Online Shopping - US - May 2009

Table of Contents

• Scope and Themes
• What you need to know
• Definition
• Data sources
• Sales data
• Consumer survey data
• Abbreviations and terms
• Abbreviations
• Terms
• Executive Summary
• Explosive growth in online retail curbed by recession
• Fastest-growing categories not tech-related
• Amazon leads online retail by large gap
• Web-only retailers benefit from increasing consumer comfort
• Growth in online shopping driven by multiple key value propositions
• E-retailers focus on internet-based advertising strategies
• Shipping fees and privacy primary barriers to adoption
• Early adopters on board for mobile shopping
• E-commerce continues to evolve through innovation
• Insights and Opportunities
• Retailer must differentiate on factors other than price and familiarity
• Emotional branding increasingly important in price-competitive market
• Cell phone commerce in early adoption
• TV becomes a purchasing tool
• Women value the internet for selection and availability
• Under-45s like to find their bargains themselves
• Market Size and Forecast
• Recession brings explosive growth to a halt
  • Figure 1: Total U.S. ecommerce retail sales, 2003-13
  • Figure 2: Total U.S. ecommerce retail sales, at inflation-adjusted prices, 2003-13
• Substantial growth still ahead
  • Figure 3: The internet shopping experience, 2002-08
• Competitive Context
• Online share growing but may see a plateau
  • Figure 4: E-commerce sales as a percentage of total retail, 2000-08
• Internet purchases come from respondents who already order by mail or phone
  • Figure 5: Incidence of internetand mail/phone purchase in past 12 months and amount spent, May 2003 -June 2008
• Online second-hand market grows in recession
• eBay
• Craigslist
• Amazon.com
• Segment Analysis
• Fastest-growing categories are not tech-related
  • Figure 6: U.S. retail sales at electronic shopping and mail order houses, by type of merchandise, 2004 and 2006
• Purchases of apparel draw most new buyers since 2006
  • Figure 7: Categories of internet purchase, January 2002-December 2008
• Leading Retailers
• Amazon maintains significant lead
• Recent initiatives
• Office supply chains see increasing share of sales from online
• Recent initiatives
• Manufacturer direct computer vendors draw visitors but convert fewer
• Recent initiatives
  • Figure 8: Sales and related statistics of top 10 internet retailers, 2008
• Brand Qualities
• Brand promise of satisfaction can overcome physical presence
  • Figure 9: Online sales of top 500 sites, by category, 2008
• Category leaders share key internet value propositions
  • Figure 10: Leading retailers by merchandise category, 2008
• Netflix: Price, selection, and convenience beat immediacy
• Drugstore.com
• Blue Nile Jewelry
• PayPal an established brand in all of online retail
• Competition
• Innovation and Innovators
• Widgets make online marketing entertaining and useful
• TrialPay increases visitor conversion with transactional advertising
• Ikan offers time saving and convenience for higher-income shoppers
• Free content on YouTube linked to retail
• Advertising and Promotion
• Television advertising
• TiVo offers in-program advertising options
• eBay
  • Figure 11: eBay -- awards show win, January 2008
• 1800Flowers.com
  • Figure 12: 1-800-Flowers -- Jimmy Kimmel Live, February 2009
• Amazon.com
  • Figure 13: Amazon -- Indie Spotlight, October 2008
  • Figure 14: Amazon -- Girl in Africa, November 2008
• Internet advertising
• Search engine ads focus on more likely targets
• Search engine optimization (SEO)
• Targeting evolves
• Smart shoppers drawn by online coupons
• New distribution for coupons
• Females, whites, and 18-24-year-olds more push-resistant
  • Figure 15: Clicking on internet ads, by gender, age, and race/Hispanic origin, February 2009
• New ShopAds banners allow direct purchase
• Market Drivers
• Recession causes pullback in consumer spending
• Internet offers several value propositions to shoppers
  • Figure 16: Motivations behind online shopping, February 2009
• Web facilitates price comparison
• Shop in-store + compare online
  • Figure 17: Price comparison online after store visit, by age and HH income, February 2009
• Wider range of products available
• Gifting made easier by wish lists and registries
• High gas prices keep consumers at home
  • Figure 18: Impact of gas prices on online shopping, by gender and household income, February 2009
• Online shopping is part of a green lifestyle
  • Figure 19: Online shopping and the environment, by gender and household income, February 2009
• High-speed internet penetration facilitates download purchases
  • Figure 20: U.S. household penetration of PCs and broadband internet, 2003-07
• Free shipping promotions overcome consumer hesitancy
• Usage
• Online consumer base continues to grow
  • Figure 21: Incidence of internet purchase and amount spent, January 2002-June 2008
