You know something is new and trendy when you can’t find one unanimous spelling of it across the web. Ecommerce, e-commerce, eCommerce –– remember those days? Omni-channel is the same. But it’s not just about the spelling; omni-channel lacks consistent syntax and definition, too.
What is Omni-Channel Retail?
Hubspot defines it as: “a multi-channel sales approach that provides the customer with an integrated shopping experience. The customer can be shopping online from a desktop or mobile device, or by telephone, or in a bricks and mortar store and the experience would be seamless.”
Google defines it as: “ensuring [retailer] marketing strategies are geared toward enabling customers to convert on any channel.”
At BigCommerce, we internally define it as: “Stores selling both online and offline –– likely also selling through multiple online channels (i.e. on Amazon, eBay, Facebook, B2B). We’ve also been referencing the importance of listing your product wherever consumers are already spending their time. This is increasingly known as contextual commerce, a more strategic take on the overarching omni-channel term.”
Typically, omni-channel retailers aren’t startups. They also aren’t web-only shops, which means they have the capital to put some feet on the ground. That much is clear. What isn’t though, is the idea of seamlessness and retailer sophistication. From that perspective, few retailers today are successfully executing on all of their omni-channel initiatives.
This is because with the momentum toward integrating commerce across channels, there’s one big piece of the puzzle missing: what the consumer wants [infographic]. Many retailers are just guessing. Sure, they have proprietary data on how consumers are using their own channels, but ‘omni’ has latin roots in the omniscient realm, meaning perceiving all things –– not just what is happening on your own channel.
To date, no one has decoded exactly how, when and why the modern American makes a purchase. What we do know though is that nobody today shops exclusively through a single medium. Consumers buy online, in store and on marketplaces, from legacy retailers and independent brands alike.
This is why we’ve launched a new study analyzing modern, omni-channel consumer behavior. This data uncovers the details on how, when, where and why Americans buy, educating the entire commerce industry on today’s consumer shopping preferences.
You’ll see the results of our study in the following chapters and gain insight into:
How Americans shop across an omni-channel environment: what they buy, how much they spend and what’s stopping them from checking out more often
What products retailers should feature on various channels to maximize sales
How to increase conversion rates on all your selling channels
The ins and outs of your audience and their motivation for purchasing
This is what retailers need to know to implement a data-driven, omni-channel strategy today.
Free webinar and data analysis
Hear from Internet Retailer’s editor in chief Don Davis, Kelton’s senior director Matt Paladino and vice president Danielle Sherman and BigCommerce’s senior product director Troy Cox on what these trends mean for the industry.
First, a quick note from the editor
This information only tells you what the customer is doing. The fundamental mistake to avoid is assuming that we’re actually asking the customer, “What do you want?” If you ask a question like this, you can’t be surprised by what you’ll hear: solutions and convenience. And requests for solutions will almost always be disappointing for companies that are trying to innovate.
According to Harvard Business Review: “Customers only know what they have experienced. They cannot imagine what they don’t know about emergent technologies, new materials, and the like. What customer, for example, would have asked for the microwave oven, Velcro or Post-It Notes? At the time the transistor was being developed, radio and television manufacturers were still requesting improved vacuum tubes.”
We offer these survey results as important data in furthering the understanding of the modern consumer. Read about our methodology here. What innovations occur next is up to the retailers.
Without further ado, let’s dive into the data.
Retail Checklist: Putting the data to action
Download the full list of action items for retailers based on the data found throughout this article.
Who shops online
At a high level, that’s an easy question to answer: almost everyone. 96% of Americans have made an online purchase at some point in their lives, and four in five (80%) have done so in the last month alone.
Online shopping is now just as popular as in-store, with 51% of Americans citing online as their prefered way to shop. This goes hand in hand with data from the National Retail Federation for the 2015 holiday season. For the first time ever, more Americans shopped online for holiday items –– but it was a narrow win. The NRF’s survey found that an estimated 151 million people shopped either in stores, online or both over the weekend. Of those, 103 million said they shopped online, and nearly 102 million headed to stores.
