Since the introduction of e-commerce and especially following its inflection point, “comparison shopping,” a paradigm shift in consumer behavior, fundamentally changed the nature of retail forever. Why do consumers comparison shop? Sixty percent say to find the lowest price, according to PwC's Total Retail Survey 2016.
Modern comparison shopping has created a new dilemma for retailers and, unfortunately, for most brands represents an uncontrollable threat, one which has been exacerbated by the introduction of mobile. Let’s explore this idea.
How Consumers Buy
It's difficult, if not impossible, for a retailer to track or control omnichannel consumer purchase behaviors. At any point in time during a consumer purchase journey, the consumer could be researching on the web, testing a product in a brick-and-mortar store, comparison shopping for the best price on Google, reading reviews in a retailer’s mobile app, or posting a photo of a product on Instagram and asking their social network for feedback.
Today, with mobile in hand, some of the above behaviors could be happening simultaneously. Recent data shows that 36 percent of consumers used their smartphone in-store to compare prices with competitors, and 31 percent of consumers looked up coupons and promotional codes. It’s clear that consumers want to get the best possible price and have become savvy in doing so.
Let’s say a consumer decides to purchase a pair of shoes. Where will they buy? From an online speciality retailer like Zappos? Directly from the brand through its mobile app? From Amazon.com? From their local brick-and-mortar store?
Price and convenience both matter in the decision-making process. Going into 2017, nearly 35 percent of all consumers will be making purchases on mobile. Should mobile adoption trends continue with similar year-over-year growth, by the year 2020 nearly 60 percent of consumers will be making purchases on mobile. That's roughly an 8 percent increase every single year.
Given the rapid shift to mobile, there's still hope for retailers. In most consumer shopping journeys, there's one common thread that provides an opportunity for the retailer to intercept the consumer and drive the conversion behavior the retailer desires. That common thread is comparison shopping.
Embracing Comparison Shopping Behavior
Comparison shopping is now the norm and is causing retailers significant revenue losses. This behavior occurs in brick-and-mortar stores and online. Often consumers will purchase products at a lower price elsewhere even if there’s an existing in-store price match policy in place.
Retailers have two choices:
- Ignore price matching behavior.
- Control behavior and experience by empowering the consumer, giving them tools to match competitors’ pricing in their app or on their website.
Price is a Primary Driver
The 2016 Total Retail Survey by PwC revealed the 60 percent of consumers shop at their favorite retailer because of price. That’s twice the percentage of any other reason cited.
Comparison shopping can lead to positive business outcomes when a retailer’s prices are always up-to-date in lock-step with those of competitors. However, comparison shopping is typically highly detrimental to most retailers, leading consumers to engage with competitors while shopping, and ultimately resulting in lost sales. Consumers also have access to browser-based tools, like Honey, which automate comparison shopping. Just as with in-store price comparison, online consumers are leaving retailers’ websites and engaging with competitors while making buying decisions.
Retailers have combatted lost sales from price comparison with price matching policies. Overall, the existing price matching process is slow, inefficient and rarely a pleasant experience for the consumer. Fortunately, there’s a way to solve this retail dilemma and provide a better experience at the same time.
Keep Consumers On Your Turf in All Channels
It's technically feasible to automate price comparison in an app or on a retailer’s website by showing a list of competitor prices for the same item and offering a discount when the product is placed in the cart. Interactions in each of these channels are controlled by the retailer and reveal only the minimum amount of competitor information needed to help the consumer make an educated buying decision.
Here’s How it Could Work
Simplifying price matching is a win-win for the consumer and the retailer. The consumer spends less time making a buying decision and remains loyal to the retailer, knowing they’re always going to get the best price. The retailer spends less time handling price matches and controls the entire process.
Another benefit of taking control over comparison shopping and the price matching process is getting a better understanding of consumer behavior. When controlled in this manner, retailers gain intimate knowledge about the decision-making process as well as events and triggers that cause a conversion. This information can be used to better engineer the user experience, personalize shopping experiences and increase customer lifetime value.
Whether retailers like it or not, comparison shopping is now standard practice for price-focused consumers. Retailers have to decide whether they want to fight or ignore this behavior, or empower the behavior and take control.
Aaron McLean is the COO of Stuzo, a digital product innovation company.
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