Online Shoppers

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Demystifying the Online Furniture Shopper David Lively

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Who Buys Furniture Online?

Transcript of Online Shoppers

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Demystifying the Online Furniture Shopper

David Lively

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The experts are

"If you're not converting to commerce at your Web site, I don't think you'll be around 10 years from now,”said Ed Stevens, chief executive of Shopatron. His San Luis Obispo, Calif., firm provides e-commerce applications. It is a growing business, especially within home furnishings.

saying...

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The industry is currently selling

$12.3 billion online, representing 9% of all category sales, according to research firm

Forrester Research Inc. These numbers are

expected to rise to 11% this year and more

than double to $26.7 billion by 2012, the firm estimates.

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Jewelry and furniture will pace online sales this holiday, comScore says…

“The most robust growth in online holiday shopping will occur in Jewelry & Watches, where sales are expected to increase 67% year-over-year to $739 million in November and December of this year from $443 million a year ago, comScore Networks Inc. projects. The next strongest growth will occur in Furniture, where November-December sales will be

up 58% to $1.7 billion from $1 billion a year ago,

comScore says.”

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source: Forrester 2008, Morgan Stanley

Home furnishingsCosmetics / fragrances

Apparel / footwearMovie tickets

JewelryFlowers / cardsOffice supplies

Consumer electronicsToys/ video games

baby productsgift cards / certificates

booksMusic/Video

other event ticketsComputer products

9%9%10%10%11%12%13%

18%19%19%

21%24%24%

27%45%

Proportion of ecommerce sales as a % of retailing subsectors (US market)

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"One cannot afford to not be in e-commerce," said Ethan Allen Chairman and Chief Executive Farooq Kathwari in an interview.

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"We knew that the longer we waited on the Web, the more risk that someone else would be capturing that demand," said Jason Camp, senior vice president of retail.

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“We estimate between 60% and 70% of people spend some time on the Web before or during the purchase process," said La-Z-Boy Chief Marketing Officer Doug Collier. With "more than a few million" visitors to its site each year, Collier said, La-Z-Boy wants to convert as many of those to sales as possible.”

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Online marketplace?“In 2009 the wheat came off the chaff in online retailing,” says Nikki Baird, managing partner at research firm RSR Research. “The online retailers that just count on being the lowest price provider aren’t going to be around for the long term. The ones that survive and grow will be ones that run a very efficient operation and give consumers the best customer service and shopping experience.”

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The strategy for identifying your marketing targets is based on two tried and true observations:

The best customers for your product are existing customers. The people who have already used your product or a similar one or other people like your existing customers are most likely your best customers.

Birds of a feather flock together. In choosing a place to live, people tend to seek out neighborhoods compatible with their lifestyles, where they find others in similar circumstances with similar consumer behavior patterns. Once established, the character of a neighborhood tends to persist over time, even though individual residents come and go.

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Nielsen ClaritasPRIZM® Profile Analysis● ● ● ● ● ● ● ●

Lively MerchantBuy Home Furnishings by Internet

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WhereUnderstanding Market Potential Index | Market Potential Index Report | 89 Locations - 50 mile radius

WhoUnderstanding PRIZM Profile Reports | Profile Charts & Reports

AppendixPRIZM Cluster Narratives

The nature of the research

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We then use MPI reports which illustrate the PRIZM market potential for each of the DMAs in the study. DMAs are ranked by potential. Each ofthe MPIs shown on the report is part of a national index of the propensity to be online furniture buyers, weighted to reflect the PRIZM Clusters present within the market, using PRIZM

An MPI of 122 shows that residentsof this DMA should be 22% more likely than the national average to buy furniture online.

To compute MPIs, Claritas calculates (1) the percentage of households within each Cluster ineach of the markets reported on and (2) the equivalent of a sixty-six Cluster PRIZM profilereport for the product, and then calculates a weight-averaged MPI for each of the markets.

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PERCENTAGE OF MRI SURVEY HOUSEHOLDS THAT FIT THE PROFILE.

Buy Home Furnishings by Internet, 1yr (A) (4.31%)

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PRIZM culminated years of research and development in a groundbreaking methodology that allows marketers to seamlessly shift from the ZIP Code level through the block group, ZIP+4, or ZIP+6 level—all the way down to the individual household level—using the same set of 66 segments. This single set of segments affords marketers the benefits of household-level precision in applications such asdirect mail, while at the same time maintaining the broad market linkages, usability, and cost-effectiveness of geodemographics for applications such as market sizing and site selection.

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PRIZM Profiling

Claritas provided specifications for a PRIZM profile “Buy Home Furnishings by Internet, 1yr” using the Mediamark Research Inc. (MRI) Survey of American Consumers data. The profile was created from counts of survey participants who made online purchases of home furnishings in the last 12 months. Each MRI survey participant is assigned to one of the sixty-six PRIZM neighborhood lifestyle clusters. Each PRIZM Cluster represents a distinct consumer market segment comprised of households with similar demographics, lifestyles, and consumer behavior.

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Who buys furniture online?

Nielsen ClaritasPRIZM® Profile Analysis● ● ● ● ● ● ● ● ●