One Click Away?

Edition: September 2001 - Vol 9 Number 09
Article#: 1049
Author: Repertoire

Many sellers' assumptions about the Internet are questioned in the article, ''Web Shoppers' Loyalty Isn't So Crazy After All'' by Jason Fry, which appeared in the Aug. 13 edition of the Interactive Wall Street Journal (www.wsj.com). Here are some excerpts.


Internet skeptics – believe that even the top Web retailers have built their businesses on shaky ground. Shoppers, are always just ''one click away'' from looking for a better price on that book or airline ticket.


But these skeptics ignore a truth of online retailing that may be as important as it is little remarked: Consumers are, well, lazy. Once people take the online plunge and find a Web retailer they like, they're likely to stick with it -even when just a couple of mouse clicks might save them money….


It is a reminder that e-commerce strategies must take into account not only economic theories, but also people's online habits. Ultimately, it's human behavior -- not technological bells and whistles -- that determines how money gets spent.


…But why don't people shop around?…One possibility: Being lazy isn't really so crazy. For online shoppers, price shopping simply doesn't pay.


The argument comes down to the thought that time is money. Prof. [Eric J.] Johnson [of Columbia University's Columbia School of Business] notes that first-time users visiting a retail site to buy a CD must learn how to use that site. On the next shopping trip the site is more familiar, and therefore more attractive. This effect is known as ''cognitive lock-in.''


In a 1999 study, Prof. Johnson and others found that the average time spent on Amazon dropped from 400 seconds on the first visit to fewer than 200 on the fifth. Estimating the median income for Web users at $53,000, the study determined that the 200 seconds saved because of site familiarity were worth $1.44 to a median-income surfer.


And price isn't everything. Erik Brynjolfsson, who co-directs the Center for eBusiness at MIT, co-wrote a study that found online shoppers who used shopbots -- Net tools that compare retailers' prices for the same item -- also tended to stick with places they knew, even though such shoppers could see that an item was cheaper elsewhere. He calculated the price advantage of an already-visited retailer over a new retailer at $2.49 for the same item.


Moral to the story: If you've got a good web design, don't change it. If you don't, copy a winner's, as much as the law allows. People may come to it – and stay.