Digital retailing gives consumers more ways to shop and more access to products and services than ever before. It’s clear that consumers are embracing the freedom of shopping whenever and wherever they please, as online sales are capturing a double-digit share of retail dollars in some markets. Traditional brick-and-mortar retailers are expanding their digital presence, while pure-play retailers are opening physical stores. The notion of being connected is taking on new meaning: Retailers are implementing innovative digital technologies that are transforming the shopping experience, in order to become more relevant to consumers’ lifestyles and shopping occasions. This findings are based on a study conducted by Nielsen Global E-Commerce in over 20 countries around the world, with more than 30,000 respondents with online access in 63 countries. The measurement itself relies on direct from retailer data (ePOS), data collected via Nielsen Consumer Panels, and other licensed data.
THE CONNECTED CATEGORY STORY: DURABLES DOMINATE, BUT CONSUMABLES GAIN TRACTION
Durable and service-oriented categories continue to lead the way in self-reported online purchasing, as expected. These categories formed the baseline of entry for e-commerce, and their popularity continues to expand. More than half of global respondents in the online study say they’ve purchased fashion products (58%) or travel products or services (55%) online, and half say they’ve purchased books, music or stationery. Consumable categories, in contrast, have been slower to gain popularity among online shoppers, but that is changing—especially for categories that are filling particular need states exceptionally well. In fact, nearly four in 10 global respondents (38%) say they’ve purchased personal-care and beauty products online, and about one-fourth say they’ve ordered meal-kit or restaurant delivery services (27%) or packaged grocery food (24%) online. When it comes to fresh groceries, images simply can’t replace the physical look, feel and smell of these products. Even so, online shopping in this category is gaining traction in certain markets – China (40%), South Korea (39%), India (35%). While not being able to hand-pick fresh groceries is a clear barrier to online adoption, as grocery delivery services expand and improve, and quality assurance is guaranteed, the allure of purchasing fresh groceries will expand.
Innovative fulfillment options, however, could be a catalyst for growth. To overcome the e-commerce adoption barriers, retailers in a host of countries are experimenting with new models that offer the convenience of e-commerce without the spoilage concerns; examples include refrigerated lockers at terminal stations, instant delivery services within a one- or two-hour window and “to go” models where consumers can order online for pick up at the retailer during a specified time slot. ONCE ONLINE, ALWAYS ONLINE? For categories with high price tags, infrequent purchasing cycle and an experiential dimension (where interacting with the product is important), the online channel isn’t nearly as dominant. For example, among global respondents who purchased consumer electronics online, only 37% say they buy the category more often online; 21% say they buy more often in store, and 43% say they buy online and in store at the same frequency. For fashion, 33% say they buy more often online, and 26% buy more often in store. And for furniture and décor, the percentage saying they buy more often in store (30%) is greater than the percentage saying they buy more often online (25%), though the largest percentage say they buy in store and online equally (46%).
The story is equally mixed when it comes to consumable categories. Among respondents who have purchased household cleaning and paper products online, respondents are likeliest to say they buy more often online (41%). For beauty and personal care, one-third say they buy more often online, while 41% say they buy online and in store with the same frequency. For edible categories, particularly fresh, online faces a more difficult climb to widespread adoption. Sixty-three percent of online respondents in Africa/Middle East say they prefer to buy their fresh and household groceries at a physical store and will not consider buying them online. In Europe, the share who say the same is 59%, and in North America, it’s 54%. While the majority would not consider buying fresh and household groceries online, there are sizable proportions of respondents who can be considered “regular” online shoppers (those who already buy these products online), “trialist” online shoppers (those who purchased online in the past but not recently) and “considerers” (those who currently do not buy online but would consider buying in the future).
