ETD: 958 Do refunds+ work?; Chinese Consumers; Year-End
Gifting Wrap-Up for 2005
E-Tailer's Digest
etd_post at gapent.com
Tue Feb 28 14:33:50 GMT 2006
E-Tailer's Digest --- Everything for the Retailer
Issue #0958 February 28, 2006
George Matyjewicz, Moderator mailto:georgem at gapent.com
Published by: GAP Enterprises, Ltd. http://www.etailersdigest.com
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CONTENTS
[1] Greetings
[2] Do refunds+ work?
[3] Chinese Consumers
[4] Year-End Gifting Wrap-Up for 2005
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[1] Greetings.
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Hi All:
List member Jim Clauson has a question on whether
offering discounts plus work, i.e., "if you find
it cheaper we will refund the difference plus
10%." What do you think? I'll hold my comments until next issue.
If you are planning on opening a retail store in
China, you better read about Chinese
Consumers. They have a practice, called tuangou,
which seems to work well there. I wouldn't be
surprised to see it catch on here in the U.S.
Pam Danziger has a wrap-up of the gifting for 2005. Interesting information.
Now, let's get to everything for the retailer.
Sincerely
George Matyjewicz, PhD
Chief Global Strategist, GAP Enterprises, LLC
mailto:georgem at gapent.com
http://www.etailersdigest.com
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[2] Do refunds+ work?
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I have a friend with illusions of becoming the
next NewEgg computer equipment supplier. His
plan for a niche is to offer slightly lower
prices, and then a "Price Difference Plus" guarantee.
He would refund the difference *plus* an
additional percentage. So, if a customer bought
a $100 stick of ram and found it for $90
somewhere else - he could get a $10 'difference'
refund plus maybe another 10 % of the difference -- for an $11 refund.
I have seen such offers, but have no idea if they
are successful in enticing business, how much the
refund might cost the company or how long to
leave the guarantee open (in weeks)...
I thought George or someone on the list might
have some experience or thoughts on this.
I have no stake in this - just trying to assist a friend.
TIA,
Jim Clauson
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[3] Chinese Consumers
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If you plan to do retail business in China, be
prepared for some heavy-duty haggling and
consumers using team tactics looking for
discounts. Today's WSJ has an article which
discusses a practice, called tuangou, or team
purchase, that begins in Internet chat rooms,
where like-minded consumers hatch plans to buy
appliances, furnishings, food, even cars, in
bulk. Next, they show up en masse at stores to demand discounts.
And, with 1.3 billion consumers, they will
probably get the prices they seek. Successful
haggling is a point of pride in China, where even
shoppers in department stores treat price tags as
mere starting points. Quality is not as important
to them as is the cheap price.
Zhang Guohua, the 34-year-old founder of
51tuangou.com, says he decided to launch his Web
site after saving money two years ago on bathroom
fixtures for his new apartment. He arranged those
purchases, he says, by posting messages in
general-interest Internet chat rooms, listing the
brands he planned to buy. "Let's meet at the
shop," he wrote. Many did. "I was really shocked
by the power of ganging up," Mr. Zhang says.
Last year, he says, 380,000 consumers registered
to use his Web site, free of charge, to organize
group purchases. He says he gets his profit from
ads and commissions from companies that offer discounts on the site.
In the U.S. and Europe, several Web-based
businesses were set up in the late 1990s to
arrange discounts on group purchases of consumer
goods. But customers were turned off by the
amount of time it took to complete transactions
and other complications, and many of the Internet businesses failed.
China's version of team buying, however, leads to
face-to-face negotiations. "That's a little
scary, the mob mentality," says Tom Van Horn,
former chief executive officer of Mercata Inc.,
whose now-defunct Web site attempted to negotiate
bulk discounts for U.S. consumers.
In Shanghai, when Cai Kun decided in December to
buy a new General Motors Corp. subcompact, the
Chevrolet Aveo, he logged onto a Web site where
others were chatting about staging a team
purchase. On a Saturday morning, 28-year-old Mr.
Cai and 17 others met for the first time at Anji
Mingmen Car Services Co., a Chevy showroom in
downtown Shanghai. As planned, they told the
dealership's manager they would buy 18 Aveos in
one pop -- but only if he would cut roughly 10%
off sticker prices as high as $12,862.
