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Discover whats influencing your consumers to make online purchases Pages 57 We analyse what persuades consumers to buy online Pages 89 The latest research in the clothing & fashion, electronics and entertainment sectors Pages 1012
IN THIS ISSUE
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INTRODUCTION
By Stephen Millard, Founder, Eccomplished
RESEARCH METHODOLOGY
How we gather our data
PURCHASE INFLUENCERS
Discover whats influencing your consumers to make online purchases
SITE PERSUADERS
We analyse what persuades consumers to buy online
SECTOR FOCUS
The latest consumer research in the clothing & fashion, electronics and entertainment sectors
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CONCLUSIONS
An overview of this quarters findings
RECOMMENDATIONS
Advice on how to use our data in your business
ABOUT US
Who we are, what we do and how we can help
www.eccomplished.com
INTRODUCTION
Welcome to this first edition of The Eccomplished Quarterly, exploring the online purchasing behaviour of connected consumers who, thanks to the rise of smartphones and tablets in particular, are practically always online - so retailers never know when and where they will buy.
Connected consumers hold all the cards. Persuading them to spend is no longer about being in a prominent location, with the right products and at the right time. Its about being ever-present as they work out what to buy and from where. But retailers can only be ever present if they know what consumers do before they buy, which sources of information and inspiration they seek out, and which make the crucial difference between looking and buying. That shift from research to buy does not boil down to a handful of factors in the way it does offline. The information that makes the difference, or the spark of inspiration, can come from peer reviews or recommendations, social media or advice from friends and family, media coverage or product information, imagery or video, or simply browsing in a store, the list goes on... We call it the perpetual tipping point because, when it comes to connected consumers, the crucial influence can work its magic anywhere and at any time. That makes predicting consumer behaviour very difficult, which is why so much effort in ecommerce
marketing is focused on drawing customers in, establishing a rapport with them, much as you would face to face - rather than just engaging them where ever they happen to be. If not then the only factor driving their decision is price, and that is just a race to the bottom. This series of reports will explore all these issues. In this edition, we start by looking in detail at where consumers search for information and inspiration before they buy and how that behaviour changes according to product category. Stephen Millard Founder, Eccomplished
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RESEARCH METHODOLOGY
Survey Source: online omnibus survey of 2,000 nationally representative respondents. Fieldwork was conducted from the 4th-6th January, 2012 by SSI. SSI adheres to the MRS code of conduct and ESOMAR guidelines.
SSI is the premier global provider of worldleading sampling, data collection and data analytic solutions for survey research. Reaching respondents in 72 countries via Internet, telephone, wireless and mixed access offerings, SSI serves more than 2000 clients, including the top 50 research organizations.
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PURCHASE INFLUENCERS
When connected consumers are deciding what and whether to buy, they essentially ask two kinds of questions.
They ask Is this the right product for me? and What do other people who have bought it think?. The weight they attach to each question, and the answers they find depends on the nature of the product. In areas like clothing and footwear, where personal taste is the dominant factor, Is this right for me? is the most important question. On the other hand, technical products like electronics demand more research how the product works is at least as important as how it looks so What do people who have bought it think? is often the most important question to answer. That balance between, essentially, judging a book by its cover and getting a feel for the content is what determines how consumers set out to find and buy products online. The good news for retailers is that we can start to predict consumer behaviour, because it varies according to product type. However, before looking at some key categories in detail, its worth considering the bigger picture, which largely confirms that consumers rely on two kinds of input when deciding what to buy. When the choice is about how a product works, they seek unbiased information from their peers we call these Information influencers. When the choice is about personal taste, they seek inspiration their Inspiration Influencers.
When the choice is about how a product works, they seek unbiased information from their peers we call these
Information Influencers
When the choice is about personal taste, they seek inspiration their
Inspiration Influencers
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PURCHASE INFLUENCERS
Which of the following have you done to help you make a purchase?
Information influencers
Online recommendation now more important than traditional word-of-mouth?
Consumers carry out research and talk to friends and family to answer questions such as Does it do what I need it to do?, Does it work?, Is it reliable? and What might go wrong? The information they seek out tends to be a mixture of trusted advice and brutally honest feedback from those who have already bought and used a specific product: Over half of consumers visit marketplaces (54%) with a huge range and associated recommendations and reviews as part of their research process Just under a quarter (23%) of consumers speak to friends and family before making a purchase But they value independent feedback more highly 31% cite online reviews, whilst 18% are influenced by Comments on online articles The importance of peer to peer ratings and reviews is further illustrated by postpurchase behaviour four in ten (39%) consumers are likely to complete an online rating or review and 35% will recommend the product to friends and family.
Visited a Marketplace Read online review Friends / Family Comments on online articles Looked at product in shop Comparison website Read an article online Viewed a video of product Sampled product in a shop Searched using mobile Advice from social media Sales person in a shop Sales person on the phone Anything else
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PURCHASE INFLUENCERS
Which of the following have you done to help you make a purchase?
