The optimal customer journey

Transcription

1 The optimal customer journey Providing your customers with the best purchase experience.

2 EDITORIAL SOURCE DATA FOR THIS YEAR S SURVEY: 4595 consumers in the Nordic region participated in the online survey 454 companies selling products online participated in telephone interviews 301 companies not selling products online participated in telephone interviews 30 e-commerce experts in Europe participated in in-depth interviews Providing insights, not stating the obvious Nordic consumers are buying more online. In this year s report we look behind the numbers and provide insights into what this trend means for everyone involved in the e-commerce market. Figures from DIBS regarding payment methods for online purchases It gives me great pleasure to present this year s Nordic E-Commerce Report from Post and Bring. This year s edition provides information and insights on the growing e-commerce market in the Nordic region and highlights features of current and emerging trends in e-commerce in general and in the Nordic region in particular. Two years ago, we concluded that e-commerce had become commerce. Even then, we realised that this was not a case of either or, but of both. Since then, businesses and consumers have become more mature and better informed internet users. This has also had an effect on the expectations and demands of all those involved in commerce including us when preparing an e-commerce report. We want this report to stand out by presenting our readers with more than just an update and sets of figures and tables. Our report will show what those figures mean for the e-commerce market. We have therefore combined an analysis of customer feedback with our own observations of the e-commerce market in the Nordic region and almost 30 in-depth interviews with leading experts in different areas of e-commerce. The theme for this year s report is the customer journey; in other words, the consumer s interaction with the online store before, during, and after the purchase. We look at how online stores should focus on creating a good overall experience for their customers. It is vital to be aware of what your customers consider a good overall experience and to act on it. This year s report consists of two parts: a written report and a dedicated website containing in-depth articles based on the expert interviews, useful advice on a range of issues, and links to international sources of information about e-commerce. The purpose of the E-commerce Report is to provide players in the Nordic e-commerce market with more expertise, because our goal is to help the Nordic e-commerce industry to succeed. Happy reading and happy e-commerce! GUNNAR HENRIKSEN Executive Vice President, E-commerce Division, Post ABOUT THE REPORT The E-commerce Report is an analysis of the e-commerce market in the Nordic region. The theme this year is the customer journey, and it follows up the survey carried out by Opinion for Bring in The report is based on the phases before, during and after a purchase. In the pre-purchase phase, the key terms are: define, search, and decide. During the purchase phase, we look at payment and delivery, and in the post-purchase phase it is goods receipt, changes, and follow-up which are key. We also include statistics from our partner DIBS and provide a status report on e-commerce in the Nordic region and look at some important e-commerce trends.

3 NORDIC E-COMMERCE Nordic e-commerce in 2014 This year s report shows that consumers overall experience is important when shopping online. Online stores must provide this to attract customers. Good product information, straightforward payment solutions, and good delivery options are all decisive factors when consumers choose which online store to buy from. It is hardly surprising that these factors are important, but what is more interesting is the fact that consumers consider them almost equally important (see Figure 1). In other words, online stores must provide a good overall experience if they are to attract customers. That is why this year s E-commerce Report focuses on the customer journey; the customer s interaction with the online store before, during, and after the purchase. There are three three words that appear again and again in this report, because they are important to the consumer during the entire customer journey: simplicity, security, and price. Not just one customer journey, but many In the autumn of 2013, Post and Bring carried out a unique, qualitative survey among Norwegian and Swedish online consumers. The study, entitled The Customer Journey, documented 160 purchasing processes in detail. During the pre-purchase, purchase, and post-purchase phases, consumers formed a number of opinions which led to their final choice of goods, online store, payment solution, and delivery method and to their decision on whether or not to keep the goods. You can read more about The Customer Journey at bring.no/netthandel. The 2014 E-commerce Report combines the insights gained from this survey with our annual survey of the e-commerce market in the Nordic region. We look at how the online stores meet their customers at every point of contact and at which elements are important for a customer to enjoy the best possible overall experience when shopping online. Which factors in the overall experience are deemed important to consumers vary depending on gender, age, and country. Danish and Swedish consumers are more concerned than Norwegian or Finnish consumers about the possibility of having goods delivered to their home. Norwegians are less interested in comparing prices than their Nordic neighbours. Women are more concerned than men about security when choosing online stores. FIGURE 1: How important are the following factors when choosing an online store? The factors were ranked from 1-10 by consumers. The figure shows the propertion that answered Important (8-10). : 79% Security Simple payment solution Good product information and pictures Good delivery options Low prices Free returns Free exchanges Free shipping Popular brands Recommendations from other buyers Attractive design No login Mobile-adaptive website 11% 5

