Brick-and-mortar shopping vs. e-commerce: what’s the ROPO effect?
Shuttered businesses, empty shopping malls, and lonely sales people: this dreary description more or less meets the description of brick-and-mortar retailers’ worst nightmares. What’s been the cause for all the commotion? The answer is the e-commerce boom. And while some business models are on the decline or in the process of retooling to better meet customers’ needs, figures on the state of traditional retail prove that the sky really isn’t falling. As of 2016, e-commerce in the United States only occupied a market share of 8.1%.
Growing evidence from recent studies suggests that the rise of e-commerce has strongly changed consumer behavior, a development that doesn’t necessarily come at the expense of offline shopping. Instead, potential customers often use online shopping sites do to research on the products their interested in prior to making their purchases. This change in behavior is known as the ROPO effect.
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Defining the ROPO effect
ROPO stands for ‘research online, purchase offline’. The ROPO effect describes the process whereby the buyer first does their research about a given product online before finally making a purchase in person. Online, potential customers search for products, compare prices, and read through reviews. Once all the essential information has been gathered, they head to the local branch of the retailer their interested in and make a purchase. This phenomenon is known as webrooming. The opposite effect is also possible; this is referred to as showrooming. Here, customers go and check out products in person before finally making their purchases online due to various factors, like price differences.
Interaction between the channels
The ROPO effect is just one of the many new interrelationships occurring between the various marketing sales channels. Developments in purchasing and media-usage behavior have contributed to the changing expectations that customers now have for their shopping experiences: for one thing, customers today crave more information than ever about the products or services they’re interested in purchasing. This need helps explain the media disruption that occurs when shopping (i.e. switching from online to offline, or vice versa, during the decision making and/or purchasing process).
Healthcare, finance, insurance, and tourism are all industries that have been observing trends like this for some time now. For products requiring more extensive and professional advice, such as life insurance, many potential customers spend considerable time doing online research before they decide on a policy.
While professional advice may be important to many customers, according to a 2015 study on brick-and-mortar commerce carried out by PWC, this aspect doesn’t even rank among the top reasons to visit a retailer as opposed to shopping online. Some of the most popular motivations that participants cited were:
- ‘I am able to see, touch, and try merchandise’
- ‘To get the product immediately’
- ‘I’m more certain about the fit/suitability of the product’
- ‘I’m more comfortable buying perishable products in-store’
So what does this mean for traditional retail outlets?
The ROPO effect offers potential for traditional retail outlets. According to one Google study from 2011, roughly 38% of the respondents made their purchase offline after having first done their research online. The increasing prominence of mobile devices in our daily lives since the study was conducted means that this figure is probably much higher. Potential customers regularly use smartphones and tablets during their shopping excursions to find out more about the products and services they’re interested in - and above all to compare prices.
The consequence of this for local businesses means that they’re advised to become more ‘digital’ with new ideas and concepts, which in turn makes them more attractive to internet-savvy online shoppers. The future will most likely feature a fusion of both marketing and sales channels, and so-called ‘cross selling’ will continue to gain in importance. Connecting online and offline offers can be carried out with the help of different models. For example, marketing and sales teams have the ‘click and collect’ model at their disposal, which allows customers to reserve products online and then pick them up at a retailer at a later point. Instead of ‘research online, buy offline’, you could say ‘reserve online, pick up offline’.
Strengthening online presences
The terms local SEO and local commerce often coincide with the ROPO effect. The main idea behind these concepts is to present retail stores online and to make products available at these locations easy to find online. Even if a local store doesn’t have an online store, it’s crucial to still have some sort of internet presence available that communicates offers to potential customers.
Some of the most important information that needs to be included here is:
- A complete product portfolio
- The availability of the different items
- Opening times
- Directions and parking information
- Options for making reservations (telephone/online reservations)
On the IONOS My Website page much of this information can be integrated and made available in just a few clicks with the help of practical business web apps. Some retailers even go one step further.
A good example is illustrated by the ready-to-assemble furniture giant, IKEA. Their website enables users to check the availability of each and every product at the location nearest to them. Customers are able to print out a list of items from their basket, and this list will then contain the precise location of these items at the storage hall from the branch of your choosing.
In addition to a soundly thought-out web presence, finding the right online marketing strategy also plays an important role in getting the desired results from the ROPO effect. Local search ads are especially important here, as this is the only way that customers are able to find out that the store exists in the first place. So-called local SEO seeks to increase the search engine ranking of regional companies or offers.
Local retailers should use their chances
The ROPO effect is a big chance for brick-and-mortar retailers. A well-thought out and optimized online shop is the requirement for catching online customers and serving their needs in person. In addition to a clear overview of the product portfolio, it’s essential to communicate the availability of products. Customers that are attracted to stores by a solid internet presence only to find that what they want is no longer available will most likely make their purchase online the next time around. For this reason, giving customers the chance to contact a store or make reservations is crucial for those wishing to make use of the ROPO effect.