A new study from Walker Sands, called 2014 Future of Retail Study, was released this week and focuses on online consumer behaviors in order for retailers to better understand their customers and help retailers better generate revenue across channels.
The online industry usually pours over stats and data that focus on our end f the business. It’s interesting to review a study that looks it the numbers from the retailer’s perspective and ultimately concludes that retailers have an opportunity to capture new customers online and increase sales through a compelling omni-channel strategy. Bottom-line: if you can’t beat ‘em; join em.
The study also finds that using proven online tactics (such as incorporating free shipping and returns) can help to alleviate some of the uncertainties associated with purchasing online and motivate consumers to spend more online.
Here are some key findings from the study:
Frequency of Amazon Online Shopping
Shopping Frequency
% of Respondents
1+ times a month
40%
7-12 times a year
20
1-2 times a week
17
4-6 times a year
12
1-3 times a year
6
3+ times a week
5
Source: Walker Sands’ 2014 Future of Retail Study, December 2013
Although the rate at which consumers are shopping online still has room to grow, certain industries, such as consumer electronics, books and clothing are seeing more than half of their shoppers going online to make a purchase.
Most Popular Online Category Purchases
Product Category
% of Respondents
Consumer electronics
69%
Clothing and apparel
63%
Sporting goods
20%
Office supplies
30%
Food and groceries
20%
Luxury goods
6%
Household goods
38%
Pet supplies
20%
Tools and home
18%
Consumer packaged goods
28%
Books
67%
Source: Walker Sands’ 2014 Future of Retail Study, December 2013
The study found that 95 percent of consumers have purchased from Amazon in the past year. Most surprisingly, 40 percent of shoppers are willing to purchase any type of product from Amazon. The rate at which they’re purchasing on Amazon causes concerns for retailers, especially as the frequency and range of product types they are willing to purchase continues to expand.
The study uncovered a number of offerings, including free shipping and returns, enhanced site security and augmented reality capabilities that retailers can provide to drive more consumers to purchase on their website.
Improve Consumers Online Purchase
Incentive
% of Respondents
Free shipping
80%
1-day shipping
66%
Free returns and exchanges
64%
Easier online returns
48%
More confidence in payment security
42%
Same-day shipping
41%
Multiple orders shipped at once
42%
Easier in-store returns
39%
Visual try-on capabilities
37%
Source: Walker Sands’ 2014 Future of Retail Study, December 2013
These numbers seem to debunk the common misconception that the only way retailers can compete with Amazon.com is through price matching tactics, which can be difficult for retailers, especially smaller businesses.
Consumers are comfortable purchasing large ticket items costing hundreds of dollars online without seeing the product in person first. 45 percent of consumers are willing to spend as much as $500 on a product online without seeing it in-person first, and nearly one-in-10 consumers are willing to spend more than $1,000 online without seeing a product in person.
21 percent of consumers will spend between $501 to $1,000 on an online product with free shipping and returns,
16 percent of consumers are willing to spend the same amount without free shipping and returns.
Nearly 30 percent of consumers will spend more than $1,000 on a product online with free shipping and returns, versus 10 percent who would do so without free shipping and returns.
When free shipping and returns are offered, consumers spend even more online. While free and fast delivery can be costly for retailers, the study demonstrates they could be well worth the investment if customers purchase as much more as they say they would.
Another way retailers can differentiate themselves from Amazon and capture a greater portion of online sales is by providing omni-channel experience and greater personalization. 64 percent of consumers have used their mobile device to research products while in a brick-and-mortar location. It’s critical for retailers to provide a seamless experience as they move from a mobile device to in-store to their laptops.
44 percent of consumers “strongly agree” or “agree” that they want product recommendations based on past purchases. Shoppers who use mobile devices while at a brick-and-mortar location are also 21 percent more likely to want Amazon-like personalization when shopping in store. 52 percent of consumers would be more likely to shop at a retailer offering in-store navigation on a mobile device, and 59 percent would be more likely to shop at a store offering self-checkout via a mobile device.
Three in five consumers interact with brands on social media. The most popular channel is Facebook, on which 55 percent of consumers report engaging with brands, followed by:
Twitter (21 percent)
Pinterest (10 percent)
YouTube videos have influenced a purchase at least once for 53 percent of consumers
17 percent of consumers have discovered a product through Pinterest
The most popular reason consumers interact with brands on social media is for coupons and promotions (78 percent of consumers). Consumers also use social media to discover the latest news and products from brands (65 percent of consumers), receive customer support (24 percent), and to see what others are buying (19percent).
Plastic has established a stronghold among today’s consumers. 62 percent of consumers surveyed reported having less than $20 cash on hand, says the report:
Only one in four consumers have used cash to pay for something in the previous 24 hours
43 percent of consumers haven’t used cash in the last three days
23 percent haven’t in the last week
5 percent of consumers say they never use cash and will not go anywhere that only accepts cash
Only 8 percent of consumers are currently using mobile passbook-like apps to check out
Currently, the most popular items that consumers prefer to rent instead of buying include:
Books (16 percent)
Consumer electronics (8 percent)
Tools (7 percent)
These same categories are expected to increase exponentially in the next year, with 32 percent of consumers expecting to rent books, 24 percent expecting to rent tools, and 21 percent planning to rent consumer electronics.
Expected Percentage of Rental Growth in 2014
Product Category
% of Respondents
Household goods
22%
Consumer electronics
90%
Clothing and apparel
48%
Sporting goods
123%
Luxury goods
113%
Pet supplies
15%
Tools and home
29%
Books
69%
Source: Walker Sands’ 2014 Future of Retail Study, December 2013
All of this data seems to point to opportunities for retailers to employ tried-and-true online tactics to growth their business, rather than simply stick to the old way of doing business and blame online for the downturn in retail economics.
I hope this will be eye opening for retailers and persuade them to embrace the online shopping world. After all, online purchasing is growing and in order to get a slice of the pie and grow the pie, you’ve got to put some skin in the game.