Testing the Limits of Online Shopper Loyalty

No one can say Buy.com doesn't have a sense of humor. The e-tailer, which was recently saved from financial ruin by its founder, briefly published a sign across its site that read: "Not Going Out of Business Sale."

But will a tongue-in-cheek acknowledgement of Buy.com's woes be enough to keep its customers from getting weak in the knees about dealing with an online merchant that was, by most accounts, days from going under for the last time?

In other words, just how far will customer loyalty stretch in the e-tail environment?

That's not just a question for Buy.com. It's a question for Fry's Electronics as well, which is apparently banking (to the tune of about US$20 million) on the customers of both Egghead.com and Outpost.com coming along for the ride when Fry's takes over those companies.

Basic Instincts

The exact answer varies for each customer, of course. No doubt, there are some diehard Buy.com shoppers out there who would have been willing to cut the e-tailer a blank check when its credit-card processing partner threatened to walk away. But those are the exceptions.

Most consumers are, by definition and habit, practical folk. We buy what we need from the people who can best deliver us both the goods and the services. At least at first.

My Brand Rules

After a while, some deeper instinct kicks in and we start to become creatures of habit. The difference between Amazon.com and Barnesandnoble.com is smaller than ever. The sites look the same. The checkout processes are similar. It has been argued that Amazon customers are just that -- Amazon customers -- and off-limits to everyone else.

That was before the economy started to turn south and kept going and going.

My guess is that loyalty is a strong bond, but not that strong. Economic benefit can break it. If I can get a book for two bucks less at the e-tailer two clicks away, I'm there.

Bad behavior of any kind, like letting hackers snoop around your database, can break the bond as well. Shake my confidence that way and you're off my favorites list.

Bad News

Likewise for nearly going out of business. Unfortunately for Buy.com, its darkest days came when it was still a public company. So every detail of its struggle for survival was out there for public consumption. And it wasn't a pretty picture.

So Buy.com might have the not-going-out-of-business sale of all not-going-out-of-business sales, and the low prices might keep people around for a while. But in the long run, consumers are going to stop believing in a shaky company's stability.

You don't follow a guy into battle who's hanging onto life by a thread. You let him go alone.

E-tailer's Best Friend

The more interesting puzzle concerns the customers whom Fry's hopes to inherit when Egghead and Outpost become part of its fold.

For its part, Egghead.com sold a lot of software during its bizarre lifespan, which took the company from brick-and-mortar chain to pure-play Web company to weak merger partner. Still, Egghead has a customer base of tech-savvy customers in its hot little hands.

Likewise Outpost. By virtue of its millions of dollars worth of Super Bowl commercials and its free overnight shipping policy, it has a database full of customer e-mails from consumers who wanted their electronic products so much they absolutely, positively had to have them the next day.

But do those customers want to be Fry's customers? Not so much, I think. Anyone outside of the West Coast range of Fry's probably had never heard of the retailer until recently.

Name Game

It's going to take one smooth transition to keep those customers around. In other words, their loyalty is going to be severely tested.

Fry's might be able to pull it off, by uttering soothing statements about privacy and keeping the original brands intact as much as possible. That is to say, begging customers to opt-in and allow their names to be transferred over.

One thing for sure: Lots of others will be watching. Because we're all wondering just how far consumer loyalty goes these days.

What do you think? Let's talk about it.