Commentary

More Than Wedding Bells Responsible For Booming Online Appliance Sales

Small Appliances are being shopped by all types of consumers and are driving a significant amount of online sales growth, not just from the wedding registry, according to a recent study from the HookLogic Retail Search Exchange network. The overall category grew by just 1% in 2013, according to NPD, but online sales grew 20%, making online sales now 20% of total category value.

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Wedding registries are now clicks from a tablet at home instead of scanning in a store. In fact, in their 2014 Future of Retail study, Walker Sands found Household Goods (encompassing Small Appliances) to be the fourth most common category purchased online, says the report.

This study analyzed more than 5.1 million online transactions representing more than $650 million in sales over a 30-day period in July and August 2014 on the HookLogic Retail Search Exchange network. Purchasing, basket composition, and conversion behavior was examined for Small Appliances so that retailers and manufacturing brands might better understand how consumers shop this category online to take advantage of this sales growth.

Among the findings for the Small Appliances category:

  • Small Appliance sales online are hot and valuable; consumers will pay more per item online than offline
  • Branding only matters after they search; consumers aren’t searching with branded terms
  • Cross-selling can be a big opportunity; both within Small Appliances and across other categories
  • Conversion Efficiency can be high; many sub-categories convert extremely well and others can improve their selling proposition to increase conversion rate 

Closing of a significant number of department store locations is contributing to a small appliance online purchase boom. But it’s also the nature of the category. Consumers generally feel confident that the products they buy will meet their needs, allaying concerns about needing to touch and feel the product or the hassle of potential returns. Pictures will generally suffice, and technology is also facilitating growth by providing solutions to overcome previous barriers to online buying, such as free shipping and returns, detailed product description pages and extensive, detailed reviews.

According to executive director and home industry analyst for the NPD Group, Debra Mednick, trade-up is also a significant factor in the online growth of Small Appliances. “… consumers are willing to pay more for  effective do-it-yourself solutions, simple pleasures, added convenience and better quality benefits from new and innovative products… “

NPD found that consumers spend an average of 34% more when they buy products online compared to offline, a gap unheard of in many other categories, says the report, especially those where consumers typically shop online to find less expensive prices.

Consumers seeking Small Appliances are much more product-focused than brand-focused. Among the top 5 most-viewed categories of vacuums, fans, air conditioners, cooktops/grills and blenders, only 25% of the top 20 search terms included a brand name. In air conditioners, none of the top 20 searches were branded at all. Given that the first page of search results accounts for 91% of all products ever viewed, being at the top matters a lot, concludes the report. 

When buying Small Appliances, the average basket value is $185, almost 50% higher than the value of a basket without a Small Appliance. A basket with no Small Appliances has an average unit price of $39.15, much lower than the $76.56 average item price of a basket with Small Appliances.

Online Shopping Basket Sizes

 

With 1+small appliances

With no small appliances

Average basket size

2.4 items

3.2 units

Average basket value

$185.37

$126.93

Average unit price

$76.56

$39.15

Source: HookLogic, September 2014

Several sub-categories had significant cross-selling within Small Appliances – that is, more than one Small Appliance purchased in a single shopping trip. In fact, 38% of Small Appliance purchases contain more than one item. But the highest volume sub-categories are not always the most cross-sold sub-categories. 

For example, consumers seem highly willing to purchase Toasters and Coffee Makers with almost all other Small Appliances. 25% of Toaster & Toaster Ovens are purchased with another Small Appliance, most often Coffee & Tea Makers.

Conversion efficiency combines three factors that relate online shopping activity to online purchase decisions:

  • The rate of browsers converting to buyers 
  • The length of the purchase path, as measured by product page views before purchase 
  • Number of units per transaction  

A higher conversion efficiency indicates that more consumers who visit your product page are actually purchasing your product. Microwaves have the strongest conversion efficiency, nearly double the category average, though many kitchen items also have strong conversion. This indicates that these are destination purchases, made by consumers more ready to buy.  

Higher priced items with strong sales volume, like Vacuums and Air Conditioners, have lower conversion efficiency than other sub-categories, indicating a more lengthy research phase. Niche items have substantially lower conversion, indicating more browsing than buying behavior. Consumers may want these items, but their need may not be as immediate, so they might just not be ready to buy.

Conversion Efficiency Index (Product, Index)

Microwaves

194

Fans

92

Griddles

164

Air purifiers

90

Mixers

145

Waffle makers

89

Irons & steamers

135

Vacuum

88

Toasters & toaster ovens

131

Electric cookers

87

Deep fryers

128

Rice cookers

71

Humidifiers

124

Air conditioners

 53

Slow cookers

121

Cooktop

52

Coffee & tea makers

107

 Ice makers

37

Blenders

103

Bread machines

30

Small appliances average

100

Kegerators

14

Source: HookLogic, September 2014

Knowing how much these consumers are spending, what these consumers are buying (and what they’re buying it with) and which categories have the highest conversion is invaluable information that can give you a distinct strategic advantage, concludes the report.

For additional information from Hook Logic, including access to the complete report in PDF form, please visit here

 

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