Online Shopping Trends: Going from “Go-Go” to “No-No”?

The easy growth for online shopping appears to be over, according to new research findings published by Boston Consulting Group.

bcgBCG just completed surveying ~3,300 Americans aged 15 to 85 about their online shopping habits across 41 merchandise categories. In every category, a clear majority of respondents report that they don’t plan to increase their online spending in the next three years.

Depending on the category, the percentage of people who do not plan to increase their online spending ranges from 78% to 92%.

And in some disparate categories ranging from food and beverages to packaged goods, fine jewelry, news media and automobiles, more than a quarter of the people already shopping online said that they actually plan to decrease their online spend over the upcoming three years.

opsoPerhaps even more surprising, the BCG survey results show similar findings regardless of generational groups — Baby Boomers, Gen-Xers and Millennials alike.

BCG has conducted other studies on this topic in the past, but reportedly this is the first time such low “future intention” figures have been collected, and it suggests that future e-commerce growth will be a good deal more challenging for many companies who offer their products and services for online purchase.

Here’s a quote from Michael Silverstein, a BCG senior partner and specialist in consumer shopping behaviors, speaking about the new research findings:

“Consumers are notoriously unable to predict their spending patterns. However, the findings from this research certainly pour cold water on everyone’s expectations for a continuously rising e-commerce world.  E-commerce winners will have to earn new dollars and new spending by providing new value.  That means me-too players will suffer — and leaders will need to provide more user-friendly websites, lower prices, and offers tailored to individual customers.”

There remain a few categories where people are planning to spend more online in the coming years.  However, they don’t represent physical products. Instead, those categories are airline tickets, hotel reservations, and entertainment ticket reservations.

Still, it’s interesting to see online commerce now entering its “mature” phase.  Those rapid, double-digit growth rates couldn’t go on forever — and indeed, they now look to be a thing of the past.

What’s the value of a consumer’s time spent online?

The value of a consumer's time onlineIf you’ve ever wondered what the “value” is of a consumer spending time online, we have some answers courtesy of SumAll, a data visualization company.

SumAll has tapped into Google Analytics data to study patterns across ~10,000 customers and nearly $1 billion worth of transactions. What it finds is that a minute of time spent by a consumer “e-window shopping” is worth an average of 43 cents.

SumAll also calculates that one full visit to an e-commerce site is worth ~$1.30.

The company has been tracking this sort of information for a number of years, so we have some comparative statistics we can observe. In 2012, SumAll finds that the average amount of time spent per site declined by approximately 14% — from 3 minutes, 16 seconds in 2011 to 2 minutes, 49 seconds today.

Despite that decrease in time spent per online visit, the revenue generated per visit actually grew by ~24%.

What’s the reason? “Buyers are more accustomed to buying online, so the hesitation is dropping,” Dane Atkinson, SumAll’s CEO claims.

The SumAll data also suggest that an average consumer spending 1 minute, 54 seconds on a site is the amount of time needed in order for the e-retailer to make a dollar in sales.

The SumAll report concludes that a balance needs to be struck on e-commerce sites between having enough depth to be interesting … but not so much as to be overwhelming, with too many products offered and/or undue difficulty in illuminating the payment path for buyers.

According to Atkinson, aiming for an average e-commerce visit of three to four minutes is a good goal for engaging customers without confusing them with too many options.

Finally, we see from the trend data that there has been a dramatic decrease in the amount of minutes spent on a site to result in a dollar sale: it was charted at over 5 minutes back in 2009, more than three times 2012’s findings.

I guess we’ve become more nimble than ever buying online.

The European Union Versus Marketers

EU e-Privacy Initiative attacks ad tracking via cookiesI wonder how many marketers are focused on what’s happening in Europe on the digital marketing front? While companies here are busily engaged in making sure ad tracking is being done to the nth degree, in the UK and Continental Europe, new legal restrictions on advertising tracking threaten to upend a lot of these efforts, particularly for multinational brands.

In short, the EU’s e-Privacy Directive restricts the use of “cookies” and virtually all other digital ad tracking methods. And the legal frameworks set up around this directive would require any marketer with users in any EU country to be subject to EU-wide and country-specific privacy legislation.

The new privacy initiatives are far more restrictive than the present US-EU “safe harbor” agreement, which merely requires American companies to notify users when cookies are used on a website. The new regs covering web pages, web apps and mobile apps would require giving notice each time a cookie is used, thereby setting up a flurry of endless notifications that promises to seriously degrade the online browsing experience.

The seemingly reasonable compromise of adding information to a “terms of use” agreement isn’t acceptable to the EU either, unless all users are issued the new agreement and they certify their acceptance.

And just to make sure everyone knows how serious all of this is, the new regs call for the imposition of financial and/or criminal penalties for the non-compliant use of cookies. But for the moment at least, only two relatively small countries besides the UK – Estonia and Denmark – have implemented controls to enforce the EU directives.

Here in the United States, privacy legislation slowly wends its way around Congress, with many legislators understanding that the key to successful commerce online is the ability for marketers to match marketing messages to interested consumers. It’s in Europe where governments appear more than willing to cripple the ability of marketers to do the job they’ve sought to do for decades: Target their audiences with as much precision as possible.

As a result, some European businesses are making noises about abandoning Europe for the United States. The problem is, in the digital age with so much of the branding and commerce blurred between countries, it’s impossible for restrictive moves in one region not to cause negative repercussions somewhere else.