4 NORDIC E-COMMERCE NORDIC E-COMMERCE FIGURE 3: Which products have you bought online in the past 12 months? : 42% Clothing/shoes Books Small electronics Beauty products Sports goods Photography Music (CD/vinyl) Brown goods Games Health food : 9% FIGURE 2: Proportion of consumers who purchase physical goods online at least once a month. SWEDEN: 28% years OTHER COUNTRIES: 34% years 9% yrs yrs % 30% 10% 21% 21% 8% 34% 28% 9% Men are not as concerned as women about good product information or images when choosing an online store. Consumers aged under 30 are less concerned than consumers aged over 50 about exchange and return policies. This shows that there is not just one customer journey or overall experience, but many. Online stores must adapt to their core customers and create the best possible overall experience for this group. Poorly defined target groups can result in poorly defined goals for your customer relations management and leave no-one with a good overall experience in your online store. We are buying more and more This year s survey shows that Nordic e-commerce is still growing strongly. Over half the Nordic companies in the survey report increased online sales in the past year. Just 5 per cent report falling sales. Over 70 per cent of businesses expect growth in e-commerce over the next 12 months. An extremely small number of companies (less than two per cent) expect a negative trend. Statistics from DIBS, one of the leading suppliers of payment solutions for online stores in the Nordic region, confirms that the Nordic e-commerce market is growing. DIBS calculated growth in e-commerce in, and based on actual transactions in over 15,000 online stores and found that experienced the strongest growth in 2013, with 17 per cent. The corresponding figures for and were 7 and 14 per cent respectively. Even though e-commerce is still showing strong growth, we find no corresponding trend in the number of people shopping online. Approximately nine out of 10 consumers in, and currently shop online. This is almost exactly the same figure as for the previous two years. However, we do find a trend for a growing number of Finnish consumers finding their way to online stores. Last year, was ten percentage points behind its Nordic neighbours in terms of the proportion of consumers shopping online. This difference has now disappeared, which means that the majority of consumers in the Nordic region already shop online. Online stores must now focus on increasing the frequency and volume of each consumer s online purchases. Some Nordic differences Clothing and shoes, books, small electronic goods, personal care items and sports goods are the five product groups for which most Nordic consumers shop online. Althrough there are minor changes from last year s report, we see a trend where an increasing number of consumers purchse clothes online. FIGURE 4: Have you bought products from foreign online stores? 50+ years 30% years 58% years 52% 50+ years 38% A summary of the goods purchased online by Nordic consumers is illustrated in Figure 3. The following differences between countries, gender and age are also worth noting: Almost half of Nordic women bought clothing and shoes online in the last 12 months. Some 70 per cent of Swedish women aged under 50 buy clothing online. Around 40 per cent of Nordic men bought small electronic goods during the past year. Norwegians aged between 30 and 50 are the most enthusiastic buyers of small electronic goods. Around 50 per cent of Norwegians in this age group purchased small electronic goods during the past year. The corresponding figure for the years 60% years 54% 50+ years 30% other Nordic countries is around 30 per cent. One third of Nordic women bought cosmetics or other personal care products during the past year. Buying from abroad Of all Nordic online consumers, 47 per cent of Norwegians, 35 per cent of Swedes, 43 per cent of Danes, and 47 per cent of Finns purchased goods once or more from a foreign online store during the past year. There are significant differences between the customer groups. In general, we find that men shop more often on foreign online stores than do women, and young consumers shop more often than do older consumers; see Figure 4. Consumers who generally shop more often online also shop more often in foreign online years 66% years 58% 50+ years 24% years 48% years 45% stores than do consumers who rarely shop online. differs from the rest of the Nordic region this year, too, in that fewer Swedish consumers choose foreign online stores when buying goods. We believe this is due to the fact that the domestic e-commerce market is so extensive that Swedish consumers visit foreign online stores to a much lesser extent than their Nordic neighbours for their purchases. Increased international e-commerce will be one of the most important trends in coming years, and we will therefore discuss this issue in detail in Chapter 4, where we also look at Nordic e-commerce flows with foreign countries, how consumers experience international e-commerce, and what the challenges are. 6 7

