In the classic book, “The Long Tail: Why the Future of Business Is Selling Less of More,” Chris Anderson makes the case that offering customers more choice will lead to more sales, at least in an online environment.
However, there have been studies that show that more choices can potentially lead to fewer sales in brick-and-mortar stores, because customers get too overwhelmed or get hung up on weighing opportunity cost.
This is often referred to as “choice overload.”
Recent advancements in technology, including the invention of the smartphone, have created a possible solution to this problem.
Choice Has You in a Jam
One of the most famous studies that demonstrated that offering too many options can actually decrease sales was conducted by Dr. Sheena Iyengar, a professor of business at Columbia University. In the study, Dr. Iyengar and her research assistants set up a booth that offered samples of Wilkin & Sons jams in a California gourmet market.
As an article in the New York Times points out, “Every few hours, they switched from offering a selection of 24 jams to a group of six jams. On average, customers tasted two jams, regardless of the size of the assortment, and each one received a coupon good for $1 off one Wilkin & Sons jam.”
“Here’s the interesting part. Sixty percent of customers were drawn to the large assortment, while only 40 percent stopped by the small one,” the article states. “But 30 percent of the people who had sampled from the small assortment decided to buy jam, while only 3 percent of those confronted with the two dozen jams purchased a jar.”
The results of this study and others like it have lead experts to suggest limiting the number of choices you offer customers is the right thing to do.
However, Chris Anderson offers different advice in his book.
The Long Tail
Before we go any further, I need to first briefly explain the concept of the “Long Tail” to those of you who haven’t read Chris Anderson’s book.
In the book, Anderson points out that, in the past, retailers were only able to offer the products that they thought would be most successful, largely due to the high costs associated with offering a variety of products to their customers. In other words, they were making the choice for their customers by offering fewer options to them.
However, as the costs associated with creating the products decreased, the costs of distribution decreased, and the increased ability to connect supply with demand were created, the opportunity for businesses to offer more options to customers became not only economically feasible, but it made some businesses flourish.
The invention of the Internet had a lot to do with all three of these forces.
In his book, Anderson uses Amazon.com as one of the main examples of a long-tail retailer that has thrived as a result of these changes.
Choice Overload
So, how does this help traditional brick-and-mortar retailers overcome the problem of choice overload?
The key to that may be in the third force mentioned above (i.e., connecting supply with demand.)
As Anderson points out, one of the ways that makes online retailers so successful is their ability to offer personalized recommendations to customers in the form of online reviews, product rankings, lists of items frequently purchased together, price and product comparisons, and best-seller lists. Google searches, blog posts, social networking sites, and other online word-of-mouth recommendations also play a big role.
In the book, Anderson points out, “The problem with the jam experiment is that it was disordered; all the jams were shown simultaneously and to guide them the customers had only their existing knowledge of jam or whatever was written on the labels. That’s the problem on the supermarket shelf, too. All you have to go on is your domain expertise, whatever brand information has been lodged in your brain by experience or advertising, and the market messages of the packaging and shelf placement.”
“Most of the information that online retailers use to order their massive variety and make choice easy—popularity, comparative prices, reviews—is available to supermarket owners, too,” Anderson continues. “But they typically don’t share it with you, the customer. That’s because there’s no good way to do it, short of a mini-screen on each shelf. The paradox of choice is simply an artifact of the limitations of the physical world, where the information necessary to make an informed choice is lost.”
The Smartphone as a Possible Solution
Keep in mind, Chris Anderson wrote “The Long Tail” in 2006. And, as forward thinking as it was, even he wasn’t able to predict the options that would be available to marketers after the iPhone was first released just one year later.
Now the “mini-screen on each shelf” is actually in your customers’ hands.
Every person with a smartphone who walks into a brick-and-mortar store has the ability to access the same information that is available to consumers who are shopping an online retailer. Now, they too have the ability to compare prices, access reviews, get product information, search the mobile web and more.
The key to success for brick-and-mortar retail stores is to make that information accessible to consumers in the easiest way possible for them.
As Jeff Hasen often points out, choice is important here, too.
This means giving customers the ability to access product information in as many ways possible, including SMS, MMS, QR codes, the mobile web, or any other way that makes it easier for the customer to get the information that will help them decide what product is best suited to meet their needs. And, don’t forget to offer Wi-Fi to your customers, because if they can’t get their smartphones to work in your store, everything else is irrelevant.
Final Thoughts
While retailers still have other factors to take into account, including limited shelf space and other merchandizing considerations, giving customers the information that will help them make a more informed choice could potentially solve the problem of choice overload.
And, in the end, can lead to increased brand loyalty and more sales, now and in the future.
Photo credit: miwok on Flickr.
