Study shows the impact of product information on online retail sales
Quality and completeness of product presentation in online retail has a quantifiable and direct impact on product sales. But, often, data is inaccurate, inconsistent, incomplete and even outdated, leading to increased returns, serious brand erosion and lost sales—all of which have significant financial ramifications for both retailers and manufacturers.
To better gauge the impact of product information on online retail sales, Chicago-based Shotfarm surveyed more than 1,500 consumers about their online shopping habits and the importance they place on content in making purchase decisions.
The 2015/2016 Shotfarm Product Information Report shows that consumers place a significant value on high-quality product content, regardless of product type, price or purchasing channel. Retail trading partners can maximize sales, minimize returns, optimize speed to market and enhance brands by improving the quality of product information they provide to digital shoppers. To achieve this goal, retailers and manufacturers will need to more efficiently develop, manage and share this data.
Product information key findings
Quality is an important factor in the success of online sales. Seventy-eight percent of consumers say the quality of product content is very important when making purchase decisions.
Product information impacts brand equity and future purchase decisions. Eighty-seven percent of consumers say they would be unlikely to consider a retailer again if they provided incorrect information for a purchased product.
Product information can play a significant role in reducing shopping cart abandonment. One in four consumers say they have abandoned a purchase because of poor product information.
Consumer electronics offer the highest quality, most complete product content. Fifty-seven percent of respondents rank consumer electronics in receiving the best and most complete product information.
Importance of product information to online sales
Product information plays a key role in online sales, according to the report. Ninety-five percent of those surveyed say product information is important when making a purchase decision, with nearly four in five indicating that it is very important.
In particular, product descriptions and images are critical, with the vast majority of consumers saying they are important (30%) or very important (63%). While product reviews are also important in the sales process, only 39% of consumers say they are very important, highlighting the value of information that comes directly from the seller or manufacturer.
Overall the type of product information that matters most to consumers varies, as does the path shoppers take in finding and consuming product content. In the end, products are purchased from retailers and brands whose product information makes shoppers feel confident in doing so.
The challenge for manufacturers
While manufacturers may want to provide the highest quality and most complete content possible, they still face significant challenges in doing so.
Historically, separate departments have dealt with product data, often resulting in discrepancies between in-store and online inventories. In addition, many of these organizations did not have the right tools and processes in place to ensure that data integrity and consistency were maintained.
Fast forward to today. Manufacturing organizations of all sizes and across industries have worked hard to weed out inefficiencies, eliminate departmental siloes and streamline processes. Yet within the realm of product content development, management and exchange, they remain saddled with meeting ever-increasing and significantly varied retail partner requirements. Because of this, product content often remains inconsistent and incomplete, negatively impacting every facet of brands’ online sales efforts.
How product information impacts return levels
Forty-two percent of consumers have returned an online purchase in the past year specifically because of poor product content. The clothing and apparel category, for example, sees the most returns as one in four consumers have returned an item due to inaccurate product information. The costs associated with each return can be significant
In addition to the hard costs of the actual returns, companies are also forced to overcome lower conversion rates and sales numbers. The returns can also hamper productivity because resources are diverted from fulfilling new, revenue-producing orders to processing revenue-killing returns for unhappy customers.
How product information impacts brand trust
The most significant impact to manufacturers and retailers of poor product content is arguably the resulting brand erosion. According to the survey, nothing directly impacts the experience of the individual customer like a product that doesn’t meet expectations.
A single negative experience may not only result in a return, but it can also cause long-term damage to the relationship between the brand and the customer. Eighty-seven percent of consumers say they would be unlikely or very unlikely to make a repeat purchase with a retailer that provided inaccurate product information, leaving just 13% who would likely shop with that same company again.
Trust and loyalty are not built overnight, so this damage can take a long time to repair—if it can be repaired at all. Whether the customer’s negative perception of a retailer or brand is temporary or permanent, it is always costly. In many instances, consumers say a less than optimal retail experience can be traced to poor quality and inaccurate or incomplete product information.
How product information impacts online shopping cart abandonment
Ninety percent of online shoppers report leaving a purchase behind at one time or another. And, while consumers list cost and delivery time as the Top 2 reasons for not completing a purchase, poor product descriptions and low-quality images follow close behind, with more than 25% citing them as reasons for abandoning carts. In addition, a lack of quality content has a greater impact on whether a sale is made than a lack of product reviews.
Product information expectations vary
Consumers have different content expectations depending on the type of product being considered.
Here are reasons consumers have abandoned shopping carts:
33% delivery time
30% poor product description
26% poor quality images/too few images
25% lack of reviews
25% lack of overall trust of the brand or retailer
15% lack of overall trust of the third-party website
Significant opportunities for grocers
With gross sales reaching $600 billion, the grocery industry is by far the largest retail sector in the country. But, only one in four consumers (23%) currently shop for groceries online, and the industry ranks next to last for quality of digital content. Additionally, nearly 40% of consumers say they are uncomfortable shopping online for groceries.
Companies such as Amazon and Google seek to dominate this retail channel, and are working to address well-documented hurdles that have historically kept grocery shoppers overwhelmingly inside traditional stores. These challenges run the gamut, from significant logistical and supply chain issues to product pricing and delivery fee structures to concerns about the delivery of perishable items to creating value for the customer who lives just up the street from a grocery store.
What has largely been missing from this digital distribution conversation, however, is another piece of the supply chain puzzle. In addition to moving physical products from the manufacturer into the hands of the consumer, retailers are challenged with getting the manufacturers’ product information in front of the consumer so an online sale can be made.
According to survey respondents, product data attributes play an important role in fostering the kind of positive shopping experience that will help grocers secure the revenue and margin levels necessary to make this channel a winning proposition.
When asked specifically why they do not shop for groceries online, 46% cite product content availability or a lack of trust in the content provided. First impressions mean a great deal, which is why it’s crucial how grocery products are presented and viewed, especially in the online world of food commerce.
The quality of product data impacts all facets of the online retail business. In the eyes of the digital consumer, a product is only as good as the information associated with it. If that information is incomplete in any way, purchases are delayed, products are returned and brand equity is lost. All are very costly propositions.
Manufacturers have made great strides in streamlining processes that had historically hindered their content development and distribution efforts. Still, retailers’ desire for more and more product assets can offset gains made with these improvements.
Manufacturers need to address the shortcomings inherent in their current processes to meet the ever-growing requirements of their trading partners, to offer higher-quality content across channels, to provide a better online shopping experience to consumers and to realize more digital sales. One way is to employ a content management and distribution solution that moves product information from Point A to Point B in the simplest, most efficient and most affordable way possible. Such a solution would:
- Consist of a cloud-based content network that allows any number of trade partners to begin requesting, sending and receiving original product information and assets from a simple, low-cost and centralized platform.
- Have the ability for all product information to come directly from the manufacturer, so that trading partners always have access to data that is accurate, complete and consistent.
- Provide a high adoption and participation rate among all trading partners—retailers and manufacturers—that far exceeds the success rates of in-house solutions.
- Provide high data collection speeds that reduce time to market and opportunity costs.
- Have the ability for manufacturers to automatically deliver a perfectly formatted product feed directly to retailers. For example, the solution would support a consumer packaged goods company that needs UPC barcodes, the Global Trade Item Numbers (GTINs) and nutritional information, as well as item sizes, colors and materials.
- Offer a significant reduction in inefficiencies in the collection, management and distribution of product information.
In August 2015, Shotfarm surveyed 1,542 consumers about their online shopping habits and product information preferences. The survey, which was conducted online, has a 2.5% margin of error at a 95% confidence level.