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Why People Buy Online

Why do people buy online, instead of at a local store?  If you’re selling online, knowing why people buy online can guide your decisions on what to sell. 

I’ve never surveyed my buyers, but I have gotten a lot of feedback from them.  By far the most common comment that mentions a reason is that they couldn’t find the item in local stores.  I do get some comments about the price being better than what they can get locally, but those are far less common.  I don’t recall anyone ever saying it’s to avoid paying state sales tax.

The other first-hand information I have is the shipping addresses of my buyers.  Low population areas are very over-represented.  Alaska, Hawaii, and APO / FPO addresses in particular are far more common buyers than their populations would suggest.  But even within states that have large populations, like California and New York, my sales are skewed toward zip codes in rural areas and away from large cities like Los Angeles and New York City.  That’s not to say I don’t have any buyers in large urban areas, I do, but the sales distribution is very different from what you would expect based on population.

A word about APO / FPO addresses.  When someone in the US military is stationed overseas, it would be expensive for anyone to send them a letter or package directly.  The military assigns them a domestic (APO / FPO) address, and carries their mail from that domestic address to wherever they’re stationed.  So sending military personnel stationed overseas a letter or package only costs domestic mail rates.  When you send a package to an APO / FPO address, including a nice note can lift the spirits of someone who’s very far from home.

It makes sense that people in remote and low population areas buy online disproportionately.  When people are ready to buy they usually need the item right away, not in 3 or 4 days.  So their first choice will be to get it from a local store if possible, and to get it online if it isn’t available locally.  People in large urban areas have good selection in their local stores, and have a good chance of finding what they want to buy there.  People who live in remote or low population areas don’t have the same selection as people in urban areas, so they’re natural online shoppers.

There are, of course, cases where people can wait a few days to receive their purchase.  Some items, like books and CDs, are more ‘want’ items rather than ‘need’ items, and this is part of the reason why books and music were successfully adapted to online sales so quickly (though I still buy a lot of books from the local bookstore, I enjoy browsing the books and picking out something I would never have known about otherwise).

Another reason books and CDs in particular adapted to online sales quickly is that there’s nothing personal to the customer about them.  For example, some items, like clothes, need to fit, so unless you’re buying the exact same product you’ve purchased in the past there’s no way to know for certain how it will fit until you try it on.  Buying it online means a lot of hassle for the customer if it doesn’t fit.

When you’re considering what to sell online, you should consider how likely it is the item is readily available locally, whether it’s the type of item people can afford to wait 3 or 4 days to receive, and if it’s something the customer can be confident is ‘right’ for them without physically holding it first.

Random Observations

The bookstore chain Borders just went out of business, which is an apropos observation for this article.  Much of the press I’ve read focused on Borders not working hard enough at online sales.  True enough, their online sales are small compared to Barnes and Noble, and of course miniscule compared to Amazon.  No doubt that was a contributing factor to the timing of their demise.  But I don’t think that was their main problem.

What did Borders sell that customers couldn’t buy from other stores, brick and mortar as well as online?  If you think about it, the answer is ‘nothing’, really.  True, they sold an interesting assortment of merchandise.  It’s also true that there are many people who enjoy browsing books (like me), and Borders had a large and varied selection.  The local Borders was rarely empty when I went, though it was rarely packed, either.  But they didn’t have anything unique.

That’s the case with many retailers, large and small.  It’s natural for a retailer to stock common, high demand items, because by definition a large number of people want to buy them, and will buy them without the retailer needing to make a case.  But if you’re going to only sell merchandise that your customers can buy just as conveniently from many other retailers, then you’re going to be susceptible to your customers deserting you. 

The other common story line I’ve seen about Borders closing is that a lot of small book stores went out of business when Borders moved into their area years ago.  A new, large, attractive store with a great selection of books, all the same books as the small local store, and a lot more.  Why wouldn’t the small store’s customers desert them?  Some will stay loyal to the store they’ve patronized for a long time, but many will go to the new, bigger, less expensive store.  And the large chain store can wait it out, losing money for a while to acquire customers, until the local stores are gone.  The small retailer can’t wait it out.

A similar situation happened recently in a town near where I live.  The town had a number of small mom and pop grocery stores, but no large chain stores.  A chain store decided to move in, and the local stores started a fierce battle to have the city stop them.  Their argument was that they didn’t have the same buying power as a chain store, so their costs and subsequently their prices were higher and they would be driven out of business.

I voluntarily try to support local stores, but I don’t agree with the city government forcing people to pay higher prices to support local stores.  Whether or not to preferentially patronize local stores is a decision that should be left up to customers.  Ultimately the city council voted to let the chain store move in without any real delay.  So far I haven’t heard of the local stores going out of business, but I have to believe they’re struggling.

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