How important is convenience to motivating online holiday shoppers?
According to Adobe’s 2016 Digital Insights Shopping Prediction, lower prices and free shipping remain the primary reasons people shop online during the holiday season, but convenience is on the rise.
Based on a survey of 1,000 consumers conducted as part of the report, better product variety, avoiding traffic/lines, and the ability to shop from work all increased this year as reasons to shop online during the holiday. While dominant overall, access to good deals and free shipping decreased in importance this year.
“It’s clear that consumers have become more comfortable spending money online,” said Tamara Gaffney, principal analyst at ADI (Adobe Digital Insights), in a blog post. “The convenience of not having to go into stores and deal with the stress and strain that take place during the holidays looks like one of the primary drivers for online sales growth this holiday season.”
Adobe said consumers may be willing to pay a premium for the convenience of shopping online. However, the authors added, “This trend may be too new still and not yet used by enough consumers for brands to begin testing it, but it is something to consider as you craft your strategy.”
A study earlier this year from CitiXsys Worldwide found that 71 percent of North American consumers regard e-commerce as significantly more convenient than shopping in bricks & mortar stores. CitiXsys likewise believed the reason is because consumers have grown more accustomed to researching and shopping online coupled with ongoing enhancements in online shopping, including quicker delivery and BOPIS. Another advantage, CitiXsys found, is that online shopping sometimes is able to deliver targeted offers based on past purchases.
Adobe’s report predicts overall online spending will expand another 11 percent over the holidays.
- New Survey Reveals Most Employees are Shopping on the Sly – Robert Half Technology
- Here’s how Cyber Monday is different from Black Friday – CBS News
- Adobe Predicts Record $91 Billion in Sales This Holiday Season – Adobe
- Bricks-And-Mortar Need To Get More Connected (Study) – Marketing Magazine
- Europe and North America: A Study in Omnichannel Contrasts” – Citixsys
Discussion Questions
DISCUSSION QUESTIONS: Does convenience become a bigger differentiator for online shopping during the stress of the holidays? Do you believe more consumers are willing to pay a premium for that convenience than in the past? Has convenience, more so than savings, become the primary driver of online’s gains in recent years?
Poll
BrainTrust
Dick Seesel
Principal, Retailing In Focus LLC
Manmit Shrimali
Founder & CEO, Dextro Analytics
It’s laughable that Adobe suggested “customers may be willing to pay a premium for the convenience of shopping online.” We’re in the midst of a market of race-to-the-bottom and online retailers are crawling over one another to offer the lowest prices and shortest shipping times.
How would this premium on online shopping be implemented? Sorry, Adobe. Photoshop is great and everything, but you’re way off on this one.
Convenience is a basic requirement of retail these days. Consumers expect a certain level or convenience, service and pricing consistent with the retailer they’re shopping at, regardless of channel.There is a caveat: as long as pricing is ballpark, consumers may opt for convenience over small savings. Amazon is a great example of that — as long as I’m not dramatically overpaying, I may choose to one-click-order something vs. creating an entirely new account on another site.
So true Sterling. And in some cases the price on Amazon is better than the other site so it is double the win — a better price on an already used platform. Anecdotal, but many people I know no longer traverse the physical store for deals, but rather look at the online deals from the comfort of home!
Part of today’s online experience is the omnichannel option. Many (though not all) retailers give customers clear inventory visibility. Showing customers the overall inventory picture (if I order it, I will get it before the holiday) and which store has it right now is important. As part of the convenience, customers want to choose whether to order online and wait or go get it right away (the instant gratification of getting it checked off the list). This type of convenience has become a differentiator for many retailers, since many still don’t have the retail technology set up.
Will customers pay a premium for convenience? Really, convenience is a differentiator (today) and a customer satisfaction enhancer. Think of it this way, by using BOPIS they are effectively increasing a retailer’s margin, by not having to ship it to them for free. Plus, while they are in store, there is a good chance they will buy something else, too.
Every year more shoppers realize the benefits of online shopping including convenience, variety and the other factors mentioned in the article. Many frazzled shoppers are even wiling to pay a premium for enhancements such as expedited delivery. The good news for shoppers is that with the hyper-competition in online shopping, prices are the same or lower than physical stores. Online holiday shopping will continue its strong growth for the foreseeable future.
