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INTERNET
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February,
2003 Issue
Introduction
Visa
Shopping was up 103 per cent in Canada this holiday season. In
the United States, many online retailers and cataloguers
experienced strong sales growth ranging from 25 per cent at
1-800-flowers.com to 101 per cent increases at ebags. While many online companies target baby-boomers and the
teen market, too many neglect the elderly. These tech savvy
individuals have above 5 years experience online, being mostly
self-taught they use the Internet for communication, product research, and games!
Bluefly
experimented with new ways of marketing online, sending loyal
customers advanced email notice of discount offers before
offering them in-store. The strategy worked so well that the company used
it this Christmas, also giving away free bags to
absorb email addresses. McDonalds,
similarly, experimented with email marketing to build brand
awareness and increase sales of its grilled chicken flatbread
sandwich. It worked even more effectively among the 18-49 year
old segment than using traditional advertising alone. Joint,
online and offline marketing strategies work well together.
Customers can be found at one-stop price comparison shopping
portals. Over twenty-three million (or 23.6 million) shoppers
visited these sites in November. Customers enjoy the
convenience of one-stop shopping. Ninety-four per cent of
comparison shoppers at BizRate admit to visiting numerous sites
to compare prices. While many US companies advertise on
comparison shopping portals, few Canadian companies utilize this
promotions and sales-generating medium.
The general
comfort and convenience with online shopping, have transferred
to other market sectors as well. Nonprofit organizations were
shown to raise six times more money using joint online and
offline fundraising strategies. Apparently, donors enjoy the
flexibility of being able to support favoured services, without
being hassled for money at their doorstep.
Ensenda has found an important niche market for same
delivery of light and heavy products ordered online. Eighty-four
per cent of customers would select this option given favourable
price comparisons with other expedited services. Univision has
negotiated contracts with AT&T Wireless, Bank of America,
Citibank, Pepsi, and Verizon as they pursue the lucrative $43
billion buying power of the Hispanic community.
With all
this good news, what could possibly go wrong? Today, ISPs and
portals are preparing to bill email marketers through a series
of tiers for the expected 268 billion emails that they will send
out by 2005. Gator has decided to challenge top search engines
by offering pop-under windows showing alternative search results
from search engines. Another firm intends to place full
motion video ads in browser windows as individuals move from
one web site to the next. The Jamaican Tourism Board has
launched a complaint with the World Intellectual Property Office
against a Canadian firm to gain control of the domain name “Jamaica.com.”
Search engine marketers and internet marketers may need to
consider a background in copyright law as BrandCrawler.com, a
newly released product from BulkRegister, scours the net for
brand, copyright, code, and meta-tag infringements.
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Contents
and Articles Below
- Canadian
Online Visa Shopping Up 103%
- The
Elderly Comprise a Good Market for Online Marketers
- Online
Retail Sales Experience Strong Growth
- Sales
at Amazon Up 28% Due to Lower Prices and Free Shipping
- Cataloguers
Increase Sales this Holiday Season
- Marketers
Should Consider One-Stop Comparison Shopping Portals
- Bluefly’s
Internet Marketing Strategy
- Restrictions
on Canadian Online Pharmacies
- A
New Online Video Advertising Alternative
- Domain
Name Being Challenged in Canada
- Online
Advertising to Hispanic Community Expands
- How
to Protect Your Brand Online
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Canadian
Online Visa Shopping Up 103%
Visa cardholders in Canada
spent $772 million during the 2002 holiday season, completing
6.4 million transactions. This expenditure comprises a 103 per
cent increase over the same period, as measured from October 1
to December 31, 2001 just one year earlier. Despite this
increase, however, 85 per cent of Canadian credit card holders
with online access remain reluctant to make purchases online.
These persons raise concerns such as security and fraud as
contributing to their reluctance.
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The
Elderly Comprise a Good Market for Online Marketers
Online marketers may need to
re-evaluate the way they think about the elderly, their shopping
patterns, and behaviour online. According to SeniorNet, 46 per
cent of adults age 50+ have been online for over 5 years.
Generally, these adults began using the Internet through one of
three methods: (1) 76 per cent taught themselves; 37 per cent
enrolled in a class; and (3) 30 per cent received help from a
relative. The way these individuals use the Internet appears
comparable to younger adults with some small variations: 94 per
cent use the Internet to communicate with friends and family; 72
per cent access news; 70 per cent access health information; 49
per cent conduct product research; and 35 per cent play games
online. All this data impels online marketers to broaden their
vision on online marketing campaigns, never discounting the
ability of elderly persons to make strong purchasing decisions.
