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The Dot-com bubble at the turn of the century was part of a new focus on technology in the digital age. Today we take for granted that we can check our email, keep up to date with our family and friends, and even complete entire assignments for work from a small rectangle that fits in the palm of our hand. Information that used to take hours of research in a library to acquire is now available through a 2.7 second Google search.
We are in a new age of instantaneous information, and as the economy shifts to compensate for these changes, so too does the definition of the Middle Class in South Africa and rest of the world.
1. 81% of purchases involve online research
The diversity of information on the internet allows for a more dynamic, informed purchasing decision. According to GE Capital Retail Bank’s Major Purchase Shopper Study, 81% of consumers perform online research as part of the purchasing process.
The best ecommerce sites include features that empower consumers to feel well-informed without needing to leave the site. One of Amazon’s biggest strengths is their strong community of customers that leave reviews on the products they purchase. These reviews are aggregated into star ratings for products, brands, and sellers.
Takeaway: Encourage users of your ecommerce site to leave reviews of the products they’ve purchased by offering them a coupon for five percent off their next purchase in return for their review. This improves the depth of information on your site and brings the customer back to make another purchase.
2. Customer demographics are shifting
The Great Recession impacted the middle-class in a way that hadn’t occurred since the Great Depression. Thankfully the US economy is recovering, but average consumers are still bruised and nervous about their economic future. An insightful article by the staff at CreditRepair shows a powerful, live infographic titled “America’s Earning History”. A map of the United States is shown, along with a moving graph depicting the rise and fall of the average yearly personal income in America.
The article points out that “…average yearly personal income increased from US$13,858 in 1984 to US$44,765 in 2013, which means Americans are now making more money than ever before. But, surprisingly, they are also spending less of their paychecks.”
Takeaway: Ecommerce sites need to effectively communicate their price-competitiveness. Show price comparisons from other sites and emphasize cost-savings.
3. Focus on a targeted audience
The average shopper sees 250 marketing messages every day according to Fluid Drive Media. As the internet becomes crowded with ecommerce sites competing for consumer attention, consumers are increasingly demanding a personalized experience.
To make personalization more affordable for ecommerce startups, the majority of sites need to focus on a narrowly defined customer base. While the big sites spend millions on attracting average consumers, more demanding customers look for a personalized experience that appeals directly to them. To reach them, you need to understand what is important to them and then create a marketing campaign centered around those things.
If you can successfully identify and then craft a targeted strategy to reach your niche market, you have a chance at dominating a specific space. This provides the best return-on-investment, as advertising and marketing is both expensive and research-intensive.
Takeaway: Minimize advertising and development costs by narrowing the focus of your site to appeal to a specific type of customer. Reaching a smaller group of customers with a perfectly tailored approach will yield a better ROI than burning the capital to capture a more diverse market. You can always leverage the success a narrowly targeted product line to launch into a new niche-market down the road.
4. Subscription based services are growing
There’s a reason Amazon is expanding to offer a discounted subscription model for groceries and everyday necessities. In fact, Prime (Amazon’s subscription model for covering shipping costs) members have the ability to purchase consumables using a “Dash Button” that they physically place in the home wherever they use a product. For example, a Dash Button for Tide detergent can be placed directly on a washer. Once a Dash Button is pressed, the product is shipped to the Prime member’s home; no computer or smartphone required.
Millennials are the first generation to grow up in the digital age, and with the proliferation of subscription based services (from smartphones to music), it’s clear that millennials prefer an all-you-can-eat option that gives them everything they want on-demand.
Takeaway: Ecommerce sites need to offer a subscription model that provides bulk discounts, free shipping and a sense of membership. Online subscribers expect that companies use insights from their usage patterns to offer personalized recommendations and benefits to keep them engaged.