Online Activity Correlates with Higher Average Ticket Prices

Published: March, 25 2008

By Thomas A. Prais

Among the eight categories surveyed for the 2008 The Retail Experience, home entertainment had the highest incidence of consumers researching their purchase online. While 53 percent of all survey participants had done so prior to their purchase, that figure rose to 64 percent among respondents who bought home entertainment furniture.

More than half of surveyed consumers who bought home entertainment furniture engaged in online price and style comparisons. While those who compared prices online did spend less than those who performed other online activities—seemingly giving credence to the popular belief that the Internet promotes commoditization—that is not the whole story.

The average amount spent among those who made online price comparisons was $1,250, or 5 percent less than for those who made style comparisons. However, that’s still 11 percent more than the average, $1,127 ticket price in this category. And that’s just consumers who researched online compared to all consumers. A little back-of-the-napkin calculation generates an average ticket of $1,084 for consumers who did not do any online research. Using that figure, those who performed online price comparisons spent 15 percent more on their home entertainment furniture than those who didn’t use the Internet at all.

In other words, even online bargain hunters are more lucrative customers than those who avoided the Internet altogether in planning their home entertainment furniture purchase.

And for most other forms of online research, the results are even more encouraging for home furnishings retailers that fully embrace the Internet. The nearly two-thirds of surveyed home entertainment consumers who used the Internet to make style comparisons spent $1,320, or 17 percent more than the average consumer in this category, and 22 percent more than those consumers who didn’t go online at all. Home entertainment furniture consumers who went online to find coupons or promotions—the cheapskates, one would assume—spent more still, ringing up an average ticket of $1,336.

Keep in mind, that, for the most part, we are not talking about people who actually made their purchase online. These are brick-and-mortar customers whose online research correlates with greater average tickets. In fact, only 6 percent of home entertainment furniture consumers who researched on the Web made an online purchase—and those who did turned out to be the biggest spenders, with average tickets of $1,548, or 37 percent more than the category average of $1,127 and 43 percent more than the “offline” average of $1,084.

One possible interpretation of the data is that, while the Internet does facilitate price comparisons, it also suggests a consumer who gives more thought to her purchase than someone who might just drop by the local, brand-name store and hope for the best. The consumer who researches a product online is a consumer who values that product enough to think ahead. Consider this: Consumers who researched online spent more than three and a half hours doing so, and those whose online activities correlated with the highest ticket prices, specifically those who made purchases or searched for promotions and coupons, also spent the most time online.