How to Conduct Current and Future State Journey Mapping
It helps to see with your own eyes how your customers see you. So, grab a camera and do a photo safari of what it’s like to shop your store in each channel. Capture each step –– choice, decision, and response –– from your systems and people. Don’t forget to log how you feel along the way. Post your photos on the wall, add your commentary, then have a discussion to find and correct disconnects. That’s called current state Journey Mapping. Run the exercise again—this time looking for ways to make shopping between channels seamless and the experiences amazing. This is future state Journey Mapping (aka strategy).
— Mike Wittenstein, founder and managing partner at Storyminers.
Millennials vs. Gen X vs. Baby Boomers
Americans as a whole are split when it comes to a preference for online or in-store shopping. But when broken out by demographic, it is clear that the younger generations will continue to drive shopping to the digital front. The survey revealed that 67% of Millennials and 56% of Gen Xers prefer to search and purchase on ecommerce sites rather than in store. Only 41% of Baby Boomers and 28% of Seniors will click to purchase.
Given their preference for online shopping, it makes sense that Millennials and Gen Xers would also spend nearly 50% more time shopping online each week (six hours) than their older counterparts (four hours).
Reduce Fear for All Buyer Types
Resistance around purchasing online is often fear-based. A flexible return policy, free return shipping and even a pre-printed return label can work wonders for a store’s conversion rate.
— BigCommerce Support Team
Parents vs. non-parents
When it comes to shopping, there is one major difference between parents and non-parents: convenience. You’ll see this trend pop up throughout the study. Yes, all online shoppers are influenced by the convenience factor, but no group values ease of purchase like parents.
In fact, nearly half (49%) of parents surveyed stated that they couldn’t live without online shopping –– and they spend 61% more online per year than non-parents ($1,071 vs. $664). Parents also spend more of their budget online in comparison to non-parents (40% vs. 34%), and spend 75% more time shopping online each week (seven hours vs. four hours).
Make Parents’ Lives Easier and Re-ordering a Breeze
Parents have to keep everyone’s needs in mind. If you know your customer and their purchase history with you, use it to make their shopping experience online easier. For example, if they purchased children’s ibuprofen in liquid form regularly, but haven’t in a while, ask them if they would like to restock. That’s more helpful than pushing an unwanted selling message on them.
— Mike Wittenstein, founder and managing partner at Storyminers.
Men vs. Women
This demographic breakdown is nothing revolutionary; American men and women shop rather similarly across all channels. The one key callout is that men reported spending 28% more online than women over the last year.
Help Consumers Create Shopping Habits with Your Brand
Both genders are creatures of habit. Think about curating a shopping list of regular items for men and women on an opt-in basis. If you can capture information about what your customers would like to have, you can offer them trials of new product (often at a profit from your CPG suppliers) and/or automatic refill programs.
— Mike Wittenstein, founder and managing partner at Storyminers.
Metropolitan vs. suburban vs. rural
Americans shop differently depending on where they live. For instance, although they have more physical stores nearby, shoppers in metropolitan areas spend more online annually ($853) than suburban shoppers ($768) or those in rural areas ($684). They also spend the most time shopping online out of the three groups.
What’s stopping those in suburban or rural areas from shopping or spending more online? More than half (63%) of suburban shoppers cited shipping costs as their least favorite part of online shopping, and 38% of rural shoppers cited strong concerns about online privacy.
Serve Coupons to Discount-Hungry Consumers
Suburban and rural shoppers are extremely price sensitive and look for coupons and discounts more so than metropolitan shoppers. To better encourage them to purchase, use IP address mapping to intelligently serve discounts to visitors coming from suburban or rural locations.
— BigCommerce Support Team
How do you compare?
Where Americans spend online
Shopping online has never been easier or more omnipresent in America. Yet according to the U.S. Census Bureau, ecommerce accounted for only 7.5% of total retail sales in the fourth quarter of 2015. Our data shows a similar, though significantly higher, trend: Online shoppers spend 64% of their shopping budget in store, and 36% online.
