Improving the Online Shopping Customer Experience
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1 Improving the Online Shopping Customer Experience August 22, 2012 Susan Kleinman, comscore David Sisco, UPS
2 Some Statistics on e-commerce 2
3 Retail e-commerce spending is up +16% Y/Y, posting $87 billion in sales through June 2012 Travel Retail $72 $30 +29% $93 $40 U.S. e-commerce Dollar Sales Growth ($ Billions) Source: comscore e-commerce Measurement +33% +26% $117 $51 +28% +22% $143 $61 $42 $53 $67 $82 +26% +26% +20% +24% +19% $171 $69 $ % +24% +17% $200 $77 $84 +9% $80 $85 $123 $130 $130 $ % +6% 0% $94 $ Q1-Q % +7% $214-2% $209-5% +9% $228 +6% +10% +12% $ % +14% +13% $141 $54 $87 +9% +16% 3
4 e-commerce Share The shift of consumer spending to the Internet continues to accelerate, with the e-commerce share of spending hitting 8.7% in Q2, up 1.6 points in only two years e-commerce Share of Corresponding Consumer Spending* Source: comscore for e-commerce & U.S. Department of Commerce (DOC) for Retail 10.0% 9.4% 9.0% 8.0% 7.4% 7.3% 7.6% 7.7% 7.7% 8.1% 8.0% 8.6% 8.9% 8.7% 7.0% 6.0% 5.0% 4.0% 3.0% 5.1% 4.3% 4.6% 3.7% 4.0% 4.3% 4.5% 5.9% 5.3% 6.4% 6.7% 5.3% 5.0% 6.3% 5.9% 6.5% 6.6% e-commerce share peaks in colder seasons (Q4 & Q1) 6.8% 6.9% 7.1% 7.1% 7.7% 7.6% Q share: +1.6 points vs. Q % 1.0% 0.0% 4 *Note: e-commerce share is shown as a percent of DOC s Total Retail Sales excluding Food Service & Drinking, Food & Bev. Stores, Motor Vehicles & Parts, Gasoline Stations and Health & Personal Care Stores.
5 All product categories showed at least +10% growth, with digital content and consumer electronics showing the highest growth Q e-commerce Sales Growth vs. YA by Retail Category Source: comscore e-commerce Measurement Product Category Digital Content and Subscriptions Consumer Electronics (x PC Peripherals) Flowers, Greetings & Misc. Gifts Computers/Peripherals/PDAs Apparel & Accessories Event Tickets Consumer Packaged Goods Jewelry & Watches Home & Garden Books & Magazines Sport & Fitness Office Supplies Video Games, Consoles & Accessories Furniture, Appliances & Equipment Q Growth vs. YA Very Strong Very Strong Very Strong Very Strong Very Strong Very Strong Strong Strong Strong Strong Strong Strong Strong Strong Q2 growth rates of 15% or higher Q2 growth rates of 10-14% 5
6 The percent of e-commerce transactions with free shipping saw a seasonal pullback to 42%, down from all-time high of 52% in Q Percentage of e-commerce Transactions with Free Shipping Source: comscore e-commerce Measurement 61% 60% 59% 51% 53% 57% 60% 48% 51% 58% 39% 40% 41% 49% 47% 43% 40% 52% 49% 42% Q Q Q Q Q Q Q Q Q Q % Transactions with Paid Shipping % Transactions with Free Shipping 55% of consumers stated in a recent survey* that if they reached the end of an e-commerce transaction and free shipping was not offered, they would cancel their purchase at that retailer 6 *comscore survey July 2012
7 Nearly 1 in 10 e-commerce dollars are spent via mobile device Percentage of Total e-commerce Dollars Spent via Mobile or Tablet Device Source: comscore Mobile Measurements Spike in percentage of e-commerce sales via mobile coincides with surge in tablet ownership 8% 9% 8% 9% 6% 6% 3% 3% 2% Q Q Q Q Q Q Q Q Q
8 Highlights: The State of the U.S. Online Retail Economy in Q The channel shift to online appears to be accelerating: online sales increased by +15% this quarter, while on a comparable category basis, offline sales increased only 2% Mobile and tablets accounted for 9% of all retail e-commerce sales in Q2 All product categories showed strong (10% or higher) growth in Q2 Leading deal-of-the-day sites are now seeing more visitors from mobile devices than from the fixed Internet and the value of offers has increased dramatically 8
9 The comscore/ups Study 9
