Online Shopping

Online shopping insights: Why is the in-store pick-up option so popular?

Phillip Nones Advertising, Business, Marketing, Marketing Communications, Marketing Research , , , , , , , , ,

With online shopping so popular these days, why are consumers electing to pick up the merchandise they’ve ordered at the store?

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While it isn’t a pervasive practice, a study published recently by consumer analytics firm Connexity/Bizrate Insights finds that more than 30% of online shoppers have used in-store pick-up at least once during the past 12 months.

Even more surprising, perhaps, is that ~13% of respondents reported that they had considered abandoning a purchase because in-store pick-up wasn’t offered as an option.

As it turns out, people choose the in-store pick-up option for four major reasons:

  • To avoid paying shipping charges: ~55% cited
  • For the convenience: ~43%
  • Need to receive the order quickly: ~36%
  • Shopping online to ensure the item is available: ~29%

At first blush, I wouldn’t think that “convenience” means having to drive to a store versus having the product delivered right to the house. But perhaps “convenience” in this sense is related to product availability – avoiding a fruitless trip to the store only to find out after-the-fact that the desired product isn’t in stock.

But the other reasons cited make good sense, too. Everyone understands the desire to save money – if not on the product itself, then by avoiding shipping charges.  And if a quick drive to the store gets you the items compared to waiting a few days for the shipment to arrive, that’s understandable as well.

The Connexity findings underscore how important it is for retailers to align their e-commerce setups to allow for in-store pick-up – especially if the economics don’t allow them to offer a free shipping option. There’s simply too much competition from online-only retailers to afford losing sale to them based on any of the four factors listed above.

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

Phillip Nones Advertising, Business, Economics, Marketing, Marketing Communications, Sales, Social Commentary , , , ,

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.

It’s Official: Cyber Monday 2014 was the Biggest e-Commerce Day in U.S. History

Phillip Nones Advertising, Business, Direct Marketing, Economics, Marketing Communications, Social Media , , , , , , , , , , , ,

Cyber Monday ShoppingIn the days following Black Friday this year, we heard reports that consumer purchase volumes at stores were down more than 10% compared to 2013.

A number of explanations for the decline were given, among them the notion that Black Friday sales are less of a draw this year, since merchandise sales now begin before Thanksgiving and tend to run the entire month of December.

But some observers speculated as to whether soft Black Friday revenue figures presage an equally soft holiday shopping season overall.

Well … now that we have sales figures from Cyber Monday (the Monday following Black Friday weekend), I think it’s safe to say that any concerns about a tepid holiday buying season are unfounded.

Custora E-Commerce Pulse, a customer relationship management firm which tracked more than 100 million online shoppers and over $40 billion in e-commerce revenue over the full Thanksgiving Holiday weekend, has just reported that Cyber Monday e-commerce revenues were up over 15% compared with Cyber Monday 2013.

That makes Cyber Monday 2014 the single biggest day in U.S. online shopping ever in history.

Other days of the Thanksgiving weekend also showed robust gains in online shopping:  Black Friday online sales were up ~21% over 2013, and online shopping on Thanksgiving Day itself were up nearly 18% over Thanksgiving Day in 2013.

The strong growth was fueled by mobile shopping, e-mail marketing, plus online product searches on Google and other search engines.

In particular, mobile shopping accounted for ~22% of orders on Cyber Monday, significantly higher than the ~16% of orders recorded last year.

On Black Friday itself, mobile shopping accounted for around 30% of all orders — yet another dramatic increase over 2013 when mobile shopping account for just shy of 23% of orders.

This year’s Cyber Monday stats put the lie to the notion that e-mail marketing is losing its luster.  In fact, e-mail marketing drove nearly one in four online shopping orders, outstripping natural search (at ~19% of all orders) and paid search (~16% of orders).

Much ado about (practically) nothing: Social media and Cyber Monday.
Much ado about (practically) nothing: Social media and Cyber Monday.

And guess which channels weren’t a meaningful part of the holiday shopping experience this year?

If you guessed social media … you’re absolutely correct.

Taken together, Facebook, Twitter, Pinterest and Instagram accounted for only about 1.5% of online e-commerce orders on Cyber Monday.  (For the weekend as a whole, it was only slightly better at ~1.7%.)

This year’s statistics just add more confirmation of several truisms about online consumer marketing:

  • Targeted e-mail still works the best.
  • Online search is important.
  • Social media is like Lucy and the football.

Amazon’s (Somewhat) Surprising Shopping Stats

Phillip Nones Advertising, Business, Sales, Social Commentary , , , , , , , , ,

Shoppin on AmazonOver the years, Amazon has branched out greatly from its original focus on books and other media to offer all sorts of other merchandise.

In fact, these days people can buy pretty much anything on Amazon — assuming it’s legal.

Even so, I was somewhat surprised to read the tea leaves on some new findings released by Chicago-based Consumer Intelligence Research Partners.  This research firm surveyed ~1,100 Amazon customers, asking them about their most recent purchases on Amazon.

