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Consumers Embrace Buying Tech Direct; Latest Survey by The NPD Group Shows Nearly Half of U.S. Consumers Are Shopping Direct (28/9/2004)

The sale of computers and consumer electronics purchased directly from manufacturers and resellers is on the rise according to The NPD Group's recent report, Who's Buying Direct and Why: Consumers Tell All.

According to the survey, which provides insight into who is buying direct and how manufacturers can appeal to this growing market, 45 percent of consumers have shopped direct during the past 12 months, with 28 percent of those surveyed buying a product directly from a manufacturer. About a third of direct buyers have been doing so for over five years.

A popular reason cited for direct channel purchases is the convenience of home delivery if, of course, the customer is willing to forego the instant gratification of taking the product home for immediate use.

When given the choice between making a direct purchase via a Web site, phone, or in-store, consumers favor the Web. However, some manufacturers marketing direct-to-consumer clearly find value in having a storefront presence. Apple and Sony, for example, use storefront locations to create unique shopping experiences that capitalize on consumers' existing brand loyalty and permit shoppers to see and touch the product.

"Much has been made over the last few years of channel strategies designed to reach consumers," said Stephen Baker, director of industry analysis for The NPD Group. "Selling direct requires special skills on the part of the marketer. One thing is clear: consumers are educated and know their options, especially for high-priced items like Plasma TVs, where buyers want to be able to see the product in use, which could be the biggest obstacle for the direct purchase. Those manufacturers with a highly visible and easy-to-access multi-channel strategy may best be equipped to convert these shoppers into buyers."

While it may appear that selling high-priced products from the direct channel may have its challenges, it does seem that brand and store loyalty are high priorities for consumers. Over 65 percent of customers who bought both computer and CE products from leading direct resellers Dell and Gateway, said that their initial experience with the purchase of an IT product was a key reason for their future purchase of electronics. Dell and Gateway have a large opportunity in front of them as only 12 percent of their customers have bought an electronics item from them. The future looks bright for other direct manufacturers as well with 71 percent of those who had purchased direct in the past saying they would be very likely or extremely likely to make their next computer or electronics purchase via a direct channel.

"The biggest danger for brick and mortar retailers is that, outside of the desire to experience the product personally, consumers see no compelling need to buy retail," said Baker. "In fact the major impediment turns out to be consumers' inertia to new ways of buying as 44 percent of consumers said the main reason they hadn't bought direct is that they had not yet had the opportunity to do so."

The Who's Buying Direct and Why survey is the first in a series of annual studies to measure ownership and attitudes underlying the growth of the buying direct channel for PCs. This report seeks to understand the consumer shopping behaviors and motivations in regard to purchasing computers and electronics products through the direct channel.

Methodology

"Who's Buying Direct and Why: Consumers Tell All" was an online survey conducted among members of NPD's online consumer panel. A nationally balanced sample of 6,565 adults completed the survey in July 2004. The survey is the first in a series of annual studies to measure consumer shopping behaviors and motivations with regard to purchasing computers and electronics products through the direct channel.

www.npd.com