Location Is (Still) Everything | David R. Bell

Summary of: Location Is (Still) Everything: The Surprising Influence of the Real World on How We Search, Shop, and Sell in the Virtual One
By: David R. Bell

Introduction

In the age of internet retail, the notion of ‘location’ may seem irrelevant. Yet, in ‘Location Is (Still) Everything’, David R. Bell argues that understanding the real-world context of consumers is vital for the success of businesses in the virtual market. The book explores various forces that influence online shopping behavior, such as search and geographic friction, delivery, and touch-and-feel features. Bell also discusses the importance of integrating the real and virtual worlds to minimize consumer friction and emphasizes the significance of location in marketing and building a customer base. Expect valuable insights on how location affects consumer behavior and ways to create a seamless user experience.

Virtual Retailing Strategies

Virtual retailing eliminates some real-world frictions but success requires integrating both the physical and online worlds.

Virtual retailing offers the supposed ability to “flatten the world” that eliminates real-world frictions such as store location, restricted business hours, and limited product selection. However, success in virtual retailing requires integrating both the physical and online worlds. Consumers’ location remains a critical factor in their decisions to shop online. A virtual retailer must factor in customers’ real-world circumstances in all stages of their strategy. This includes initial marketing efforts, cultivating growth, and establishing a bricks-and-mortar showroom, or other physical counterpart.

Understanding where your target customers are is critical to predict demand in virtual retailing. Consumers from different geographical areas use the internet differently. For example, a shopper living in an urban environment, with abundant nearby stores, may not use online shopping. However, a consumer living further away from stores may find online shopping more convenient. To succeed in virtual retailing, it is essential to offer customers an integrated experience where they can access your business in both the real and virtual world contexts seamlessly.

Frictions of Real and Virtual Shopping

The act of purchasing a product, whether in the physical or virtual world, is not free of frictions. Consumers face two types of friction in the real world: search friction and geographic friction. The former reflects the effort and cost of finding information about products and prices, while the latter is the effort and cost associated with getting to a physical store. In the virtual world, delivery and the inability to touch and feel products create friction. While online shopping is efficient, it decreases the potential for consumers to see, touch, or test items before purchasing. As a result, the shopping experience is of low friction. However, the delay in delivery may impact consumer purchasing decisions, especially when it comes to everyday products. Ultimately, our physical circumstances are intertwined with the way we shop in the virtual world, and this creates its own set of frictions.

Bridging the Real and Virtual Worlds

An effective way to minimize consumer friction is to combine elements of the real and virtual worlds. The internet can reduce real-world frictions and provide access to almost the same choices available to big-city residents. On the other hand, a real-world presence can reduce online frictions and increase visibility and credibility. The size and demographics of a city also have a significant influence on whether the internet is used as a tool for searching or shopping. Companies like WarbyParker, an online prescription eyewear retailer, have successfully bridged the gap between the two worlds by opening brick-and-mortar showrooms in different cities and introducing a “Home Try-On” program that eliminates information and geographic friction for customers.

Homophily and Consumer Behavior

People tend to cluster based on similarities in demographics, ideology, or culture. This leads to the development of ethnic, artistic, or political communities with distinct preferences in goods and services. The Internet further enables this clustering, creating markets of similar people from different locations. Neighborhoods with high social capital, where residents have higher levels of interaction and trust, are ideal for word-of-mouth advertising. Regional preferences extend to individual brands of coffee, soda, and beer. Understanding homophily is crucial in catering to these communities and shaping consumer behavior.

Targeting Hot Spots for Business Growth

The real-world location of senders and recipients is crucial in determining the veracity and usefulness of information in the virtual world. Communities with homophily and high social capital are excellent hot spots for businesses to target as they share information and are likely to have similar preferences and needs. Through social contagion, a virtual business that becomes popular in a particular zip code will probably spread to bordering zip codes. Retailers can nurture imitation by making their wares socially visible, perhaps by using brightly colored boxes or displaying a distinctive design motif on their products. A study of the Bonobos website found that seeding customers in neighborhoods with high social capital leads to sales growth through word of mouth.

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