10 Study Objectives & Methodology Help retailers make more money by providing insights into consumers online shopping preferences and what shipping and post-purchase services enhance customer experience. What are most/least important aspects of past online shopping experiences? What leads a site user to return to or recommend a site? What is important to consumers during the check-out process? What shipping services and options do consumers find most valuable? How important is tracking and what other delivery services are preferred? What are consumers returns experiences and what aspects are important in a returns process? How do all of the services offered during and after the online purchasing experience impact the overall impression of that online retailer? Methodology: Online focus group and online survey 10
11 About 75 million people, or 1/3 of the total US internet population, buys something shippable online over the course of a quarter. Of those, about 1/3 make 1 transaction and half make 1-2 transactions. About a quarter make 3-5 purchases, and the other quarter makes 6 or more. 11
12 Online Shopping Experience and Satisfaction 12
13 Overall satisfaction with online shopping is high. Online shoppers are least satisfied with flexibility of shipping and returns. Satisfaction with Aspects of Online Shopping Experiences 7 pt. Scale Top 2 Box Ease of checkout Variety of brands/products Online tracking ability Free/discounted shipping Number of shipping options offered Ability to create an account Clear returns policy Ease of making returns /exchanges Availability of live customer service Flexibility to choose delivery date Flexibility to re-route packages I am very satisfied with my online shopping experiences. All of the items were in stock and shipping was either free or really low. 58% 57% 65% 61% 74% 74% 70% Overall Sat Top 2 Box - 86% - 74% 83% 82% 79% 13 Base= Total Respondents (n=3,128) Q10. How satisfied are you with your previous online purchasing experiences overall? /Q11.How satisfied are you with each of the following aspects of online purchasing as they relate to your previous experiences?
14 Derived Importance Weight A quadrant analysis reveals that the ease of making returns/exchanges is above average in importance but falls short in terms of satisfaction. Free shipping is one of the least important drivers of satisfaction Higher Importance/ Lower Satisfaction Quadrant Analysis Higher Importance/ Higher Satisfaction 0.25 Ease of checkout Ease of making returns/exchanges Ability to create an account to store purchase history and personal information Variety of brands and products offered Clear and easy to understand returns The ability to track online purchases after policy Availability of free or discounted shipping they ship Flexibility to re-route packages % 55% 60% 65% 70% 75% 80% 85% 90% 95% 100% Lower Importance/ Lower Satisfaction % Top 2 Box Satisfaction Rating Lower Importance/ Higher Satisfaction 14
15 Online shoppers want to see their favorite retailers improve by offering free/discounted shipping and easy returns/exchanges. Wanted Aspects to See Improved by Retailer Free/ discounted shipping 58% Ease of returns /exchanges Variety of brands/products Online tracking ability Availability of live customer service Ease of checkout Clear returns policy Flexibility of delivery options Number of shipping options Ability to create an account A carbon neutral shipping option 42% 38% 38% 36% 34% 33% 29% 28% 26% 23% 15 Base= Total Respondents (n=3,128) Q13. Thinking about these aspects of the shopping experience, which of the following would you like to see improved by your favorite retailer? Please select all that apply and the primary aspect.
16 In addition to free shipping availability, timely arrival of shipments would most often encourage shoppers to recommend the online retailer. Recommendation of Online Retailers - Top 4 Factors - 68% 65% Would Lead to Recommendation Has Led to Recommendation 43% 41% 37% 29% 31% 28% Free shipping Receiving my product when expected 16 Free returns Easy returns and exchanges Base= Total Respondents (n=3,128) Q16. Assuming you are happy with the product you purchased, what service features are most likely to make you recommend an online retailer? Please select up to four options. / Q17. Assuming you are happy with the product you purchased, what service features have actually led you to recommend an online retailer? Select all that apply.
