Note To Online Retailers: Less Is More

by

Brett Nelson and Maureen Farrell 10.12.06,
6:00 AM ET

Everything suffers by comparison.That was the central–and somewhat unsettling–observation hammered home by Barry Schwartz yesterday at Shop.org’s online-retailing conference in New York City. The retailing association’s three-day networking event features a bevy of speakers–from specialists at Google (nasdaq: GOOG – news – people ), Home Depot (nyse: HD – news – people ), Borders (nyse: BGP – news – people ) and Best Buy (nyse: BBY – news – people ), as well as analysts from Goldman Sachs (nyse: GS – news – people ) and Forrester Research (nasdaq: FORR – news – people ).Schwartz’s spiel came straight from the pages of his 2004 book, The Paradox Of Choice, and its message has big consequences for all sellers of stuff online.The breezy, well-researched text takes a dear notion–that greater freedom translates into greater welfare–and turns it on its head. Schwartz cites a slew of studies showing that, while consumers have more choices than ever, the angst of having to cull through all those options tarnishes their shopping experience–and eventually takes a bite out of retailers’ revenues.”There is no area of commerce where this problem isn’t present,” says Schwartz, who has taught various psychology courses at Swarthmore College since 1971.To be sure, offering a vast menu of options attracts customers initially. We like the idea of going to the grocery store and finding, say, 175 kinds of salad dressing.But separating shoppers from their money requires a bit of savvy. In a world of infinite choices, the standard for choosing a product or service becomes nothing less than perfection, says Schwartz. And that’s the problem: When customers eventually do pull the trigger on that one salad dressing, they inevitably regret their decision because surely (they think) there was another dressing tastier, healthier and less expensive; worse, the unpleasant experience dissuades them from making a repeat purchase. Still other consumers become so paralyzed that they don’t choose at all.The key for retailers, says Schwartz, is to find the “sweet spot” that balances the level of choice with what customers can adequately process, appreciate and act on. That’s what Google did back in 1998 when it introduced its elegantly simple homepage, vaulting it ahead of established (and comparatively cluttered) players Excite and Yahoo! (nasdaq: YHOO – news – people ). More recently, clothier Ann Taylor (nyse: ANN – news – people ) and Staples (nasdaq: SPLS – news – people ) have spurred sales by reducing the number choices in each of their product categories.Another trick, courtesy of the restaurant industry: Present people with an overwhelming number of options but offer an easy, tangible solution right alongside it. This is precisely what the archetypal Greek diner does by clipping a brief list of “specials” to the inside of its phone-book-sized menu.A third tactic, geared mainly toward online retailers, is to “change the defaults,” says Schwartz. This means engineering the buying process such that shoppers automatically “select” a product or service, but still have plenty of options for customizing their purchase.The bottom line: An ounce of strategy will take you farther than a ton of inventory. Quips Schwartz: “The substitute for thinking is to offer a lot of options.”

Note To Online Retailers: Less Is More – Forbes.com

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: