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e-Commerce: Understanding the customer purchasing decision-making process

Today we are living in a world dominated by technology, and most areas of our daily lives

have been impacted by it. The rules for living and participating in this “new” world has changed the way we live, work  and  indeed  relate to one another.

The  big  question  is,  how  do  we  prepare  ourselves  – personally  and  in  business –  to  cope,  participate  and  reap  the  benefits  of  the digital economy?

It is against the background of the demands that participation in the digital economy places on small businesses and communities that we at Let’sTalk, have developed our Building Sustainable Futures strategy. The purpose is to support socio-economic transformation, through capacity building and the adoption and innovative use of ICTs in both social and business contexts. In order to achieve this vision, we have launched numerous projects, including the Showmelocal.info and Shoppinglocal.co.za programmes to empower SMME’s to learn about and adopt technology and in particularly e-commerce (in the latter programme) to prepare themselves for participation in the digital economy.

E-commerce has become an integral part of business in the modern world. In today’s competitive and convenience focused society, customers don’t always want to venture out to find and buy products and services as they did 10 or 15 years ago. This is not to say that consumers are abandoning traditional brick and mortar retail stores and outlets in favour of doing business online – far from it, but e-commerce is a rapidly growing consumer outlet that is not showing any signs of slowing down. If you sell something and plan to continue to do so for the foreseeable future, you’ll want to pay attention to e-commerce and become an active participant as soon as it is feasible for your business.

In our experience, very few small businesses – formal and informal – have the resources in terms of the technical know-how, time, personnel and money to build, maintain and manage a fully-fledged e-commerce website. This is especially true for small or medium sized businesses, both formal and informal and often home-based. In order to support, enable and grow these particular category of businesses, we have launched Shoppinglocal.co.za, an online marketplace complete with multiple vendors, products and a full, secure payment processing service, enabling easy, secure and instant transfer of money between online buyers and sellers.

Let’s for a moment (and briefly) consider the consumer decision making process when purchasing a product or service. Whether they’re purchasing a breakfast cereal or a sports car, all consumers go through basic steps, known as the consumer decision-making process, to determine what products and services will best fit their needs. As a business owner, you should review these steps and put yourself in the customer’s shoes and imagine them having a need to buy your product or service.

The first step of the consumer decision-making process is recognizing the need for a service or product. Recognition is driven by both internal and external stimuli. As we have seen on Facebook and other online groups, examples of stimuli for consumers wanting to buy a particular handmade or craft product for example, include an upcoming birthday, an anniversary or special event such as a matric fair well and the need to buy something special and unique.

Need recognition, whether it occurs through internal or external means, prompts the same response: a want.

Once a consumer recognises a want, they need to gather information to understand how they can fulfil that want.

Now comes step two – the task of gathering information. Consumers again rely on internal and external factors, as well as past interactions with a product or brand, both positive and negative, to make their decision. In this stage, the consumer may browse through options at a physical location, but today, most consumers, when preparing their mind to buy something, begin by searching for it on internet.

As you already know, websites serve as a portal, giving consumers access to information on your products and services (the same goes for a Facebook page), where otherwise they may not have even known your business existed. Now imagine that instead of only having a normal, static website, you had an interactive e-commerce site, then the same product a consumer are looking for, are now only a few clicks away from being theirs – with little physically effort.

Therefore, having a well-managed, eye-catchy e-commerce website can positively influence your customers purchase decisions – helping you to boost your conversion rate as people get a possibility to instantly buy from you rather than visit a store. Also consider reach – having an e-commerce site makes your business accessible to consumers from literally all over the world – and suddenly geographical location becomes less important as your potential market has no physical boundaries.

For the purpose of this article, we are not delving deeper into the other three steps, apart from a short practical note on each of them.

 Step 3 involves consumers weighing their prospective choices against comparable alternatives. From our research it has been clear that using for example a Facebook group as your [only] marketing platform is not sufficient compared to an e-commerce site. Let’s take the example of Facebook groups where a buyer expresses an interest in buying as specific product – the result may be multiple responses and comments from potential sellers. In the first place, your response may get lost among all the others and the buyer may not even get to see your comment. Furthermore, you are prevented from giving the buyer sufficient information on the product because the rules may not allow you to post a link to your website or FB page. In the event where you make a post to advertise your product, it may only be visible for a limited period of time as your post moves down the list as more and more new posts or comments are added to the group page.

This not only makes the purchasing decision for the buyer much more difficult because of the lack of information, but you as seller do not get the opportunity to share enough information about your product to influence the buyer’s purchasing decision.

This directly defies the purpose of marketing, because as a brand you are required to give the potential customer access to as much information as possible, with the hopes that they decide to purchase your product or service. When creating content, put yourself in the shoes of your customer. What might they be interested in knowing about your product? Is there something that sets your product apart from competitors? Explore ways to present information to your potential customers that will help them arrive at a decision faster and easier.

Step 4 is the actual purchase decision. This is the moment the consumer has been waiting for: the actual purchase. Once they have gathered all the facts, including feedback from previous customers (an e-commerce site allows for ratings and product reviews by previous buyers), the consumer should arrive at a logical conclusion on the product or service to purchase. In this step, we should make it as easy for a buyer to make the purchase as possible. An e-commerce site offers buyers various payment options that are quick, convenient, user-friendly and secure. Whereas in the past, making a purchase online was limited to buyers with credit cards only, today we can offer buyers choice in terms of the payment method, including credit & cheque cards, Instant EFT, Bitcoin, mobicred, ATM debit cards (via Visa Electron and Maestro), Masterpass and Scode.

The 5th step involved a post-purchase evaluation. This part of the consumer decision-making process involves reflection from both the consumer and the seller. As a seller, you should try to gauge the following:

  • Did the purchase meet the need the consumer identified?
  • Is the buyer happy with their purchase?

Remember, it’s your job to ensure your customer continues to have a positive experience with your product. Post-purchase engagement could include follow-up emails, discount coupons, and newsletters to entice the customer to make an additional purchase. You want to gain life-long customers, and in an age where anyone can leave an online review, it’s more important than ever to keep customers happy.

Happy Shopping