Negotiations went on for six hours. Group members
broke away occasionally for private meetings. The
dealer tried unsuccessfully to negotiate
separately with buyers who wanted the more
expensive SX model and those who didn't. In the
end, the group extracted a discount of nearly 9%
on a fleet of 18 Aveo cars, along with gifts such
as car-wash vouchers, says one buyer. Group
members such as Mr. Cai who bought the fancier
Aveo SX AT, for instance, agreed to pay $11,712,
about 8.9% below the sticker price. Individual
buyers can normally expect a discount of as much
as 6%, Shanghai Chevrolet dealers say.
Yang Feng, sales manager of the dealership that
provided the discount, declines to talk about
individual deals. "Team purchases aren't common,"
he says. "But if more than 10 buyers come
together, we can give them a cheaper price than we do individuals."
Details at...
http://online.wsj.com/article/SB114106170222284388.html
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[4] Year-End Gifting Wrap-Up for 2005
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Americans spent $1,934 on average buying gifts
last year, according to the latest results of
Unity Marketing’s quarterly gift tracking
study. While the fourth quarter remains the most
important season for gift purchases, the typical
gifter spent less than half of their annual
budget ($928) from October to
December. Throughout the rest of the year,
gifters spent an additional $1,006 buying gifts.
“Gifting is an important motivator for people to
go shopping. Retailers tend to overlook the
potential of the gifting market except for the
final months of the year, while consumers are
active shopping for gifts all year
long. Birthdays, followed by anniversaries, new
baby, friendship/thank you, and weddings are the
top five gifting occasions. Christmas, Mother’s
Day and Valentine’s Day are the most popular gift holidays.
Gift Selections in Fourth Quarter Differed Markedly from the Rest of the Year
Throughout 2005, giftables were the most popular
gift category. Giftables include such
traditional gift items as candles, flowers,
figurines, stationery, collectibles, seasonal
decorations, gift for pets and other ‘gifty’
items. But during the fourth quarter, giftables declined to fourth place.
For the holiday gift season, entertainment and
recreation gifts rose to first place for
gifting. This category includes such items as
books, toys, sporting goods, video/audio, DVD's
and entertainment equipment, photographic
equipment, computers, games, etc. In all of
2005, this was the second most popular gift category.
Clothing and fashion accessories rose to more
prominence as a gift in the fourth
quarter. Clothing and fashion accessories were
the second most popular gift in the last three
months of the year, while ranking in fourth place overall.
Store gift certificates and gifts of cash were
the third most popular gift during both the
fourth quarter and throughout the year.
People make different gift choices depending upon
the occasion for the gift. Holiday gift giving
tends to be focused across a wider range of gift
selections, while throughout the rest of the
year, people think of giftables first. Retailers
who want to capture a greater share of gift
givers’ spending should look more closely at
expanding their giftables offerings, targeting
the $25 to $50 price range which is the spending
sweet spot for shoppers when buying a gift.
The most popular giftable items in order of
preference were candles and candle accessories;
flowers, plants and garden accessories and
decoratives; seasonal ornaments and decorations;
gifts for pets; and figurines and sculpture.
About Gift Tracker Survey
Unity Marketing, on the forefront of market
research on the gifting market, conducts a
quarterly gift tracking study to measure the
pulse of the gift consumer in a longitudinal
survey of 500-600 gift buying consumers. Every
quarter Unity tracks what gifts they bought
during the past quarter, what gift occasions and
holidays stimulated those purchases, how much
they spent per holiday and occasion, where they
bought gifts, the store and product brands they
relied upon for gifts and their expectations for
future purchases of gifts. The next Gift Tracker
survey will be fielded early April 2006 to track 1Q2006 gift purchases.
The results of the quarterly Gift Tracker studies
are compiled in an annual report called Gifting
Report 2006: The Who, What, Where, How Much and
Why of Gift Giving & Shopping, scheduled for
publication in March/April 2006. See
http://www.unitymarketingonline.com/reports2/gifting/gifting.html
For more information on Gift Tracker, click this
link http://www.unitymarketingonline.com/reports2/gifting/gifttracker.html
Pam Danziger,
President of Unity Marketing
Author of Let Them Eat Cake: Marketing Luxury to
the Masses — as well as the Classes.
717-336-1600
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