These numbers, though, are expected to increase. Between Q3 and Q4 of 2015, ecommerce sales grew 32%. In total, 2015 ecommerce sales were 14% higher than in 2014. Experts have predicted that by 2020, ecommerce sales will hit $523 billion –– a 56% increase from the $335 billion achieved in 2015. In order for those predictions to come true, ecommerce sales need only increase 9.32% annually. If last year’s numbers are any indication, we are well on our way to surpassing the estimates.
Nab Sales Back from Brick-and-Mortar Competitors
Consider offering an expedited shipping option. People are often willing to pay extra for convenience and a merchant can expect to capture more purchases that would otherwise be lost to a local brick-and-mortar.
— BigCommerce Support Team
Of course, Americans aren’t shopping at all online retailers in the same way. The majority begin a search for items on marketplaces, while some go to their tried-and-true local boutique’s website, and others look for traditional brand name stores. There are multiple factors that contribute to a final purchasing decision, much of which will be covered later. Below you will find data on exactly where Americans are spending their money.
Online vs. in store
The in-store draw is still an important one for many merchants. In fact, many of the most successful retailers are omni-channel, meaning they have both online and brick-and-mortar stores.
Americans are almost evenly split on which channel they prefer: 51% think shopping online is best, while 49% prefer shopping in store. There’s a more distinct difference in how much they spend on each channel, though: those surveyed spent 64% of their shopping budget in store, and 36% online.
Even if you prefer online shopping, chances are you’ll spend more when you buy in store. Of course, this changes based on your demographics. See the breakout below on how Americans in various demographic groups spend online vs. in store.
Note: Everyone reports spending more in brick-and-mortars.
Create Recognizable Brand Experiences by Channel
Great omni-channel experiences feel the same to customers regardless of channel. So strive to standardize your processes, rules, messaging and pricing policies. Also, without deviating from the familiar feeling customers expect, create something unique to each channel. Something that’s valuable, memorable and story-worthy.
— Mike Wittenstein, founder and managing partner at Storyminers.
How do you compare?
Webstore vs. large retailer vs. marketplace
There are thousands of online shopping options for consumers, and few shoppers are loyal to just one. Survey data revealed that 74% of Americans have shopped at large retailers, 54% on ecommerce marketplaces, 44% at webstores and 36% at category-specific online retailers.
This modern consumer behavior has led to a rise in two industry terms: multi-channel and omni-channel.
Multi-channel means a retailer sells in multiple online channels (e.g., a web store, marketplaces and social media). Omni-channel refers to retailers with both a physical and digital presence.
Retailers can be both or neither, though the most successful merchants are typically multi-channel and growing to become omni in the near future. That’s because consumers generally shop wherever is the most convenient.
Nearly half of all online product searches (48%) begin on marketplaces like Amazon, for instance. In comparison, 31% of Americans first turn to larger retailers, 12% to category-specific retailers, and 7% to webstores. If you sell through a webstore without using Amazon as part of a multi-channel strategy, you’re missing out on a huge amount of searches and potential conversions.
In fact, in the last year, shoppers have spent the most with ecommerce marketplaces ($488), closely followed by large retailers such as Nordstrom or Best Buy ($409).
Product discoverability is the name of the game for online retailers, even big brands. Here’s how each retailer type fares in consumer visibility and conversion.
How do you compare?
When Americans spend online
Now that mobile devices are always on hand, there is no limit to where and when people shop online. And they do so frequently, with 80% making purchases at least once a month –– and 30% purchasing at least once per week.
The charts below detail exactly how often different demographics are clicking the buy button, and from where they are doing it.
Online shopping frequency
Shopping online is now almost ubiquitous, with 93% of Americans having done so in the last year. For many, online shopping has become habitual: 80% cite purchasing something online monthly, 30% weekly and 5% daily.
Online shopping takes up a good chunk of our time, too. Respondents spend five hours per week on average shopping online, and those with kids spend an additional two per week.
Let’s put that in terms of dollars. Using the current federal minimum wage of $7.25 an hour, Americans could make an additional $36 a week putting those hours toward income generation. That’s more than $1,500 a year on minimum wage alone. For those in states making a $15 hourly minimum wage, that’s $3,600 a year spent online shopping.