5 IN BRIEF IN BRIEF This year s report in brief These are the main findings from this year s report: CHAPTER 1: PRE-PURCHASE PHASE CHAPTER 2: PURCHASE PHASE CHAPTER 3: POST-PURCHASE PHASE CHAPTER 4: TRENDS The majority of consumers prefer to obtain information from the online store s own website before buying online. Consumers seek more information and go directly to the online store where they find the best information. A growing number use mobile devices such as smartphones and tablets to obtain information before buying. One in five Nordic consumers makes use of bricks-andmortar stores when obtaining information for their online purchases. Our experts believe that even more do the opposite: they search online before buying in a bricksand-mortar store. Consumers become uncertain long before they reach the checkout. Providing good information about the purchase process right from the pre-purchase information phase will activate their sense of security and generate increased sales. 40 per cent of consumers say they have cancelled an online transaction one or more times in the past six months. Complex payment processes and insufficient information are among the main reasons cited. Shopping via mobile or tablet currently makes up around 15 per cent of Nordic e-commerce, but this is expected to increase significantly in the future. Seven out of 10 say that good delivery options are decisive when choosing an online store. One in three consider it important to be able to choose between multiple delivery options for the products they purchase. Security, price, and multiple delivery options are what consumers look for. Online stores believe that customers are most concerned about fast delivery, price, and delivery time (delivery precision). Paying by card in online stores is preferred by Nordic consumers on the whole, but there are differences in Nordic consumers preferences for other methods of payment. Over 90 per cent of consumers were satisfied with their most recent online purchase. 40 per cent have returned a physical product to an online store once or more. Almost 90 per cent of these were satisfied with the return scheme. Returns are more than increased transportation costs for the online stores. Good return options build customer confidence and represent good customer service. 70 per cent of the consumers most recent online purchases were made in stores from which they had previously made purchases. The reasons for this were that they had a good overall experience, it felt safe and straightforward, and that that the store offered good prices. We find several trends that will dominate the e-commerce market in the near future. Trend 1: More complex customer journeys. Consumers will demand more from online shopping and from the customer experience. Trend 2: Interaction between bricks-and-mortar stores and online stores. Consumers draw few distinctions between bricks-and-mortar and online stores. They expect to be able to shop when and where they want and in the way that suits them best. Trend 3: Use of insight and analysis. The big winners will be those who manage to use insight in the right context with regard to consumers. Trend 4: Global e-commerce. Consumers are already experienced online shoppers. At the same time, a number of international companies are making things easier so that barriers such as uncertainties related to customs duties, language, and currencies are disappearing. 8 9

6 CHAPTER 1: PRE-PURCHASE PHASE CHAPTER 1: PRE-PURCHASE PHASE CHAPTER 1: PRE-PURCHASE PHASE FIGURE 5 How do you prefer to seek information before choosing the products you buy online? SWEDEN: 28% Product tests 9% Direct mail advertising 18% High street stores 13% Reviews in newspapers/ magazines 12% Social media More experienced consumers 21% Reviews on the internet 46% Search engines 60% Online store's own website 12% Ads in newspapers/ magazines 11% Online advertising 15% Catalogues 33% Friends and acquaintances Online store websites are becoming increasingly important during the pre-purchase information phase when consumers make decisions on what to buy, where to buy it, and when. 6% TV adverts The store s own website is the preferred channel for customers seeking information. The competition to attract consumers into online stores is extremely fierce. More than one in four online stores say that marketing is the most important focus area in the coming year, ahead of areas such as product range, service, and customer relationship management. In order to win the competition for customers, it is therefore essential for online stores to know how the customers they want to reach obtain information before buying. Six out of 10 go straight to the online store During the past year, online store websites and search engines have become more important when Nordic consumers seek information before making an online purchase. Online stores own websites are growing most, and now rank above search engines as the most important source of purchasing information; see Figure 5. This year, around 60 per cent of Nordic consumers prefer to obtain information from stores own websites before choosing what to buy. This is ten percentage points more than last year. 40 per cent of Nordic consumers answered search engines to the same question, up two percentage points from These findings indicate that the e-commerce market is beginning to mature. Consumers know where to go to find the information they want. For the online stores this means that good information on their websites is a key competitive advantage. Consumers want things to be kept simple and to shop at the same place where they find purchase information. Annette Falberg, Director of the Danish E-commerce Association, confirms our analyses, and believes that a change in the way in which consumers obtain information before making their purchase is under way. She says that in the United States observers are now seeing that Google searches are levelling off and that more consumers are choosing to go directly to store website when looking for something to buy. Be present where your customers are The number of sources consumers use when seeking information varies depending on the type and price of the goods in question. The more expensive the goods, the more time the consumer spends on finding information about them. Online stores that manage to come across as product experts in the form of text and pictures will win the customers. Johan Holgersson, Commercial Director of Bring in, believes that in the future consumers will increasingly seek information within groups for which they have strong sense of belonging, so-called online tribes. By studying the consumer groups connected to their products, online stores can better tailor the overall experience than if they try to reach a broader audience. Since the e-commerce market is becoming more mature, we believe that in future consumers will seek information from a narrower range of sources than they do today. Consumers are becoming experienced online shoppers, and know how to find relevant information easily. This is why they go straight to the source. As we have seen, online stores product information is becoming increasingly important. This year s survey also shows that, compared with last year, fewer consumers are using product tests, friends, acquaintances or reviews on the internet or in newspapers or magazines to find information. These sources are often seen as subjective, while online stores often focus on more objective and technical information about products. We believe that the reason why consumers want more objective information is that they have become more used to online shopping and thus have more confidence in their own ability to find relevant information. OTHER COUNTRIES: Channel Online store's own site 55% 67% 60% Search engines 32% 46% 46% Product tests 19% 16% 28% Discussion on the internet 31% 19% 21% Friends and acquaintances 28% 26% 33% Discussion in print media 12% 3% 13% High-street stores 18% 12% 18% Online advertising 16% 22% 11% Catalogues 13% 25% 15% Print ads 10% 12% 12% Social media 8% 16% 12% Direct mail advertising 9% 14% 9% TV advertisements 7% 12% 6% 10 11