Categorizing the responses by type of merchandise, CIRP found that books are no longer the most popular products sold on Amazon.

Instead, pride of place now goes to top-ranked electronics products, with ~33% of the survey respondents reporting that those types of products were their most recent purchase on the site.

Books still maintain their high ranking; the category comes in second at ~20% of respondents.  (Incidentally, approximately one-third of those book purchases are e-books.)

Amazon’s Fresh service, which delivers groceries within 24 hours of ordering, has been operating in select West Coast cities for some time now — and it appears that the company has latched onto a winning formula.

In fact, the grocery category ranked third in the survey.

This surprised me:  Call me old school, but I still prefer to select my fresh meats and produce on my own, instead of relying on some anonymous “picker” to do it for me.

What were the bottom three merchandise categories found in the CIRP survey?  Sports-related purchases were low  … and music purchases were lower still (about half of them being music downloads, by the way).

Dead last is the automotive category.  No real surprise here, I don’t think.

Personally, I don’t know anyone who would feel comfortable purchasing a car online.  And since the vast majority of consumers don’t work on their cars either, it seems natural that most of them will continue to rely on their repair shops to procure the replacement parts and consumables they need for servicing their vehicles.

If you have particular merchandise you like to buy through Amazon — or if there is something really unusual that you’ve purchased from the site, please share your experiences with other readers here.

What Will Retail Look Like in Five Years?

Phillip Nones Advertising, Business, Economics, Social Commentary, Uncategorized , , , , , , , ,

retailIt’s a question many people are asking:  To what extent is the digital revolution fundamentally changing shopping habits? 

A new report from Forrester Research titled “U.S. Cross-Channel Retail Forecast, 2012 to 2017” attempts to answer this question.

Its prediction:  just over 10% of total U.S. retail sales will be online purchase in five years’ time.

By comparison, in 2012, e-commerce accounted for about 5% of total U.S. retail spending, so Forrester is projecting a doubling of e-commerce volume.

Forrester also projects that by 2017, ~60% of retail sales in the United States will involve the Internet – either as a direct commercial transaction or as part of buyers’ pre-purchase research on laptops, tablets or smartphones.

The sectors most likely to be influenced by online research are grocery, apparel, home improvement and consumer electronics – no doubt abetted by the ability to access customer reviews and comparison prices during shopping excursions, Forrester reports.

These findings and more are included in Forrester’s report which can be found here (it’s a for-purchase study).

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

Phillip Nones Uncategorized , , , , , , , , , , , ,

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.

Data-Driven Pricing: Biting the Hand that Feeds

Phillip Nones Uncategorized , , , , , , , , ,

Data-driven-pricingWe hear the claim all the time: Online shopping gives you the best opportunity to find the best pricing on goods.

But here’s the rude reality: Developments in “data-driven pricing” is putting the lie to that assertion.

Although it’s a turn of phrase that hasn’t received very much play – at least until now – data-driven pricing is the latest method by which sellers are hankering to extract every last dollar they can from buyers.

Think of it as the digital version of global zone pricing in the petroleum industry, wherein gas companies charge filling stations in well-heeled areas more for the exact same gasoline product that they sell for less elsewhere.

But in the digital realm, online retailers like travel sites are keeping track of customer IP addresses and recording past shopping activities in order to serve up higher prices to the people who are interacting with their sites.

These retailers are taking customer loyalty … and standing it on its head.

Using browsing and shopping data collected about each customer – including every time a site is visited via Google search results – retailers can determine in real-time if they can get away with charging a higher price.

And that may well be why you paid $75 more for your air ticket than the person seated next to you on the plane who also purchased their ticket online on the exact same day.

Now, this scenario isn’t universally true. When there are many retailers to choose from on a particular item, along with ample supply of a good, the consumer can usually hold out for the lowest combination of price, shipping (hopefully little or none), and sales taxes (hopefully none).

But on items ranging from airline tickets to concert tickets, the online consumer is often up against a stacked deck.

Believing that online shopping is the slam-dunk way to extract the lowest price from the retail channel is a notion that’s out of date at best … and naïve at worst. Simply put, data-driven systems have gotten a whole lot “smarter.”

Some consumers might respond by hesitating before buying – no longer assuming that the price they’re being offered is the “lowest available” one.

So here’s a question: When consumers become more cautious about buying online, who’s hurt more?

The consumer? Or the suddenly smarter retailer?

Shopping in the Internet Age: Let’s Make a Deal

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Consumers love their online dealsI hear the complaint often that e-mail has become the preserve of “deal a day” promotions and communications from brands that have devolved into little more than breathless announcements about discounts that are “too good to pass up,” coupled with the obligatory “free shipping” pot-sweetener.

And then the next day, another deal shows up that’s practically the same as the last one …

But how surprising is this, really? Let’s not forget that daily newspaper advertising – the equivalent antecedent to e-mail marketing, has always had a similar focus on price, sales and deals.

