Brand loyalty is changing dramatically in light of Internet capabilities. Major product names can still draw a devoted following, but stores are having a difficult time retaining customers. Shoppers can shop in the store and online simultaneously, and a growing variety of factors influence their buying decisions.
Price certainly is one factor for shoppers, and they can make simple price comparisons instantly by scanning barcodes with smartphones. But even the draw of savings is not always enough to entice buyers to click the Add to Shopping Cart button while they are standing in the aisle.
Another important factor is instant gratification. Being able to walk out of the store with the purchase can sway the buyer in favor of the store if other factors are not significantly different. The ability to avoid sales taxes on Internet purchases has traditionally been a factor in overall pricing, but Websites like Amazon.com have recently moved away from fighting state sales taxes in favor of other advantages.
It's been rumored that Amazon is establishing more regional distribution centers to make deliveries the day after an item is ordered -- or even the same day in some cases. A July article in the Financial Times indicated that paying taxes while offering speedy delivery may produce better overall results for the company. Of course, the fact that more states are enforcing sales taxes (regardless of an item's original location) may mean Amazon is simply making the best of a battle it assumes will come out in favor of the states.
Another issue is choice. Local retailers can provide the instant gratification of walking out of the store with an item, but they can't deliver what has been described at the endless aisle of e-tailers. Companies like Amazon, Zappos, and even eBay have concentrated on expanding their online inventories to meet nearly any shopper's buying desires.
These e-tailers can out-inventory their brick-and-mortar competitors by leveraging the inventories of their suppliers and taking advantage of their ability to ship directly from the supplier (and, in some cases, the manufacturer) to the purchaser. As far as the shopper is concerned, the purchase is being made from the online retailer, which handles delivery and customer service. This single point of contact emulates the old retail store experience in some ways, but it adds the new dimension of expanded inventory.
Thanks to the Internet, shoppers' loyalty to specific retailers may be changing in previously unforeseen ways. The expanded capabilities brought about by the Web and electronic order processing seem to be delivering the things people liked about shopping in familiar stores with the advantages they enjoy about buying online.
As retailers and e-tailers continue to develop the missing parts of their respective offerings, shoppers are developing new loyalties that have less to do with the name on the building (or Website) and more to do with getting what they want when they want it. Brand loyalty is becoming more about actual experience than historical reputation.
— Scott Koegler was a CIO for 15 years and has been writing about technology for the last 18 years. He is editor of www.ec-bp.org, a newsletter that addresses supply chain technologies, and he manages other newsletters at www.YourCompanyNewsletter.com. You can contact him at firstname.lastname@example.org.