7 CHAPTER 1: PRE-PURCHASE PHASE Around one in five Nordic consumers make use of bricks-and-mortar stores when seeking information before making their online purchase. This means that they visit the traditional bricks-and-mortar retail stores for information but make the actual purchase over the internet. In general, we find that it is mostly younger consumers who seek information in bricks-and-mortar stores before purchasing online. Norwegian consumers aged under 30 make up the group that does this the most, with a share of over 30 per cent. However, compared with last year, we see a slight decline in this method of finding information in all countries. Benjamin Gundgaard, founder and CEO of Customer Sense, considers it a myth that consumers mainly visit stores for advice before going home and buying online. He believes that more and more do the opposite: find information on the internet before purchasing in a bricks-andmortar store. His views receive support from Mikael Stålnacke, eccommerce Manager in the Swedish fashion chain MQ, which has bricks-and-mortar stores in and as well as an online store. Stålnacke finds that many use the online store to find information before coming into a bricks-and-mortar MQ store to shop. The channels complement one another Many also use their mobile phone when inside a store. In fact, it is not simply the case that consumers obtain information in bricksand-mortar stores before shopping online; many consumers also do the opposite, our experts believe. There has been a noticeable change in attitude in the e-commerce market in recent years. From seeing online stores as taking over from bricks-and-mortar stores, the attitude today is that they complement each other. For the stores it is important to know how consumers obtain information in their sector because purchasing behaviour varies from one product group to the next. In certain industries there can be significant benefits in having both a bricks-and-mortar store and an online store; for example, in the clothing industry, where the opportunity to try clothes on is important to consumers. The interaction between bricks-and-mortar stores and online stores is a key trend in e-commerce; see Chapter 4. Adapting to mobile phones is vital Smartphones have now become commonplace, and using them to search for purchasing information has become standard practice. When the user needs information, she can easily find it using a mobile phone; for example, in a bricks-and-mortar store where consumers often want to compare prices between stores. Our survey shows that half of Swedish, 40 per cent of Norwegian and 30 per cent of Danish online stores have mobileadapted websites. These websites have a responsive and simpler design that can adapt to the screen size of the mobile phone or tablet on which it is viewed. Many of the experts we interviewed say that an increasing number of consumers use mobile phones to find information before making a purchase, but that relatively few use them to make the actual purchase. Paul Skeldon, editor of the British trade magazine Internet Retailer, believes that this trend will change. He believes that in the future a significant proportion of consumers will use mobile phones not only to find information but also to buy goods. Karl Phillip Lund, lecturer at the Oslo School of Management. likens not having a mobilefriendly online store to closing the store several days a week. Accessibility is a matter of do or die. Market players must have a presence on whatever devices are available. Ole Johan Lindøe, Moods of 13

8 CHAPTER 1: PRE-PURCHASE PHASE FIGURE 6: What do you find difficult about shopping online? Difficult to find the right size Uncertainty about returning goods Having to register in online stores Poor product information Don't find it difficult Uncertainty about payment process Not knowing total price until late in the process Poor informaton about delivery method Poor online store solutions Don't know : 50% In one year s time over fifty per cent of all traffic to online stores will come from mobile devices. Patrik Müller, DIBS : 3% Uncertainty before checkout Once customers have found the online store, our survey shows that they become uncertain long before reaching the checkout. Many then abandon the purchase process. It is important to help customers find the right item through relevant product information and at the same time provide clear information about terms of delivery and returns to ensure that potential customers choose your online store rather than those of your competitors; see Figure 6. The way to do this varies between industries and between customer groups. In the fashion industry, it is uncertainty regarding size and fit that leads to most returns. More than half of those who have bought clothing or shoes say that it was difficult. Online stores that are good at providing comprehensive information about size and fit, often with good descriptions and pictures, have higher sales and fewer returns. A good return system will also help lower barriers for purchasing. This, along with good information, activates the customer s sense of security, which is important when they are deciding which online store to buy from. When the customer is familiar with the site and feels secure, the numbers of abandoned purchases and returns decline. There are differences between the Nordic countries. In general, Finns report having the most problems with online shopping. Norwegians and Swedes find online shopping less difficult. This is one of several findings which show that is currently the most mature market for e-commerce while is the least. WE RECOMMEND: Make sure you provide sufficient information, particularly about size and fit. Consumers are now so mature that they quickly find the information that is relevant to them. This will increase traffic to your website and thus sales. Tailor your online store to mobile devices. Consumers make active use of mobile devices when seeking information before a purchase. Give consumers information about the purchase process and return options on the very first page of your online store. This activates the customer s sense of security, which is important when decideng which online store to use. 14

