With nearly half of avid U.S. online shoppers purchasing items from international retailers, there is a need for retailers to offer more personalized services as a way to compete against lower prices, according to the sixth annual UPS Pulse of the Online Shopper study.
The UPS study found that almost all avid U.S. online shoppers (97%), made purchases on marketplaces, up 12 points from 2016, and that 81% cite price as the most important factor when searching for and selecting products online.
According to respondents who purchased from an international retailer (47%), 43% were driven by lower prices nd 36% wanted unique products not found from U.S. retailers.
“The lines that separate domestic and international retailers continue to disappear,” said Alan Gershenhorn, chief commercial officer for UPS. “Retailers are now competing across the globe. In order to win, retailers can distinguish themselves by providing value through personalized experiences.”
Personalized experiences includes the physical store. Many online shoppers find stores important to touch and feel products (59%), solve immediate problems (54%), receive superior customer service (52%), and participate in rewards/loyalty programs (52%). Half of shoppers (50%) have used ship-to-store this year, of whom 44% made additional purchases in store, and 41% plan to use ship to store more often in the next year.
The use of smartphones continues to be an increasingly important part of the shopping experience online and in physical stores. Eight in ten online shoppers use retailer apps, often preferring apps to websites because of faster speed and a better user experience. The convenience factor is key as “on the go” mobile shoppers seek efficiency at every turn. Mobile coupons (50%) and high-quality product images (50%) are two of the most important app features.
“Online shoppers are able to shop the world’s boutiques and bazaars with ease,” said Gershenhorn. “We’re witnessing a glimpse of the future, when retailers and their customers will be defined less by geographic location and more by how they connect with each other. The challenge is to best provide shoppers with the choice, control and convenience they desire.”
According to eMarketer, global cross-border e-commerce is projected to grow at an average of 22% from 2015 to 2020 compared to 15% for U.S. e-commerce during the same time period.
The top considerations that online shoppers make when purchasing from international retailers include clearly stating the total cost of the order including duties and fees (77%), stating all prices in the shopper’s native currency (76%), the retailer being reputable (74%), and reasonable speed of delivery (66%).
The Global Retailer Next Door
Of the 47% of U.S. consumers who purchased from an international retailer on a U.S. online marketplace, the majority of these retailers are based in China (61%), the U.K. (23%), Canada (15%), and Japan (14%).
UPS recently announced a joint venture with S.F. Holding, the parent company of China’s market-leading express delivery company SF Express. The two companies will develop shipping products designed to help Chinese companies gain greater access to the U.S. market.
China is now the biggest e-commerce market in the world with approximately $900 billion 2016 sales, accounting for nearly half of all digital retail sales worldwide according to eMarketer.
According to the study, avid online shoppers start their searches at marketplaces more than any other channel (38%). In the next year, 29% of online shoppers plan to research more frequently using marketplaces and 30% plan to purchase more on marketplaces.
The number one reason online shoppers shop at a marketplace instead of going directly to a retailer is better prices (65%), followed by free and discounted shipping (55%), the total cost of the order including shipping costs and/or taxes (45%), and speed of delivery (44%).
The Mobile Mindset
Retailer apps are also growing in adoption with eight in 10 consumers using a retailer smartphone app. App users prefer them to retailer websites due to faster speeds (51%) and better user experiences (35%).The number of shopping apps a consumer will use, however, is limited. Online shoppers prefer to limit the number of retailer apps to three to five on their smart phone to conserve memory on the device.
Despite the overall growth of m-commerce, consumers are hesitant to use mobile in-store payment methods. While 59% of smartphone users research on their device, only 28% have used a smartphone to make an in-store purchase.
What’s In Store for Stores?
Providing personalized experiences at stores includes adapting with new technologies and offers. The average percentage of purchases made in physical stores by avid online shoppers decreased from 53% in 2014 to 48% in 2017. Comparatively, online sales increased from 47% in 2014 to 52% in 2017.
New technologies including chatbots and virtual reality are ways retailers can enhance their consumer experience. While online shoppers prefer to talk with sales associates when shopping in stores, when online they prefer self-service options such as email (55%) and live chat (42%). They are also comfortable using chatbots to get product information (42%), new product updates (39%), and completing their order and returning products (39%).
This also includes how shoppers are immersed in the store experience. Virtual reality is appealing to online shoppers interested in visualizing furniture and home décor (42%), seeing products brought to life through product demos (40%), and browsing through a store (39%).
“Technology continues to drive change in the retail industry, but the physical store is still very important. Pure play online retailers are expanding with physical stores and multichannel retailers are using their local storefronts as e-commerce fulfillment centers,” said Gershenhorn. “Online shoppers are indicating they want technology that enables rewarding, personalized experiences both online and in store.”