Inspiration influencers
Online or offline its all still retail.
In many ways, consumers seeking inspiration behave much as they would when buying in store they rely much more on visual cues like photography and video and are more likely to check out a product in store before buying online. Consumers rely more on sources of inspiration when the choice of product is more about personal taste, asking themselves questions like Is it to my taste?, Does it look good?, and Will it suit me?
15%
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SITE PERSUADERS
Retailers are failing to connect with consumers when and where they decide to buy, and that lack of meaningful engagement early in the process has significant consequences.
Despite the best efforts of retailers to enliven the customer experience with rich media, connected consumers still see deciding what to buy and deciding where to buy as largely separate decisions and very different decisions at that. In stark contrast with the array of influences called upon when selecting a product, consumers make uncomplicated decisions about where to buy. A lack of engagement throughout the purchase process and at the all important tipping point means consumers ask themselves much simpler questions when selecting a retailer to buy from Which site has it in stock?, Which site offers convenient delivery? and Where can I get a good price?. Choices then, are driven by hygiene factors, with only the availability of product reviews and recommendations bridging the chasm between what to buy and where to buy: Price is an important factor in determining where to buy for 60% of consumers Similarly, 28% of consumers cite promotions The product was in stock drives 39% of choices Convenient delivery options tip the balance 37% of the time Ratings and reviews do the trick for 22% of consumers
Lowest price Product in stock Convenient delivery Promotions Ratings & reviews Family/friend recommendation Company recommendation Social media recommendation Recommendation elsewhere Anything else
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SITE PERSUADERS
Marketplaces like Amazon are far and away the most common places to buy online. They account for 57% of purchases, twice as many as the high street brands.
That reflects their ability to be present far earlier in consumers journey towards purchase. Consumers see Marketplaces as sites where they can seek out a wide range of information, for instance via user reviews and recommendation engines. On online Marketplaces just like the traditional physical market - consumers are encouraged to see researching and buying as part of the same process a perception helped by genuine price competitiveness, extensive product ranges and convenient delivery. As a result, and as we will see, the Marketplaces do particularly well when decisions about what to buy are shaped by information, rather than inspiration. On the other hand, high street retailers account for 22% of online purchases among those shoppers surveyed, brand owner sites (9%) and auctions (8%) and perform much better when it comes to purchases driven by inspiration for instance in the fashion and footwear categories. That perhaps reflects a preference for known-brands, but it is also a function of physical high street presence bearing in mind the fact that consumers are more likely to view or try a product in store when inspiration is an important factor.
Marketplace (eg. Amazon, eBay, Pixmania) High street site (eg. Argos, Asda) Product owners site (eg. Apple, Burberry) Auction site (eg. eBay) Comparison site (eg. Pricerunner, kelkoo) Coupon site (eg. Groupon)
57% 22% 9% 8% 3% 1%
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Consumers buying clothing and fashion online take offline behaviour onto the internet, responding to similar influences and making similar choices.
Online fashion purchases are all about personal taste. Consumers take a version of their high street behaviour online, seeking out sources of inspiration, both traditional and modern. They are more likely to search out or try the product in store before buying, or view a video of the product online. On the other hand, fewer consumers read reviews and recommendations before buying and advice from friends and family is less important. Meanwhile, the choice of site to buy from is less influenced by hygiene factors, though price still drives 46% of decisions. Type of site most often purchased from
Auction site (eg. eBay) Coupon site (eg. Groupon) Marketplace (eg. Amazon, eBay) Product owners site (eg. Apple, Burberry) Comparison site (eg. Pricerunner) High street site (eg. Argos, Asda)
3% 1% 22% 43% 9% 19% 1% 1% 57% 23% 8% 13%
All these factors combine to give the high street brands and brand owners a considerable advantage and they take a 62% share of the market between them mainly at the expense of the Marketplaces, whose rich sources of information are less relevant.
Anything else
Total Clothing/Fashion
Anything else
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Consumers buying electronics online are cautious. They do more research, and call on more sources of information than they do for any other category.
In stark contrast with fashion, electronics purchases are strongly research-driven. The relative complexity and high price of the products, along with a huge breadth of choice, drives consumers to seek out more sources of information and rely heavily on peer reviews. Half of electronics purchases are influences by online reviews and recommendations, whilst online editorial, online video and in-store advice also feature heavily. After deciding what to buy, however, consumers focus on hygiene factors when deciding where to buy. Price, stock and delivery are powerful persuaders though, reflecting the preference to carry out research during the purchase journey, ratings and reviews are also important factors. As a result, Marketplaces dominate, taking a 53% share, whilst the high street sites capture 20% of the market, perhaps reflecting the tendency to seek information and demonstrations in store.