9 CHAPTER 2: PURCHASE PHASE FIGURE 7: In your currency, how much did you pay for the last physical product you ordered online? CHAPTER 2: PURCHASE PHASE Over NOK % Over EUR % Over NOK % Over NOK % Under NOK % Under EUR 25 26% Under NOK % Under NOK % NOK % EUR % NOK % NOK % No sale is complete until the goods are received Simple payment solutions and flexible delivery options: these are the two key factors consumers look for when making their purchases online. The actual purchase is a critical phase for online stores. Good product information and marketing can prove futile if the actual payment process feels complicated and insecure, and potential customers abandon the purchase. Today, most online purchases are worth between NOK 250 and NOK 1,000 (EUR ); see Figure 7. Since nine out of 10 consumers already shop online, it is vital for online stores to get each customer to buy more. How can online stores effectively convert visits to the online store into actual purchases in a way that will make customers want to return? Again, this is about making things easy for the customer while still maintaining a strong sense of security at all times. However, the transaction between the online store and the consumer is not over until the goods are delivered. We will therefore take a look at the factors behind the consumer s choice of delivery options. Preventing abandoned purchases Security and simplicity are the two single most important factors for the consumer when paying for goods from an online store. This chapter has been written in collaboration with DIBS, one of the leading suppliers of payment solutions for online stores in the Nordic region. Here we present some of their key findings together with our own analyses. Surveys from DIBS show that secure and simple payment processes are important to the consumer. Almost 40 per cent of Nordic consumers report that they have abandoned one or more purchases during the past six months. The reasons given were vaguely worded terms and conditions and insufficient information; see Figure 8. Online stores must therefore know what their customers mean by simple and secure payment solutions. To give customers a sense of security during the purchase process, it is important to clearly state the terms and conditions for the purchase, what is being purchased, and how the goods will be delivered. Customers must also trust the actual payment solution. Most of these issues can be resolved by providing good information in the online store. Consumers shop online because it is easy; the information must therefore be useful, provide security, and simplify the purchase process. One way of increasing sales is to look at the payment methods which online customers prefer. The reason given by almost 30 per cent of consumers who abandoned a purchase over the past six months was that the online store did not offer the right payment options. It is therefore important to know which payment options online customers prefer. Familiarity with industry standards is a good way of identifying which types of payment solutions the customer is already familiar with. Figure 9 shows which payment types consumers in the Nordic countries prefer. Their preferences also depend on what they are buying and on their situation at the time of payment. The differences between the Nordic countries also illustrate the fact that there are different perceptions as to what constitutes simple and secure. Habits also play a part here. 16

