Successfully reaching online shoppers during the critical holiday season is crucial to the Q4 success of eCommerce businesses. Forrester recently published its “US Online Holiday Retail Forecast, 2011”; it predicts strong growth despite the current economy. My colleague Sucharita Mulpuru shared in her blog that November and December alone are expected to pull in nearly $60 billion in online revenues in the US, a 15% increase over 2010 and about one-third of the overall volume of online sales for the year.
But what are the drivers for purchasing? How do consumers discover a good deal? Forrester collaborated earlier this year with the eCommerce company GSI Commerce to answer these and other questions and to create a picture of online buyers’ purchase journey in various categories during key periods of the Q4 2010 holiday season across 15 eCommerce sites.
We found in this study that search and email were the most effective tactics in driving sales, and shoppers were heavily influenced by retailers’ marketing efforts during key dates such as Cyber Monday and the Thanksgiving weekend. But in many cases, it's a combination of marketing tactics that makes people buy: More than half of US consumers purchasing products online in the soft goods category experienced two or more marketing touchpoints prior to the completion of their transaction.*
Although data nowadays shows that young consumers in particular are moving away from traditional media in their daily media consumption, our Forrester data also shows that traditional media are still powerful means for advertising/promotion. In Roxana Strohmenger’s recent report, “Young Hispanics Lead In Mobile Activity But Don't Trust Mobile Ads Very Much,” she discovers that the two top channels are TV and magazines; American youth trust them twice as much as other online or mobile channels, and ads on mobile phone are being trusted the least. No wonder TV spending continues to top other forms of media in America and continues to grow, according to Nielsen; even search engine giant Google is getting into the TV advertising business by offering unique targeting and measurement capabilities.
My colleagues Charles Golvin and Thomas Husson recently published a report that reveals The Global Mainstreaming Of Smartphones, and they found that while the majority of smartphone owners are high-income adopters, the low-income optimists (who Forrester defines as Techno-Strivers, Digital Hopefuls, and Gadget Grabbers) and high-income pessimists (who Forrester defines as Handshakers, Traditionalists, and Media Junkies) are the ones who together make up the majority of the US population. They are the potential consumers who will lead to smarthphone sales growth.
Mobile banking adoption among US online adults more than doubled in the past two years. However,Forrester’s Technographics® data shows that 85% of online adults in the US have never used mobile banking. When we look more in depth at the reasons why, we get answers such as “don’t see the value,” “don’t believe it’s safe,” and “don’t want to pay for fees.”
US consumers have plenty of alternatives they can use, like ATM machines, online banking, and retail branches. For them, the benefits have to outweigh the hurdles. Yet it’s a different story in other parts of the world. Due to a lack of existing banking infrastructure, we see mobile finance penetration picking up quickly in developing markets like China, India, and even Africa, fueled by the growing cellular penetration and mobile Internet penetration in these regions. In fact, in the most recent World Economic Forum’s Digital Asia panel that Forrester CEO George Colony moderated, Michelle Guthrie, JAPAC director of strategic business development at Google Asia Pacific, stated that for the next hundred million users coming onto the Internet in Asia, primary access to the Internet will be on mobile, and maybe only on mobile due to the infrastructural challenges (and costs) of fiber and broadband.
Companies like Coca-Cola, Nike, Unilever, Procter & Gamble (P&G), McDonald’s, and Johnson & Johnson have done a great job converting their brands into household names in Metro China, mainly by investing big in advertising and promotions. Having pockets deep enough to put these messages in front of the Chinese people is great, but if your firm is interested in entering this market of 1.37 billion people but doesn’t have access to the advertising financial resources of a Coca-Cola or P&G, what do you do?
Start thinking about word-of-mouth (WOM) campaigns. Due to historic events and their family teachings, Chinese people tend not to trust content coming from strange sources. However, Chinese people are known to be loyal to their friends and family. Forrester Technographics® data shows that “recommendations from friends and family” (44%) is the primary source of content people trust in Metro China. Interestingly, among the top five sources, we also see “email from people you know” (40%) and “social networking site profiles from people you know” (25%). These are both forms of word of mouth that have transitioned from the offline world to the online world.
One of the responsibilities of my role includes analyzing data in complex ways to help our clients understand how their target groups behave and if there are more relevant ways to segment them based on the results. However, sometimes it just makes sense to take a step back and look at some basic demographic profiles as a starting point for further analysis. We developed a new deliverable that we call Demographic Overview, and we kicked off the series with digital dads, followed by digital moms, and these will soon be complemented with digital natives and digital Seniors.
