and other out-of-state vendors.”
E-tailers saw a need and acted. And the cigarette industry is not the only industry booming online. Overall online consumer sales jumped 26 percent from July 2001 to July 2002, by which time they were averaging $6 billion usd per month.
“This is one of the only us economic sectors experiencing double-digit growth this year,” wrote Lieb. “It’s because buying online increasingly fits consumer needs . . . Look at what’s growing: travel, computer hardware, and, most of all, financial services and information. All offer solid incentives to buy online.”
What Sells and What Doesn’t Sell Online
Unfortunately, marketing and sales success do not always go together. An example of a company that was very successful at marketing itself online but unsuccessful at selling products online was Petopia (see Case Study). Besides pet supplies, other items that are difficult to sell online are designer clothing and large items such as furniture and appliances (the main reason www.Furniture.com failed). Besides the high cost of shipping heavy items, the chief deterrent to such online sales is that customers want to be able to touch a product before deciding to make an expensive purchase.
Case Study
Petopia launched a million-dollar ad campaign to sell pet products online. But no matter how big their online marketing efforts were, their product was not right for the web. They never created a “need” for buying pet supplies online. Shipping costs were a primary factor affecting Petopia’s online sales. People just didn’t want to pay high shipping costs for a heavy bag of discount cat litter or dog food when they could buy the same product at almost any grocery store. Plus, most additional purchases people make for their pets are impulse buys, like cute chew toys and treats.
Petopia closed its online store in February 2001 and its domain name now points to www.Petco.com, one of its initial investors. Petco now uses the website to help promote its 500-plus retail stores. The website sells pet products online, but also provides a community for pet owners, as well as articles and health information about pets. However, the site’s primary function is to promote Petco’s retail stores and their overall brand as pet experts, not generate online sales.
A study by Forrester Research and the National Retail Federation found that US Internet users feel more comfortable spending money on small-ticket items, the most popular categories being software, music, books, toys, small appliances, gardening supplies, and flowers — basically, anything consumers don’t feel the need to touch.
This information applies especially to small businesses. Online stores tied to an established retail chain are much more likely to find success in selling big-ticket items than small, home-based businesses. This is because consumers are already familiar with the quality and “feel” of products from recognized brands.
Let’s take expensive clothing for an example. Banana Republic recently moved its specialty sizes (petites and longs) out of its brick-and-mortar stores and into its virtual store, www.BananaRepublic.com. Typically, I would never buy a suit that I had not tried on first, but I will buy from BananaRepublic.com for a couple of reasons. One, I have been inside their stores, touched their clothing, and know how their sizes fit. The second reason is that there are two Banana Republic stores less than ten miles from where I live, making it very convenient to return items that don’t fit quite right. The final and most important reason why I would buy an expensive suit that I had never tried on is that the marketing folks at Banana Republic created a genuine need for me to shop online, just like the New York tobacco tax did. Because I am above average height, I need extra-long pants. Long sizes from Banana Republic were only available online.
Let’s assume that you are not Banana Republic, and your product or service doesn’t seem well-suited to online sales. Just because people may not buy your product online doesn’t mean you shouldn’t use the Internet to market it. The Pepsi-Cola case study exemplifies everything that online marketing is supposed to be. It shows a complete synergy between the brand, offline sales, customer communications, and effective co-branding efforts.
Even if you don’t sell your product online, you can still use the Web to generate offline sales.
More and more often, effective online campaigns significantly help offline sales. A study by DoubleClick and Information Resources found that online advertising markedly influences consumer perceptions of an offline brand in a positive way.
Case Study
When Pepsi-Cola launched its website www.PepsiStuff.com in 2000, the site became the centerpiece of one of the most successful advertising campaigns in Pepsi’s 103-year history — and the company didn’t sell a single bottle or can of Pepsi online.
According to John Gaffney’s article in Business 2.0, here’s how it worked: Pepsi printed special codes underneath more than 1.5 billion caps of plastic Pepsi bottles. Each code was worth 100 points, which could be used to shop online for prizes such as clothing and CDs.
Taking the campaign online had its advantages from the very beginning. Right away, Pepsi-Cola saved more than $10 million usD simply by not having to print prize catalogs. Pepsi also benefited from its partnership with Yahoo! (See Chapter 7 for more information about online co-branding opportunities.) With Yahoo! hosting and providing technical assistance to the PepsiStuff.com website, Pepsi was able to sidestep having to manage its own high-traffic e-commerce site. In exchange for its technical assistance, Yahoo! received co-branding on all PepsiStuff bottles and in-store displays, as well as $5 million usD in television and print exposure.
During the online campaign, overall national sales of single-serve Pepsi bottles jumped 5 percent. That is a huge accomplishment considering that overall soda sales increased by only 0.2 percent the previous year. More important, the online campaign allowed Pepsi to collect 3.5 million customer profiles, which included golden demographic information such as customer name, email address, zip code, and date of birth. Once Pepsi’s marketing team could confirm who their target audience was, they were able to create additional extremely effective marketing campaigns both online and offline.
Demographic information collected during the PepsiStuff campaign solidified the company’s decision to place Britney Spears in its Super Bowl commercial. The Britney Spears campaign proved to be a huge success with Pepsi’s target audience. In only nine days, more than 1.1 million people logged on to www.yahoo.com and downloaded the television commercial. For consumers to actively take the time to download a commercial shows that Pepsi appealed to its target audience with overwhelming success.
Finally, as you read the next few chapters, think about how you can take the strategies and case studies presented throughout this book down to a more localized and personal level for your business. The Internet may have taken the small business global at one time, but today, the most success is found at the local level. Google, Microsoft’s Bing, and Yahoo! now list local businesses at the top of their keyword searches. Customers rely on their mobile phones and applications like Foursquare to find local businesses and specials. We’re seeing localized coupon sites like Groupon.com generate incredible success by marketing local businesses to local customers. More and more people check local directory sites like Kudzu.com, Yelp.com, and various city guides for testimonials, ratings, and contact information before venturing to a company’s actual website. Having a strong, local, targeted online presence is essential for the success of today’s small businesses, and it’s crucial to how they stand out from the more global competitors online.
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Attracting
