NPD Group: Online software sales provide an upgrade of opportunities
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NPD Group: Online software sales provide an upgrade of opportunities

NPD’s "A Landscape View of Online Software Purchasing 2009" report found that while those customers are increasingly comfortable acquiring their software virtually, (63 percent directly downloaded their purchase versus 60 percent the previous year), 59 percent of all buyers still opted to acquire the physical copy as well. In fact, more than one-third of virtual buyers hedged their download with a request for a physical copy as well.

One aspect of the software business that is increasingly virtual is subscription renewals. Consumers who said they renewed their software products online increased from 30 percent in 2008 to 35 percent in 2009. System utilities software, which includes anti-virus products, experienced a 10 percent boost in online renewals, going from 45 percent in 2008 to 55 percent in 2009 making it the strongest category for online renewals in 2009.

“The core competency of the retail store is the initial purchase, but it’s the online experience which maintains and builds that customer relationship,” says Stephen Baker, vice president of industry analysis at NPD. “The best software opportunities will develop from a recurring revenue model and long-term relationship which the industry has witnessed from the success of software publishers driving traffic to their web sites.”

According to the study 47 percent of consumers purchased software directly from a publisher in 2009, compared to 44 percent in 2008. Most of these purchases were finance related software (76 percent) and utilities software (51 percent).

Online purchases from third party retail sites continue to be an important source of sales, accounting for 38 percent of all buyers. What consumers like about shopping at retailer web sites is very much what they like about retail stores. Price, selection, ease of navigation, and having the ability to purchase other items at the same time were all reasons given by consumers who shopped on retailers’ web sites. What’s driving consumers to publishers’ web sites, however, is quite different.

“Consumers are going to publisher Web sites because they want a direct relationship, and because sometimes sites may offer exclusive products or easy renewal options,” says Baker. “The online software purchase cycle allows publishers to capture and hold buyers by providing both the initial sale and subsequent services, which is much more likely to increase their loyalty to that software title or application.”

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