20 Nov 2012
Tech-ing It Online
Retailers' influence lessen as 7 out of 10 gizmo buyers surf net to choose gadget, reveals a Google-Nielsen study
Google India’s tech shopper report, a pan India offline study conducted by Nielsen (on behalf of Google) which attempts to analyse the influence of the internet on consumers purchasing technology products, albeit in retail stores, becomes topical in this context. The idea was to observe how “user behaviour has been changing offline because of online trends,” says Rajan Anandan, VP and Managing Director, Sales and Operations of Google India.
Of the 3,677 respondents interviewed across 12 (4 metro, tier 1 and tier 2) cities, 40 per cent said they engaged in online research before buying a product. The most definitive finding is that an impressive 69 per cent of these intending purchasers make up their minds about the exact model (of smartphone, laptop, tablet, camera etc) they want to buy based on the gamut of information available on the internet before visiting a store. “The retailers’ ability to influence a buyer's mind is diminishing and companies need to look at engaging buyers online about their products and offerings”, explains Anandan. The study conducted at 200 multi-brand and single brand retail stores, interviewed respondents as they were coming out of these stores of whom 34 per cent has already made their purchase. Not surprisingly, 86 per cent of the interviewees were male and 92 per cent fell within the demographic of 18-44 years.
Interestingly, the trend highlights that the impact of the internet (in the final decision making process) is greater in smaller cities. The study finds that 83 per cent of consumers from tier 2 cities (Kanpur, Vadodara, Kochi, Bhubaneshwar) know precisely what they wish to purchase (owing to online research) before they enter a store. The number dwindles to 73 per cent when it comes to tier 1 cities (Chandigarh, Pune, Indore, Coimbatore) and decreases to 53 per cent in the metros (Mumbai, NCR, Chennai, Kolkata).
Contrarily and more predictably, the percentage of people committing to pre purchase tech research online is highest in metros at 43 per cent and lowest in tier 2 cities at 25 per cent. Anandan attributes this acute reliance on online data to inform consumer choice in tier 2 cities to the relatively low penetration of brick and mortar gadget and consumer goods retail shops in these cities.
The monumental reach of the internet in tier 2 cities is concomitant with the sharp rise mobile internet users. The new mobile generation emerges from smaller cities which is evident from the fact that 22 per cent of people from tier 2 cities (in this survey) access the internet exclusively through their mobile phones as opposed to 8 per cent in metros. Despite the growing presence of the online medium across India it still isn’t the most effective medium for generating initial awareness among prospective consumers as it cannot surpass 9 and isn’t likely too very soon) surpass the lure of television. Fifty-three per cent of the respondents revealed that television advertisements caught their attention as opposed to internet ads which intrigued 23 per cent of the population: this is however higher than print and radio ads which only intrigue 14 per cent of the people, the study reveals.
Price point is a decisive moderator of research patterns since the amount of time spent in learning about a tech product is directly proportional to its price; research intensity is higher for high value products. In the mobile phones category, the research intensity increased when price exceeded Rs 7000, for laptops when the price exceeded Rs 30,000.
Among the products most researched online, laptops (at 54 per cent) top the list, followed by mobile phones (39 per cent), digital cameras (38 per cent) and televisions (33 per cent). The study estimates that an interested consumer devotes an average of two weeks gathering information about a product before purchasing it. Google’s internal data reveals that volume of search queries on technological and consumer electronics goods is growing at a healthy rate of 39 per cent and is second only to travel. With around 137 million internet users in India, that translates into a lot of hits.
Search queries on mobile phones are growing three times faster than those from desktops and this trend is more concentrated in tier 2 cities as previous statistics indicate. Tablets are the most searched category, growing at 160 per cent YoY, followed by television (51 per cent), mobile phones (41 per cent) laptops at 39 per cent and refrigerators at 19 per cent.
How many of these tech searches convert into real purchases is a larger question, not quite answered by the survey in question which also chooses to exclude purchases made from e-commerce portals. There is however reason to believe that the rate of conversion (from search to purchase) is significantly high since 67 per cent of the interviewees claimed that they have used Google maps, Original Equipment Manufacturer (OEM) website to locate an electronics store for their convenience.
This corroborates with a recent survey by Deloitte which reports that only 15 per cent of India’s population shops online.
Read: E-shopping Yet To Take Off
Seventy-two per cent feel the need to buy products from such stores to get a complete ‘touch and feel’ of the product they have otherwise finalised. Forty-six per cent believe they can secure a better deal in terms of price from shop owners.
The study culminates in emphasising the new age wisdom which calls on brands to develop their digital strategy, better. Despite the proliferation of user review sites, and technology blogs (such as tec2 and techradar) the survey finds that 66 per cent of people rely on OEM websites to gather information about the product they are interested in buying. Blogs and review sites are favoured by only 39 and 38 per cent of the consumers, respectively. “Brands need to focus on building assets for the internet,” quips Anandan while going on to talk about how Google’s advertising platform will thus enhance its forcus on screening relevant ads. Given that the trust factor (at 78 per cent) is very high among brand websites, it is essential that they focus on providing what consumers search online on their website itself,” Neeraj Gupta, Industry Director, Google India, exclaims.
What matters most of course is price, followed by photographs, product specifications, videos and product comparison. Most respondents (82 per cent) watched user videos on brand websites whereas many (62 per cent) relied on YouTube videos. Given that the internet leads to a multiplicity of choices: 55 per cent of people searching for one particular product found many others within the same league and 57 per cent subsequently changed their original choice after a detailed online research, tech OEMs need to work on creating the complete digital package, to whatever extent possible in the near future.