing a store.
He also noted the low effectiveness of attempts to influence the choice of buyers of time for making essential purchases with the aim of unloading stores in peak hours. He concluded that visitors prefer to stick to their schedule and expect the store to adapt to them, and not vice versa.
Applebaum’s research also revealed that consumers tend to shop at several grocery stores. At the same time, they often buy things and essential goods in the same places, and vegetables and meat and dairy products in others, even when both are available in the same store. According to Applebaum, this behavior threatened the stores with the loss of customers who could at any time leave to customers or niche suppliers (for example, milk jugs), who at that time still occupied a very important place in the retail mix.
And now 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 identified one important unfinished business. He urged researchers to better understand the impact of advertising and product promotion on the buyers' intention to purchase those that are not on the shopping list at the time they enter the store.
Attempts to investigate the effectiveness of in-store signs and indexes, presentations or stories about goods, in his opinion, were unreliable, since their methodology contained natural flaws.
And at the same time, it was impossible to ignore this area of ​​knowledge, since it plays an important role in increasing sales.
What is spontaneous buying?
Researchers give such a phenomenon as a spontaneous purchase the following classical definition: it is an unplanned decision of the consumer to purchase something shortly before making the purchase itself. It is believed that such episodes are an important source of additional sales.
Historically, spontaneous purchases were closely associated with relatively inexpensive but profitable goods located near cash registers directly in front of consumers who waited their turn, the average time spent in which was six or seven minutes per person.
Source: assemblyman-eph.blogspot.com
Another classic element that contributes to making unplanned purchases is attractive stands located at the ends of the product lines.
And finally, for the same purpose, live culinary presentations, or food samples, are offered to visitors when they walk through the ranks in search of food. This method is especially effective in terms of spontaneous sales, both visually and in terms of the impact on other senses.
Scientists say that such unplanned purchasing decisions occur when the frontal lobe of the brain responsible for decisions of a higher order takes the initiative and decides that this is the way to go.
So our frontal lobes decide that you need to throw gum, candy, chocolate bar, lip balm or magazine, which you still half a minute ago did not even think about the cash register during the next trip to the store.
Still digging deeper, it turns out that the frontal lobes in the stores work much harder than it seems at first glance.
Such unplanned purchases, according to some sources, account for 1% of all grocery purchases, or $ 6 billion in annual expenditures in monetary terms 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 study conducted in 2013, the average consumer in the United States spends just over $ 118 a year, or about $ 115,000 dollars in his entire life, on emotional, unplanned pre-purchases.
In addition to the typical list of snacks, sweets and magazines, consumers, they said, thus buy clothes, personal hygiene items and even shoes. According to the Statista survey conducted this year among consumers who took part on Black Friday, 35% of them made unplanned apparel purchases, 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 work of the frontal lobes: the placement of inexpensive or profitable or easily purchased goods near the frequently visited places or cash registers of stores.
However, the changes that have occurred over many years affected not only the range of spontaneously purchased goods: the portrait of the average spontaneous buyer was different.
And understanding this difference can help retailers to bring 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 based on the price, discounts and other momentary motives. That is, he, for example, knows that he needs to buy a black sweater, but chooses one style or another and the place of purchase based on which store offers the best deal.
The buyer of the second group recalls important goods that he regularly purchased on site. This is one of those visitors who sees mozzarella in the dairy section on the way to the tomatoes and remembers that the cheese is also over.
The third group consists of people who have a tendency to acquire something that they have never used before, and who do it regardless of whether there is a need for this purchase or whether they are familiar with this type of goods. For example, a woman who buys a red lacquer with sparkles at the cash register of a cosmetic shop, but will never use it like that. The researchers note that buyers in this category often regret their purchases, because their habits are very different from the inclinations of the majority of visitors to the stores.
And finally, the fourth group - consumers who, seeing the product for the first time, imagine its potential utility and buy it. For example, the guy who came to the building materials store for drills for a drill and picked up a jewelry cleaner after him so that his bride could always keep her wedding ring in a proper radiant condition.
Please note that all the above examples occur in physical stores, and this is not an accident.
Approximately 80% of all spontaneous purchases take place 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 the visitor will pay attention to them.
But retailers are also striving to apply their knowledge about 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 such approaches, which gives retailers the opportunity to push 1st group buyers to acquire things that they have already seen. As a rule, this is achieved by offering discounts in any form.
Recommendations - an approach that encourages consumers to think about purchasing goods that they did not even consider, by reminding them that they are in good demand from other buyers.
Retailers are also well aware that more than half of consumers buy more when they come to pick up their orders, and very often these purchases turn out to be unplanned. Therefore, the presence of the option of pre-order 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 a regular subscription for goods with delivery shows itself very well.
Another important and relatively new phenomenon in the e-commerce world is contextual shopping . It is expressed in the ability to purchase goods directly from Facebook news feed, advertising on Instagram, products with green labels in Houzz, inside instant messengers or directly from a link in a blog. Thus, a whole galaxy of ecosystems came into being, allowing consumers to learn and buy something that was never on their shopping list.
The 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 available method of payment.
A few months ago, MIT professors Drazen Prelitz and Derek Dunfield published a paper aimed at exploring the habits of online shoppers. Like Applebaum a decade ago, they wanted to better understand the connection between payments, the buyer's intention to make a purchase, and additional sales by retailers.
In the course of their work, they created an Amazon-like marketplace with millions of selectable products and gave consumers access to them. The buyers participating in the research spent their own real money on these purchases.
Prelich and Danfield have previously conducted a study aimed at studying consumer habits, and devoted to the phenomenon, which they called the "pain of buying", and the ability of credit products to help in making these purchases. Probably, the quite expected result of this study was the confirmation of the fact that access to credit, rather than debit card eliminates the “pain of purchase”, since it reduces doubts about the availability of the necessary funds in the account for making an electronic purchase.
But the most intriguing were precisely their findings regarding spontaneous commerce and unplanned purchases.
During the study, they concluded that the difference between whether the buyer will make this or that unplanned purchase or not depends on when the available methods of payment are shown to him.
If at the time that the researchers called the “fully reversible” intention, the visitor of the online store knew that he could use a credit card for an unplanned purchase, then he made this purchase. If this method of payment was not shown until “the moment of irreversibility of the decision made”, then, according to the results of the study, the buyers refused their intention.
That is, a signal about the possibility of buying on credit using one method or another simultaneously with showing the buyer online analogues of the most pleasant little things that are placed at the checkout or at the ends of the malls in regular stores seriously affects the positive outcome of a spontaneous purchase.
We also came to the same observation during the compilation of our purchase conversion index . Our researchers found that the earlier the customers learned that they had the opportunity to use the digital method of processing and paying for the order, the better it would affect the conversion rates.
As is often the case in the areas of payments, commerce and retail sales, everything new is well forgotten old with new tools and technologies added to it.
As William Applebaum noted back in 1932, an understanding of who makes this or that purchase and for whom is one of the basic knowledge for any retailer. He also considered the ability to convince consumers to leave the store by making purchases, which were not originally on the list, as the holy grail of retail.
And almost 70 years later, we finally began to understand the role of payments in this process on the example of the fastest growing retail sales channel.
As it turned out, the main point in this process is to inform the consumer in time that he can use the payment method that eliminates the “pain of the purchase” by doing this before he has already decided that he will not make the purchase.
Source: https://habr.com/ru/post/374127/
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