The typical US consumer likes to shop online, regards free shipping as better than fast shipping and thinks cash is passé for just about everything other than buying a snack from a street vendor.
And while he still has reservations about using his phone at the cash register, he's open to innovation — especially drones and virtual reality shopping.
That's the word from Walker Sands second annual Future of Retail study, which examined trends and consumer behaviors in retail. The Chicago-based marketing and public relations agency said it analyzed more than 1,400 US consumers to uncover insights about omnichannel shopping and how retailers can use technology to increase sales in 2015 and beyond.
Give 'Em What They Want
If you're still thinking e-commerce will fade away, it's time to face reality. According to the study, nearly every respondent (99.8 percent) made at least one web purchase in the past year.
Not only that, but they are shopping more frequently: 28 percent of consumers shop online at least once per week, a 27 percent increase from a year ago. About 68 percent shop online at least monthly, up from 62 percent in 2013.
Amazon is still the go-to website for most purchases. Consumers trust Amazon more than traditional retailers such as Gap, Home Depot and Best Buy in 10 out of 11 product categories — a huge plus for the e-commerce Goliath.
And seeing is no longer believing, even for big ticket items. More than three-quarters (76 percent) of consumers are willing to spend more than $100 online on a product without seeing it first, up from 70 percent in 2013. What's more, nearly three times as many consumers (27 percent compared to 10 percent) would purchase a product costing more than $1,000 without seeing it first if they get free returns.
Want to get more customers? Offer free shipping and free returns. More than four in five rate free shipping as the top incentive to buy online. Free returns are the second biggest incentive, according to 65 percent of respondents. And one-day shipping falls close behind, at 62 percent.
While free and fast shipping options are a challenge for those in logistics, there's more to consider. Consumers are willing to pay more to have their orders delivered by drones.
Drones are rapidly evolving — from tools that governments use to spy on civilians or strike military targets to more effective ways to deliver products to consumers.
Just over a third of consumers expect drone delivery to become a reality in the next two years. And once they do, one-day shipping will likely fade away. Consumers could see their products in as little as one hour.
Only 23 percent of those surveyed are unwilling to pay for delivery via drone, making the option potential appealing for retailers to pursue.
What's more, almost all consumers (88 percent) are willing to have almost anything delivered by drone —including books, clothing, pet items, tools.
The exceptions are luxury items, which only 15 percent would consider having delivered by drone. Could the wait for delivery help build desire?
But consumers like virtual reality. More than one-third of consumers (35 percent) say they would shop more online if they were able to try products on virtually.
Take My Wallet
Mobile payments are slowly but surely becoming part of the retail scene. While only two out of five consumers surveyed currently use mobile payments, interest is growing.
Google Wallet is leading the mobile payment market share, with banking payment apps in second place and retailers' mobile payment apps in third. Apple Pay was a distant fourth, and Samsung Wallet finished dead last. These numbers suggest that mobile payments still have a long way to go to become the rule rather than the exception.
Those who have yet to embrace mobile payments cited security (57 percent) and privacy concerns (48 percent). They also noted that mobile payments are still not accepted in enough locations, adding that some retailers seem unprepared for the technology.
Another 29 percent are open to changing their form of payment, suggesting that mobile payments could eventually replace credit cards at the point of sale if retailers address security concerns.
As for cash ... you can fugetaboutit, except for a few locations. It's still the preferred form of payment for street vendors (87 percent), cabs and transportation (64 percent) and bars (52 percent).
So what should retailers do? The study offers retailers three primary suggestions:
- Offer the best possible e-commerce experience: Retailers that remove as much friction from the online shopping experience as possible will capture the most additional sales.
- Create flexible and secure payment options: Retailers who embrace mobile payments and convince consumers it’s a safe way to make a purchase might be able to offer the best of both worlds.
- Embrace emerging technologies: Consider how things like virtual reality and drones fit into your overall strategies, but recognize the risks of failure and hype.