Table of Contents
Scope and Themes
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- What you need to know
- Definition
- Data sources
- Sales data
- Consumer survey data
- Abbreviations and terms
- Abbreviations
- Terms
Executive Summary
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- Explosive growth in online retail curbed by recession
- Fastest-growing categories not tech-related
- Amazon leads online retail by large gap
- Web-only retailers benefit from increasing consumer comfort
- Growth in online shopping driven by multiple key value propositions
- E-retailers focus on internet-based advertising strategies
- Shipping fees and privacy primary barriers to adoption
- Early adopters on board for mobile shopping
- E-commerce continues to evolve through innovation
Inspire Insights
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- Trends
- How trends will impact the market
Insights and Opportunities
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- Retailer must differentiate on factors other than price and familiarity
- Emotional branding increasingly important in price-competitive market
- Cell phone commerce in early adoption
- TV becomes a purchasing tool
- Women value the internet for selection and availability
- Under-45s like to find their bargains themselves
Market Size and Forecast
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- Recession brings explosive growth to a halt
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- Figure 1: Total U.S. ecommerce retail sales, 2003-13
- Figure 2: Total U.S. ecommerce retail sales, at inflation-adjusted prices, 2003-13
- Substantial growth still ahead
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- Figure 3: The internet shopping experience, 2002-08
Competitive Context
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- Online share growing but may see a plateau
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- Figure 4: E-commerce sales as a percentage of total retail, 2000-08
- Internet purchases come from respondents who already order by mail or phone
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- Figure 5: Incidence of internetand mail/phone purchase in past 12 months and amount spent, May 2003 -June 2008
- Online second-hand market grows in recession
- eBay
- Craigslist
- Amazon.com
Segment Analysis
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- Fastest-growing categories are not tech-related
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- Figure 6: U.S. retail sales at electronic shopping and mail order houses, by type of merchandise, 2004 and 2006
- Purchases of apparel draw most new buyers since 2006
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- Figure 7: Categories of internet purchase, January 2002-December 2008
Leading Retailers
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- Amazon maintains significant lead
- Recent initiatives
- Office supply chains see increasing share of sales from online
- Recent initiatives
- Manufacturer direct computer vendors draw visitors but convert fewer
- Recent initiatives
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- Figure 8: Sales and related statistics of top 10 internet retailers, 2008
Brand Qualities
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- Brand promise of satisfaction can overcome physical presence
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- Figure 9: Online sales of top 500 sites, by category, 2008
- Category leaders share key internet value propositions
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- Figure 10: Leading retailers by merchandise category, 2008
- Netflix: Price, selection, and convenience beat immediacy
- Drugstore.com
- Blue Nile Jewelry
- PayPal an established brand in all of online retail
- Competition
Innovation and Innovators
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- Widgets make online marketing entertaining and useful
- TrialPay increases visitor conversion with transactional advertising
- Ikan offers time saving and convenience for higher-income shoppers
- Free content on YouTube linked to retail
Advertising and Promotion
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- Television advertising
- TiVo offers in-program advertising options
- eBay
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- Figure 11: eBay – awards show win, January 2008
- 1800Flowers.com
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- Figure 12: 1-800-Flowers – Jimmy Kimmel Live, February 2009
- Amazon.com
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- Figure 13: Amazon – Indie Spotlight, October 2008
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- Figure 14: Amazon – Girl in Africa, November 2008
- Internet advertising
- Search engine ads focus on more likely targets
- Search engine optimization (SEO)
- Targeting evolves
- Smart shoppers drawn by online coupons
- New distribution for coupons
- Females, whites, and 18-24-year-olds more push-resistant
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- Figure 15: Clicking on internet ads, by gender, age, and race/Hispanic origin, February 2009
- New ShopAds banners allow direct purchase
Market Drivers
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- Recession causes pullback in consumer spending
- Internet offers several value propositions to shoppers
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- Figure 16: Motivations behind online shopping, February 2009
- Web facilitates price comparison
- Shop in-store + compare online
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- Figure 17: Price comparison online after store visit, by age and HH income, February 2009
- Wider range of products available
- Gifting made easier by wish lists and registries
- High gas prices keep consumers at home
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- Figure 18: Impact of gas prices on online shopping, by gender and household income, February 2009
- Online shopping is part of a green lifestyle
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- Figure 19: Online shopping and the environment, by gender and household income, February 2009
- High-speed internet penetration facilitates download purchases
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- Figure 20: U.S. household penetration of PCs and broadband internet, 2003-07
- Free shipping promotions overcome consumer hesitancy
Usage
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- Online consumer base continues to grow
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- Figure 21: Incidence of internet purchase and amount spent, January 2002-June 2008
- Penetration of online retail skews by gender, age, and household income
- Men lag behind women
- Online shopping just as probable among Boomers
- Higher household income respondents more likely to shop online
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- Figure 22: Incidence of internet purchase, by various demographic factors, January 2006-December 2008
- Online purchases are made on a weekly basis
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- Figure 23: Relationship between online, on phone and in-store shopping, research and delivery, February 2009
Motivations
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- Shoppers head to internet to save time and money, buy hard-to-find products
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- Figure 24: Motivations behind online shopping, February 2009
- Women value the internet for selection and availability
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- Figure 25: Motivations behind online shopping, by gender, February 2009
- Over-$100Ks looking to save time and get exactly what they want
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- Figure 26: Motivations behind online shopping, by household income, February 2009
Reasons Not to Shop Online
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- Key barriers can be overcome through consumer education