10 CHAPTER 2: PURCHASE PHASE FIGURE 9 How do you prefer to pay when shopping online? (Source: DIBS) 4% 2% 3% 1% 1% 2% The mobile phone has moved from being a sales channel to a purchasing channel, and is used for inspiration and searches. Benjamin Gundgaard, Customer Sense 1% 2% 2% 89% 2% 8% 2% 17% 28% 13% 57% 1% 5% 2% 2% 13% 29% 38% Card Online bank Invoice Cash Micropayment By instalments Other 40% 13% 23% *Credit or debit card ** Payment via online bank FIGURE 8 Why did you abandon your online purchase? Question to respondents who abandoned one or more online purchases during the past six months: Why did you abandon the purchase process? (Source: DIBS) Unclear terms and conditions Not the right payment method Payment process Technical problems Difficult registration process Lack of trust in the payment process Insufficient information 0% 40% Payment by card (debit or credit) is the preferred method of payment in all countries, with the exception of. Direct payment from an online bank account is preferred in. stands out in that nine out of 10 prefer to use cards. This is due to Dankort s strong position in the Danish market. has the highest proportion of consumers who prefer to be invoiced. If you are going to open an online store in one of the Nordic countries, it is important to give customers multiple payment options to choose from. Mobile commerce will grow A small proportion of physical goods purchased online are currently bought via mobile phones. This trend will grow significantly in the future. Just under 15 per cent of all Nordic online purchases of physical goods are currently made using a mobile phone or tablet. PCs/Macs dominate with an 86 per cent share: see Figure 10. If services such as airline tickets and hotel accommodation are included, the proportion using mobile phones is somewhat greater. E-commerce experts we have interviewed all agree that mobile shopping will grow in importance in the future. More than one third of Nordic consumers say that they expect to shop via mobile phone or tablet in the coming year. Not unexpectedly, those aged under 50 are in the majority here. When we ask what it would take for consumers to buy more online via mobile phone, most reply that websites must be better adapted to smaller screens; see Figure 11. Younger consumers are particularly concerned about this. According to Paul Skeldon, editor of Internet Retailing, consumers now use mobile phones to find information pre-purchase, but they make the actual purchase on a PC/Mac. He expects this trend to change in the future, and that consumers will buy more via mobile phones and tablets. Leading players in the UK market have started using adaptive responsive design, which means that the website is displayed according to both the device used and the context in which it is used. For example, websites are displayed differently if the consumer is surfing on a wireless rather than a mobile network. Patrick Müller in DIBS believes that the way in which we use mobile phones will change in the future, both in e-commerce and in all areas of consumers everyday life. It is now the customers, not the stores, who are leading development on mobile phones, because they are making demands. This is not the way things worked before. Demanding simple and good processes More than one in five say that a simple buying process will increase mobile purchases. According to DIBS, almost one third of Norwegian consumers will buy more via mobile phones if they can store their card information. Consumers want it to be easy and not to have to enter card information every time they shop. Online stores should focus on this rather than opting for standard solutions. Some consumers will be sceptical about storing their card information. Online stores must therefore address customer needs for security while also making the purchase process easier. FIGURE 10 Your most recent online purchase (physical goods): on which device did you buy the goods? FIGURE 11: What would it take for you to buy more goods via mobile phone in the future? Better adapted websites are the most important factor to increase e-commerce via mobile phones. Better adapted websites Simpler purchase process Better navigation Simpler search options Better payment solutions : 10% Mobile phone Mac Tablet/iPad PC In, 82.5% of those questioned used a PC for their most recent online purchase. : 44% 18

11 CHAPTER 2: PURCHASE PHASE FIGURE 12: To what extent are the following factors important to you when choosing a delivery option? Percentage that answered Extremely important : 65% Safety Low prices on shipping/delivery Can have items delivered where I want Knowing when goods will be delivered Fast delivery Tracking options Optional services How do your customers want their goods delivered? FIGURE 13 Delivery option chosen for your last purchase : 8% Seven out of ten say that good delivery options are decisive when choosing an online store. Delivery is an important part of the customer s overall experience. FIGURE 14 How was the last item you bought delivered? Small electronics Clothing Shoes Beauty Books Music/movies Mailbox: 12% Collection point: 61% Collection point Mailbox Home delivery Collection point Mailbox Home delivery Even though delivery is often carried out by operators other than the online store itself, it is part of the customer s overall experience of the online purchase and of the online store. There are roughly three main types of delivery options: home delivery, mailbox, and collection point (Post in Shops, collection points, automated parcel boxes, etc.). Which of these options the consumer wants will depend on factors such as the type and price of the goods, the age of the customer, when the goods are to be used, and the customer s situation when the goods are due to be delivered. Three factors determine delivery Most consumers consider security, price, and expectations of delivery method when deciding how goods should be delivered; see Figure 12. Our analyses show that for home deliveries, situation and security are the most important drivers. By situation is meant the delivery time, and that delivery takes place at the preferred time and place. If goods are picked up at a collection point, price and security are the motivating factors, whereas delivery to a mailbox is motivated by price and simplicity. This means that online stores must understand the combination of security, delivery expectations, and price that are important to the customers buying their products. The type of goods also affects the choice of delivery option. For example, expensive goods will activate the consumer s need for security and to have the goods delivered. If the goods are of little value, the mailbox will be preferred. When the online store decides which delivery options to offer, they need to know what their customers mean by security, price and delivery expectations and which of these three factors are most important. In, and, most goods are delivered via collection points, but a large proportion of books, music and film are also delivered via mailboxes. The tradition in has long been to have goods delivered to the consumer s home, and this is still the most popular method. However, a growing number of Danes are now choosing collection points instead of home deliveries. This change is primarily driven by a change in the service offered by one of the main operators in the Danish logistics market. The consumer s life situation also determines the choice of delivery method: Younger consumers are more concerned about price than are other age groups. 61 per cent of those aged under 30 state that price is very important when choosing a delivery option. 48 per cent of those aged over 50 say the same. Older consumers are more concerned about simplicity. 43 per cent of those aged over 50 state that it is very impor tant that goods are delivered where they want them, while 30 per cent of those under 30 say the same. Not unlike consumers, internet stores consider price and delivery to meet customer s needs to be the most important factors when deciding which delivery options to offer their customers. However, unlike consumers who put security first A defective delivery after a customer has waited a long time destroys goodwill. Mikael Rosendahl, Atelje Margartha 21

