Why Internet Retailers Should Pay Attention to Where Potential Customers Live

While the Internet holds immense promise for reaching retail customers far beyond traditional trading areas, new Wharton research indicates that customers discover online retailers by offline word-of-mouth, online word-of-mouth, online search and magazine advertising. Old world dynamics, such as neighbors sharing word-of-mouth recommendations, therefore, can still have powerful effects on Internet sales. In another case, researchers investigate people whose shopping needs might be different than most of the people in their geographic area – preference minority. For example, young parents living in a zip code populated mostly by elderly people would find fewer offerings in local stores because the retailers need to devote the bulk of their shelf space and inventory to meeting the demands of the majority of their customers. Preference minority customers are more likely to purchase online for niche brands and less price sensitive…


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