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Research round up - InternetRetailing Magazine 2019

Emma Herrod pulls together the findings from the latest consumer and retail research.

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An amazing 86% of shoppers in Britain use Amazon with 70% of those who regularly shop from the retail behemoth’s site saying that Amazon is the first retailer they go to when shopping online. The research from Mintel further highlights the ongoing popularity of the retail giant, discovering that more Amazon shoppers have increased their shopping (21%) with the retailer than decreased it (13%) over the past year. Overall, most (70%) Amazon customers shop with the retailer at least once a month, while just under a fifth (17%) use the retailer on a weekly basis.


In terms of what’s in the basket, hardcopy media such as books, DVDs and video games remain Amazon’s most popular purchases. This is followed by electricals (30%), fashion/jewellery (30%), and toys (20%). Some 45% of households in the UK have some form of Amazon produced device, with Kindle (23%), Fire TV/TV Stick (16%), Fire Tablet (14%), and Echo (11%) proving the most popular.


Inherent trust in this retail giant is confirmed by the fact that as many as half (51%) of Amazon users assume that the retailer has the cheapest prices, while six in ten (59%) say they are loyal to the company.


GROCERY SECTOR FAILS TO ATTRACT NEW CUSTOMERS

Another research study from Mintel has discovered that the amount being spent on groceries online in the UK is continuing to grow as ecommerce takes a larger share of the grocery market. However, the number of new customers swapping to buying their groceries online is dropping. In fact, the number of customers shopping online for groceries has dropped to 45% from 48% in 2015.


Last year, sales of online groceries in the UK reached £12.3bn, up 9% from 2017 with online increasing its share of the market up from 6.1% in 2016 to 7% in 2018. What is more, consumers’ love of online shopping is set to continue as this year, sales are expected to reach £13.6bn. Over the next five years, online grocery is forecast to account for 10% of all grocery shopping, with sales growing by 60% to reach £19.8bn in 2023, according to Mintel.


According to Mintel research, younger shoppers in Britain are still enthusiastic about the convenience of having groceries delivered, particularly those aged 25-34, with 61% of this group doing some online grocery shopping and over a quarter (27%) saying they do all or most of their grocery shopping online.

 

However, it seems that middle aged and older shoppers are more reluctant to join the online revolution, and their reluctance is growing. Whilst just over a third (35%) of people aged 45+ report buying some groceries online, the number of shoppers in this group who have “never bought groceries online and have no interest in doing so” has grown from 34% in 2015 to 42% in 2018.


“Online grocery is, alongside the food discounters, one of the fastest-growing segments within the wider grocery sector. However, growth is slowing and the number of users is plateauing as retailers struggle to encourage new customers to try their services. Many consumers remain reluctant to buy fresh products online, concerns around substitutions persist and delivery charges are still off-putting, particularly in a market where value is key,” says Nick Carroll, associate director of retail research at Mintel.


“However, most importantly, online services are still best suited to the traditional big-basket weekly shop, at a time when consumers are increasingly shopping on a top-up or when-needed basis.

 

That is why we are seeing more retailers launch trial services designed to tap into the potential market for same-day or small-basket online grocery delivery. The difficulty is such services, at present, are costly to both the customer and the retailer, limiting their appeal and potential geographic rollout,” he adds.


The most common reason why consumers do not shop online was found to be that they prefer to choose fresh products themselves (73%). There are also concerns around high delivery charges (24%) and minimum spend (18%).


When asked how much they would be willing to pay for same-day delivery, 30% of online grocery shoppers say they would pay £1-£2.99; whilst a further 27% say £3-£4.99. Just 19% of these consumers would be willing to pay over £5 and 24% say they would not be willing to pay anything for same-day delivery, highlighting the need for costs to be kept in line, where possible, should same-day delivery become mainstream.


“For some consumers, the larger basket-style shopping that online grocery best supports does not fit with their current habits, indicating that, should same-day delivery come to the mass market, with services targeted towards immediate meal solutions, it could be the next driver of growth for the sector,” says Carroll.


The Mintel research also reveals that almost two thirds (63%) of online shoppers have experienced an issue with their order in the past year.


Top of the complaints are missing products, with just over a quarter (26%) of online grocery shoppers experiencing this frustration. This issue is closely followed by incorrect product substitutions (25%) and out of date/short shelf life items (24%). A further one in five has received damaged goods (20%) and been inconvenienced with late deliveries (20%).


The majority (85%) of those who have experienced an issue have taken measures to resolve it. The most popular way of which was to call customer service (42%). Meanwhile, 28% have made a complaint via the retailer’s website and 15% have complained via live chat/chatbot. Just under one in ten (8%) has taken to social media to air their complaints, while a nonchalant one in seven (15%) said they did nothing when faced with an issue.


“The fact that nearly two thirds of online shoppers have experienced problems with orders in the past year should be worrying for the sector. For those retailers with bricks-and-mortar stores, this may not be as great of a concern given that groceries are, to a degree, non-discretionary and, therefore, consumers who experience issues online ordering do not simply stop buying groceries altogether; they just go back into the store. However, this is playing dice with customers given the level of promiscuity in-store and, despite the thin margins, how relatively loyal online shoppers can be to a business.” concludes Carroll.

 

RETAIL REVENUES SUFFER FROM SOFTWARE BUGS

Meanwhile, another study has found that UK ecommerce sites are limping behind the US and Germany for customer satisfaction and functionality. More than 3,000 software bugs and user experience issues were found amongst the world’s top 52 retail sites by software and usability experts conducing testing for digital quality and crowdsourced testing firm Applause. Many of the bugs would have impacted retail revenues, says the company. In fact, 65 of the bugs would have cost top US retailers more than $60m in lost sales over the Christmas period when the testing was undertaken.


More worryingly for the UK retail sector though is the fact that almost half (45%) of the issues were found on UK sites. Some 32% were on US sites and 23% on sites in Germany.


Over half of all bugs found were classified as severe – potential delayers or blockers – which would significantly impact the functionality of a website and potentially discouraging customers from using the site to complete purchases. One of these bugs had the potential to cost a US business $915,240 in lost revenue every two weeks.


Amongst the bugs found were issues with specific omnichannel journeys including buy online, return in store. The speed and performance of sites was also measured. In some cases, search results and product pages failed to meet customer expectations, while the shopping cart and checkout process also left customers confused.


“It’s been disappointing to see the UK market perform so badly. Issues identified by our testers ranged from functional errors to poor search relevancy and slow website speeds. It’s clear that UK retailers need to rapidly stabilise their digital properties in order to meet the high bar set by leaders like Amazon,” says Richard Downs, UK director at Applause.

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