According to a new study from UPS and ComScore, online shopping has surpassed in-person shopping. I think this has everything to do with convenience. As we all know, it’s just too easy to shop online. The easier merchants make this task, the more people will keep doing it.
Just to clarify, the study from UPS above was of 5,000 online shoppers, so is naturally skewed.
Convenience is a big factor in online shopping. Retailers have taken much of the joy out of holiday shopping through a lack of knowledgeable staff, out-of-stocks, clutter and delays at checkout. It’s easier to sit at home or in the office, compare prices, click to buy and avoid traffic and holiday lines. If a consumer can save time and money, why not shop online?
I agree with Max except that some shoppers like to get out of the house, socialize and shop, if the experience is pleasant enough.
Your point is key, Al. Mall and in-store shopping offers stimulation and discovery. With these, consideration of other people comes easily to mind. How often have we overheard of or thought that a product is ideal for someone else? The rewards of these are physiological and motivate human behavior.
It’s not hard to expect that convenience will be a big differentiator for online during the holidays, but convenience needs to weighed against the certainty of having that special gift on the big day. While online retailers have significantly improved logistics and getting gifts to their destinations on time, there are risks — packages do get lost. I don’t think consumers will pay more for convenience, but I suspect that many will pay more for certainty of delivery.
This data from Adobe shows the reasons not to rely on surveys that “just ask” people why they do something.
Yes, convenience is of very high importance in online holiday shopping. But I don’t even think convenience quite captures it. Customers are shopping for a wide range of items under the deadline of the holiday and with the pressure of wanting to please friends and family. Perhaps we should say “I know my buying will be successful in finding what’s important.”
I’ll also suggest this language shift — online people tend to be buyers and not shoppers (because not even Amazon makes a good online shopping experience). I was reminded of this when I visited the new local Amazon store. Lots of people in the aisles doing what they can’t do online … truly shopping for books by reading bits, flipping through them and comparing them with others.
This distinction is important as we seek to understand omnichannel. Smart retailers will be focusing their online efforts on increasing buying while making their stores places consumers seek out to shop.
Convenience, selection and price are prime motivators. Avoiding holiday traffic and parking issues combined with the ability to see a broader selection online and the ability to compare prices to get a good price make online shopping more attractive. Why face the parking lot hassle and crowds in the store to see a limited assortment of products? The exception is if you have no idea what to give. In-store merchandising, if done well, is still a better way to highlight products and provide suggestions for gifts.
The important point here is that the customers are in the driver’s seat. They now have access to unlimited merchandise, available either immediately or within 48 hours, with near-complete price transparency. The job facing retailers is to compete successfully against the best-known shopping sites by creating great experiences in the store. Convenience IS a big driver, but experience may outweigh it over time.
Speaking of inconvenience, last holiday I monitored customer service communications at the top retailers and for their responses to the very frequent questions: “When will it be back in stock?” and “when does the sale start?” Almost 100 percent of the answers were, “sorry we don’t know. You’ll need to keep checking back.” But I see a major uptick in this convenience area this holiday. Several retailers, like Cost Plus World Market Customer Care, are now responding to these questions by letting the shopper opt in to alerts on their specific products of interest and the criteria they set, like back-in-stock.
Walk a mall this Friday morning and you’ll probably see what I saw in 2015: The huge crowds at 8 a.m. are a thing of the past. Part of this is the retailers’ fault for pushing their opening hours earlier and earlier (back to Thanksgiving itself), but the bigger reason is the rapid growth of e-commerce sales. Let’s face it: At this time of year “omnichannel” means shopping online for the same deals that you can get in-store, having goods shipped free to your house or across the country and generally avoiding the hassle of the entire Black Friday experience.
There is still a social element of shopping and for online shoppers that’s limited to sporadic reviews and inadequate shopper helpers. There is a continued strong interest in engaging other people, both shoppers and staff, while shopping. This isn’t a generational thing, as Millennials seem just as apt to want to get out to the stores as Boomers. It’s more about what makes our consumer society move. Price, convenience, service, assortment, engagement and other variables all come into play when someone decides to shop online or at a brick-and-mortar store. The bottom line for retailers is to have an overall offer that captures the continued interest of the targeted customer base.