So why is it important for companies to look at dads? Forrester’s Technographics® data shows that s lightly more than one-third of US online men ages 18 to 50 are parents of a child younger than 18 living with them. Companies need to understand how the digital profile of dads differs from non-dads, as their behaviors influence the tech behaviors of their kids.
Some of our findings include that in general, dads are more likely to use the Internet as a resource, while non-dads are more active in entertainment-focused activities such as social networking. But dads know how to use social media to get their point across: 72% of dads who regularly engage in social activities have posted a review of a product or service on Twitter in the past 12 months, as compared with only 57% of non-dads.
Videos are definitely one of the strongest forms of media in our society nowadays, and there are 48 hours of video uploaded on YouTube per minute: from consumers sharing their creative expressions to companies uploading how-to videos about their products and brands.
These videos help many people in their purchasing process. My colleague recently had to shop for a car, and it’s been interesting to hear about her car shopping journey and how online videos helped her make the ultimate decision. She was interested in one specific car — the 2012 Ford Focus with the Sync with MyFord Touch comes as standard package. The challenge she, and Ford for that matter, encountered was that the majority of car salespeople aren’t that tech-savvy. While they are familiar with the horsepower and the smart-key entry feature, they really struggle to explain how to turn the car into a Wi-Fi hub or how the Sync system can read incoming text messages.
Trying to learn about every available optional feature, my colleague had to turn to the Internet for help. She was able to find demo videos on the Ford Focus website, on YouTube, as well as on her cable TV widgets. These online videos, produced by Ford, auto review sites, as well as tech-savvy online peers, really helped her understand how the optional features of this new product will enhance her ultimate driving experience. Forrester’s Technographics® data shows that videos created by other people are the most watched online type of video:
Do you remember the last trip that you took? In this season, chances are that it was only last week or last month. As much as we love to travel, ideally for leisure, we are often overwhelmed by all the planning and coordination that are involved in the process — flights, car rentals, lodging, just to begin with. And if you are truly a planner, you want to add the places to dine, events to attend, and attractions to stop by to the itinerary.
Luckily, we are in the technology-centric era. We have websites, software, and devices that help us make life easier. Two companies that I recently came across, TripIt and Traxo, are designed to take care of travelers’ concerns. Much like TripIt, Traxo aims to simplifying travelers' lives by aggregating all of their travel information in one place, but it does so in a more elegant auto-pull manner versus an email push one. Traxo users just need to link their travel accounts to Traxo via a one-time, upfront process, and then Traxo automatically detects all of their trips, miles, and points and intelligently combines them into a single travel dashboard. It also allows members to share experiences with friends and possibly discover where they might have an overlapping trip with another.
PayPal recently shared its new peer-to-peer payment functionality that allows Android users to pay each other by tapping two Near Field Communication (NFC) enabled devices together. A user enters the transaction information and then taps her phone up against another phone also equipped with the same PayPal widget. After the phones buzz together, the recipient can decide to send or receive money by entering a PIN number.
Sounds very interesting, but are consumers interested in this functionality?
My colleague Charlie Golvin recently blogged about the Google Wallet initiative and its hurdles, one of them being lack of consumer interest. In fact, our Technographics® surveys show that interest in mobile payments is low and has not translated into activity in the US: Less than 6% of US online adults have ever used any type of mobile payment. Over the past three years, Forrester has seen interest in mobile payments continue to grow slowly.
Recently, my colleague Jackie Anderson published a report, Understanding Online Shopper Behaviors, US 2011, and she indicated that 2010 online retail spending in the US had reached $175.2 billion and will grow at double-digit rates at least for another few years.
But among all the items that can be purchased online, some are more popular than others. We have extracted the top three and bottom three items that consumers research online and purchase online based on data from our North American Technographics® Retail Online Survey, Q3 2010 (US). The data shows that while online consumers are generally comfortable with both researching and purchasing books, hotel reservations, and airline tickets online, they still prefer to purchase footwear, consumer electronics, and household products from traditional channels.
About one-third of US Internet users aren't shopping online yet. The majority of them do use the Internet to research products but don't feel comfortable making the purchases online. The biggest barrier people mention for not buying online is their need to see things in person.