In this newest AfterPay Insights blog, we look at the inflow into e-commerce in March. Do Dutch, German and Norwegian consumers continue to shift their purchases from brick-and-mortar stores to online channels? What does the development look like for Light, Medium and Heavy Shoppers? We answer these questions using two key metrics: the number of online purchases and the online share of consumers’ total spend. While the purchase volume metric is relatively volatile and sensitive to seasonal changes, the online share of total spend metric is more stable and reflects consumers’ online loyalty.
In our previous blog post about the inflow to e-commerce in February, we saw that 79% of Dutch, 81% of German and 72% of Norwegian consumers shopped online. In March we see these percentages drop. Particularly the ‘Heavy Online Shopper’ segment (5+ online purchases every two weeks) significantly decreases in size - this is the case in the Netherlands, Germany and Norway. After an unparalleled peak season – nd tightened lockdown restrictions - in October, November and December – it is likely that this reduction in online purchases in Q1 2021 is seasonal. At the same time, we clearly see that, while the amount of online purchases decreases due to seasonality, consumers’ share of spend online remains strong. This again confirms that consumers’ loyalty to online channels is high, as we state in earlier analyses on this blog.
Interestingly, loyalty does not only grow among Heavy Online Shoppers but also Light and Medium Online Shoppers so across the entire breadth of the online consumer base. We can conclude that existing shopping behavior is being reinforced: once consumers start shopping online and make repeated purchases, they are more likely to do so more often. This once again confirms the importance of stimulating retention for merchants: making a repeat purchase increases the chance that consumers will return in the future. We will talk more about the relationship between loyalty and shopping frequency soon - stay tuned!
E-commerce growth in the Netherlands reduces to +39% in March 2021 (from +70% in February). Reasons for this decrease are existing online shoppers buying less, particularly the Heavy Online Shopper segment that reduces from 18% to 13% in combination with a decreased overall online shopper base (72% in March compared to 79% in February).
But consumers’ online share of total spend reveals a slightly different picture. In September, 39% of Dutch consumers’ total spend was conducted online (with the remaining 61% of spend being conducted in brick-and-mortar stores). And consumers’ share of spend online increases gradually up until January 2021, where after it stays stable at about 50%. So we can conclude that even though online purchase volumes declined in March, Dutch consumers’ loyalty to online stays strong.
In Germany, we see e-commerce growth reduce to +27% in March (compared to +37% in February). Like in the Netherlands, the main driving force for this development is existing online shoppers buying less than the Heavy Online Shopper segment declines from 17% in February to 14% in March). During this period the German online shopper base stays relatively intact: 8 out of 10 German consumers make at least one online monthly purchase in March.
And in line with the findings in the Netherlands, looking at the development of online purchases in comparison to consumers’ online share of total spend adds an essential perspective here. In September, 42% of German consumers’ total spend is conducted online (and 58% is conducted in brick-and-mortar stores). And consumers’ share of spend online gradually increases up until February 2021: consumers online share of spend remains virtually unchanged at 49%: German consumers’ loyalty to the online channel stays strong.
Just like in the Netherlands and Germany, we see a decline in online purchases in Norway in March. E-commerce growth falls back to +37% in March (compared to +55% in February). And also in Norway the driving force behind this development is that existing online shoppers buy less (Heavy Online Shoppers decline from 10% in February to 8% in March). In addition, the online shopper base decreases from 72% of consumers to 68% in March.
But although online purchase volumes decline in Norway during Q1, we see that consumers’ online loyalty continues to stay stable and strong. In September, 31% of Norwegian consumers’ total spend is conducted online (with the remaining 69% spent making purchases in brick-and-mortar stores). The share of online spend peaks in January at 37% and is by March at 35% (up +4 pct points since September).
We will talk more about the relationship between loyalty and shopping frequency soon - stay tuned!