Marketing managers may need to look more closely at segments
such as lifestyle choice, interests, socio-economic status, and
convergence among generations as factors influencing buying
decisions, instead of age.
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Online
Retail Sales Experience Strong Growth
In
the 2002 holiday season, online retail sales grew 20 per cent, with several
online retailers experiencing sales growth above 30 per cent.
Excluding travel expenditures, sales were forecasted to reach
between $7.92 billion and $13.7 billion this holiday season.
Similarly, many online retailers realized strong sales
increases:
All these
businesses and their products comprise strong growth
opportunities for entrepreneurs interested in online retail
marketing.
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Sales
at Amazon Up 28% Due to Lower Prices and Free Shipping
Amazon
realized 13 per cent growth in segment sales for books, music,
and DVD/Video in the fourth quarter. Sales in the electronics,
tools, and kitchen segment grew 21 per cent to $262 million in
the same quarter. International segment sales representing U.K,
Germany, French and Japanese sites grew 76 per cent to $461
million. Nonetheless, apparel and accessories, representing 450
brands, comprise
the fastest growing segment at Amazon (since November). In
addition to 5 price cuts during the last 18 months, Amazon
will offer year round free shipping on purchases over $25.
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Cataloguers
Increase Sales this Holiday Season
Discussions
with Sears, Lands’ End, and Williams-Sonoma reveal that 78 per
cent of cataloguers increased holiday Internet sales in 2002.
Web sales increased an average of 47.3 per cent from 2001. While
17 per cent of companies reported that Internet sales remained
constant, none posted a decline.
Similar results were
obtained for print catalogue sales, with 52 per cent of
companies reporting an increase. Print catalogue sales increased
an average of 12.5 per cent over 2001. Only 22 per cent of
companies reported a decline in print catalogue sales, with an
average decline of 11.4 per cent. Print catalogue sales remained
the same for 17 per cent of companies.
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Marketers
Should Consider One-Stop Comparison Shopping Portals
One-stop
comparison shopping portals attracted 23.6 million people or 25
per cent of online shoppers in November. In a study conducted by
BizRate, a comparison shopping site, shoppers reported the
following tendencies: 54 per cent reported being more deal
hungry than in 2001; 94 per cent visited numerous sites to
compare prices; and 72 per cent shopped around for the best
shipping charges. All this data suggests that to thrive online,
marketers will need to offer clear price, shipping and product
advantages. Businesses that ignore comparison shopping, may want to
provide relevant information for shoppers on the web site. The aim of this strategy is not to chase buyers but to create
an environment conducive to completing transactions. Below,
please find a list of one-stop comparison shopping portals:
While the
number of comparison shopping portals in Canada remains
relatively low, Canadian marketers may want to consider US sites
in situations involving clear price and product quality
advantages.
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Bluefly’s
Internet Marketing Strategy
At
Bluefly,
one Internet marketing strategy involved providing online
shoppers with a 48 hour advanced notice of special offers before
making the same offer available to the general public. This
strategy proved so effective that, during the holiday season,
the company continued the strategy using first weekly, then
bi-weekly emails, followed by advanced private previews of sales
and new products. Though seemingly aggressive, this strategy
proves effective since shoppers have a relationship with
Bluefly and, probably, appreciate the offer of advanced discount
prices.
Other retail
marketing strategies at Bluefly included a sweepstakes to
capture new email addresses. Each week the company gave away a
Hermes handbag, in exchange for customer names and email address.
While this strategy may prove too expensive for some small to
medium size businesses, there may be many other incentive that
will motivate potential buyers to offer their email addresses.
Just a few
comments on Bluefly. It targets fashion-savvy women above age 30
with a household income above US $75,000. Providing discounts up
to 80% off products, the company maintains ties with high-end
vendors through a strategy of ensuring that their products,
though discounted, will only be seen near other high end
vendors. Consequently, the consumer is satisfied due to
discounts on high-end products. Vendors are satisfied since they maintain brand
integrity, although the selling price shifts downward. Importantly, Bluefly earns
a valued reputation as a great place to shop online. Oddly, the
site uses a soft blue tones, which are not too feminine by
design. Nonetheless, the market is saturated with soft pink
hues, creating the impression of females who lack the strength
and savvy to shop independently online.