17 Comparison Shopping and Attractive Offers 17
18 When comparison shopping, consumers take product price and shipping charges almost equally into consideration. Factors Taken into Consideration when Comparison Shopping Average # of Chips Allocated out of Product price Shipping charges Shipping Speed Consumer/peer reviews Retailer reputation Delivery time flexibility Base= Total Respondents (n=3,128) Q34.Thinking of factors that you take into consideration when comparison shopping, how likely are you to consider each of the following factors? Please distribute 100 points across these 18 factors, allocating more points to factors you are most likely to consider and fewer points to factors you are least likely to consider. Please only think about these factors for the moment.
19 Online shoppers prefer free shipping on orders over $50; while on orders less than $50, they prefer to pay a flat rate charge. About 60% of online transactions are more than $50 Discounts/Specials that Bring Customers Back to Retailer Average # of Chips Allocated out of 100 Free shipping on every order over $50 Flat rate shipping of $3.99 on all orders under $50 10% off entire purchase Save $10 on any purchase over $100 Receive a coupon for 3-5% off your next purchase Base= Total Respondents (n=3,128) Q36. Thinking of various discounts or specials a retailer may offer, which of these types of offers would most likely bring you back to the same retailer? Please distribute 100 points across these offers, allocating more points to offers most likely to bring you back and fewer points to offers least likely to bring you back. Please only consider these offers for the moment.
20 Check-Out Process 20
21 Well over half of online shoppers say that an estimated or guaranteed delivery date is important at check-out. Important Information/Options at Check-out Free shipping options 73% Estimated or guaranteed delivery date 60% Variety of payment options 56% A login to save my purchasing preferences 50% Order history 47% Expedited shipping options 38% Suggesting other items 32% 21 Base= Total Respondents (n=3,128)
22 Of online shoppers that have abandoned their cart due to delivery date, a quarter indicated that no estimated delivery was shown. Estimated Delivery Time Provided (of those that abandoned their shopping cart) I have deleted items from my shopping cart during checkout before. Sometimes the item won't be available for shipping for a longer period of time than I am willing to wait for. 6% 5% 3 days or less 4 days Anything more then 10 days for shipping I wont order, unless it is something that is hard to find or something I really have to have. there has been a few times that I have not placed an order. The item was going to take too long for it to get to us. It was three weeks for shipping. 24% 38% 42% Abandoned Shopping Cart Due to Estimated Delivery Date 10% 6% 10% 5 days 6 days 7 days 8 days or more Estimated delivery date not provided 22 Base= Total Respondents (n=3,128)/ Respondents that abandoned (n=1,331) Q41. Have you every decided not to make a purchase because of the estimated time from when you purchased to when you would receive your item(s) was too long or not provided? /Q42. What was the estimated delivery time from purchase that caused you not to make your purchase?
23 Online shoppers are typically willing to wait 4-7 days to receive most of their purchases. I feel a standard 3-5 days is very acceptable. Anything purchased in the U.S. should be able to get to you in that time without paying extra for rush delivery. Days Willing to Wait for Most Purchases If I have not gotten my item in more than 7-10 days that bothers me. Generally I get them in 4-5 days and I like that A reasonable wait time is 7 business days from the purchase date. 29% 29% I am willing to wait about 2 weeks for an item from an online retailer. If I have to wait a month or more I usually will cancel my order 23% 14% 5% Next day 2-3 days 4-5 days 6-7 days 8 or more Base= Total Respondents (n=3,128) Q40. What is the number of days that you are willing to wait for most of your online purchases to 23 be delivered?
