Our first half of July research – now covering more than 9.600 interviews with Dutch online shoppers - indicates that Dutch consumers made less overall purchases (i.e. in both online and offline purchases) in July. It is worth noting that July is a summer month, which may impact consumers’ purchase intent. And looking forward, Dutch consumers say that they will reduce their overall purchases in August. However, Dutch consumers also say that they will continue to shift purchases to online channels in August: 16% say they will shift purchases to online channels, and 11% say they will shift purchases to brick-and-mortar stores.
The drivers for making fewer overall purchases are mainly centered around financial uncertainty: Dutch consumers are more cautious, actively saving money and are buying less as a result. Our research supports this and shows that 16% of Dutch online shoppers say that their financial situation has become more stressed, while 8% say that their financial situation has improved in July. And when looking into the coming month, Dutch consumers are more uncertain about their future financial situation – this is likely to impact future purchases.
Dutch Heavy Shoppers have a more positive financial outlook compared to consumers that shop less online. However, the share of Heavy Shoppers has decreased even further in July. In the first half of May, Dutch Heavy Shoppers make up 17% of all shoppers (and make 50% of all online purchases), and by the first half of July this reduces to 10% (making 36% of all online purchases). This reduction affects both the overall purchase growth as well as the overall financial outlook of Dutch consumers.
When looking at the development of online product categories, Fashion stands out in The Netherlands, as it is the leading category in acquiring new consumers: in the second half of March, 18% of Dutch shoppers made at least one purchase in online Fashion, and this share has grown to 29% by the first half of July.
We asked consumers to estimate if they would increase or decrease their total number of purchases in general, as well as online purchases specifically. And we find that Dutch consumers project that they will make more purchases online. This means that, providing that consumers act on their intentions, we can expect e-commerce to grow in The Netherlands in August. Growth is driven by an accelerated shift of purchases from brick-and-mortar stores to online channels.
Even though Dutch online shoppers say they will consume less overall, they also say a larger share of their purchases will be made online in August, coming at the expense of sales in brick-and-mortar stores.
Above graph illustrates which segments claim to shift purchases from online and offline channels in August. Only one segment claims to increase both offline and online purchases during August and that is the normally more risk-taking segment of younger males. Overall, we predict that e-commerce growth is driven by the younger segments with a high income. Older segments with a lower income are significantly more restrictive and will likely hold back purchases in August.
As overall consumption for Dutch consumers slows down in August, consumers’ survey responses indicate that e-commerce will grow. In most product categories, recent growth has been driven by a combination of an expanding consumer base as well existing online shoppers buying more. But in The Netherlands, Fashion is an exception as the total amount of purchases is predominantly driven by the inflow of new consumers: in the second half of March, 18% of Dutch shoppers made at least one purchase in online Fashion, and this share has grown to 29% by the first half of July.
At the same time, we see that purchases within especially Hardware/Building materials and Gardening tools show a significant increase since end of March, but the August outlook points towards a dampened rate of growth.
A key driver for consumers to purchase less online is related to a deteriorated financial situation – and the share of consumers claiming that personal finances are limiting purchases has increased since end of March. In The Netherlands, 22% of online shoppers even say that their financial situation today is worse than their financial situation in pre-corona times. But the share of consumers who say it has worsened is lower (16%). Looking one month ahead, only 11% of Dutch online shoppers think it will become worse. And the outlook for August is uncertain as the share projecting it will become better is not larger than the share thinking it will become worse. This marks a change from the numbers measured at the end of June, where the share with a positive outlook was larger than the share being negative.
Looking at shopping frequency, Heavy Shoppers (having made 5 online purchases or more in the past 2 weeks) have a more positive future outlook as 19% think their financial situation will be better in the coming month – which can be compared to 13% among Light Shoppers. So, the overall change in future financial outlook can then be explained by a shift in composition of the Dutch online consumers; more Dutch consumers have started to shop online since the second half of March, but at the same time the share of Heavy Shoppers (which showed a rapid increase up until the second half of May) has decreased since mid-June.
Dutch online shoppers’ worries decreased continuously from the end of March up until June, but have since then started to flatten out. Worries about personal health decreased the most, from 53% at the second half of March to 36% by the first half of July. In that same period, worries about the personal financial situation also decreased, from 36% to 29%. We can also conclude that – over the past months - Dutch consumers worries are more health than finance-focused.
Consumers shifting purchases from brick-and-mortar stores to online channels is the main driver behind the increased number of online purchases in The Netherlands since end of March. 22% of Dutch online shoppers say they have started shopping more online and less in physical stores in the past month, and 9% say they have started shopping more in physical stores and less online. And not surprisingly, the more purchases a consumer currently makes online, the more likely it is that a consumer states that they have shifted their share of purchases from offline to online.
To understand the shift in a larger context, it is important to note that the share of Dutch, German and Norwegian consumers who have shifted to online purchases is higher than the share who have shifted to offline purchases. In this regard, The Netherlands displays the largest difference (22% online versus 9% offline).
The projected online/offline balance for August is also positive towards online purchases, as 16% of Dutch online shoppers claim they will shift purchases to online in August, while 11% claim they will shift purchases towards offline.
In the first phase of Dutch e-commerce development, we see a rapid increase in e-commerce purchases up until the first half of May, with e-commerce up +51% in The Netherlands compared to pre-corona times. In the second phase, going into the second half of May, growth stabilized and a plateau is reached. Afterwards, e-commerce growth even decreases in a third phase that takes place in the first half of June. After a recovery in online purchases during mid-June, we again see a dampening going into the summer months.
As we do not see an increase in offline purchases during the past month, this dampening of online purchases should not be interpreted as consumers shifting purchases from online to brick-and-mortar stores - they have simply made less purchases overall.
We also see interesting developments in the motivations to purchase online over time. In The Netherlands, the fact that prices are cheaper online has increased continuously in importance as a driver to make more purchases online. It looks like the functional benefits of online shopping have increased in impact, and are possibly leading to a lasting change. And since end of March, the fact that stores and restaurants were closed and having to take care of family at home were two important reasons to increase e-commerce purchases for Dutch, German and Norwegian consumers. But these have now significantly decreased in importance.
As for the barriers for consumers to decrease online purchases, the share of consumers who have virus-related concerns around receiving packages has decreased continuously. On the other hand, a limited personal financial situation has increased in importance for making less e-commerce purchases.
Stay tuned for an updated deep dive into German and Norwegian e-commerce behavior very soon.