Take Advantage of New Ad Offerings to Increase Shopping Frequency
If you’re looking to target younger generations, taking advantage of new platform advertising options (SnapChat, Instagram, etc.) could be a way to sway them to engage with your brand more often – leading to increased loyalty and sales from those consumers.
— BigCommerce Support Team
How do you compare?
Purchase location and time
So we know Americans shop online often, but let’s drill down another layer. During which times and from which locations do they find it most convenient to do so? You might be surprised.
A 2015 InReality study found that 75% of shoppers have browsed for items online while in a physical store. Our survey took things even further, confirming that 25% of Americans have actually made an online purchase while standing in a brick-and-mortar store.
Consumers do their online shopping from a variety of locations — wherever it’s most convenient. Almost half (43%) of Americans who have shopped online have made a purchase from bed; Millennials and Gen Xers are 3x more likely to do so than Baby Boomers and Seniors (59% vs. 21%).
Of those surveyed, 23% have made a purchase from work; 29% of Millennials and Gen Xers have done so, and 15% of Baby Boomers and Seniors.
Another 20% admit to purchasing from the bathroom or while in the car. Millennials and Gen Xers report the highest incidences of bathroom shopping; they’re 5x more likely to have made an online purchase from the bathroom than Baby Boomers or Seniors (31% vs. 6%).
It’s not just where Americans are shopping, though, that’s of interest. It’s also in what state of mind. One in ten shoppers admitted to buying something online after drinking alcohol. Men are more than twice as likely to drink and shop compared with women (14% to 6%), and younger generations are 5x more likely to do so than older (15% to 3%). Parents are over two times more likely than non-parents to have made an online purchase after drinking (15% vs. 7%).
How do you compare?
What Americans are buying
It’s clear that Americans are shopping both online and in store. Yet what they buy at each type of retailer varies –– and also overlaps. Our study further proves that the modern buyer journey is multi-channel. Few Americans have bought items only through one or even two channels. Most purchase items through a variety of retailer types, likely whichever is the most convenient or cost-effective at the time of purchase.
See the chart below for a more thorough breakdown of which items consumers are buying at which retailers. Here are a few takeaways:
Clothing, shoes and accessories: 44% of shoppers have purchased from marketplaces, 47% from large retailers, 27% from webstores and 30% from category-specific online stores
Electronics: 34% of shoppers have purchased from marketplaces, 32% from large retailers, 10% from webstores and 19% from category-specific online stores
Beauty and personal care items: 29% of shoppers have purchased from marketplaces, 24% from large retailers, 18% from webstores and 17% from category-specific online stores
Books, music and movies: 44% of shoppers bought from marketplaces, 28% from large retailers, 15% from webstores and 21% from category-specific online stores
Flowers and gifts: 14% of consumers bought on marketplaces, 14% from large retailers, 15% from webstores and 19% from category-specific online stores.
Use Your On-Site Analytics to Better Merchandise
Analytics are your best friend when it comes to merchandising. A high view rate but low conversion rate can point to either a lower priced competitor or a need for more detail in the product description or images. Conversely, a high conversion rate with relatively low views can identify an underserved niche product that deserves higher placement on your website, Adwords and in marketing emails. Constantly paying attention to, and putting action on, these details can result in immediate boosts in revenue.
— BigCommerce Support Team
How do you compare?
What influences the American shopper to purchase
Convenience and price are the two most important influences on a purchasing decision. Have a low enough price, though, and convenience takes a back seat.
Likely as a result of the recent recession and slower-than-expected return to stability, Americans are most persuaded to buy when the price is right. But price comes into play in multiple ways. Shipping, taxes, fees, returns, coupons, discounts and giveaways all matter to consumers. For retailers, especially independent boutiques and webstores, perks like “free shipping” are being more frequently offered and considered a marketing expense. For larger chains like Amazon, the net loss is worth the increase in brand reputation. Either way, most retailers are struggling to keep up.