THE MOST PROMISING PRODUCT PITCH: FRESHNESS GUARANTEED
When it comes to online purchases of fresh foods, such as fruit, vegetables, meat and dairy, there is a clear hierarchy in terms of strategy effectiveness, and it’s remarkably consistent among both trialists )purchased online in the past but not recently) and considerers (currently don’t buy online but would consider buying). At the top of the list are strategies that address consumers’ quality concerns. A full refund for fresh produce that doesn’t meet consumers’ expectations is most influential among both trialists and considerers. However, while considerers are most satisfied with a refund alone (54%), trialists say a refund paired with a replacement product on their next trip is most influential (54% versus 50% for a refund only).
As was the case for consumables in general, the activation strategies for fresh products showed greater adoption willingness among respondents in developing markets than advanced markets. However, the relative influence of each strategy (how effective it is in relation to the other messages) is consistent across the regions, with only a few exceptions: While a full refund, with or without replacement product, is the most effective strategy in almost every region, freshness labels top the list in the emerging European markets, where this strategy was cited by 49% of respondents. In addition, while a full refund is the most effective strategy in India, a full refund with replacement product ranks significantly lower (sixth of eight messages).
POWERFULLY PERSUASIVE INFORMATION SOURCES
For consumable categories, the most widely cited information sources used in purchasing decisions are traditional touchpoints. Visits to a physical store are helpful for all product categories, but they’re clearly the most influential source for personal-care and fresh-grocery products. Forty-four percent of global respondents say in-person store visits help them decide which fresh groceries to buy, and the percentage is 39% for personal-care and beauty products. Globally, word of mouth is the second-most-influential source for the fresh-grocery (27%) and personal-care and beauty (32%) categories.
Conversely, for consumer electronics and fashion, the most commonly cited information sources for purchasing decisions are digital touchpoints. Store websites top the list of sources used to make purchasing decisions about fashion products (49%), and that source is the second most commonly cited for consumer electronics (42%). For consumer electronics, brand websites are the most widely cited source, while store websites placed third (35%), behind in-person visits (40%).
For all categories, social media is more influential in purchasing decisions in developing markets than advanced ones. In fact, it’s among the top three sources used for fashion purchasing decisions in India, Southeast Asia and Africa/Middle East, and for personal-care and beauty decisions in Southeast Asia and Africa/Middle East. In all regions, social media has little influence in fresh-grocery purchasing decisions.
WHAT’S NEXT FOR IN-STORE DIGITAL TECHNOLOGY ADOPTION?
E-commerce is only part of the digital big picture. Increasingly, stores are going digital as retailers incorporate a variety of digital tools—from digital coupons to smart shelves to virtual stores. These technologies bridge the online and physical worlds, bringing the ease, convenience and personalization of online into brick-and-mortar stores. And they’re not just “cool” nice-to-have features; they create real value for retailers. In-store digital-enablement options have been shown to increase dwell time, engagement levels, basket size and shopper satisfaction.
While only a small percentage of consumers around the world say they’re using digital technologies—for example, in-store handheld scanners, self-service checkouts and mobile apps—to aid in their shopping, usage is growing. The availability of many in-store digital technologies is most prevalent in the advanced markets, where modern trade is well developed and internet and smartphone penetration rates are high. Israel is a leader when it comes to mobile-based features. Nearly four in 10 Israel respondents say they’re using online or mobile coupons (38%) and shopping lists (24%), both up from 2014 (up five percentage points and four pp, respectively). One-fifth (20%) have downloaded a retailer or loyalty program app to receive information or offers while in store (no change from 2014).
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Nielsen Holdings plc (NYSE: NLSN) is a global performance management company that provides a comprehensive understanding of what consumers Watch and Buy. The Company’s Watch segment provides media and advertising clients with Nielsen Total Audience measurement services across all devices where content—video, audio and text—is consumed. The Buy segment offers consumer packaged goods manufacturers and retailers the industry's only global view of retail performance measurement. By integrating information from its Watch and Buy segments and other data sources, Nielsen provides its clients with both world-class measurement as well as analytics that help improve performance. Nielsen, an S&P 500 company, has operations in over 100 countries that cover more than 90% of the world's population. For more information, visit www.nielsen.com .