April 02, 2007

E-Commerce: Order Taker, Or Demand Generator?

I've read through three presentations in the past week, all written by folks with a strong catalog heritage.

Each presentation stated that websites are not capable of generating demand on their own. Instead, some sort of marketing must happen to drive the customer to a website.

What do you think of this hypothesis? Do websites generate their own demand? Or, are websites helpless tools that require marketing to get the customer to visit the website?

Or, do you fall somewhere in-between, rooting for a business model like Zappos?

5 comments:

  1. Anonymous5:44 AM

    You've done it again, by golly. given us an either/or question, when I think there's another possible answer.

    The other option I'm looking for here is demand "influencer". Example: Customer comes to the website not sure if she wants product A or product B. Or quite possibly -- knows she wants product A, but isn't sure if she wants to buy it from provider X or provider Y.

    Good web sites "influence" customers. They explicitly recognize that some customers are already somewhere down the purchase cycle, beyond the awareness stage, beyond the "I need/want this product" stage, and are already at the "which one/who do I choose".

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  2. Anonymous10:12 AM

    I'm actually in agreement with you, Ron.

    A lot of catalogers measure the impact of paper on online sales, and see that the majority of orders come from prior catalog customers, or happen because the customer received a catalog.

    The fact that Amazon and Zappos grow without paper, with very little traditional advertising, suggest the websites are doing something to generate demand.

    There's a subtle interaction between online marketing and website demand generation --- this subtle interaction, in my experience, is not well understood by traditional marketers.

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  3. Anonymous4:55 PM

    Clearly many web sites get traffic they don't pay for through the search engines; I'm not sure I would call this "marketing" - unless, of course, you had to pay somebody to redesign the web site so it would show up in the listings at all.

    On the other hand, it's not "demand creation" in the traditional sense since the customers already had the demand and simply found what they were searching for.

    What this does bring up is the role of serendipity in offline retailing - the effect by which one accidentally discovers a product they didn't know exists - catalogs / retail generate demand for products nobody would search for or buy because they don't know the product even exists.

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  4. That was articulated well, Jim!

    Could a website be designed in a way that created demand?

    In retail, the customer wanders all over the store, ultimately buying things they wouldn't otherwise purchase. The customer takes the action of entering the store.

    In catalog, the customer is presented merchandise that is easy to browse. The customer takes no action --- the catalog simply arrives.

    So, in the online channel, the customer has to take action to enter the "virtual store" --- making it similar to retail. However, websites are just not very "shoppable", making them very different than catalogs, or retail. It is very hard to get the customer who wants to purchase a dress to know that there's a handbag she would absolutely love.

    Maybe at some point, e-commerce will evolve to become more like a store experience --- where the customer is literally "bumping into" merchandise that she wouldn't otherwise consider.

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  5. Anonymous5:35 AM

    This is a nice posting . I really like this post .

    ReplyDelete

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