Zohar Gilad is cofounder and CEO of Fast Simon.
After soaring when accessing retail stores proved difficult, e-commerce growth is now slowing (paywall). With a new wave of inflationary pressures and intense competition, physical and online merchants are looking for new avenues of growth.
Beyond policies like lower interest rates, one age-old merchant strategy has emerged to keep shoppers shopping: the allure of “new” products. Take Target, for example. On its Summer 2024 earnings call, it emphasized a strategy of embracing new products as a significant strategy for attracting shoppers to its stores and sites.
Humans: Hardwired For New
We’ve all had it, from new car fever to the confidence boost of new clothes. Attraction to “new” is psychologically hardwired into the human brain. Retail therapy is real.
If there’s one chemical that humans crave over all others, it’s feel-good dopamine. And a new thing—from an experience and products to a relationship—delivers a significant dopamine hit to our brains. Experiments have shown that big dopamine releases come from absolutely new (novel) images. And only new images caused any midbrain activity.
New also delivers that feel-good chemical hit to merchants. Creating something new feels good to designers, merchants and others who sell products. Creating art releases another chemical humans crave: endorphins. Endorphins ease pain and release dopamine. It breaks the “supply and demand” pressures, anxieties and depressions of everyday work life—and drives positive change for merchants. And novelty aids in learning, helping to train your workforce.
How To Leverage New Products To Grow Sales
Beyond the brain boost of new products and experiences, new has significant bottom-line benefits for e-commerce businesses as well. Up to 25% of revenue can come from new products or services. So how can merchants capitalize on our fascination with new stuff and do so without promoting over-consumption and wasting resources?
Navigating For New
Just searching for new items delivers dopamine. New products need to be visible and accessible from the menu and filters. Also, remember that 71% of consumers expect companies to deliver personalized interactions, and new products served up are a perfect way to get a one-two punch of personalization and sales. Fold new products directly in personalization strategies, leveraging data and AI to serve up new products that are an ideal match for consumers.
Collaboration Creativity
Creator and brand collaborations can deliver both new products and new novelty to existing products. You can get new value for products you’re already building, optimize the supply chain and expand the audience for products dramatically with cross-promotion. When paired with scarcity marketing, collaborations can create a short, frenzied burst of excitement that builds your brand and your bottom line.
Freshening And Fueling Promotions And Social Media
New products are promotion fuel. More than half of online shoppers return to a site that suggests products for them. We’ve all experienced disinterest in brands, especially where there isn’t much news.
New is news, especially for your social media audience. Questions, videos and photos get the most sharing. (Photos alone influence 75% of shopping decisions.) Share strategies paired with offers (share for 5% off, for example) create inexpensive and organic mini-marketing pushes. Collaborations also need fuel for partners to push products to their audiences.
Capturing Higher Pricing
New products can garner higher prices. Higher-priced products can deliver more satisfaction. (Not commodities. No one feels good about paying more for eggs.) Increased prices can help merchants recoup investments faster on new products. New products present an opportunity to update design and supply chain strategies to capitalize on newer materials and more efficient suppliers to improve margins and potentially reduce waste.
Limited Availability Or Release
Scarcity marketing strategies like limited availability only further infuse new with more attraction. It’s a big attraction and, in some cases, a social badge to wear. (Target and Stanley are doing a Wicked limited-release collaboration to coincide with the movie studio release.)
Limited releases can also be a critical merchandising safety valve. It’s hard to estimate and optimize batch sizes. You can spend marketing and under- or over-shoot your demand estimates and be left with too little, or too much. Limited availability curbs the risk, and has marketing benefits to boot. (Research also shows that consumers want low stock and limited notifications. Simply put, they don’t like surprises.)
New’s Sister: Back In Stock
Scarcity marketing’s sister is “back in stock.” If you fuel demand and run out, back-in-stock saves the day. You’ve hooked a consumer on the possibility of a new product and now have a reason to keep engaging with them. It’s great for higher-end solutions with big ticket prices.
Loyalty
Brand loyalty continues to diminish, with 90% of shoppers willing to switch brands. “New” products are a significant strategy to not only attract those “switchers,” but also keep your customers from leaving. Launch to your most loyal customers 24 to 48 hours ahead of time. Make it only available with a subscription to your application (or other loyalty strategy). And don’t forget: Many consumers collect something, from Legos and Funko Pops to handbags and ornaments. Collectors are a perfect target for new, scarcity and loyalty programs.
Used, Trade-In And Trade-Up
New is not necessarily “never owned.” Merchants can have a very successful business offering trade-in and trade-up programs, then offering repair or reuse programs. This is one of the ways to get the win-win of revenue gains, loyalty and responsible use of resources.
Going all the way back to the Ice Age, “new” things helped humans feed their flight or fight survival instincts. That survival mechanism is in full force today in e-commerce. Science tells us new grabs our attention. And I’m betting that owning a successful and responsible e-commerce business with happy customers could deliver a ton of dopamine.
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