Consumers are using online information to identify best deals
Online sales continue to increase as consumers leverage new shopping channels. New research highlights however that consumers are also increasingly leveraging online information to better inform their purchasing decisions. The additional shopping channels, while adding opportunities, too creates additional challenges for shops as consumers seek out good deals or avoid bad reviews.
As the channels and ease through which consumers can access information goods diversifies, largely due to an increase in the number of digital channels and mobile devices, changes in buying behaviour is becoming more pronounced. Mobile phones connected to global databases, forums and social media sites allows consumers to quickly and easily determine if the deal presented in a shop, online or offline, is a good deal. With the increase in information, competition for sales is becoming fiercer while positive consumer sentiment becomes more important.
In a new report from KPMG, titled ‘The truth about online consumers: 2017 Global Online Consumer Report’, the consultancy firm explores consumer trends around the use of digital avenues, both in terms of their level of online and offline buying behaviour, as well as their wider use of technology to accesses key information to inform that behaviour. The report is based on a study of 18,430 consumers from across the globe.
With the rapid proliferation of online shopping ‘ecommerce’ channels, consumers are increasingly buying products through digital shops. Online sales topped $1.5 trillion in 2015, a total of around 7.4% of total retail sales globally. According to the current trend in sales volume growth, by 2020 total online retail sales are expected to top $4 trillion, or around 14.6% of total retail sales globally. Considerable differences exist between countries however, with the UK already (far) ahead of the global average.
While internet sales channels utilisation represents one considerable change in consumer behaviour, other differences too are noted, that are not directly linked to online sales as such, as consumers leverage online information to better inform their purchasing behaviour – from identifying goods deals to checking reviews.
The study shows that the majority of consumers are using their smartphones to look up products while in shops. Baby Boomers are the least likely to do so, at around 50%, while more than three quarters of Millennials have checked the price of goods in shops.
In terms of information sought while in a shop, price comparisons with other retailers was the most oft sought after information, as cited by 65% of respondents, followed by product information/specifications at 61%. Around 49% of respondents that had check information, checked online reviews, while 35% sought information about product options and 16% looked for store inventory/availability.
The study also sought to identify in how far consumers purchase decisions are affected, by region, in terms of key drivers. In North America for instance, consumers are largely affected by price/promotions and branding, while in Asia product branding and product features are key drivers. Western European consumers are particularly price sensitive as well as focused on product features. In most segments consumers are affected by online reviews.
The improved access to information provided by online channels, in relation to key purchase decision drivers, means that consumers are considerably harder to pin down. Particularly if there is a better deal elsewhere or brand reputation or product quality are affected by word of mouth.
According to the study, feedback from consumers about their shopping experience, which affects other consumers’ perceptions and buying behaviour, is posted predominantly on the sellers’ website by the three generational groups – a boon to sellers seeking to placate turned off consumers. Facebook is more often used by Millennials (34% of respondents) compared to Baby Boomers (25%), while Baby Boomers (22%) are more likely to use manufacturer or brand websites then Millennials (17%). Other forms of social media are less often leveraged to post views by all consumer groups.
Online and in store benefits
The report also looked into what consumers saw as key reasons to shop in the two different environments, online and in store. The top reason to shop in store is related to wanting to see/touch the item before purchase (56%) and trying the item of for size (55%). Practical reasons, such as long shipping times (34%) and high shipping costs (24%) were also cited as issues. Around a quarter of shoppers enjoyed the shopping experience itself.
In terms of conditions driving consumers to buy online, the ability to shop 24/7 came in at 58%, followed by the ability to easily compare prices (54%) and leverage the often better prices and sales online (46%). Saving time and the convenience of not having to go somewhere were cited by 40% and 39% of consumers respectively.
Paul Martin, UK Head of Retail at KPMG in the UK, reflects, “Companies should be channel agnostic, meaning it does not matter if they start with online or offline, what matters is that all channels are interlinked to give consumers the convenience they need. Online plays a major part in the customer journey or ROPO (research online, purchase offline). The most successful multi-channel companies established their online channels as early as the late nineties, went on to establish ‘click and collect’, eradicated silos across the entire organization and established a channel agnostic incentive program so retail staff do not consider online as a separate business.”