When Everyone has a Stake in the Outcome, the Customer isn’t the Only Winner
Omni-channel requires overlapping to ensure that the customer perceives a seamless experience from end to end. Helping a customer through his entire buyer’s journey means knocking down internal barriers to hold his hand at each stage, making sure that each hand-off is perfect. Plan your strategy by including all departments early in brainstorming a path to success.
— Ted Rubin, Social Marketing Strategist, Brand Evangelist and Acting CMO of Brand Innovators
Price, however, is not the only factor that can sway a consumer to purchase. In this section, we’ll explore what exactly closes the deal for today’s shopper.
Most important influencing factors
The top three factors Americans rank as “very” or “extremely” influential in determining where they shop are price (87%), shipping cost and speed (80%), and discount offers (71%). Seniors are an outlier to the pricing trifecta, as they are less influenced by discount offers than other generations (47% to 74%).
Almost a quarter of online shoppers (23%) are influenced by social media recommendations, and 42% find recommendations from friends and family influential –– twice the number who cite advertisements as influential. Interestingly, younger generations self-report as more receptive to advertising; Millennials and Gen Xers are nearly twice as likely as older generations to find advertising influential.
Surprised? We’ll dive into that in more detail later.
Customer Experience is the Desired Value Add, Not Just a Low Price
American shoppers don’t just look for the lowest price — they search for the greatest value. Retailers tend to think that the lion’s share of value comes from the products they sell. Retail customers disagree. They want a fair price for the ‘thing’ they get AND they want convenience, service, reasonable policies, ease-of-use, friendly service, timely deliveries and a myriad of other elements of the experience that represent value for them. The bottom line is most customers make purchase decisions based on the overall experience, not only on the cost/quality dimension.
— Mike Wittenstein, founder and managing partner at Storyminers.
How do you compare?
Reviews vs. advertisements vs. friends and family
There is something shifting among generations as to how reviews, advertisements, and friends and family influence a purchasing decision.
In general, 42% of online shoppers find recommendations from friends and family influential, 23% are influenced by social media recommendations and reviews, and 21% cite advertisements as influential.
Although advertisements were rated the least influential purchasing factor, the data showed that younger generations are more receptive to advertising than older ones. Millennials and Gen Xers fare nearly twice as likely as Baby Boomers and Seniors to find ads influential (27% vs. 14%). This may be due to the constantly shifting nature of online advertising.
A Network Gives You Reach, but a Community Give You Power
In today’s digital world it’s all too easy to let our relationship-building muscles atrophy. We’re super-connected, yet somehow disconnected at the same time. This puts us at risk of losing the very relationships that help us prosper as companies and people. It is time to re-build our one-on-one communication skills and muscles that we’ve forgotten in our rush to new technologies. These skills scale via social because most participate vicariously via the few who interact publicly.
In order to get by-in from the c-suite be sure to bring awareness to the fact that… a network gives you reach, but a community gives you power. That power solidifies trust, and loyalty, which lead directly to ROI for any person or organization.
— Ted Rubin, Social Marketing Strategist, Brand Evangelist and Acting CMO of Brand Innovators
How do you compare?
Conversion killers and online pain points –– what makes consumers abandon cart
At the end of the day, it doesn’t matter how much traffic an online store receives –– if no one actually buys, the business will perish.
The average conversion rate for a U.S. online store in Q4 of 2015 was 3.6%. So, for every 100 visitors a site receives, less than four people will purchase an item. This creates an ROI issue. Advertising is expensive, and so is creating a quality customer experience that generates reviews or word of mouth to drive more sales.
Abandoned carts continue to be an issue for retailers of all sizes, with the average abandoned cart rate at 69%. What’s stopping consumers from buying once they add to cart? Cost is a big issue. Our data shows that 66% of Americans have decided not to buy an item because of shipping costs: that’s 72% of women and 59% of men.
After cost, the natural limitations of buying online are the leading causes of abandoned carts. Nearly half of respondents (49%) cited not being able to touch, feel or try a product as one of their least favorite aspects of online shopping. Another 34% said difficult-to-return items and long delivery estimates were also a pain.
Finally, site design also matters: 21% of Americans state that unattractive or hard-to-navigate websites are frustrating when buying online. A well-designed store is essential to decreasing abandonment and increasing sales.