12 CHAPTER 2: PURCHASE PHASE FIGURE 15 When your company chooses which delivery options to offer online customers, how important are the following factors to you? : 67% Fast delivery to customers Knowing when goods will be delivered Low prices on shipping/delivery Tracking options Return schemes Multiple delivery options Installation of new goods Return of old goods Return of packaging FIGURE 16 Does your online store offer free delivery? : 4% For purchases of a certain amount 21% Yes 37% For purchases of a certain amount 10% Yes 28% For purchases of a certain amount 20% Yes 33% Danmark Norge Sverige During campaigns 3% During No 38% campaigns 9% No 54% During campaigns 3% No 38% the stores consider fast delivery to be the most important factor; see Figure 15. Predictable freight costs are important Price is one of the most important factors when consumers choose a delivery option. This has become more important in all countries compared with last year, with the exception of, where the trend remains stable. has had the greatest increase in price sensitivity. This year, 53 per cent of Danish consumers say that price is very important, up ten percentage points from last year s survey. At the same time, consumer expectations for free delivery have increased. Almost six out of 10 consumers state that free delivery is important when choosing an online store. At the same time, almost seven out of 10 say the same about good delivery options These expectations are a result of the fact that many online stores have used free delivery as part of their marketing strategy to win customers. The advantage of offering free delivery is that the total price is easy to predict for the consumer, but it is important to realise that once free delivery is first offered, it is difficult to change. Consumers quickly latch on to expectations of free delivery and view it as part of the service offered by online stores. But we also see that some consumers are willing to pay to have goods delivered to meet their exact needs. This is of course related to the price and type of goods. This consumer group has strong purchasing power and can choose not to use online stores which offer free delivery as the only option. There are also several ways to make the total price predictable and easy for customers to understand without having to offer free delivery. For example, one can offer a fixed delivery rate. This means a fixed price for each delivery option offered by the online store. This makes it easy for customers to understand what the total price will be and will make them more inclined to complete the purchase. WE RECOMMEND: Find out more about who your customers are and what they expect in terms of payment and delivery options. There is no such thing as standard delivery options. Provide easily under standable options so that customers know what they are paying for. Know what your competitors charge for delivery your customers will. Keep in mind that there are smart ways of offering free delivery, not necessarily just free delivery without conditions. 22

13 CHAPTER 3: POST-PURCHASE PHASE CHAPTER 3: POST-PURCHASE PHASE It has to be simple and smooth. If the shopping experience is friction-free, the customer will be loyal. Sarah Wittbom, Nordic ecommerce Knowledge How do you get customers to return again and again? Over 90 per cent of consumers were satisfied with their most recent online purchase. This shows that e-commerce works well and that online stores are generally meeting customer needs. Over 70 per cent of Nordic e-commerce is namely carried out in online stores from which the consumer has previously made purchases. To the question of why they return to the online store, consumers respond that they value simplicity, security, good deals, low prices, good delivery solutions, and a wide range of products. All of these factors are of almost equal importance to consumers. Combined, these factors constitute a good overall experience and result in customers returning to the online store to shop again. Loyal consumers There are, nonetheless, some national differences. Swedes and Norwegians are more concerned about simplicity and security than are Finns and Danes. Norwegians are less concerned about good deals than are consumers in other Nordic countries: see Figure 18. Our analyses show that gender and age do not affect loyalty, but that loyalty is gained in different ways for different customer groups. As already mentioned, price is a key driver for creating loyalty to online stores, though in slightly different ways for men compared to women. Women are drawn back by good deals more often than men, who more often return to stores that generally offer low prices. We also find that younger consumers are more often drawn back to online stores which offer a wide range of products and low prices than are older consumers. On the other hand, older consumers are more concerned about the quality of customer service than are younger consumers. These differences illustrate how important it is for online stores to know what creates loyalty for FIGURE 17: Why did you choose to shop at the same online store? Simplicity Good deals Security Lowest prices Best product range Good delivery options Good customer service Habit : 11% : 57% 24

