Understanding and keeping pace with what drives people to shop and buy online is critical to success in digital retail.
KPMG International has analyzed the online shopping preferences and behaviors of more than 18 000 consumers, and concludes that online shopping, while still only a smaller fraction of overall retail spend, is growing and brick and mortar stores will need to re-examine methods for attracting and keeping customers.
“Today’s consumer no longer goes shopping, but is shopping, all the time and everywhere. And in a truly global online marketplace, competition is no longer limited to local shops during regular business hours. Consumers can easily buy from retailers and manufacturers located anywhere in the world – or from those with no physical retail locations at all,” comments Dean Wallace, industry leader for consumer markets and technology at KPMG.
“Increased competition, combined with consumer demand for richer experiences, means that retailers need to rethink their online strategy. For many retailers, creating an online shopping experience enhanced by technology such as augmented and virtual reality or 3D is becoming at least as important as providing convenient and personalized ordering, payment and delivery options.”
Survey respondents averaged 17 online purchases per year, or 1.25 per month. Generation X consumers (born between 1966 and 1981), averaged nearly 19 transactions per person per year, and they made more online purchases in the past 12 months than any other age group. In fact, Generation X consumers made 20% more purchases than the ‘tech-savvy’ Millennials (born between 1982 and 2001).
Wallace comments: “Stage of life and income levels are certainly primary factors driving both online and offline shopping, and Generation X consumers, many of whom are more established in their careers and may be building homes and families, are likely buying more consumer goods than the younger Millennials overall. As Millennials continue to enter the workforce and adulthood, however, their online shopping activity is expected to surge and even far surpass the levels currently exhibited by older generations.”
And while it may be presumed that the more traditional Baby Boomers (born between 1946 and 1965) are less inclined to shop online than younger generations, the survey revealed that they shop online just as frequently as Millennials. Furthermore, Baby Boomers were more likely to spend more per transaction than the younger consumers (average purchase for Baby Boomers was $203, $190 for Generation X and $173 for Millennials).
Online of Offline?
When comparing the impact of online versus offline buying triggers, 52% of consumers cited at least one offline channel as a source of initial awareness, and 59% cited one or more online channels.
Retail websites or online shops were the most common trigger (33%), followed by brick and mortar shops (22%), and then online advertisements (15%).
Millennials were more likely to be influenced by online sources such as social media or peer reviews – they were also more likely to be influenced by offline channels. Millennials were 25% more likely than Baby Boomers to have seen their most recent online purchase in a shop, nearly 50% more likely to have talked to a friend about it, and more than twice as likely to have seen someone with it.
Wallace comments: “E-commerce is not an online-only affair. Both online and offline channels are effective in creating consumer awareness and demand, especially when used together. Furthermore, despite the rise of online shopping, e-commerce still makes up a relatively small percentage of total retail spending. Retailers’ brick and mortar strategies need to continue to evolve to attract customers into their stores, and to compete with online retailers opening their own physical outlets. Increasingly, we are seeing innovative marketing strategies, as well as new technologies such as smart shelves, robots, self-checkout, and interactive and virtual reality, being deployed in stores, as retailers strive to compete on all fronts.”
Why and Where They Shop Online
The number one reason that consumers said they shop online is for the convenience of shopping at any hour of the day (cited by 58% as a top reason). This is followed by having the ability to compare prices (54%), or to find online sales or better deals (46%). All age groups reported the same top three drivers. However, when it came to locating harder to find items, Baby Boomers reported having a higher motivation for shopping online (26% of Baby Boomers versus 20% for Gen X, 17% for Millennials, and 20% overall).
When asked to identify the most important factor when deciding where to buy an item online, consumers were most likely to buy from the website with the lowest price they could find (57%) followed by websites with enhanced delivery options (43%) or easy return policies (40%). There was a notable difference between generations when it came to the importance of being able to see online whether a product is in stock. Millennials were the least concerned about being able to see real-time product availability (cited as important by 28%) versus 36% of Gen Xers and 37% of Baby Boomers.
When it came to earning trust, consumers said that protecting their data and information was most important (63%). Although Millennials were the generation least concerned about data protection, it still ranked high as a priority for earning their trust (cited by 56% of Millennials, 66% of Gen Xers and 71% of Baby Boomers).
Keeping Consumers Loyal
Excellent customer support was the number one loyalty-earning attribute, cited by 65% of the respondents. The second-most successful loyalty strategy was providing exclusive promotions and offers (cited by 45%), followed by loyalty or membership programs (37%). Baby Boomers placed a higher importance on customer support (74%) than Gen Xers (66%) or Millennials (59%).
Taking a deeper look at the differences by generation, younger consumers tend to be more loyal to companies that offer personalized interactions such as customized promotions, anticipation of needs, having a sense of community, one-on-one engagement in social media, online games and, as well as concierge services.
Wallace notes: “The more traditional attributes like excellent consumer support, loyalty offers and membership programs will remain important for all companies to consider as part of their mix. The challenge will be for companies to find ways to also offer more personalized services to satisfy Millennials who, in 10 years, will be the mainstream consumer. One-on-one engagement will become an expectation for the majority of the market.”
Increase in Sharing Feedback Online
Overall, 31% of the consumers responding to the KPMG survey said they shared a product review online. The Millennials were the most likely to post a review (34%) followed by Gen Xers (29%) and Baby boomers (28%). Furthermore, nearly all (92%) reported reviews were positive.
Wallace observes: “The growing trend for consumers to post positive reviews is driven by factors including the rise of social media, where consumers subtly compete with their peers by publicly sharing their latest purchases and experiences, the rise of bloggers, whose business models are based on providing product reviews that drive affiliate clicks, and sellers, who proactively solicit ratings from happy customers.”
Consumers responding to the survey said they were most likely to post feedback directly to sellers’ websites (47%) followed by posts on Facebook (31%) then on a manufacturer’s or the brands’ websites (18%). This was consistent across all age groups, with Millennials also frequently posting on WhatsApp, Instagram and Twitter.
“The implication for companies is that user-generated reviews are being posted on sites that are increasingly out of their sphere of control or influence. Companies need to integrate these social media sites into their marketing and customer strategy,” Wallace concludes.
You can read the entire report at: https://assets.kpmg.com/content/dam/kpmg/xx/pdf/2017/01/the-truth-about-online-consumers.pdf
Article adapted from post by itonline.com | Photo Credit: Pixabay