Anything else
Total Electronics
Convenient delivery Ratings & reviews Promotions Family/friend recommendation Company recommendation Social media recommendation Recommendation (other)
Total Electronics
Anything else
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Entertainment purchases are culturally driven. All are heavily promoted through advertising and the media, which ultimately leads consumers to form internal preferences according to genre, artist and brand.
As a result, sources of both information and inspiration are less important than they are in other categories and, since consumers see products in the entertainment category as commodities, price is the dominant factor driving purchase behaviour. The only outside influence to beat the average is advice from friends and family. All other peer influence is suppressed in the mix, as are sources of inspiration, which suggests that most consumers go online to buy products they have already identified. Given that behaviour, the relative frequency of purchase and the commodity view of entertainment products, it is no surprise to see hygiene factors dominate when it comes to deciding where to buy. Price is by far the most important, whilst delivery and stock availability are also powerful persuaders as a result, Marketplaces dominate, taking a 75% share of our samples entertainment purchases.
Total Entertainment
Ratings & reviews Family/friend recommendation Company recommendation Social media recommendation Recommendation (other)
Total Entertainment
Anything else
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CONCLUSIONS
This report marks the start of our research to explore how constant connection is changing the way consumers behave. The clear implication for retailers is that they cannot know when or where the customer journey will start or end, but that they must be visible throughout that journey and learn from it to maximise conversion at point of purchase.
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CONCLUSIONS
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RECOMMENDATIONS
Be present throughout
The connected consumer uses multiple devices and buys through multiple channels, with the vast majority of purchases taking place away from the retailer or brand owners site. Explore the journey typical consumers are taking from initial inspiration to ultimate purchase and identity the key channels on which your products must be present: comparison shopping engines, marketplaces, affiliates. Ensure the information you place onto shopping sites, marketplaces and other channels is up to date and correct. Its all about quality data. Nothing is more frustrating for a consumer than clicking through to a retailers site to find the product is actually out of stock. Even more galling and sometimes legally damaging is displaying the wrong price. Be accurate on descriptions, clear on price and up-front on delivery costs. Steve Rivers Managing Director, Ultimate Feed
Dont focus on just driving purchase decisions enable and host the research and decision process. Be present throughout, and when it really counts.
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RECOMMENDATIONS
receive an email, view on a smart phone, visit the website, share in social reach and finally, re-targeting all to generate a sense of brand worth. Darren Hitchcock EMEA VP, Rich Relevance
Deliver on promise
Trust or a lack of it is a big factor when it comes to shopping cart abandonment. We are all uncomfortable placing large orders with brands we are unfamiliar with. In the world of cart recovery, we recommend our clients focus on building trust within an organisation by offering that extra level of customer service and increased awareness. Your customer promise is critical to building that trust: a fair price; products available and convenient delivery options. Many retailers are focused on the next big thing social commerce for example, but we have found that being as open and honest as possible around these items is the best way to reduce the level of shopping cart abandonment. Matthew Cox International Partner Manager, SaleCycle
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ABOUT US
Eccomplished is a free resource for online retailers to discover how their consumers are behaving and their competitors responding.
Operating as a consortium of ecommerce experts, Eccomplished is run on behalf of our members, and is committed to helping retailers by providing ongoing research and insight of consumer trends, and evidence of innovation in action.
Register and receive: Weekly insights and the latest trends in online purchase behaviour The Eccomplished Quarterly - exploring the latest in online purchase behaviour The ecommerce innovation index - the innovations driving growth in the world of ecommerce Expert advice from worlds leading ecommerce providers Click here to register on our website now
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Ultimate Feed
Ultimate Feed helps retailers dynamically market products to multiple channels, increasing coverage and reaching new markets. Customers include AsdaDirect, Dixons and House of Fraser. Complex product data is managed and merchandised to multiple channels in the best format to sell more products to more people. Every interaction is tracked and analysed to allow you to manage product revenue and profit. For further information visit: www.ultimatefeed.com
RichRelevance
RichRelevance powers personalisation for some of the worlds largest and most innovative brands and retailers, deepening shopper engagement, increasing conversion and fostering brand loyalty. Customers include Dixons, M&S and Ann Summers. Established by the personalisation pioneers at Amazon, Rich Relevance helps increase sales, while respecting the shopper and surfacing only the most relevant products, content, offers and advertising. For further information visit: www.RichRelevance.com
SaleCycle
SaleCycle helps online retailers such as Fat Face, Schuh and TM Lewin recover lost sales by re-engaging customers who abandon their shopping carts during the online purchase process. Its web-based solution integrates with a retailers online checkout, enabling them to track and recover abandoned carts automatically. For further information visit: www.salecycle.com
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We hope youve found the first issue of The Eccomplished Quarterly useful.
We look forward to your comments and feedback and if you have any specific points that you would like us to consider in the next issue, please do contact us at emily@eccomplished.com