Give More Without Sacrificing Margins, Its Win-Win for Everyone
Nobody likes paying for things they can’t see (like shipping). Have you considered offering lightweight add-on items at a discount during check-out time to help mitigate that awful feeling of paying too much?
— Mike Wittenstein, founder and managing partner at Storyminers.
How do you compare?
What Americans want more of from online stores
Shoppers appreciate stores that recreate the in-person buying experience using images (78%), reviews (69%), comparisons (46%), testimonials (42%) or video (30%). These immersive features help alleviate the fact that 49% of online shoppers dislike not being able to touch, feel or try out a product.
Here is what Americans would like to see more of from online stores.
Always be Looking for New Tools in Personalization
In the not-too-distant future, retailers may have the option to adapt the kind of shopping support information they offer based on customers’ observed or stated preferences. That means if you (in the role of shopper) like to see more pictures, that’s what you’ll see. If you (in the role of a different shopper) prefer to see videos of products in use, you can get that too. Instead of trying to treat all customers the same (which is perceived to be more efficient for the business), personalize the shopping experience and hop on innovative technologies that help to serve different customers (even within the same persona set) the content they most want in order to close the sale.
— Mike Wittenstein, founder and managing partner at Storyminers.
How do you compare?
How Americans feel about online shopping
Online shopping is more convenient than ever, and many Americans admit to purchasing from absolutely anywhere –– and occasionally in an altered state of mind. So it stands to reason that not all purchases are home runs.
In our study, 42% of online shoppers said they’ve made a purchase they later regret, and 21% have accidentally bought something they didn’t want.
Shopping regret
As mentioned above, 42% of Americans have made a purchase they later regret. Millennials are the most likely to experience buyer’s regret than any other generation (51% v 37%). Here’s how it breaks down.
Regret and Returns Go Hand-in-Hand, So Make the Experience Positive
A clear returns policy helps instill trust in your brand. Offer money back if you can, or store credit if you want to retain the revenue. Either way, make the return process as easy as possible for the consumer. A regretted purchase doesn’t have to be a point of contention between your brand and a potential repeat customer.
— BigCommerce Support Team
How do you compare?
Overspending
Nearly half of online shoppers (48%) reported overspending on a purchase. Millennials and Gen Xers lead overspending at 55%, followed by 38% of Baby Boomers and Seniors.
Be Transparent, Always – And Win Customer Loyalty
Previous overspending may explain why sticker shock at checkout is a major driver of abandon carts. Be clear about your pricing up front, ideally on the product page, to avoid abandonment later in the buyer journey.
— BigCommerce Support Team
How do you compare?
How important is online shopping?
For many Americans, online shopping is an indispensable part of life. In fact, 40% of those surveyed said they couldn’t live without it. Seniors are the least digital-dependent among us; Millennials, Gen Xers and Baby Boomers were more than twice as likely to say they couldn’t live without online shopping (43% to 20%).
What would consumers give up before online shopping? Turns out, quite a bit!
Respondents were nearly twice as likely to say they could not live without online shopping compared to streaming music (40% to 21%). And they were 8x as likely to say they could not live without online shopping compared to dating apps (40% to 5%).
When it comes to priorities, Americans favor shopping over first dates and music.
How do you compare?
What this means for U.S. retailers: Tying it all together
Technology has wholly disrupted the retail industry. Consumers are no longer loyal to a single brand or type of shopping. They now shop in an omni-channel fashion, sometimes buying on a mobile device while in a brick-and-mortar store, or browsing a marketplace before heading to a category-specific site.
4 More Charts Analyzing Consumer Mindset for Each Retailer Type
Free access to four additional charts, showcasing the unique shopper mindset various retail channels, including how much consumers spend on each channel, what drives their purchases and more.
It’s imperative for brands to truly understand their target customer, then dig deep on how that persona purchases. For instance, webstores and category-specific online stores have a leg up on selling gifts and flowers. However, if you’re a webstore selling clothing, shoes and accessories, you’ll also want to list on a marketplace or go the wholesale route to get your items in a large