As consumers transfer more purchases from offline to online, venturing into new categories, also comes a change in mindset from a consumers’ point of view. Offline habits and expectations have now completely transferred to the digital experience. With this also comes a challenge for merchants. Are they able to satisfy consumers’ online and offline purchasing needs?
Our research shows that consumers are becoming increasingly less satisfied with merchants’ performance as the pandemic continues. The satisfaction with delivery time, for example, has significantly decreased with -5 percentage points. Consumers are also much less satisfied with the range of products offered by merchants . The reason for this is probably a combination of consumers’ increasing demands as well as merchants’ struggle to perform.
In this blog we have concentrated analytics on uncovering which consumer groups have driven this increase in e-commerce purchases, the underlying consumer needs and how effective merchants are in meeting these needs.
Not only the number of e-commerce purchases has increased in the last weeks of March and the first half of April; the demands that consumers place on merchants are also intensifying.
Consumers’ demands can be placed into three different categories that accumulate, as in a process. Starting off, in order to even be considered by consumers, merchants need to meet specific ‘hygiene needs’. Once these demands are met, the battle for consumers plays out on the field of ‘webshop choice drivers’ - this is where merchants need to perform better than their competition to win consumers trust and business. If consumers then perceive merchants as performing similarly, to what extent merchants can satisfy consumers’ ‘niche needs’ becomes the final and critical factor for choosing a webshop.
In the second half of March, consumers’ most important demands of a webshop were having used the webshop before, that the webshop was secure and that it offered the lowest price. These demands are still the most important, but the big change lies within the security dimension.
Going into April, 33% of consumers say security is a hygiene need. 18% of Dutch consumers and 16% of German consumers perceive security as even more important. In Norway, 24% of consumers think security is important. But what makes a consumer perceive a webshop as secure? Multiple dimensions of ‘security’ are applicable here, but worth looking into are information security, financial security (as in stability of the merchant) and payment security, just to name a few. We will revisit security and consumers’ perception of feeling secure in a coming deep dive.
There are some interesting differences between countries. Going into April, Dutch consumers place more importance on webshops displaying in-stock information and having a wide range of products available. Demand on reliable deliveries has increased significantly in Germany. In Norway, significant increases in demands are seen regarding having used the webshop before as well as for webshops having the lowest price.
As described above, consumers’ demands of merchants have increased in the second half of March and the first half of April. However, consumers don’t perceive merchants as having delivered on these changing and strengthening demands.
Consumers are particularly less satisfied with merchants regarding fast delivery. This level of dissatisfaction applies to The Netherlands, Germany and Norway. We also see a decreasing level of consumer satisfaction regarding merchants’ available stock, especially in Germany and the Netherlands.
In The Netherlands we can see a drop in satisfaction regarding website security. On the other hand, Dutch consumers are more satisfied with shipping and delivery as well as the return process.
In Germany consumers are less satisfied with shipping and delivery, as well as merchants having products in stock. And Norwegian consumers are less satisfied with merchants’ customer service.
Looking at the data in the first half of April compared to before the corona outbreak, we can (from a socio-demographical perspective) distinguish two overall drivers for the increase in online purchases.
One is proximity to physical stores, as consumers living in city suburbs, small towns and rural areas have increased online purchases the most – in contrast to consumers living in city centers and larger towns where the increase in number of online purchases is moderate. However, consumers living in more urban areas still account for the largest shares of all online purchases – as they represent a larger share of the population and also make more online purchases on average per individual.
There is a strong correlation between age and online purchase increase, where younger consumers stand for the majority of the purchase increase, except for young single households where the financial situation is a barrier. And looking at gender, females have increased online purchases considerably more than males after the corona outbreak. The split of online purchases on gender before the corona outbreak was roughly 50/50 – but with considerable differences in product mixes purchased – and now females account for 54% of all online purchases.
Disposable income is also correlated to the change in online purchases since the corona outbreak, but not to the same extent as the above factors. And income acts more like an enabler or barrier – not a driver in itself.
Consumers in general have started to acclimatise themselves to the new situation and the expected longevity of the corona outbreak. Spending more time at home, getting used to shops and restaurants being closed and being restricted in terms of feedom of movement is now a more or less an accepted reality.
But the financial implications of the corona outbreak are hitting many consumers hard. Looking at the first half of April, this is also one of the main reasons for consumers to refrain from making online purchases.
Reasons for consumers to shop online more
Consumers who have increased e-commerce purchases in the first weeks of April are still mostly doing so because they want to avoid meeting other people in physical stores. Directly following the corona outbreak, drivers related to the sudden change in life situation – spending much more time at home – were very important. The convenience of online shopping - due to not being able to leave home - is still an important driver for increasing online purchases, but not to the same extent as directly following the outbreak.
These patterns are quite similar across Germany and the Netherlands, but Norwegians are more rational in that they also claim closed physical stores and lack of public transportation as reasons for increased online shopping. Since March, these more rational reasons have decreased significantly in Germany and the Netherlands in the first half of April.
Reasons for consumers to shop online less
Directly following the corona outbreak, consumers who decreased their number of online purchases mainly did so because of financial reasons. Going into April, this is still the most important reason to shop less online. For consumers who have shopped less, the financial barrier to shop online has increased in importance even more.
The desire to support local physical stores is also a reason to decrease e-commerce purchases. This has become even more important for consumers in the second half of April. This reason to shop online less is not as important to consumers as finances, but a substantial share of consumers that try to prioritize local businesses definitely exists.
When looking at reasons for consumers to shop less online, we see some interesting differences between countries. The Dutch are more concerned about getting contaminated by packages ordered online, but are on the other hand less concerned about packages not being delivered on time. Both Germans and Norwegians perceive the financial barrier as more important and Norwegians also claim wanting to support local trade as more important than in the other countries.
Consumers’ increasing demands of merchants, in combination with how they perceive merchants delivering on these needs, gives a clear picture of the gaps that exist. Below we present the main gaps that we currently identify, and some statements and questions that might be useful for you as a merchant to reflect on:
Perceived security is one of the most important base needs that merchants need to deliver on (we will dive into this subject in a future blog post) and it’s a multidimensional challenge:
The fact that consumers now place more of their total purchases online, and at the same time start buying in new product categories (like groceries and pharmaceuticals), this also means that the e-commerce experience gets more vital and important in their everyday life. As a result, some of the traditional offline demands from consumers now get transferred to e-commerce:
We will continue to monitor consumers’ demands in the weeks to come. Stay tuned for deeper insights into what the role is of delivery, security and payments when it comes to consumers’ level of satisfaction with merchants.