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- Figure 27: Reasons not to shop online, February 2009
- Older respondents still more resistant to cyberspace purchases
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- Figure 28: Reasons not to shop online, by age, February 2009
- Under-$75Ks more opposed to shipping fees
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- Figure 29: Reasons not to shop online, by household income, February 2009
Limitations on Online Shopping
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- Majority of online shoppers feel safe enough to try the unfamiliar
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- Figure 30: Limitations of online shopping, February 2009
- Younger respondents 18-24 more suspicious of the unfamiliar
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- Figure 31: Limitations of online shopping, by age, February 2009
- Fear of unfamiliar lower in the more experienced $100k+ group
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- Figure 32: Limitations of online shopping, by household income, February 2009
Usage of Specific Online Retailers
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- Amazon receives monthly business from a third of online shoppers
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- Figure 33: Usage of specific online retailers, February 2009
- Younger respondents more likely to purchase at leading retailers
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- Figure 34: Usage of specific online retailers, by age, February 2009
Attitudes Towards Online Shopping
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- Internet becomes important source of product reviews and coupons
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- Figure 35: Attitudes towards online product feedback, promotions and gift shopping, February 2009
- Female respondents more likely to trade opinions and look for sales
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- Figure 36: Attitudes towards online product feedback, promotions and gift shopping, by gender, February 2009
- Under-45s more likely to use the web to find exactly what they want
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- Figure 37: Attitudes towards online product feedback, promotions and gift shopping, by age, February 2009
- Higher-earning respondents more active users of online reviews
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- Figure 38: Attitudes towards online product feedback, promotions and gift shopping, by household income, February 2009
Shopping with Cell Phones
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- Shopping via phone: Who’s buying now?
- One in four shopping via phone or wanting to
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- Figure 39: Attitudes towards shopping with cell phones, by gender, February 2009
- Under-35s best target for cell phone commerce
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- Figure 40: Attitudes towards shopping with cell phones, by age, February 2009
- Higher-earning respondents more receptive to cell phone purchases
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- Figure 41: Attitudes towards shopping with cell phones, by household income, February 2009
Race and Hispanic Origin
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- Racial/ethnic bias in online purchasing reflects income disparity
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- Figure 42: Incidence of internet purchase and amount spent, by race/Hispanic origin, April 2007-June 2008
- Minority respondents share attitudes of younger consumers
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- Figure 43: Limitations of online shopping, by race/Hispanic origin, February 2009
- Hispanics more likely to stick with well-known branded retailers
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- Figure 44: Usage of specific online retailers, by race/Hispanic origin, February 2009
- Online Hispanics want to find deals, not be told about them
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- Figure 45: Attitudes towards online shopping, by race/Hispanic origin, February 2009
- Online English-language Hispanics more likely to shop with their cell phone
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- Figure 46: Attitudes towards shopping with cell phones, by race/Hispanic origin, February 2009
Cluster Analysis
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- Online minimalists
- Who they are
- Opportunities
- Online fanatics
- Who they are
- Opportunities
- Bargain hunters
- Who they are
- Opportunities
- Cluster characteristics
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- Figure 47: Relationship between online, on phone and in-store shopping, research and delivery, February 2009
- Figure 48: Limitations on online shopping, by clusters, February 2009
- Figure 49: Online shopping preferences, by clusters, February 2009
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- Figure 50: Use of feedback and couponing, by clusters, February 2009
- Figure 51: Interest in gift cards and wish lists, by clusters, February 2009
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- Figure 52: Usage of specific online retailers in the past month, by clusters, February 2009
- Figure 53: Motivations for shopping online, by clusters, February 2009
- Cluster demographics
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- Figure 54: Online shopper clusters, by gender, February 2009
- Figure 55: Online shopper clusters, by age, February 2009
- Figure 56: Online shopper clusters, by household income, February 2009
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- Figure 57: Online shopper clusters, by race/Hispanic origin, February 2009
- Figure 58: Online shopper clusters, by marital status and presence of children, February 2009
- Cluster methodology
Custom Consumer Groups
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- Marital status and children in the household
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- Figure 59: Incidence of internet purchase and amount spent, by marital status and children in the household, October 2007-December 2008
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- Figure 60: Attitudes towards online shopping, by marital status and presence of children, February 2009
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- Figure 61: Online shopping and gas prices, by marital status and children in the household, February 2009
- Gender and presence of children
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- Figure 62: Incidence of internet purchase, by gender and children in the household, February 2009
Appendix: Other Useful Consumer Tables
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- Motivations
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- Figure 63: Motivations behind online shopping, by age, February 2009
- Reasons not to buy online
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- Figure 64: Reasons not to shop online, by gender, February 2009
- Limitations
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- Figure 65: Limitations of online shopping, by gender, February 2009
- Popularity of online retailers
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- Figure 66: Usage of specific online retailers, by household income, February 2009
Appendix: Incidence of Leaving Feedback Rising
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- Five-point difference from November 2008
- Online feedback surveyed in November 2008
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- Figure 67: Leaving online feedback, by gender, November 2008
- Figure 68: Leaving online feedback, by age, November 2008
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- Figure 69: Leaving online feedback, by household income, November 2008
- Figure 70: Leaving online feedback, by race/Hispanic origin, November 2008
Appendix: Trade Associations
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