Understanding and keeping pace with what drives people to shop and buy online is critical to succeeding in the digital world. In response to demand for greater insights regarding the online customer, a new report by KPMG International analyzes the online shopping preferences and behaviors of
more than 18,000 consumers in 51 countries, by geography, generation and product category.
“Today’s consumer no longer goes shopping, but is shopping, all the time and everywhere. And in a truly global online marketplace, competition is no longer limited to local shops during regular business hours. Consumers can easily buy from retailers and manufacturers located anywhere in the world—or from those with no physical retail locations at all,” comments Willy Kruh, Global Chair, Consumer Markets, KPMG International.
“Increased competition, combined with consumer demand for richer experiences, means that retailers need to rethink their online strategy.
For many retailers, creating an online shopping experience enhanced by technology such as augmented and virtual reality or 3D is becoming at least as important as providing convenient and personalized ordering, payment and delivery options.”
The number of online transactions made by survey respondents averaged 17
purchases per year, or 1.25 per month. Generation X consumers (born between 1966 and 1981), averaged nearly 19 transactions per person per
year, and they made more online purchases in the past 12 months than any other age group. In fact, Generation X consumers made 20 percent more purchases than the ‘tech-savvy’ Millennials (born between 1982 and 2001).
Kruh comments: “Stage of life and income levels are certainly primary factors driving both online and offline shopping, and Generation X consumers, many of whom are more established in their careers and may be building homes and families, are likely buying more consumer goods than the younger Millennials overall. As Millennials continue to enter the workforce and adulthood, however, their online shopping activity is expected to surge and even far surpass the levels currently exhibited by older generations.”
And while it may be presumed that the more traditional Baby Boomers (born between 1946 and 1965) are less inclined to shop online than younger generations, the survey revealed that in fact they shop online just as
frequently as Millennials. Furthermore, Baby Boomers were more likely to spend more per transaction than the younger consumers (average purchase for Baby Boomers was US$203, US$190 for Generation X and US$173 for Millennials).
When comparing the impact of online versus offline touch-points that create the first trigger moment, of note is that 52 percent of consumers cited at least one offline channel as a source of initial awareness, and 59 percent cited one or more online channels.
Retail websites or online shops were the most common source of initial awareness, cited by nearly a third of consumers, and online advertisements were cited by 15 percent. At the same time, physical shops were the second most popular source of awareness, cited by 22 percent of consumers.
Millennials were not only more likely than the older generations to be influenced by online sources such as social media or peer reviews—they were also more likely to be influenced by offline channels. Millennials were 25 percent more likely than Baby Boomers to have seen their most recent online purchase in a shop, nearly 50 percent more likely to have talked to a friend about it, and more than twice as likely to have seen someone with it.
Kruh comments: “Ecommerce is not an online-only affair. Both online and offline channels are effective in creating consumer awareness and demand, especially when used together. Furthermore, despite the rise of online
shopping, ecommerce still makes up a relatively small percentage of total
retail spending. Retailers’ brick and mortar strategies need to continue to
evolve to attract customers into their stores, and to compete with online
retailers opening their own physical outlets. Increasingly, we are seeing innovative marketing strategies, as well as new technologies such as smart shelves, robots, self-checkout, and interactive and virtual reality, being deployed in stores, as retailers strive to compete on all fronts.”
The number one reason that consumers said they shop online is for the convenience of shopping at any hour on any day (cited by 58 percent as a top reason). This is followed by having the ability to compare prices (54 percent), or to find online sales or better deals (46 percent). All age groups reported the same top three drivers. However, when it came to locating harder to find items, Baby Boomers reported having a higher motivation for shopping online (26 percent of Baby Boomers versus 20 percent for Gen X, 17 percent for Millennials, and 20 percent overall).
When asked what is most important when deciding where to buy an item online, consumers were most likely to buy from the website with the lowest price they could find (57 percent) followed by websites with enhanced delivery options (43 percent) or easy return policies (40 percent). There was a notable difference between generations when it came to the importance of being able to see online whether a product is in stock. Millennials were the least concerned about being able to see real-time product availability (cited as important by 28 percent) versus 36 percent of Gen Xers and 37 percent of Baby Boomers.
