Posted on | May 30, 2013
Written by | James Laurenti
Today few people raise an eyebrow at the thought of selling or purchasing wine online. Some of the largest online retailers’ websites have served consumers for over a decade and a half. A quick scan at Wine-Searcher.com also reveals there are now over 12,000 outlets in the United States showcasing their products online. The increasing saturation of wine stores online may be worrisome to some retailers. With more competitors nationwide, consumers outside of your market have a better opportunity to find the same products more cheaply and conveniently elsewhere. However, stores should remember that their long-term success online–and in their store–greatly relies on the ability to acquire repeat customers. And while it may be increasingly difficult to attract loyal customers outside of your market, your local market is still ripe with opportunity.
A recent study conducted by Adobe in Q2 2012 titled, “The ROI From Marketing to Existing Online Customers” found that the likelihood of a returning website purchaser (i.e. a person who has placed one order previously) is over five times more likely to complete a transaction on a website than someone who has arrived for the first time. For repeat purchasers (i.e. those who have placed multiple orders in the past), they are over nine times as likely. Without question, the value of repeat shoppers show the importance of having them as a foundation of your business. The questions that loom though are how can stores build customer loyalty online–and where?
In a review of returning visitors on 20 established retail websites on our network, from the New York Metro and New Jersey markets, the data (taken from January to April 2013) showed that of all local traffic, 39.8% were repeat visitors while of all non-local traffic only 17.5% (less than half) were repeat visitors. What’s also striking is at the same time, though almost 40% of the local visitors are repeat customers, over 60% are first-timers. In other words, though stores do a much better job at converting customers in their market to be repeat purchasers, more than half of the people looking at the site are engaging with it for the very first time. This segment is where the greatest opportunity lies to grow and develop the foundation of your online business.
However, while a store’s local market contains the most reliable source of repeat business, it’s often not a large part of a store’s advertising strategy. Instead many online businesses attempt to maximize sales through high-volume, paid referral sites, where nearly all visitors to the site are new, and the opportunity to inspire repeat business is slimmer. This strategy has merits (SEO benefits, sales, e-mail list growth), but stores should be wary of singularly relying on them. For such a store, if one of these referring site makes an unfavorable policy change (such as removing all wine and spirits from its site), the results can be catastrophic. Retailers who remember when Google Products removed wine and spirits from their listings in June 2012 can attest to this.
Stores should keep these details in mind as they strategize the growth of their online business. Think: how can I change the shopping experience on my site to make it more appealing to my local market? Review your policies on local delivery on in-state shipping and consider offering flat-rate or free shipping/delivery opportunities. When it comes to spending advertising dollars, also look into marketing options that allow you to target a local audience, such as Google Adwords. And perhaps most importantly, when you see an order from a local customer whose name you don’t recognize, make the order fulfillment process as personal and pleasant as possible. These customers represent the best opportunity to grow the foundation of your business.
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