One of these days people are going to wake up and realize that shoppers, well … they shop. They don’t think in terms of channels, they think about options. As long as online pricing is so low it’s hard to understand why it wouldn’t continue to rank at the top of the decision tree. Too bad Adobe’s taxonomy isn’t a tad more refined. Shoppers opt for shopping where and how it is most appropriate — to their budgets, location, lifestyles and schedules. It really isn’t much more complicated than that. We keep studying the trees and missing the forest.
Retailers don’t need to sell on convenience because by virtue of online shopping it is already rooted among shoppers. I don’t think retailers will be able to differentiate at all on this proposition. How is convenience a proposition to shop at specific retailer? Indeed, this will do more harm than good. Retailers need to find a way to increase basket size and it is a well-known fact that online shopping basket size tends to be much lower than in person. Just because some sample of consumers say what they think they want does not mean it is the fact.
Time is the great differentiator for online vs. in-store. Experiences add to the return on time equation for consumers and experiences provide the emotional reward for effort that elevates the brand. Online makes Thanksgiving and Christmas all about commerce while in-store offers the potential to celebrate the season at a deeper level.
All things being equal (price, quality, etc.) convenience will tip the scale and win. And, while many consumers are looking for the lowest prices online, convenience will take away some of that price sensitivity. Convenience can be considered a premium service experience which consumers will be willing to pay more for.
For an online retailer to be successful they must offer up competitive pricing, comparable quality and a level of customer service, which includes convenience, that instills trust and loyalty with their customers.
At Slice, our data is telling us pretty clearly that the principal motivation to shop online is now convenience, followed by price and breadth of selection. This explains why Amazon doesn’t lose market share when it starts charging sales tax in a state, why companies like Blue Apron and Hello Fresh are enjoying triple digit growth and why a million Dash buttons have been sold. Merchants that misread the tea leaves and bet that they have to offer the lowest prices at the expense of investments in convenience will lose ground.
Consumers want to save money all the time but expect to save even more so during the holidays. They have come to expect convenience as table stakes.
Only truly differentiated convenience can garner a premium. That type of convenience turns on personalized value perception and a completely revamped buying/payment/delivery processes.
The discussions regarding convenience should to take into consideration legitimate access to new products and technologies. This aspect allows for a continuing need for the brick-and-mortar retail venue. The size and scope of brick-and-mortar may need to evolve for the foreseeable future but the need and profitability will continue. That said, this aspect of consumer motivation must be dealt with using a keen understanding of inventory presence and control.
Brick-and-mortar retail will continue to provide high-visibility showcase floor space at a price to vendors for new products and closeout materials. Impulse and closeout sales will continue to remain a challenge for e-tail for the same reasons as now. That is, shipping costs and application allowance for consumer visibility without annoyance. Add to this the evolution of convenience stores to service remote areas and the convenience advantage may be seeing a shorter lifespan than anticipated or an evolution in its scope. Software and service are and will remain the keys to how well either side can and will deal with convenience.
Convenience is a differentiator but just try to charge extra for it and we might see that ball swing back the other way. Today’s consumer wants convenience and the best price.
And that’s my 2 cents.
It’s not much of a surprise to see convenience rising in importance with online shoppers. Now that consumers have integrated online shopping as an increasingly regular part of their buying habits, lower prices, free shipping and broad selection have become a normalized set of expectations. And so we move downstream to the intangible, yet highly valued aspect of convenience. I suspect this to be the one factor to continue to rise the most in importance going forward, though online retailers shouldn’t believe their customers will pay a premium for it.
For a segment of customers who value convenience, I think they are willing to forgo a little bit of discount to get what they need at the time they need it to get their time back. That’s different than “willing to premium.” There will be a significant segment of deal hunters whom Jasmine identifies as the “Race to the Bottom” crowd where price is everything and nothing else matters. For those, they aren’t going to pay for convenience or service. It is up to the retailer to figure out the mix of the customers they want to draw, between the two.