Digital Natives are Making the Digital Path to Purchase a Busy Place

Stephen DeAngelis

July 5, 2016

“For the first time,” reports Laura Stevens (@LauraStevensWSJ), “consumers say they bought more of their purchases on the web than in stores, according to an annual survey of more than 5,000 online shoppers by United Parcel Service Inc.”[1] I admit to being a bit skeptical about the survey results since it relies on shoppers’ memories and impressions rather than hard data. Nevertheless, it does demonstrate shoppers are relying more and more on the digital path to purchase. Stevens continues:

“The shoppers now made 51% of their purchases on the web compared with 48% in 2015 and 47% in 2014, according to the survey by UPS and analytics firm comScore Inc. The survey polled shoppers who make at least two online purchases in a three-month period, excluding groceries. The latest results of the survey — now in its fifth year — illustrate the degree to which the adoption of online shopping is accelerating. This year, 44% of smartphone users said they made a purchase from their device, up from 41% a year ago. It also helps explain why retailers are having so much trouble adjusting to the new cybershopping era.”

The amazing global penetration of the smartphone is having a significant effect on how quickly consumers are taking advantage of the digital path to purchase. Bala Ganesh, Senior Director of Marketing for the UPS US 2020 Team, reports that Marc Andreessen (@pmarca), entrepreneur, investor and cofounder of Netscape, believes the smartphone is even more important than most people think. “The smartphone revolution is under-hyped,” Andreessen insists, “more people have access to phones than access to running water.”[2] Ganesh adds, “Pocket-sized communication devices seem to be taking over our lives — and exercising our thumbs — more than many retailers realize.” Commenting on the UPS/comScore survey, the Material Handling & Logistics (MH&L) staff observe, “Avid online shoppers, who make two or more purchases online in a typical three-month period, are leading a retail revolution. … These consumers are shopping more with their smartphones and demanding a more seamless experience between virtual and physical stores.”[3] The introduction to the UPS/comScore Survey concludes, “One certainty is clear — the shopper is taking more and more control.”[4] A brief overview of the study explains:

“Shoppers are taking more and more control of their retail experience. Two groups are forcing retailers to act as never before, Power Shoppers and Millennial Marvels. Savvy and strategic across all channels, the Power Shopper’s digital expertise has real financial implications for retailers. Engaging smartly using new technologies and customer service conveniences yields sales, loyalty and social media currency. As first-generation digital natives, Millennial Marvels are having a profound technological impact on retailers. Their eagerness and prowess for all things digital has retailers striving to understand the implications and cultivate lifetime relationships.”[5]

As the article notes, Millennials, first-generation digital natives, are primarily responsible for crowding the digital path to purchase. They will soon be joined by Generation Z and the digital path will get even more crowded. Retailers who don’t adjust to this new reality aren’t likely to remain in business. It’s not that Millennials don’t like to shop in stores. I’ve seen surveys indicating they don’t want brick-and-mortar stores to go away. Supply chain experts at MIT insist, “Bricks-and-mortar stores … still provide a vital interface with customers.”[6] Although they do note, “Switching to an omni-channel business model requires retailers to drive change in many parts of the supply chain.” The UPS white paper identifies three foundational digital trends that impact retail environments across the board:

Digital fuels future growth. Shoppers are increasingly shifting their purchases and transactions to a digital retail environment. The in-store experience has yielded its preeminence to desktop, laptop, smartphone and tablet shoppers, with smartphones and tablets showing the highest growth.

Smartphones are a driving force in shopping. More smartphone use means retailers must react by optimizing their mobile retail experiences, even if the ultimate sale is completed elsewhere. As satisfaction with mobile shopping improves, retailers can expect to see even faster growth.

Cross channel purchases growing. Using multiple channels to purchase is on the rise, whether it’s researching online and buying in store or vice versa. Retailers must react by valuing and optimizing all channels and purchase paths for evolved shoppers.

According to UPS, “Retailers not ready to step up their game will fall behind.” Where they really need to step up, Ganesh claims, is in the area of mobile customer experience. “In terms of time spent,” he notes, “mobile (i.e., smartphone and tablet) has reached a tipping point, eclipsing desktop and laptop usage, which has declined steadily from a peak in March 2015.” A couple of years ago, a survey by xAd concluded, “Mobile is now dominating the consumer purchase decision process.”[7] That statement has only grown more true in subsequent years. In addition to providing consumers with new channels through which to buy things and with new experiences, mobile technology is changing the way consumers are paying for products and services (especially in the developing world). That’s why having a solid mobile strategy is essential for every business. The MH&L staff elaborates:

“Cross-channel transactions, which refer to purchases using in-store and at least one online channel, now account for 38% of all purchases (up 2 points). Store-only searches and purchases declined by two points (to 20%). Retailers must create seamless experiences that resonate with how their customers want to shop. Providing detailed product information with good photography, professional and peer reviews, and online access to store inventory (58% find it important) are critical.”

Ganesh states it bluntly, “The effect [of mobile] on future revenue growth for large and small retailers alike is certain to be profound.” He continues:

“Taking a deeper dive into the reasons why shoppers choose to use smartphones can be valuable. In the study, of the 44 percent who purchased products using their handhelds, 31 percent do so because they ‘always have their smartphone with them’ and it’s more convenient. And 28 percent say they use it while in the store for research. They may turn to their smartphone to compare prices among retailers, search for a coupon or check product reviews on social media. Whether they use a smartphone to purchase or not, 72 percent of mobile device users said they use handhelds at least monthly to track delivery of an order. Some 69 percent use it monthly to compare prices among retailers and 64 percent used their smartphone at least monthly to research products prior to visiting a store.”

Even if the smartphone gives way to a new technology, that new technology is going to be mobile and the increased use of the digital path to purchase is only going to grow.

Footnotes
[1] Laura Stevens, “Survey Shows Rapid Growth in Online Shopping,” The Wall Street Journal, 8 June 2016.
[2] Bala Ganesh, “The Smartphone Is Changing Retailing for Good,” Longitudes, 8 June 2016.
[3] Staff, “Tech Savvy Consumers Purchase Most of their Stuff Online,” Material Handling & Logistics, 10 June 2016.
[4] UPS Pulse of the Online Shopper™, UPS, 2016.
[5] “UPS Pulse of the Online Shopper™ White Paper,” UPS, 2016.
[6] “Where Bricks-and-Mortar Meets Omni-Channel,” Supply Chain @ MIT, 12 May 2016.
[7] “xAd and Telmetrics Release 3rd Annual U.S. Mobile Path-to-Purchase Study Revealing Mobile Dominance in Consumers’ Purchase Decisions,” Digital Journal, 3 June 2014.