The Impact of Online Parking Sales to Transient Traffic: Cannibalization or Market Growth?
Updated: Jun 24, 2020
See key takeaways from our webinar, "Digital Parking Sales: Market Cannibalization or Growth?" Featuring Todd Tucker, SVP of Market Development at Arrive and Andrew Sachs, President of Gateway Parking Solutions. Hosted by Wen Sang, CEO of Smarking.
Todd, why did you decide to focus your dissertation on online-offline sales in parking?
Todd Tucker: I worked on both sides of parking, both operations and technology, and needed to know if I was taking traffic away from my existing channels by enabling a 3rd party online sales channels.
"Am I just spreading the same amount of money around? If I'm going to spend time and effort on revenue channels, I need to know that we're actually going to make more money than what we started with, not just move it around." - Todd T.
As an operator it was a topic of concern, and with Arrive, I would often hear cannibalization as an objection to using online sales channels. And there were a lot anecdotal perceptions of what was going on, and assumptions such as, "well here's what it did in this location, it will probably do this in other locations too". But no one had any data on it. So, I wanted to use academic rigor and data to perform regressions and really understand the impact.
Andrew, what motivated you to dig into the relationship of offline-online sales?
Andrew Sachs: The line between offline and online has blurred. Todd is focused on the macro, I'm hyper-focused on the micro. It started when people started to use their phones in their car and Google and search results of my garages was impacting business. Google and online search disrupted everything, especially parking and we need to pay attention to it.
Connecting your online business to your offline operations
Andrew Sachs: We are in a period of massive disruption. It's not because of COVID-19, it's accelerated by it. Let's look at the data, as you can see below, in 2012, 99.97% of my revenue came from transient, offline parkers. But by 2019, ParkWhiz and SpotHero made up almost 10% of my revenue, and my revenue grew. My revenue jumped back up largely because of the offline work I was doing.
"You can see below that 2014 revenue was down YOY, and it jumped back up in 2015. The difference here is that we started to focus on our online presence. It's imperative to connect your offline business to online." - Andrew S.
Here's what we did:
Focused on SEO (search engine optimization), this is not paid advertising. This is a strategy to help Google show your garages first, at the top.
Claimed my Google My Business profile - this is free to do.
Focused on my reviews and made sure to respond to each one, this helps with your rank on Google, responsiveness helps.
Make sure that the 'Direction' button takes users to your garage, and not your office mailing address
These are not people using online reservation apps. Everyone that clicked 'Directions' and transient parkers who came and pulled a ticket, but if I didn't have my online presence, they wouldn't have found my garage.
If I didn't focus on the online strategies and my online presence, it would impact my offline traffic.The internet is changing, people are searching before they go, and aggregators help us sell right then and there- and get them to your location. - Andrew S.
Why is online search important?
86.4% of people do an online search to learn about a company or product
82.9% read customer reviews
86.4% of my transient traffic found my garage through Google
The internet is changing, people are searching before they go, and aggregators help us sell right then and there- and get them to your location. Too many people haven't done this, it's free and impacts my market share significantly. I went from $2.1 million in 2015 to $2.7 million in 2019.
The impact of online sales to offline traffic
Dependent variables were 3 measures of daily sales figures: total revenue, offline revenue, and online revenue
Independent variables: ParkWhiz online channel, # of facilities selling in the same zip code, total # of facilities existing in the same zip code, total online search for parking (ParkWhiz and Google)
30 locations - 15 intervention sites and 15 controlled sites: 5,400 total observations (180 days)
The core of the study is simply: does the addition of online channels to existing offline channels produce net new revenue gains? - Todd T.
Results indicated strongly that online channel is significant revenue contributor; beneficial operator of any brick-and-mortar facility
Results suggest significant positive interaction effect occurring between number of online competitors and online intervention
Search demand appeared to have negative moderating effect to online intervention
No evidence of cannibalization
Improvement in revenue per space
Different groups/user base on parking reservation apps, attracted new people
The results show resounding evidence that online channels grew the pie, it didn't just move money from one channel to the other. - Todd T.
Leveraging online sales for COVID-19 recovery
Todd T: My recommendation to my peers is to get out of your comfort zone. Take chances, explore, and try new things. But before you do, make sure you have the right tools in place, like Smarking, to measure the impact to your business. To get to where you want to go, you have to have the right tools and technology to fully recover and move forward.
Andrew S: What I'm seeing today, is that this a slow recovery, it's going to take time. But the traffic increase that we have seen, is driven by AYM (Smarking's Automated Yield Management system) its' driving initial sales for me, people are looking for a deal.
These are not people that I would've gotten otherwise. The other side of it, is making the garage a positive experience.
You will get cannibalized if you don't open yourself up to all of these channels. Prevent the cannibalization, be proactive with your online search (Google) and reservation (online sales channels). Little by little, your competitors will take your parkers by improving their online presence. Consumer behaviors are changing, they are searching.
COVID was a massive accelerator. It was like pouring lighter fluid on what was already happening. Focus on 6 months and 12 months ahead, get the right tools in place now, such as automation. - Andrew S.
Get accurate information out there, claim your business for each garage. The more time they spend online, the less they spend driving around, they get right to where they want to go which reduces traffic and congestion. Very important for schools and municipalities.
Need real-time data for your parking locations? Get Smarking's leading Business Intelligence solution free for 3-months. No risk, no commitment.
Questions from attendees & panelist responses
Dennis Cunning, "The revenue went up over 7 years (12 - 19), but how much of that was rate increases? the better answer is how many more vehicles did you park over base years?"
Andrew S: Great question. Thanks to Smarking, I can easily track both revenue and traffic. The two are closely correlated at a high level. Showing revenue allows us to focus on the value derived from the many channels that encompass Search Marketing. We can price target to both the value s