Why ecommerce is the future for ‘big-ticket’ goods
Fran Quilty, co-founder and CEO at Conjura, explains how ecommerce is disrupting the way consumers make major purchasing decisions
Say what you like about Elon Musk, he thinks big. And while he might be remembered for his showmanship, we cannot discount that his company has helped to reshape online shopping.
Tesla was the first auto brand to swap out the physical showroom for its website. For the first time, shoppers could click to buy a brand-new luxury vehicle.
Since Tesla laid the groundwork for ‘big-ticket’ ecommerce, others have followed suit. Now it’s not just cars – diamond rings, yachts, furniture, and even houses can all be purchased online.
The trend towards using ecommerce for major purchases started in the US but has been gradually spreading to the UK, and we predict it will be hugely disruptive in certain sectors over the next 12-24 months. We can see the beginnings of this in the high-profile awareness campaign currently underway by online used car platform Cazoo, which has become Aston Villa’s principal sponsor.
Other industries that promise to be upended by ecommerce include jewellery – around five percent of the engagement ring market was online pre-Covid, but that figure will become far higher. Diamonds-USA.com has shifted $500 million worth of diamonds, while 77diamonds.com has shaken up the market on this side of the Atlantic.
The sales cycle for something like a car or a diamond ring typically averages between 30 and 50 days. Shoppers have historically used the internet as an initial stage in the funnel to conduct often intensive research that can factor in multiple channels, including reviews, articles and video. However, the deal had previously been sealed offline.
Tesla proved that this doesn’t have to be the case. After all, it makes little sense to risk the loss of a warm prospect by asking them to jump through a fresh set of hoops when they are in buying mode.
Early indication of demand
What sets online businesses apart from their bricks and mortar competitors in these spaces is stock control. It’s simply not good business sense to invest in expensive inventory if you can’t be sure it’s going to sell.
The really savvy big-ticket ecommerce players remove risk as far as possible by forecasting what stock they need to procure far in advance of a sale being made.
Buying intelligence based on what people are searching for within their sector is used to ensure they always have enough of the right kind of inventory to respond to customer demand.
Moreover, data-led businesses will also use an API connecting the ecommerce site and the warehouse to automatically reorder stock when it dips below a certain level.
The physical retail experience is often very different. High street stores simply don’t have space to hold bulky items, such as furniture, on the premises. Cost-efficiencies dictate they won’t put in an order until there are sufficient goods to fill a shipping container. This means shoppers can wait weeks or even months to get their new sofa.
Wider choice
Buying furniture both in store and online can be a time-consuming experience, involving traipsing from store to store or scrolling through website after website to find just the right kind of sofa or dining room table.
That’s why in recent months we’ve seen the rise of aggregators such as ufurnish.com. These types of sites provide a lifeline to time-poor consumers and to both traditional and online furniture/interiors brands, by allowing consumers to browse thousands of products by category in a single online location.
The aggregator platforms perform well on search engines and can be a good option if a brand is looking to drive sales volume or reach new audiences. However, they are a double-edged sword given the aggregator owns the traffic. If a brand wants to understand data-led trends, they can only buy this information from the aggregator itself.
Avoiding personal interaction
While the experience has traditionally had a big part to play when shopping for big-ticket items, consumers are having to forego this as non-essential businesses are closed. However, online sales of the biggest ticket luxury items such as diamonds were already growing at real pace before the pandemic struck.
Many millennials now favour less personal interaction when it comes to dating, gaming and shopping, and this shift in behaviour has also translated into the purchase of big-ticket items. The test-drive at the showroom or the glass of champagne while browsing for an engagement ring have now been removed from the process. This has reduced the need for physical stores and big sales teams.
Now, traditional retailers are competing online against digital disruptors which have entered the market and are experts in prospecting and converting leads on a website.
Lower price
The tighter control on stock and reduced need for physical infrastructure has resulted in genuine price saving when shopping for cars, furniture or diamonds online. Leaner, more optimised businesses which are free of major overheads can be genuine disruptors.
With major consumer advantages, notably efficiencies and price, this trend is only set to accelerate.
The benefits extend to brands too, with the savvy ones better able to use research data to forecast and manage stock. The best ecommerce businesses already do this, and as more big-ticket brands migrate online, it is those that have invested in data that will gain the edge.
This Thursday (5th)’s Future of Brands: Ecommerce conference will feature speakers from Maplin, Diageo, Cox & Cox, Astrid & Miyu, Tata Consumer Products, eve sleep, RB, Organix Brands, Marie Claire and more. Find out more and register for FREE here.