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Restrictions
on Canadian Online Pharmacies
GlaxoSmithKline
(GSK) Inc., a based US wholesaler, intends to restrict the sale
of pharmaceuticals to Canadian businesses that sell drugs online
to US citizens. The company intends to withdraw GSK products
from Canadian companies such as Kohler’s Drug Store in
Hamilton, Central Med Pharmacy in Toronto, and Point Douglas
Pharmacy in Winnipeg.
GSK
products are approved by Health Canada for sale in Canada only,
and not the US. Selling to Americans, therefore, breaches US
food and drug law. Other concerns mentioned by GSK include: (1)
differences in product formulations and indications; (2)
regulatory tracking requirements and manufacturing; and (3)
transport and delivery between Canada and the US. Despite the
concerns for US patient safety,
GSK neglects to discuss the $145 billion US market for
online prescription drugs, which may be threatened by Canadian
discount pharmacies.
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A
New Online Video Advertising Alternative
Destiny
Media Technologies
and FBPA Group, recently, launched
the “first streaming interstitial video solution.” In
other words, this technology will provide live moving video ads
in browser windows during the gap between closing one website
and moving to the next. Unlike
pop up windows, however, these ads turn off once the desired
page is downloaded. While the two companies claim that this new
technology will reach 93% of all Internet users, bypassing
firewalls and other ad blocking technologies, one stumbling
block may be the move to high speed connections. After all, how
much time will there be for a 15 second ad if it only takes two
seconds to switch between web sites?
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Domain
Name Being Challenged in Canada
The
Jamaica Tourist Board (JTB), presently located at www.jamaicatravel.com,
is preparing to take legal action against the Canadian
owner of www.jamaica.com.
Appealing to the World Intellectual Property Organization (WIPO)
– a United Nations body mandated with worldwide protection of
intellectual property, the JTB intends to show that they are the
rightful owners of the domain name.
Oddly,
this case between a country and a small Canadian business might
not be so simple after all.
For example, in December 20, the WIPO ruled for a US
based business and against Queen Elizabeth in an alleged
cyber-squatting case filed for www.newzealand.com.
In this case, three neutral arbitrators concluded that New
Zealand neglected to register the disputed name as a trademark
and that the US firm, Virtual Kingdom, has not acted in bad
faith in registering the domain name.
Marketers
intending to launch a claim before the WIPO should be aware of
the three principles enabling companies to dispute various
domain names:
(1)
the domain name is identical or confusingly similar to a
trademark or service mark in which the complainant has rights;
(2)
the respondent has no rights or legitimate interest in
respect of the domain name; and
(3)
the domain name has been registered in bad faith and is
being used in bad faith.
Generally,
the most important point is that establishing a valid trademark
is key to protecting domain names for business. In Canada, visit
the Canadian Intellectual Property Office (www.cipo.gc.ca).
In the US, visit the United States Patent and Trademark Office (www.uspto.gov).
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Online
Advertising to Hispanic Community Expands
Univision.com,
a Hispanic portal, reported an increase in ad spending by
companies intending to reach the Hispanic community. In 2002,
the company added 70 new advertisers, bringing the total number
to 100 while increasing revenues by 92% (AT&T Wireless, Bank
of America, Citibank, Fannie Mae, Pepsi, and Verizon). Univision
received 733,000 unique visitors in December.
Hispanics
have become the most populous minority group in the US with a
population of 37 million, according to Comscore
Networks. There
are 15 million Hispanics online with an expected growth rate of
about 20 per cent per year for Internet use, becoming the
fastest growing cultural group online in the United States.
Population demographics
for the American Hispanic community are as follows: New York and
Los Angeles (1.6 million); and Miami (718,000). Similarly,
according to DRI/McGraw Hill, the Hispanic represents $443
billion in annual buying power.
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How
to Protect Your Brand Online
BulkRegister,
the third largest domain registrar in the US, announced the
launch of BrandCrawler.com, an online service that monitors
millions of web sites for potential abuses of companies product
names, brands and trademarks. Designed for small to medium size
businesses, BrandCrawler
will prevent revenue loss by scouring 40 million web sites from
all generic domains such as .com, .org, .net, .biz and .info,
and country domains looking for abuses of company brand. This
technology also has the ability to check regular text, links and
logos as well as sites' hidden text and “meta-tags.”
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