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Nielsen Reports On Keys To Online Sales Success

By Paul A. Greenberg
Oct 19, 1999 12:00 AM PT

According to new research released by Nielsen/NetRatings (NYSE:NMR), online shoppers are looking for quality, convenience and a personalized shopping experience over low prices.

Nielsen Reports On Keys To Online Sales Success

"Internet sites that will score big with holiday shoppers this year are those with well-known brands, and that offer speed, quality and value," said Allen Weiner, vice-president of analytical services at NetRatings. "One of the consistent Internet marketing findings is that online buyers aren't driven by price. Convenience and value rule."

If Weiner's observations are indeed true, nervous e-tailers might wonder about the best methods to capture and keep the attention of new online shoppers. According to the research, personalization may be the key.

Sites using a technology called "collaborative filtering" seem to have the best success in converting a shopper to a buyer. The technology offers recommendations based on similarities in user preference compared to other users. For example, when a user requests information on a specific book from barnesandnoble.com, the site automatically indicates what other buyers of this book are purchasing.

The Numbers Tell The Story

Online marketers with personalized sites, such as CDNow, show a much higher rate of converting shoppers to buyers than non-personalized sites such as Beyond.com. Since e-commerce is still such a new prospect for so many companies, purchase conversion rate measurements are crucial to future marketing decisions.

"Filtering technology is one reason sites like Amazon.com and Drugstore.com had purchase conversion rates of 8.3 percent and 7.9 percent in August, whereas sites like Reel.com and J.Crew lagged with conversion rates of 3.5 percent and 3.4 percent," said Weiner.

The group of potential buyers is clearly out there, according to daily statistics maintained by NetRatings. For example, in one day last week, the average user in the U.S. spent 30 minutes online and visited four sites.

How Important Are Brand Names?

The big question among e-tailers remains: What will make shoppers stop surfing and make a purchase, and how important are brand names?

"Brand is definitely an important factor," Weiner said. "Our research indicates the consumer will go to the branded site they know best. Although the prevailing theory used to be that Internet consumers were fickle, basing purchasing decisions on price, the emerging consensus is that brand recognition plays a key role in the success of e-commerce."

August sales results indicate some of the top sites are brick-and-mortar companies, such as Barnesandnoble.com, Ticketmaster.com and Microsoft.com. However, others are strictly online companies like eBay.com or Amazon.com. Among all of the sites, the common thread seems to be brand recognition.

A Little Extra Push

Still, the important thing is to attract the shopper to the site in the first place, and many companies are using a mixed-media approach toward that end. Media often viewed as competitors of the Internet are enjoying some increased advertising revenues because of e-tailers and online services that need to increase awareness of their sites.

Online companies spent $72.6 million (US$) on TV ads in June of this year, a $67 million increase from last June. Results from NetRatings current research seem to indicate that sites that cleverly strategize to make consumers feel less anonymous and more catered to may be positioned to have a prosperous e-commerce holiday season.

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