The Complex Digital Path to Purchase

Stephen DeAngelis

December 17, 2015

Manufacturers and retailers need to reach consumers in order to motivate them to buy their products and services. To do that, they have to attract consumers through the best means available. More and more those means involve mobile technologies. “As consumers have transitioned from television and newspaper to connected devices,” writes Assaf Henkin (@ahenkin), “so also have the big consumer products goods brands that will spend an estimated $5 billion on digital advertising this year.”[1] Mobile technologies are beginning to dominate the consumer digital path to purchase. The generation most responsible for driving this change from the traditional marketing funnel approach to the digital path to purchase is Generation Y (so-called millennials). Alexa Cheater, a social media and public relations professional at Kinaxis and a millennial, asks, “What kind of sway does this technology-loving, values-driven, need-to-know right now, group have over your supply chain?”[2] Her short answer would be, “A lot.” She elaborates:

“We want what we want when we want it. The speed of your supply chain in delivering goods to the end consumer is about to become critical. Same day delivery is becoming the norm. Why? Because millennials demanded it. But the pressure we’re putting on supply chains doesn’t stop there. Mass production is no longer good enough. Leading consumer behaviouralist Ken Hughes points out we’re also demanding boutique, artisan goods and services, personalized in their nature and delivery. And did I mention how much we love shopping local? Are you sourcing your materials from within my country? What about from within my community? That’s going to make a difference. Right alongside the fact that we’re all about local goods is our desire to see companies we support give back — to communities, workers and the environment. … I’d love to tell you that you have time to make changes to your supply chain. That you can take years to work on sustainability, sourcing local suppliers, and developing an environmentally-friendly process. But the reality is that one of the most defining traits of my generation is our expectation that everything we want is available at the swipe of a finger. Growing up in the age of the Internet of Things means we’re used to things being available at hyper speed.”

Clearly, supply chains are going to be changing (and rapidly) in the years ahead; but, no change is more evident (or has come more quickly) than the digital path to purchase. The folks at Pymnts.com note, “The path to purchase has undergone a radical change in recent years. The rise of social media and, now, connected mobile devices have reshaped how consumers discover, research and complete the purchase of products, both online and in store. To stay competitive, retailers must not only understand these shifting patterns in the path to purchase but be able to innovate within them.”[3] They go on to note, however, that the digital path to purchase is complex. Not only are there numerous consumer touchpoints on the digital path but there are generational differences in the paths consumers take as well. They explain:

“It’s no secret that different generations have different comfort levels associated with usage of technology. Nowhere is this more evident than in retail and eCommerce. A recent SSI study articulates the subtle differences between how consumers of different generations use technology — or don’t — on their buying journey. The report breaks the respondent pool — which consisted of 6,173 people in six countries (the United States, the United Kingdom, Australia, France, Germany and Japan) interviewed online in Sept. 2015 — into three distinct ‘digital generations:’ Digital Immigrants (Baby Boomers), those who had to learn to be digital as adults; Digital Pioneers (Gen X), those who grew up learning each new technology tool as it came onto the market; and Digital Natives (millennials), those who have never known anything but a digital world. The differences in how these generations use, interact with and think of technology was stark. For example, 80 percent of Baby Boomers said they use online tools to keep in touch with friends and family, which speaks to the mass adoption of prolific social media tools like Facebook. However, digging deeper, the study shows that only 4 percent of Boomers say they only meet new people online, while 21 percent of millennials say this is true for them. When it comes to the path to purchase, millennials again come out as the heaviest mobile users across all four stages of the path to purchase, which, for the sake of the study, were defined as: information gathering, brand shortlisting, the purchase itself and then post-purchase rationalizing. Seventy-two percent of millennials say they use their mobile device during the information gathering stage, compared to 57 percent of Gen Xers and 32 percent of Boomers. The numbers stay relatively consistent across the generations as they move through the funnel, ending at the purchasing stage — where the numbers shift slightly but follow the same general pattern, with 61 percent of millennials, 52 percent of Gen Xers and 31 percent of Boomers using mobile devices.”

It takes little imagination to see how complex the digital path to purchase can become. Fortunately, cognitive computing systems are emerging that are well-suited for dealing with the complexities of the modern supply chain. They can help with customer segmentation as well as assist with many supply chain optimization functions. Data is the fuel that keeps cognitive computing engines running. Mark van Rijmenam (@VanRijmenam), founder of Datafloq, observes, “The world around us is changing so rapidly, that even the hype about big data is already outdated. Big data is nothing new anymore and by now we all know that more data is coming our way, rapidly.”[4] He continues:

“But in big data itself is no value at all. We can all generate massive amounts of data after all. By itself, big data is not transformative. Not even big data analytics is driving the change, after all any company can hire analysts to provide insights into your data. Where the real value lies is in algorithms. Algorithms define action and dynamic algorithms are at the core of future businesses. Welcome to the Algorithmic Business.”

I believe the algorithmic business is going to be driven by cognitive computers. The topic at hand, however, is the complexity involved in the digital path to purchase. And even though cognitive computing can help on the supply chain side of that path, the most powerful technology affecting the consumer side is mobile technology. Pete Cape (@pete_ssi), an executive with SSI, the company that published the study discussed earlier, notes, “If we consider the path to purchase as having four distinct stages — information gathering, brand shortlisting, the purchase itself and then post-purchase rationalising — results from the Digital Citizen Study show that mobile devices impact every stage.”[5] The staff at eMarketer recognizes the importance of mobile technologies in today’s commercial world, but, interestingly, uses some old school imagery in describing that importance. “Smartphones,” they write, “have become an integral part of the shopping process for US mothers, who rely on the device throughout the purchase funnel.”[6] But if you think that a good digital strategy is one that favors marketing to women, you’d be wrong. “While women are typically the top targets for marketers,” reports Jiaxi Lu (), “men drive nearly as much e-commerce spending in the United States. Women control about 80 percent to 85 percent of household spending, but they account for a much lower proportion of online spending.”[7] At least that is the conclusion of a Business Insider Intelligence report. “The BI Intelligence report,” Lu writes, “analyzed data and studies conducted by organizations including comScore, SeeWhy, Extrabux and Greenfiled, and found consistent results indicating men’s preference in mobile and online shopping, said Marcelo Ballvé, editorial director of BI Intelligence.” The bottom line is that the more we learn about the digital path to purchase the more complex it becomes.

 

Footnotes
[1] Assaf Henkin, “Cross-Channel Engagement: The Next Big Thing In CPG,” Cross-Channel, 14 September 2015.
[2] Alexa Cheater, “The Millennial Mentality: Is Your Supply Chain Ready for the Shift?eMarketer, 31 July 2015.
[3] “Different Generations, Different Paths To Purchase,” Pymnts.com, 20 November 2015.
[4] Mark van Rijmenam, “7 Reasons why the Algorithmic Business will Change Society,” Datafloq, 16 November 2015.
[5] Pete Cape, “How digital devices are changing the path to purchase,” Research, 16 November 2015.
[6] “US Mothers Depend on Smartphones Throughout Shopping Process,” eMarketer, 4 November 2015.
[7] Jiaxi Lu, “Research shows men are more likely to shop on mobile than women,” The Washington Post, 6 August 2014.