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Gadgets | Illustration by Harry Campbell

Journal-ist: Freedom of Choice

From the journals, studies on why we shop online, how clicks-and-mortar stores can build trust, and how negative reviews can be overcome.

A) Worldwide e-commerce spending is expected to surpass $7 trillion this year. To determine why consumers increasingly prefer virtual storefronts to physical ones, Pui-lai To, writing in Technovation, distributed questionnaires about shopping motivation to 206 Taiwanese students and workers. Obvious answers surfaced, including convenience, cost, and selection. But To also uncovered two other, less-expected factors: a sense of adventure and the satisfaction of using technology effectively. He calls these "hedonistic motivations" and learned that consumers prone to them had a tendency toward "unplanned and hasty" buying online. To capitalize on such motivations, online vendors can design Web sites that stir feelings of technological control and adventure — not so much with jungle motifs, but by promoting ideas of newness.

B) How does an online retailer cultivate trust with a shopper? By looking good, say Yu-Hui Chen and Stuart Barnes in Industrial Management & Data Systems. Chen and Barnes write that concerns about poor security and vendor unreliability are the largest deterrents to Internet shopping — and site design matters more than one might think in overcoming those fears. They found that consumers feel more comfortable making purchases from "impersonal and anonymous" sources if they are easy to navigate and search, and provide "full and detailed information about goods." A highly functional Web site doesn't just help customers find the product they're looking for, but it also makes them feel comfortable about being there in the first place.

C) Online retailers who have gotten negative reviews at sites like the Better Business Bureau's shouldn't worry too much — if they really can give their customers a positive experience, says John Fuller in Decision Sciences. Survey data shows that anything an Internet shopper reads about a site can quickly be trumped by personal experience. So "if the e-vendor can get shoppers to their Web site (perhaps through promotional efforts), a positive direct experience for online shoppers can attenuate the effects of a negative review."

Gadgets | Illustration by Harry Campbell

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  • James Kane

    Each of these three studies are right on target in their findings, especially as they relate to building and maintaining customer loyalty online. True loyalty is only possible when an organization strongly demonstrates to its customers each of the following six behaviors on a consistent basis: competency, integrity, recognition, proactivity, savvy, and chemistry. Traditionally, a retailer would be able to demonstrate these behaviors through their sales staff and their showrooms, in addition to their services and products. But can you create a relationship when there are no human beings to interact with? The answer is yes, and more and more online retailers are discovering the secrets.

    Amazon and iTunes have created perfect loyalty-building models in the virtual space today. Consider how each each demonstrate these six required behaviors and how both support the findings of the above-mentioned studies:

    Both Amazon and iTunes have more products "on their shelves" than all of their competitors combined. If you are looking for a book or a song, no matter how obscure, it is highly likely they have it.

    Amazon offers lower prices than retail, but is also willing to offer used items at reduced costs for those who aren't looking for the highest quality.  iTunes allows you to buy individual songs instead of entire albums and is consistent with their per song pricing. They alert customers (especially parents) to explicit lyrics, and they offer free music and videos of some new, up and coming artists. Most importantly, both offer incredible transparency to their customers by allowing unedited feedback and reviews to be posted. Negative reviews aren't erased or edited even though they may discourage a purchase. This flies in the face of conventional sales wisdom, but they both score high marks for integrity and trust by appearing to care more about honesty and openness than sales.

    When you login to Amazon and iTunes, they remember who you are, what you purchased before, what credit card you used and what addresses you previously shipped to.  iTunes even keeps track of your approximate age in order to offer you specials on music from the decades that may be most meaningful to you (teens ands 20's). They both create experiences that feel very personal.

    Amazon and iTunes aren't just competent at having the book, product or music you went looking for. They make recommendations of other similar books, products and music that "you might like."  Books and songs you may have never heard about, weren't looking for, and never knew existed.  Amazon automatically bundles similar books together to offer you a better value. iTunes creates celebrity playlists (what do other people - who you respect and admire - listen to?). Amazon and iTunes position themselves as more than retailers, they want to be your "trusted advisor" when it comes to books, music, movies, and everything else they offer.

    Amazon and iTunes understand their customers. They understand their challenges and their needs and work to eliminate every barrier and concern they may have. They understand their concerns about giving out credit card information, so they create security measures to alleviate those fears.  They know their customers may want to make a purchase, but aren't in a position to buy at that moment, so they create wish lists for later reminders. Amazon understands that you may want to send a gift, but you would like it wrapped and personalized with a card, so they offer both. They know that you will worry about it getting there on time, so they allow you to track the shipping online.  iTunes knows that you may not remember the names of all the songs you like and want to download, so they show you all of the albums an artist recored and give you 30 second samples of every song on that album to listen to.  They also let you search songs by lyrics, in case you don't know the artist.  They will alert you (if you choose) when a particular artist releases a new song or album.  They let you share information with your friends.  They let you build your own music collection of an artist, taking as many or as few songs from each album as you like.  They allow you to download your music digitally and instantly.  The list goes on.

    Finally, chemistry in a traditional world is the relationship a retailer's employees have with their customers. Do their customers like dealing with them? Do they enjoy the experience? It's hard to say if anyone other than Jeff Bezos works at Amazon because you never have to deal with a human being when making a purchase. That is a testament to the online experience Amazon has created.  Every thing you need can easily be found.  Every question you have is easily answered.  They lead you through every step in the process I am led.  iTunes is an even better interface than Amazon with that typical Apple simplicity.  The chemistry Amazon and iTunes builds with their customers creates tremendous loyalty and supports the research of Chen and Barnes.

    Jim Kane