Internet can be considered one of the most explosive inventions of the world. It can easily be placed alongside inventions that radically changed how our world functions, such as combustion engine, printed press, and sliced bread.
In fact, the impact that internet is having on the lives and buying decisions of consumers exceeds everything that has ever happened before, if you look at it from the e-commerce point of view.
During the past years, e-commerce sales in the U.S. have been growing at a very steady speed, reaching up to 15.7% YoY growth, while the total retail market growth was only 2.2% YoY, as of Q3 2016.
Source: Business Insider
In just two years, the U.S. e-commerce sales grew by nearly $30 billion.
Charts and information like this have prompted every big retailer to focus their attention on the online world more and more, while in the meantime shoving the offline world to the backstage.
And that, is the biggest mistake of all.
What businesses need to understand and remember for all time is that virtual world decisions and information consumption choices are largely dictated by the real world.
If two people with the exact same demographic (age, sex, income, education, etc.) are located in two different physical places, their online search queries, shopping preferences, and buying habits will be different. This might turn some of them into undesirable customers for certain businesses, if businesses had this information.
How the real world influences customer behavior in the virtual one.
Let’s look at a very simple example.
A customer jumps onto Bonobos.com and buys a pair of stylish pants. First time purchase. Nice!
Who was the customer? (Demographics)
A woman named Alice, age 29, Caucasian, high education, high income.
What kind of a person is Alice? (Psychographics)
Based on her browsing history, online activities and social media, you can conclude that she is into sports, loves adrenaline, but also enjoys romantic evenings.
Why did Alice buy a pair of stylish men’s pants? Will she become a returning customer or was this a one-time purchase? Is it worth spending marketing budget on Alice?
Well, we have absolutely no clue…
…until, we take a look at location data.
Turns out that Alice got a new job and has recently moved to Abbot Kinney Blvd, Venice, CA 90291, and because she is surrounded by local stores, stylish and trendy neighbors who have tried the product before and most probably endorsed it, she bought a pair of pants for her husband from a brand that has a high influence where she lives now. Perhaps this way she and her man can merge into the new community a little easier.
Just a month before, the couple lived in Denver, Colorado and had absolutely no intention of buying anything from Bonobos.com, because there was simply no need to.
What do we have as a result?
Same demographics, same psychographics, different location – brand new customer. Alice’s location in the real world made her become a customer for Bonobos in the virtual world.
Will Alice become a returning customer? There is a ridiculously high chance that she will, while she is in that location. Is she worth spending marketing dollars? Absolutely.
Location matters. More than you think.
There are, and always will be, a number of various reasons that drive a consumer to make a purchase on your website.
Don’t overlook location just because you have an e-commerce business department or are an e-commerce retailer.
Remember, your buyer (every one of them) is still a human being who lives in and is bound by the physical world. His or her buying decisions are vastly influenced by surroundings, how they move through that space and social dynamics that makes us, as humans, human.