14 CHAPTER 3: POST-PURCHASE PHASE FIGURE 18: Reasons for returning goods Wrong fit is by far the most common reason for returning goods Wrong fit/size Damaged or missing goods Did not meet expectations Wrong item Change of mind : 3% : 56% their specific customers. When as many as seven out of 10 choose an online store from which they previously made purchases, it is more important than ever to focus on the customers they already have, provide them with the service they expect, and meet their demands. Simple return systems A good return system reduces costs and is a competitive advantage that attracts more customers. Around 40 per cent of Nordic consumers have returned a physical product to an online store once or more. Almost 90 per cent of these were satisfied with the return scheme. The proportion of consumers who return goods because they change their mind about their purchase has declined in all Nordic countries. The same applies to returns due to damaged or missing items. This may suggest that Nordic e-commerce operators have become more efficient in ensuring quality at all stages in the predelivery process. Most returns are due to incorrect size or fit; see Figure 18. The consumer finds it a challenge to choose the correct size. Better information about size and fit as well as good, large pictures and other tools to describe products will reduce the proportion of returns. If customers know exactly what they are buying, the less likely they will be to change their minds and return goods. Free returns for profitable customers Klas Hjort, a professor at Uppsala University, has studied reverse logistics since He believes that online stores should identify their most profitable customers and differentiate the services offered to different customer groups. For example, free returns could be offered to the most profitable customers. Johan Holgersson at Bring believes that online stores see returns as customer service but that they must be alert to customers abusing a free return system. He believes that online stores should consider making customers who repeatedly abuse the scheme pay for returns. WE RECOMMEND: Find out how much emphasis your customers place on price, security, and convenience in connection with delivery of goods. Consider this in relation to the product to be delivered. Expectations of free delivery among consumers can be changed by making more use of free deliveries during campaign periods or for purchases over a certain amount. Return schemes mean more than increased transportation costs they represent good customer service and give your customers a sense of security, which in turn will generate more sales. Give your customers good product information to increase sales and reduce returns. Give them relevant information so that they feel secure enough to complete the purchase. There s little point in an online store looking at return percentages to find the reasons for returns. You need to look at the return percentages per product. Klas Hjort, Uppsala University 27

15 CHAPTER 4: TRENDS CHAPTER 4: TRENDS E-commerce trends There are many exciting trends in the global e-commerce market. Knowing about these trends and about how to predict how they will impact the Nordic market in the future constitutes vital expertise. Post and Bring will help Nordic e-commerce to succeed by serving as a competent advisor with insight and expertise in e-commerce. To be a competent advisor, it is important to be familiar with key trends in the e-commerce industry in the Nordic region and the rest of the world. In this way we can advise our customers on how they can best keep one step ahead and exploit these trends to create profitability and growth for their businesses. There are many exciting trends in the global e-commerce market, from increasingly sophisticated delivery methods to integrated and personalised solutions in all channels and on all platforms. More industries are offering their products online, and customers are continuously making new demands on market players. Knowing about these trends and about how to predict how they will impact the Nordic market in the future constitutes vital expertise which we and our business partners possess and share with our customers. In this year s report we want to look more closely at some e-commerce trends which we believe will have the greatest impact on Nordic consumers and on e-commerce market players, both today and in the years to come. The trends we cover are: 1) the customer journey, and how it develops; 2) the integration of online stores and bricks-andmortar stores, or what is known in the industry as omni-channel retailing ; 3) insight and analysis, and how what many refer to as big data will affect the development of e-commerce; and finally 4) global e-commerce and the consequences and opportunities it creates for both Nordic consumers and online stores. E-commerce is here to stay. and you need to act to keep up. You need to think in new ways and to constantly challenge established ways of doing things. Ole Martin Evensmo, Netthandel.no 29

16 CHAPTER 4: TRENDS TREND 1: Complex customer journeys There is not just one customer journey, but many. Today s customer journeys are more complex than ever before, making it even more essential to know your customers and their needs and wants. Consumers do not differentiate between online and offline channels, and these channels work together. As we have already mentioned, consumers are mature and experienced, and more often go directly to online stores for information. They demand more from online shopping and from the customer experience. Do you know your customers? Knowing who your customers are, their views, and the decisions they make when they shop is essential to become an e-commerce winner. You need to know how the right customer group finds your store and what expectations and needs they have. One in three customers buy on impulse. and it is the customer s situation at the moment of purchase that determines where and how they shop. It is important to be aware of how you treat customers at all customer contact points in your business. You need to know how to create the best possible overall experience for your customers so that they return. This year s e-commerce report shows that today s internet consumers make many demands on online stores. Time is perceived as a limited resource in the Western world, and how we spend our time has become a key issue for us. Simple, efficicient, time-saving solutions adapted to our situation at any given time are no longer things which consumers simply dream about: they demand them. We believe that consumer power will become stronger in the future: consumer power and groups who exchange experiences in common, transparent communities will set the terms and demands for online stores Consumers want more information, simple solutions, affordable prices, and efficient delivery options adapted to individual industries and to individual wants and needs. The range of delivery options is growing we now see growth in the use of automated parcel boxes and parcel terminals, large networks of collection points, and new, larger parcel boxes for houses in Europe and the rest of the world. Customers want to be able to choose how and when to receive their goods according their situation at the time. This represents simplicity and security for customers. The ability of online stores to see each customer s journey will be vital. All customers are different, and we need to view each customer on an individual basis. Marius Hermansen, Proteinfabrikken 31