When it came to earning trust, consumers said that protecting their data and information was most important (63 percent). Although Millennials were the generation least concerned about data protection, it still ranked high as a priority for earning their trust (cited by 56 percent of Millennials, 66 percent of Gen Xers and 71 percent of Baby Boomers).
Kruh notes: “While most companies are of course making a concerted effort to protect their customers’ personal information, frequent media reports on data breaches around the world continue to make consumers anxious and keep the issue top of mind.”
Excellent customer support was the number one loyalty-earning attribute, cited by 65 percent of the respondents. The second-most successful loyalty strategy was providing exclusive promotions and offers (cited by 45 percent), followed by loyalty or membership programs (37 percent). These top three loyalty drivers were consistently effective across all generations, with Baby Boomers placing a higher importance on customer support (74 percent) than Gen Xers (66 percent) or Millennials (59 percent).
Taking a deeper look at the differences by generation, younger consumers tend to be more loyal to companies that offer personalized interactions (customized promotions, anticipation of needs, having a sense of community, one-on-one engagement in social media, online games and other interactive experiences, as well as concierge services).
Kruh notes: “The more traditional attributes like excellent consumer support, loyalty offers and membership programs will remain important for all companies to consider as part of their mix. The challenge will be for
companies to find ways to also offer more personalized services to satisfy
Millennials who, in 10 years, will be the mainstream consumer. One-on-one
engagement will become an expectation for the majority of the market.”
Overall, 31 percent of the consumers responding to the KPMG survey said they shared a product review online. The Millennials were the most likely to post a review (34 percent) followed by Gen Xers (29 percent) and Baby boomers (28 percent). Furthermore, nearly all (92 percent) reported reviews were positive.
Kruh observes, “The growing trend for consumers to post positive reviews is driven by factors including the rise of social media, where consumers subtly compete with their peers by publicly sharing their latest purchases and experiences, the rise of bloggers, whose business models are based on providing product reviews that drive affiliate clicks, and sellers, who proactively solicit ratings from happy customers.”
Consumers responding to the survey said they were most likely to post feedback directly to sellers’ websites (47 percent) followed by posts on Facebook (31 percent) then on a manufacturers or the brands websites
(18 percent). This was consistent across all age groups, with Millennials also frequently posting on WhatsApp, Instagram and Twitter.
“The implication for companies is that user-generated reviews are being posted on sites that are increasingly out of their sphere of control or influence. Companies need to integrate these social media sites into their marketing and customer strategy,” Kruh concludes.
Emmanuel P. Bonoan, Vice Chairman and Chief Operating Officer of R.G. Manabat & Co. (RGM&Co.), the Philippine member firm of KPMG, also noted that this study is of great relevance to Philippine businesses who wish to step up and engage their target consumers efficiently and effectively. “The buying behaviors of Filipinos or global consumers, whether they are Millennials or from Generations X or Y, are becoming differently motivated and are
increasingly influenced by world views and preferences. With the help of this
study, retailers will have a more adept understanding of the current trends
deemed useful to successfully address consumer buying demands equally beneficial to the growth of their respective businesses,” he shares.
KPMG International commissioned Intuit Research to conduct a survey of global online shoppers about their purchase behavior, purchase drivers, and perceptions and attitudes towards online shopping.
The sample consisted of consumers aged 15 to 70 years old that made at least one online purchase in the past 12 months and who were within the top 65 percent of income earners in their country.
The survey was conducted using an online questionnaire. A total of 18,430 qualified responses were received from 51 different countries. Within each country, the sample was weighted to the same age distribution to ensure that country comparisons showed behavioral differences rather than those caused by differences in demographic make-up of the population surveyed in each
The full report can be found at www.kpmg.com/onlineconsumers.
2017 Global Online Consumer Report
For further information, please contact:
Cristina Roxas Loquinario
Markets Assistant Manager
KPMG R.G. Manabat & Co.
Telephone +63 (2) 885 7000 ext. 339