Retailers earning more from online sales than offline: Study

Sydney: Retailers offering customers an option to buy online are earning more revenue than those who sell their products only through offline channels, new research has found.

In the study, the team investigated how a larger selection of products available online affects consumer spending.

Junzhao Ma, lecturer at Australia`s Monash University, used the data from a large US retailer that specialises in apparel and offers both printed catalogue and internet shopping.

Ma took note of the retailer`s in-demand main products which are offered in the catalogues and the less-popular items that were available on the retailer`s website and found no or less space in its catalogues.

He found that online shoppers spent more time than catalogue shoppers on both popular and low-demand products -- almost 11 per cent more per customer per year on the main offerings and 250 per cent more on the hard-to-find niche items.

Catalogue shoppers spent only 2.5 per cent of their total on niche items, yet the category accounted for 8.4 per cent of the total spending of online shoppers.

"Low-selling products are regularly pruned from the product line to reduce operational complexity and corresponding cost...but as shoppers grow more accustomed to the idea of searching for niche items online, carrying these niche products can not only yield additional revenue but also help retailers recruit and retain customers," Ma said.

Overall, customers spend more online because it is easier to locate items through the search function, the author suggests, especially the less mainstream items.

The study is forthcoming in the Journal of Retailing at New York University.