Consumer behavior at product search engines

What do consumers want at shopping engines?
The consumer wants to find what they are looking for with a minimal amount of effort. The consumer does not want to use Google as a book marking tool, which is what it effectively is at the end of day. There are different types of consumer shopping patterns.

Product search engines cater to consumer shopping patterns.
There are many different kinds of consumers. Some want search engine to find a red pair of shoes, or a part number, or drill down into a product category via taxonomy tree or using a classification engine.

Consumers have different shopping methods.

1. Some consumers need a solution: a certain auto part or an appliance that is a certain size.
   
2. Some consumers want to select several products from the same category and priority sort the products by attribute. Sorting by attribute requires that the product data records in the search engine be normalized and that a comparison feature be enabled.
   
3. Other consumers want to know if their peers think that a product has the cool factor. This requires that groups of the same type of people are able exchange information about a product.
   
4. Or is the product functional or reliable. Consumer reports is one source for reliability information. End users are another.
5. Some consumers want a recommendation from owners of the product.
6. Amazon has a voting system which purchasers of products use to rate a product after they have used it.
7. Drill down through taxonomy trees is another method.
   

The conversion of paper catalogs to web pages

Auto trader is an example of a company that thrived by offering the consumer an organized source of cars for sale in a particular geographical area. New Autotrader publications were released periodically.

If you were looking for a car in the 80's you might have gone to the local street corner and picked up a copy of the local classified ad weekly and turned to the auto section.

Apartment rentals are another example of a news paper information source being usurped by the web.

Craigslist changed the communication medium for the regular newspapers and free classified ad hand outs.

Autotrader migrated to the web. But competitors soon appeared to challenge their dominant position in the auto ad business. Companies such as vast.com and craigslist captured market share in the auto ad business.

Craiglist is a database that is maintained by its members.

Vast.com aggregates information from online sources.

The evolution of the catalog business

Almost every retailer has a product catalog. Sears and Montgomery Ward were some of the first catalog merchants. Customers would visit the local store, find products to buy in the catalogs, place orders with the clerks and then wait for the order to arrive at the store.

The next step in retailing was to target consumers via direct mail campaigns. Retailers mass mailed catalogs to customers. This method was popularized by companies such as Smith and Hawken, a garden supply company that started in the late 70's/early 80's. Specialized mail order firms, such as Smith and Hawken, created their own product lines by sourcing products from over seas that were difficult to purchase in the USA or by having contract manufacturers produce the goods. The retailers would find lists of customers and then mail them catalogs. Alternatively companies took out large ads in vertical magazines to sell to a niche market via mail order.

Another set of mail order companies grew by offering products at a lower price than stores selling the same products. These companies survived with high volumes and low margins.

Some of the mail order operators in the 70's and 80's became very wealthy in a short period of time. One unnamed computer retailer used their store front to get authorized with the major software companies so that they could then sell truck loads of Amiga software via mail order. They took out a full page ad on the back of a specialized computer magazine. Electronic Arts shipped them boxes with 25-50 game titles per box which they then in turn shipped to their customers. They could not run down the back stairs to the waiting UPS truck fast enough with the customer's packages. The partners in the firm later bought houses in Palo Alto and Atherton from their profits.

The process for the mail order companies worked as follows. Customers placed orders via 800 numbers. Operators would take orders and the goods were shipped via UPS. Customers paid with VISA or MasterCard . Many entrepreneurs were successful with this business model because they out sourced large parts of the their operations to the US Postal Service (delivery of marketing materials), credit card companies (collection of payments), and UPS (delivery). Companies such as Sierra Trading Post built large mail order operations around the mail order business model.

Consumers mail boxes over flowed with product catalogs as the mail order companies increased in number. A seemingly endless supply of product catalogs was delivered to the customer offering everything from outdoor products to flowers and food via mail order.

The next challenge for the mail order companies was the transition from a paper catalog company to an online retailer. Some companies were able to meet the challenge. Those that did not understand technology and web business lost out to the upstarts that marketed via the web. This will be discussed in the next post.