• Penetration of online retail skews by gender, age, and household income
• Men lag behind women
• Online shopping just as probable among Boomers
• Higher household income respondents more likely to shop online
  • Figure 22: Incidence of internet purchase, by various demographic factors, January 2006-December 2008
• Online purchases are made on a weekly basis
  • Figure 23: Relationship between online, on phone and in-store shopping, research and delivery, February 2009
• Motivations
• Shoppers head to internet to save time and money, buy hard-to-find products
  • Figure 24: Motivations behind online shopping, February 2009
• Women value the internet for selection and availability
  • Figure 25: Motivations behind online shopping, by gender, February 2009
• Over-$100Ks looking to save time and get exactly what they want
  • Figure 26: Motivations behind online shopping, by household income, February 2009
• Reasons Not to Shop Online
• Key barriers can be overcome through consumer education
  • Figure 27: Reasons not to shop online, February 2009
• Older respondents still more resistant to cyberspace purchases
  • Figure 28: Reasons not to shop online, by age, February 2009
• Under-$75Ks more opposed to shipping fees
  • Figure 29: Reasons not to shop online, by household income, February 2009
• Limitations on Online Shopping
• Majority of online shoppers feel safe enough to try the unfamiliar
  • Figure 30: Limitations of online shopping, February 2009
• Younger respondents 18-24 more suspicious of the unfamiliar
  • Figure 31: Limitations of online shopping, by age, February 2009
• Fear of unfamiliar lower in the more experienced $100k+ group
  • Figure 32: Limitations of online shopping, by household income, February 2009
• Usage of Specific Online Retailers
• Amazon receives monthly business from a third of online shoppers
  • Figure 33: Usage of specific online retailers, February 2009
• Younger respondents more likely to purchase at leading retailers
  • Figure 34: Usage of specific online retailers, by age, February 2009
• Attitudes Towards Online Shopping
• Internet becomes important source of product reviews and coupons
  • Figure 35: Attitudes towards online product feedback, promotions and gift shopping, February 2009
• Female respondents more likely to trade opinions and look for sales
  • Figure 36: Attitudes towards online product feedback, promotions and gift shopping, by gender, February 2009
• Under-45s more likely to use the web to find exactly what they want
  • Figure 37: Attitudes towards online product feedback, promotions and gift shopping, by age, February 2009
• Higher-earning respondents more active users of online reviews
  • Figure 38: Attitudes towards online product feedback, promotions and gift shopping, by household income, February 2009
• Shopping with Cell Phones
• Shopping via phone: Who' s buying now?
• One in four shopping via phone or wanting to
  • Figure 39: Attitudes towards shopping with cell phones, by gender, February 2009
• Under-35s best target for cell phone commerce
  • Figure 40: Attitudes towards shopping with cell phones, by age, February 2009
• Higher-earning respondents more receptive to cell phone purchases
  • Figure 41: Attitudes towards shopping with cell phones, by household income, February 2009
• Race and Hispanic Origin
• Racial/ethnic bias in online purchasing reflects income disparity
  • Figure 42: Incidence of internet purchase and amount spent, by race/Hispanic origin, April 2007-June 2008
• Minority respondents share attitudes of younger consumers
  • Figure 43: Limitations of online shopping, by race/Hispanic origin, February 2009
• Hispanics more likely to stick with well-known branded retailers
  • Figure 44: Usage of specific online retailers, by race/Hispanic origin, February 2009
• Online Hispanics want to find deals, not be told about them
  • Figure 45: Attitudes towards online shopping, by race/Hispanic origin, February 2009
• Online English-language Hispanics more likely to shop with their cell phone
  • Figure 46: Attitudes towards shopping with cell phones, by race/Hispanic origin, February 2009
• Appendix: Other Useful Consumer Tables
• Motivations
  • Figure 63: Motivations behind online shopping, by age, February 2009
• Reasons not to buy online
  • Figure 64: Reasons not to shop online, by gender, February 2009
• Limitations
  • Figure 65: Limitations of online shopping, by gender, February 2009
• Popularity of online retailers
  • Figure 66: Usage of specific online retailers, by household income, February 2009
• Appendix: Incidence of Leaving Feedback Rising
• Five-point difference from November 2008
• Online feedback surveyed in November 2008
  • Figure 67: Leaving online feedback, by gender, November 2008
  • Figure 68: Leaving online feedback, by age, November 2008
  • Figure 69: Leaving online feedback, by household income, November 2008
  • Figure 70: Leaving online feedback, by race/Hispanic origin, November 2008
• Appendix: Trade Associations