24 Shipping and Delivery 24
25 Online shoppers expect a variety of shipping options to be available. One-third choose an option that has a nominal fee. Shipping Options Expected Option Actually Chosen Most 78% Economy Ground (5-7 days) Ground (3-5 days for a nominal fee) Two- or three-day air (for a nominal fee) Next-day (for a nominal fee) 60% 2% 6% 43% 30% 25% 67% Economy Ground (5-7 days) Ground (3-5 days for a nominal fee) 2-3 day air (for a nominal fee) Next-day (for a nominal fee) 25 Base= Total Respondents (n=3,128) Q38.When shopping online, which of the following shipping options do you expect online retailers to offer? Choose all that apply. / Q39.When shopping online, which shipping option do you choose most often?
26 Most online shoppers agree that tracking information is important. Tracking directly on the site or /text notifications are the most important services. Giving me tracking information for my packages is an important service every retailer should offer 24% 0% Most Important Shipment Tracking Service or text notifications with a tracking number The ability to track my shipment directly on the retailer`s website A text message alerting me my shipment will be delivered 10% 31% 45% 75% Completely Agree (Top 2 Box) Neither Agree or Disagree (Neutral) Completely Disagree (Bottom 2 Box) The ability to track my shipment with my mobile device An easy-to-find customer service number I can call to ask Tracking is not essential to give me a great customer experience 6% 4% 4% 26 Base= Total Respondents (n=3,128) Q49. Please indicate how much you agree with the following statement: Giving me tracking information for my packages is an important service every retailer should offer. / Q50. What is the most important shipment tracking service that a retailer should offer?
27 Returns 27
28 The majority of online shoppers look for the returns policy before placing an order. Look for an online retailer s returns policy Once I find something I am interested in and think I will purchase I check the return policy. I want to know I will find what I need but not get too far into the process before knowing.. Before I purchase an item, 33% After, if I need to return an item, 20% Not at all, 17% I don't look at the returns policy until i need it. Its so rare that i have to return something that reading a big long explanation isnt a good use of time. If it's something that will be hard to return I would look before I placed my order. Both before and after, 30% 28 Base= Total Respondents (n=3,128)
29 Online shoppers that have made returns prefer to have a return label in their original package or access to an easy-to-print label. An automatic refund is also important. 51% of online shoppers returned a product purchased online for a refund/exchange Elements of the Best Returns Experience It was such an easy experience. The gift came with a pre-paid shipping label. All I had to do was fill out a for an exchange 62% 61% 57% 47% 38% 30% A return label right in the box An easy-to-print returns label Automatic refund An easy-to-follow procedure Ability to return to a store Flexibility on how I can ship return to retailer 29 Base= Respondents that have made a return (n=1,719) Q58. Thinking of the best returns experience that you have had, what elements were included as a part of this experience?
30 A lenient and clear returns policy is likely to lead to recommendations and repeat business from online shoppers. If an online retailer offers a lenient, easy-to-understand returns policy, I will Agreement (Top 2 Box) Return policy has to be clear, easy and up front. Shop more often with that retailer 48% Recommend the retailer to a friend 48% Drop another retailer with a less easy returns process Focus less on prices and more on their quality of service 32% 35% [If] I cannot find the return policy or it is unclear I will never purchase or return to that site again 30 Base= Total Respondents (n=3,128) Q60. How much do you agree with the following statements? If an online retailer offers a lenient, easy-to-understand returns policy, I will
31 Final thoughts 31
32 In a few words Shipping promotions can be used to attract, retain, and reward shoppers Promotion doesn t mean free shipping consumers understand that a minimum spend may be required to qualify for free shipping One-third of shoppers say they most often choose a nominal fee shipping option for faster delivery Ease of making returns and exchanges should be an area of focus for retailers The returns policy should be easy to find Customers want a return label included or easily available to print from the retailer site Estimated delivery time must be provided at check-out Receiving product when expected leads customers to recommend a retailer Customers also want tracking updates while waiting for their shipment 32
33 More Information 33
34 For more information Go to comscore.com to: Download the comscore/ups study Download the infographic comscore Susan Kleinman, UPS David Sisco, 34
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