It’s just that with e-mail, it seems more ubiquitous because they’re being pitched to us hourly on any number of digital platforms and mobile devices, rather than just once a day with the newspaper delivery.

And there’s no doubt that the sheer volume of deal activity is growing – the low cost of e-mail marketing makes sure of that. Not only is seemingly every consumer brand out there working the e-mail channel like they did catalogues and newspaper advertising in the past, there’s also the bevy of coupon marketers like LivingSocial, Groupon, Yipit and Gilt City, to name just the top few.

Some have discerned a decline in the “quality” of the information that is being provided; whereas there may have once been some educational, informative or “cool” content included along with the special deals, now it’s often devolved into nothing but “price, price, price” and “savings, savings, savings.”

The extent of consumer interaction with “deal-a-day” websites and e-mail offerings was quantified recently in consumer research conducted by Yahoo and Ipsos OTX MediaCT. The survey, fielded in February 2011, discovered that U.S. adults who are on the Internet subscribe to an average of three daily or weekly shopping e-mails or e-newsletters. (And more than half subscribe to two or more.)

How often are people reading these e-communiqués? With daily regularly, it turns out.

Nearly two-thirds of the respondents who subscribe to at least two of these “daily deal” e-mails or e-newsletters report that they read all of the messages that are sent. Here’s how reading frequency breaks out:

 Read several times per day: ~22% of respondents
 … Once per day: ~38%
 … A few times per week: ~23%

 Read once per week: ~7%
 … A few times per month: ~5%
 … Once per month or less: ~5%
The same Yahoo/Ipsos survey measured the degree of pass-along activity, which is one of the most potent aspects of e-mail marketing. Most recipients reported doing this – about 45% doing so on a weekly basis or more frequently:

 Forwarding deals to friends or family several times per week: ~17%
 … Several times per day: ~12%
 … Once per day: ~10%
 … Once per week: ~6%

 Forwarding once per month or less frequently: ~19%
 … Never doing so: ~22%

Despite the complaint commonly heard about groaning e-mail inboxes, the Yahoo/Ipsos survey gives little indication that consumers are in reality becoming all that tired of the onslaught of daily deal promos. In fact, over six in ten respondents in the survey reported that they subscribe to more of them today compared to last year.

Moreover, nearly half of the survey respondents reported that they’re excited to receive them … and that they “can’t wait” to see the latest deals being offered each time.

There’s another way we know that these deals are retaining their relevance: Three-fourths of the respondents reported that these types of e-mails come to their main inbox rather than to a separate account they’ve set up to receive such offers. So there’s little doubt that when people say that these deals are desirable, they actually mean it.

We consumers do like our deals, don’t we? And if you think that the popularity of deals and discounts is due to the recession, that’s belied by the fact that even America’s super-affluent are on the deal bandwagon. Unity Marketing’s recent survey of the wealthiest 2% of Americans — those earning $250,000+ per year — finds that value-priced Amazon is the top shopping destination for ~45% of them. Not only that, ~10% use Groupon for coupons and ~8% use Craigslist.

No, it seems bargain-hunting is the thing for practically everyone.

The Ripple Effects of High Gasoline Prices

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Shopping at home is rising along with gasoline prices.We’ve all heard the news reports about the effects that high gasoline prices are having on families who rely on automotive transportation for their livelihoods. It’s all well and good to promote the use of public transportation, but when your job is 25 miles away along suburban or rural roads, it’s often impractical to adjust commuting behaviors.

We’re also reading how high gas prices are affecting other aspects of the economy, such as the rising price of food items in the grocery stores due to higher transportation costs.

To this, we can now add another consequence of the high cost of petrol. Paralleling the gas price spike has been an increase in Internet activity.

Marin Software, a leading paid search manager platform for advertisers and agencies, has performed an analysis across more than $2 billion worth of paid search marketing activity. The firm established a benchmark based on the share of activity across the Google and Bing search engines, and then studied cost-per-click activity, clickthrough rates and conversion rates.

Marin evaluated the rise and fall in the volume of clicks along with the rise of gas prices over the time period January – March 2011. Voila! It found a positive correlation between rising gas prices and increased click activity.

In a similar vein, digital market intelligence firm comScore is reporting that U.S. e-commerce sales were ~$38 billion during the first quarter of the year. That’s up ~12% compared to the first quarter of 2010. And while e-commerce volume has been up over the past six quarters, this is only the second time the growth as been in double digits.

So the premise that the higher gas prices climb, the more the propensity is to shop from home and avoid the cost of driving appears to be on target. And it’s probably being helped along by the plethora of “free shipping” offers that are also out there — along with avoiding paying sales taxes.

Looking forward to the day when gasoline prices may plateau or fall back, it’ll be interesting to see if Internet activity drops back as well. Or will more people have become used to the comfort of shopping from home in their boxer shorts – so that online activity remains at an elevated level?

I have a suspicion it’ll be the latter.