Closing the eCommerce gap
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Brands and retailers alike should be demanding more from online sales. Connected Life reveals the barriers to eCommerce fulfilling its potential – and shows how marketers can overcome them.
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Closing the eCommerce gap
- 1. Share this 1 3 Intelligence Applied Closing the eCommerce gap Connected Life 2014 Special edition
- 2. Share this 2 Connected Life Closing the eCommerce gap Intelligence Applied | Special edition eCommerce has dominated business growth in recent years. But brands and retailers should be demanding more – here’s why
- 3. Share this 3 Connected Life Closing the eCommerce gap Intelligence Applied | Special edition It’s become a truism of modern business life that eCommerce growth routinely outstrips any other channel: a rule of thumb that holds broadly true across categories, and across markets. But does this mean that businesses should be content with the growth that online sales are providing for them? Far from it. This year’s Connected Life study reveals the significant gaps that still exist between eCommerce potential and eCommerce reality, between the number of those researching online and those going on to complete purchases online. The size of the eCommerce gap, with less than half of all online research translating into purchase, should motivate almost any retailer or brand to secure first mover advantage when it comes to closing it. However, doing so effectively requires specific insight about the barriers that keep shoppers browsing rather than buying. Evolving ecosystems, evolving barriers In many regards, the barriers to eCommerce evolve alongside the digital ecosystem of the market, since they represent the points of friction where digital potential doesn’t fully align with reality. For markets with the lowest absolute level of eCommerce, the dominant barrier is usually access to the internet itself. As access expands, focus shifts to the trustworthiness of eCommerce providers, the nature of the eCommerce experience and concerns over the security of making payments online. Once those concerns are met, attention falls on the delivery infrastructure that eCommerce depends on, and whether this undermines the convenience and cost benefits that it should offer. Solutions that can anticipate and address these issues greatly expand the range of shopping missions that eCommerce can meet. However, do not assume that eCommerce will develop in exactly the same way everywhere in the world. UK eCommerce is 82 per cent PC-based but 78 per cent of Nigeria’s occurs on a mobile. The percentage of mobile transactions for Snapdeal, one of India’s largest eCommerce players, has catapulted from 5 per cent in 2013 to over 50 per cent today. Getting the right experience onto the right device can remove barriers and trigger rapid uptake of eCommerce services. The size of the eCommerce gap, with less than half of all online research translating into purchase, should motivate almost any retailer or brand to secure first mover advantage and close the gap. Do not assume that eCommerce will develop in exactly the same way everywhere in the world. 82% 78%
- 4. Share this 4 Connected Life Closing the eCommerce gap Intelligence Applied | Special edition Different categories, different gaps The barriers to eCommerce don’t just evolve with markets; they vary significantly across categories as well. And as a result they produce eCommerce gaps of different sizes and shapes. Amazon and Alibaba may have pushed the eCommerce boundaries further than anyone, but the detail of the Connected Life survey reveals that even their powerful combination of online reviews, automatic recommendations and secure payments are not enough for every category. Where eCommerce is concerned, there is no true one-size- fits-all solution. Grocery shoppers are by far the least likely to follow up online research with online purchase, with only 23 per cent of online researchers going on to buy online in categories such as hair care. This is because the specific barriers for grocery shoppers are those that eCommerce solutions have been least adept at addressing – at least up to now. The fact is that 43 per cent of grocery shoppers find it easier to buy offline – and for 39 per cent, getting products right away matters hugely. However these barriers are by no means insurmountable. Several grocers are currently working on eCommerce models that can deliver goods in 2-3 hours rather than 2-3 days; others are focusing on smart shopping lists that can offer a tangible convenience benefit by learning from shoppers’ buying routines, anticipating what they need and when. Other categories have different barriers, and therefore require different solutions to unlock the potential for growth. For financial services, security concerns and a desire for personal service top the list. Many developed market banks have already developed reassuringly tangible security solutions using familiar card-and- PIN verification techniques. Now they are focusing on moving customer service onto digital platforms; those that can convince customers that this delivers a comparable experience to speaking to someone in branch or on the phone will find themselves with a considerable competitive advantage. Where eCommerce is concerned, there is no true one-size-fits-all solution. For technology brands the key to unlocking eCommerce’s potential lies in reassurance on quality (a concern for 42 per cent of shoppers), potentially through better use of reviews; and cutting down on delivery costs for bulky items, an issue that undermines the perceived benefits of buying online for 40 per cent of shoppers. In the financial services industry security is a concern for its users.
- 5. Share this 5 Connected Life Closing the eCommerce gap Intelligence Applied | Special edition Don’t let the hard work go to waste Moving from online research to online purchase ought to be a frictionless experience. When the hard work of gaining consumer attention and engagement online has been done, the decision to purchase has largely been made, the only thing stopping the shopper buying online are the barriers they perceive to eCommerce in general and to the category they are buying for in particular. Huge growth potential still exists for retailers and brands that can end this disconnect and close the eCommerce gap. Those that succeed in doing so will be those that best understand the very specific remaining barriers for their market and category – and build the solutions that ensure they dominate when online shopping comes fully of age. Huge growth potential still exists for retailers and brands that can end this disconnect and close the eCommerce gap.
- 6. Share this 6 Connected Life Closing the eCommerce gap Intelligence Applied | Special edition About Connected Life Connected Life is a leading global study of the digital attitudes and behaviours of over 55,000 internet users across 50 countries, exploring how technology is transforming the lives of consumers across the world. It offers essential insight into the impact of the growing digital ecosystem on the media landscape. Connected Life also uncovers new and exciting opportunities for marketers to connect with their consumers in this increasingly complex environment; it is a powerful tool that helps brands make better digital decisions. The fieldwork was undertaken in all markets between March and June 2014. Please visit www.tnsglobal.com/connectedlife for further information. About TNS TNS advises clients on specific growth strategies around new market entry, innovation, brand switching and stakeholder management, based on long-established expertise and market-leading solutions. With a presence in over 80 countries, TNS has more conversations with the world’s consumers than anyone else and understands individual human behaviours and attitudes across every cultural, economic and political region of the world. TNS is part of Kantar, the data investment management division of WPP and one of the world’s largest insight, information and consultancy groups. Get in touch If you would like to talk to us about anything you have read in this report, please get in touch via enquiries@tnsglobal.com or via Twitter @tns_global About the author Sam Curtis, Global director, has worked at TNS for seven years and currently works in the Global Retail & Shopper team that has just merged with Kantar Retail. Sam specialises in analysing shopper purchase journeys and shopper testing research and has conducted research in over 60 countries. Sam previously helped set up and run global studies such as Mobile Life and Digital Life.