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Local Distrubution – How the number of physical shops affects different international online demand

Understanding the way that a customer makes purchasing decisions is vital for the success of any business. If you understand how and why a target customer makes a purchase, including the type of research that they conduct during the purchase journey, you can create online content to help them make their decision and engineer a product proposal to meet their requirements.

The internet provides time-saving resources for both researching and purchasing products. Intermediaries provide instant price comparison on selected products, enabling consumers to make quick judgments. Billions of blogs and product review sites available online offer guidance and after-sales information on just about every conceivable product available on the market. On top of this, the information that companies provide on their websites act as a virtual marketing brochure and is just a click away. The search and research stage of making a purchase is increasingly moving towards online media platforms, therefore the internet represents a critical marketing tool for businesses that sell offline as well as online.

Whilst consumers from most parts of the world have access to online resources, the way in which the internet is used by consumers varies vastly between nations. For example, only 48% of customers in Spain with internet access research products online compared with 81% in the US.[1] This could have a significant impact on the way that a business promotes their product. For example, the use of social media and blogs may have more impact in markets such as the US where the majority use the internet to research products and brands.

The local retail distribution network

One key element which effects consumer online buying behaviour is the number of offline ‘brick and mortar’ shops within travelling distance of the consumer. Research conducted by Holland and Mandry (2013) [2] identifies the shop density per ‘000 in 15 European countries and the percentage of consumers within those countries that use the online channel for research and/or shopping. The results are as follows:

Country Shop density per ‘000 population Use of the online channel for research (%) Use of the online channel for purchasing (%)
France 5.93 65 45
Germany 5.01 72 56
Italy 15.6 35 12
Portugal 12.44 44 13
Spain 14.18 54 23
UK 3.36 63 66

 

In terms of shop density, we can see that there is a clear divide between Northern and Southern Europe. The Southern European countries here have a shop density in the range of 12-16, whilst the Northern European countries have a range of 3-6. A link is clearly visible with the density of shops and the use of the online channel for purchasing products. A likely explanation is that, the greater the convenience and ease of shopping at ‘brick and mortar’ shops, the lower the use of the internet for purchasing items. Aside from the UK, in the countries listed, there are a greater percentage of consumers that use the internet to research products than purchase them. Interestingly, the internet can function to support research online for purchase offline, and vice versa. Consumers in the UK may research review sites on different brands of washing machine before purchasing the product on the high street. Alternatively, the consumer may also go to the local book store to browse the latest releases before making the purchase online.

This information gives insight into search behaviours of consumers across different parts of Europe. We can see that there is a negative correlation between online consumer research and buying, and shop density. This should come into consideration when developing an online strategy to export. Where should you focus your efforts? Does a ‘brick and mortar’ store need an active online marketing strategy to ensure that it has an impact on the consumer’s purchase journey?

The Purchase Journey

Many marketers now talk of a circular purchase journey, as oppose to the outdated purchase funnel. As stated previously, consumers may discover your brand through social media, research your product offline by visiting a store, and then buy the product on your website. Integration across media channels is essential in guiding the customer through the purchase journey. That includes obvious media portals such as websites and social media, but also less obvious portals.

For example, if you monitor the use of your brand name online, you may find a negative review of your product on a review site. This review may create part of the purchase journey for some of your target customers. It could also create the end of an unsuccessful journey if they lose trust in your product. You need to respond to negative feedback and maintain the correct style of language used throughout other media channels. Your response could turn a negative into a positive, and therefore function as part of the purchase journey.

For online exporters, the key is to make sure you understand your export market and their purchase journey. How do customers look for your products and how do they buy them? If you don’t understand this, your sales efforts will be in vain.

[1] Holland, C. and Mandry, G. (2013) Online Search Buying Behaviour in Consumer Markets. In: System Sciences (HICSS), 7-10 January 2013, Wailea, HI, USA.

[2] Online Search and Buying Behaviour in Consumer Markets




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