Brick-and-mortar versus e-commerce: What is the ROPO effect?
Shutter companies, empty shopping malls and retailers: this bleak description is more or less the description of the worst nightmares of brick-and-mortar retail. What was the cause of all the excitement? The answer is the e-commerce boom. And while some business models are going down or being reworked to better serve customer needs, figures on the condition of traditional retailers show that the air really does not fall. As of 2016, e-commerce in the US only had a market share of 8.1%.
Recent research shows that the rise in e-commerce has changed consumer behavior, a development that is not necessarily at the expense of offline shopping. Instead, potential customers often search online store locations to research the products they are looking for before making their purchases. This change in behavior is called the ROPO effect.
Defining the ROPO effect
ROPO stands for “online research, purchase offline”. The ROPO effect describes the process in which the buyer first searches online for a particular product before making a purchase himself. Online, potential customers search for products, compare prices and read reviews. Once all essential information has been collected, go to the local store of the store you are interested in and buy it. This phenomenon is called webrooming. The opposite effect is also possible; This is called showrooming. Here, customers see the products personally before they make their purchases online due to various factors, such as price differences.
What is the ROPO effect?
Interaction between the channels
The ROPO effect is just one of the many new relationships between the various marketing channels. Purchasing and Media Usage developments have contributed to changing customer expectations of their store experiences: for example, customers today need more information about the products or services they want to buy. This need helps to explain the media breaks that occur during shopping (ie, during the decision-making and / or buying process from online to offline or vice versa).
Health care, finance, insurance and tourism are all industries that have been observing trends for so long. For products that require more comprehensive and professional advice, such as a life insurance policy, many potential customers spend a lot of time searching online before deciding on a policy.
Although professional advice may be of interest to many clients, this aspect is not even one of the primary reasons for visiting a retailer, rather than shopping online, according to a 2015 study on physical commerce by PWC. Some of the most popular motivations that the participants gave were:
“I can see, touch and try goods”
“To get the product immediately”
“I’m more sure about the fit / suitability of the product”
“I’m more into buying perishable products in the store”
What does this mean for traditional businesses?
The ROPO effect offers opportunities for traditional business. According to a 2011 Google survey, around 38% of respondents made their purchases offline after researching online. The growing awareness of mobile devices in our daily lives since conducting the study means that this number is likely to be much higher. Potential customers regularly use smartphones and tablets during their shopping trips to find out about the products and services they are interested in – and above all to compare prices.
The implication for local businesses is that they are being made to become more “digital” with new ideas and concepts, making them more attractive to online shoppers with the Internet. The future will most likely involve a merger of marketing and distribution channels, and so-called “cross-selling” will become increasingly important. The combination of online and offline offers can be done with different models. For example, marketing and sales teams have a “click and collect” model that allows customers to reserve products online and later pick them up at a store. Instead of “researching online, buying offline”, one could say “book online, pack offline”.
Strengthening the online presence
The terms local SEO and local commerce often coincide with the ROPO effect. The basic idea behind these concepts is to present business online and easily find products online in these places. Even though a local store does not have an online store, it is important to have some sort of internet presence that passes offers to potential customers.
Some of the most important information that should be included here are:
A complete product portfolio
The availability of different items
Directions and parking information
Options for Reservations (Phone / Online Reservation)
On page 1 & 1 My website, much of this information can be integrated in just a few clicks and made available via convenient business web apps. Some traders even go one step further.
A good example is the prefabricated furniture giant IKEA. Through their website, users can check the availability of each product at the nearest location. Customers can print a list of items from their cart, and this list includes the exact location of those items in the warehouse of the store of their choice.
In addition to a well-thought-out presence on the Web, finding the right online marketing strategy plays an important role in achieving the desired results of the ROPO effect. Local search ads are particularly important here, because only then can customers find out that the shop even exists. So-called local SEO tries to increase the search engine ranking of regional companies or offers.
Local traders need to use their options
The ROPO effect is a great opportunity for brick-and-mortar retailing. A well thought-out and optimized online shop is the prerequisite to win customers online and meet their needs personally. In addition to a clear overview of the product portfolio, it is important to communicate the availability of products. Customers who only visit shops through a solid web presence to discover that what they want are no longer available will most likely be buying online next time. Therefore, it is important to give customers the opportunity to contact a business or make a reservation for those who want to use the ROPO effect.