Online shopping is more accessible than it has ever been in the digital era with the introduction of tablets, smartphones, easy checkout systems and more secure systems. As a result, the e-commerce industry is generating higher sales volume.
According to Forrester Research, the online retail sales volume for the US 2012 is $231 billion. This figure is predicted to grow continually to $370 billion in 2017. Forrester also reports that 53% of people in the US shopped online in 2011 and it is predicted to grow to 58% in 2016, according to the U.S. Census Bureau,
20.3% of the U.S. population is under 15 years old. Assuming the online shoppers are above 15 years old, the majority of the U.S. population above 15 years old, 66% shopped online in 2011.
This is thrilling news for internet retailers. However, with more and more players jump into the market and grabbing the shares, the behavior of online shoppers is something every internet retailer is trying to figure out. The purpose of this post is to collect quick, actionable insights about online shopping behavior that marketers and retailers can use to allocate resources and develop strategies.
Now let’s dig into the data.
Who is shopping online?
According to Experian Simmons, drawing from a pool of 4,887 online shoppers, the 25 to 54 year-old age bracket makes up 65.7% of online shoppers, of which 59.1% are female. 57.3% of online shoppers have an annual household income above $50,000, and 77.9% have education level as some college or higher.
Source: Experian Simmons Survey
What Are People Buying Online?
According to ComScore, the top-performing online categories are Digital Content & Subscriptions, Consumer Electronics, Flowers, Greetings & Gifts, Computer Hardware and Apparel & Accessories.
Where do online shoppers get information from?
Based on compete.com, 94% of online shoppers conduct research before purchasing and 61% of online shoppers use search engines to discover information when shopping online. Also, according to Experian Simmons, more than half of all consumers are “informed consumers,” indicating they tend to gather information about products before purchasing online.
Source: compete.com, 2011
Source: Experian Information Solution, Inc ,2012
RichRelevance released a report in 2011 detailing their finding for the performance of search engines in directing traffic to eCommerce sites. As we can see below, Google is the biggest player in the game – leading organic search to the internet retailers at 80.62%.
Source: RichRelevance , 2011
According to chitika.com, consumers only have the patience to view the first two pages of search engine results pages (SERPs) and a very small percentage of consumers will actually click beyond the first page, though we’ve conducted our own research on search behavior, which suggests that 90% of users regularly check the second page of search results – and that number increases with age.
Source: chitika.com, 2010
Based on the above findings, we cannot deny the importance of search engines for ecommerce sites. Therefore, SEO is crucial to ecommerce sites. Competing to rank for product keywords on the first page of SERPs, especially the top spots should be a top priority (and major budgeting consideration) for every ecommerce site. Finding the low hanging fruits that are high search volume and low competition keywords is something every internet retailer should do to gain competitive edge in the digital era. If you don’t have an in-house SEO team, contact a good SEO agency to help your ecommerce site today!
What Role Does Social Media Play in Online Shopping?
Looking at the same chart from RichRelevance we can infer that social media is a small channel getting the online shoppers to the sites. However, the average order value of shoppers from Twitter was the highest among all shoppers, $121.33.
Source: RichRelevance , 2011
Generally Social media requires low investment but has high returns! As an internet retailer, if you don’t already have the social media platforms, you should start it today! As retailers begin to see the ROI potential of social media, it is likely that the channel’s growth will follow the same pattern as organic search.
Why do online shoppers abandon their shopping carts?
It is said by basketabandonment.com that 73.6% of the online shopping carts were abandoned in the first quarter of 2013. Here are more statistics on cart abandonment rate: http://baymard.com/lists/cart-abandonment-rate. The cart abandonment rate is so high that it becomes one of the most important concerns for the internet retailers. But what causes a consumer to drop out of the purchase funnel?
There is an interesting infographic from invesp.com explaining this phenomenon:
Chief among all reasons for cart abandonment rates are high shipping costs: 44%, and the sentiment of being“not ready to purchase,” at 42%. For shipping cost, ComScore reports that 42% of online transactions included free shipping in the second quarter of 2012. practicalecommerce.com reports a survey result that over 40% of internet retailers say free shipping increases their profits. Whether or not free shipping constitutes an opportunity for growth is debatable, but free shipping will certainly change the dynamics of the competition. Whether or not it is profitable depends on the categories and the value of the products.
Source: practicalecommerce.com, 2010
42% of online shoppers claim that they abandon their cart because they are not ready to purchase and 24% save the cart for later consideration. Based on basketabandonment.com, 48.1% of abandonment emails were opened and about 15% clicked the emails, of which 33.3% went on to purchase a product. Ultimately, 2.4% of shoppers made a purchase through the abandonment retargeting emails.
We can infer that retargeting emails are an effective way to deal with abandonment rate. Retargeting ads would be very effective to these online shoppers, which make up roughly 61% of all consumers, according to Experian.
Source: Experian Information Solution, Inc ,2012
Based on the infographics above, 14% of abandonment happens because there is no guest checkout. Also marketingcharts.com showed a survey result that 42% of online shoppers don’t want retailers to track their purchase history and 37% don’t want retailers to know anything about them. From this survey we can infer that these online shoppers will certainly prefer guest checkout.
However, from internet retailers’ standpoint, guest checkout is again debatable. It’s a trade-off from email campaigns. As an online shopper, I prefer guest checkout for those sites I think I won’t come again or some items I just purchase it one time. For sites I visit frequently, I will use member checkout because it will be more convenient if I come back and purchase again. So, instead of forcing online shoppers to checkout as a member, I will suggest internet retailers improve sites and service to “pull” the target consumers rather than “push” them.
Source: marketingcharts.com, 2011
Other findings about online shopping behavior:
(Source: Experian Information Solution, Inc ,2012)
Website design is as important to online stores as interior design to physical stores.
- 42% of online shoppers strongly agree that “the website layout can make a difference in whether I shop here”.
Online shoppers can also be very loyal. Internet retailers should focus on customer retention. Service and the brands that are sold on the site are important aspects for online shopper’s retention.
- 15% of online shoppers strongly agree that “I usually only shop at my favorite website because I know what kind of service I will receive.
- 35% of online shoppers strongly agree that “I usually only shop at my favorite website because I know that they have the brands I like”.
Online shoppers are price sensitive and deal sensitive:
- 39% of online shoppers strongly agree that “for relatively expensive items, I’ll shop at different stores to make certain I get the best price”.
- 24% of online shoppers strongly agree that “for i shop around a lot to take advantage of specials or bargains”
- 25% of online shoppers always look out for special offers.
Marketingcharts.com suggests that product videos can improve online shoppers’ confidence in purchasing. This is also a good way to decrease the cart abandonment rate since it gives shoppers more information and to improve the decision making process. Of course, the condition is that the product itself should be good enough.
Source: marketingcharts.com , 2013
Here are some recommendations for the internet retailers based on the above findings:
- Conduct more market research to know more about your target customers
- Utilize the web analytics tools to learn about the shopping behavior of your customers. Google Analytics for example, it just released the new application: customer journey to purchase (searchenginewatch.com). This is very helpful for internet retailers to figure out the shopping behavior on their sites.
- Tailor the retarget marketing plan to deal with the abandonment rate
- SEO! Very very important to optimize your site! Get your keywords rank on the first page of Google SERPs!
- Set up and optimize your social media platforms
- Improve the site speed and site design and offer more information to your customers
- Consider and test if guest checkout is good to your site
- Consider and test if free shipping is the best option to your site. You can also consider holidays free shipping only or free shipping for rewards, etc.