The Supply Side: Study suggests brands adjusting to modern shopping habits

by Kim Souza ( 371 views 

Consumers are driving radical changes in shopping behaviors, leaving brand manufacturers and retailers scratching their heads. There is no crystal ball or algorithm that truly knows when and why each customer will make a purchase.

A senior citizen wanting to purchase a smartwatch might get a text recommendation from a grandchild and then go to a brick-and-mortar store to make the purchase. The same grandchild could spend weeks reading smartwatch online reviews, adding then abandoning items in their online cart before finally making a purchase with an email coupon. This is what makes omnichannel — having numerous options and methods to buy items — so important and difficult to navigate, according to a recent report from BigCommerce and Square.

The report, in cooperation with Kelton Global, indicates shopping segments are no longer siloed, regardless of the generation involved. Omnichannel is gaining traction because it gives consumers the most choices about how and when to shop. The report states many brands have been slow to pivot to omnichannel, but Walmart has been focused on it for the past four years. Suppliers to Walmart are also expected to have their own omnichannel strategy that aligns with the retail giant.

The BigCommerce report provides shopper insights for brands trying to navigate the Wild West of omnichannel retail. One key piece of solving the omnichannel puzzle is understanding what consumers want. The report looks at who shops online, which is almost everyone. The report found 96% of Americans with internet access have made an online purchase, and 80% have done so in the last month.

The National Retail Federation reports 151 million people shop in stores or online on the weekend, and 51% of U.S consumers say they prefer to shop online. The BigCommerce report indicates 67% of Millennials prefer shopping online, and 56% of Generation X prefer to search and purchase on e-commerce sites rather than in stores. Four in 10 Baby Boomers prefer online shopping compared to 28% of seniors.

Millennials and Gen Xers spend nearly 50% more time shopping online each week (six hours) compared to their older cohort generations (four hours). The rise in online shopping relates to positive experiences. BigCommerce researcher Stevie Huvai said resistance to online shopping is often fear-based. But flexible return policies, free return shipping and pre-printed return labels can work wonders for a store’s conversion rates.

Comparing shopping preferences between parents and non-parents also provides keen insights. Nearly 49% of parents surveyed said they could not live without online shopping. They spend 61% more online per year ($1,071) than non-parents ($664). Parents spend 40% of their budget online, compared to 34% of non-parents. Those parents spend seven hours a week shopping online compared to four hours by non-parents.

When comparing the spending habits by gender, the survey found more similarities than differences. Men reported spending 28% more online last year compared to women. A person’s zip code has more to do with their shopping preferences than gender. Consumers in metro areas have more physical stores to shop than those in rural counties.

Urban consumers spent about $853 annually online, compared to $684 among consumers in rural areas. The main reason rural consumers would rather shop in physical stores is because of privacy concerns. Consumers living in suburban areas said free shipping would entice them to purchase more online, as 63% cite shipping costs at their least favorite part of online shopping.

While there is a lot of focus on omnichannel, the U.S. Census Bureau reports e-commerce accounted for only 7.5% of the total retail sales in 2015. Consumers spent $453.46 billion on the web for retail purchases in 2017, a 16% increase compared with $390.99 billion in 2016. That’s the highest growth rate since 2011, when online sales grew 17.5% over 2010. Last year, online sales represented about 13% of the total retail commerce, according to the U.S. Commerce Department.

The report found three main influencing factors for where consumers shop — price, shipping costs and speed, and discount offers. About 23% of online shoppers are influenced by social media recommendations from friends and family, which is twice the number who cite advertisements as influential.

The report noted a major issue for retailers and manufacturers is getting consumers to convert from lookers to purchasers because it’s easy to abandon an online shopping cart. The report asked consumers what they hate the most about online shopping, and paying for shipping ranked the highest at 58%. Nearly half (49%) said they don’t like the inability to try a product first before buying it.

The study also found 42% of online shoppers said they made a purchase they later regret, and 21% have accidentally bought something. Millennials are the most likely to experience buyer’s regret (51%) according to the report. Nearly half of the consumers surveyed (48%) reported overspending on a purchase. Millennials and Gen Xers lead overspending at 55%, followed by 38% of Baby Boomers and seniors.

The report suggests retailers need to do more to meet the needs and behaviors of customers wherever they are.

“Omnichannel selling is about being proactive in getting in front of customers when and where they’re likely to make a purchase,” the report noted. “Consumers are no longer loyal, to a single brand or type of shopping.”
Editor’s note: The Supply Side section of Talk Business & Politics focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by Talk Business & Politics and sponsored by Propak Logistics.