Walker Sands’ New Report: U.S. Consumers are Doing More Shopping Online but are Wary of Mobile Payment Systems
Last year saw more businesses venture into omnichannel retailing and in-store marketing solutions—such as beacon technology—to enrich consumers’ shopping experiences. In 2015, platforms such as social media and mobile are expected to play a greater role in the consumer shopping experience. In light of changing consumer behaviors, businesses are expected to strengthen their omnichannel retailing strategies this year, further bridging the gap between online and offline channels.
While different businesses chose to use social media to engage users and influence their purchase decisions in 2014, this year, businesses are expected to go beyond these objectives and use social media not only to showcase products, but also to sell them.
Mobile commerce is being bolstered by the introduction of viable mobile payment systems from Apple, Samsung (@SamsungMobileUS), and Google. In an effort to compete with Apple Pay, Samsung announced in February 2015 that it had acquired LoopPay (@LoopPay), the transformative digital wallet platform. Google also announced that it would be working with major carriers in the United States to help more Android users gain the benefits of tap and pay with Google Wallet.
More American Consumers are Shopping Online than Ever Before
According to Walker Sands’ (@WalkerSands) seminal white paper Reinventing Retail: What Businesses Need to Know in 2015, consumers in the United States are making online purchases more frequently, and are spending more in a broader range of product categories. Walker Sands surveyed more than 1,400 U.S. consumers on their online shopping habits to help retail technology companies predict consumer behavior in 2015.
Online shopping has become commonplace. Virtually every respondent (99.8%) indicated that they’d made at least one online purchase in the past year. Consumers are also buying a greater range of products online, and are purchasing more expensive items, including luxury goods.
More consumers shop online at least once a month (68%) compared to 62% in 2013. Moreover, the survey noted that 28% of consumers shop online at least once a week, a 27% increase from a year ago. Figure 1 gives a more detailed breakdown of consumers’ online shopping habits.
Consumers generally have an overwhelming preference for Amazon (@amazon), with 96% of respondents saying they’ve made a purchase on the Amazon website in the past year. Figure 2 showcases consumers’ online purchases by product category over the past year.
In 10 out of 11 categories, respondents indicated that they were more comfortable purchasing from third-party websites like Amazon than they were from traditional retailers like Gap (@Gap), Home Depot (@HomeDepot), and Best Buy (@BestBuy).
American Consumers are Ordering More Big-Ticket Items Online
With online shopping’s growing pervasiveness, consumers are more willing to purchase big-ticket items online without seeing them first. Seventy-six percent of consumers state that they would spend more than $100 online on a product without seeing it first, up from 70% in 2013. Furthermore, 27% of consumers state that they would purchase a product costing more than $1,000 without seeing it first if free returns were offered. Figure 3 provides more information.
In 2014, 83% of respondents said free shipping was their number one incentive for shopping online, followed by free returns (65%), and 1-day shipping (62%). Figure 4 provides more information.
American Consumers are Using Mobile Payment Systems More Frequently
Forty percent of respondents said they have used a mobile payment application in the past year, up from just 8% in 2013. Nearly half (45%) have used Google Wallet, 41% have used banking payment apps such as Chase QuickPay, and one-third have used retailer payment apps. Figure 5 provides more information.
While only 4% of respondents stated they have used Apple Pay, 18% stated that the introduction of the service incentivized them to make a purchase in the near future. Even Windows phone owners and Android owners (16% and 8% respectively) said the introduction of Apple Pay incentivized them to make purchases with their smartphones.
These findings indicate that Apple Pay has the potential to help mobile payments go mainstream in 2015. However, consumers still have misgivings about using mobile payment systems, as Figure 6 demonstrates.
Takeaways: Improve E-commerce; Offer Greater Security & Flexibility in Payments; Explore Emerging Technologies
Based on the findings, Walker Sands recommends that retail businesses focus on the following:
- Improve the E-commerce experience: Retailers need to make the online shopping experience as convenient and easy as possible to continue growing in this arena. With consumers spending more frequently and in larger amounts across an array of product categories, retailers need to improve the online shopping experience to improve customer loyalty and capture additional sales.
- Offer greater flexibility and security in payments: Apple Pay, Google Wallet, and other mobile payment systems have incentivized users to try innovative means of making payments. However, many consumers are unwilling to go all the way until security and privacy issues are addressed. But with cash payments declining and hacking scandals eroding trust in traditional POS systems, retailers who embrace mobile payments can offer their customers even more varied and convenient means of making transactions.
- Explore emerging technologies but understand the risks: While emerging technologies, like drones and virtual reality, might sound a little too Star Trek to some, consumers expect these to transform the E-commerce experience in the near future. “Retailers should think about how emerging technology might fit into their overall strategies, while also realizing that untested tech may turn out to be nothing more like hype in the end,” noted the report.
Will rising trends like M-commerce, mobile payment systems, and same-day shipping transform your omnichannel retailing strategy?
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