Transactis Home Shopping Index reveals strength of online shopping

The unparalleled growth of online shopping over much of the last decade appears to be starting to level off, as the internet has matured as a purchasing channel and emerged the centrepiece of an established multi-channel retail mix, the five-year Transactis Home Shopping Index shows. But initial figures for 2011 indicate there might be a slight bounce-back for online purchasing growth. The index, which covers the five years between 2006 and 2010, showed that online shopping growth slowed to 8% in 2010, down considerably from its 20% rise in 2009, 35% increase in 2008, and 58% upsurge in 2007, according to the index, which is based on the actual transactions of 39 million customers across 205 home shopping brands partnered with customer insight and database marketing specialist Transactis. Top-line figures for the first two quarters of 2011 show that, in the first half of the year, online purchasing growth rebounded slightly to 14% – still well below the rate for previous peak growth years recorded by the study.

Online spend soared by 173% over the five years (2006 to 2010) covered by the index, which encompasses purchases of fashion items, household goods, children’s merchandise, gadgets, home furnishings and other products through catalogues and websites. The percentage of home shopping purchases made via the web increased from 21% in 2006 (the base year of the index) to 51% in 2010. This tremendous growth in web purchasing came during a five-year period in which overall spend across all home shopping channels climbed by only 14%, and actually fell in 2010 (down 0.9% year-on-year) and 2009 (down 2.5%) – indicating a decline in catalogue orders as internet purchases were skyrocketing.

The biggest growth in internet shopping over the five-year period covered by the index – for which Transactis compiled complete online and mail order transactional data from its retail partners, not just representative figures – came from consumers aged 18 to 24, who spent 1076% more online in 2010 than in 2006, followed by 25 to 34-year-olds, whose web spending escalated by 314%. During that time, total combined catalogue and online spend by consumers aged 45 years and older fell while overall spend for younger, web-savvy consumers increased hugely, with those under 35 showing the most sustained growth – indicating a shift not just in channel preference but in the demographics of home shopping.

The index’s age demographic breakdown also indicates that there is less scope for future growth in online purchasing as the vast majority of those fuelling the boom in internet shopping – the youngest consumers – are already web purchasers. The figures reveal that 83% of home shoppers under age 35 were internet shoppers in 2010, making 80% of their purchases via the web.

Despite the figures demonstrating the huge increase in internet purchasing and the growing value of the younger consumers gravitating towards shopping online, a supplementary study included with the Transactis Home Shopping Index report revealed that multi-channel customers are far more valuable than those who use a sole purchasing point – including those who are online-only. The supplementary research, which examined the purchasing of 250,000 multi-channel consumers versus those shopping through a single channel, showed that those using a mix of media put in roughly 50% more orders and spent nearly double what online-only or offline-only buyers did – and that even when consumers were migrated from 100% offline to 100% online, they were still spending considerable less than those who continued to use multiple channels

Michael Green, Director of Insight at Transactis, comments: “The figures from the index seem to confirm that, in total, home shopping has been hit by the economic uncertainty of the last couple of years while also undergoing a fundamental transition. But to say there has basically been a linear shift from mail order to web shopping is too simplistic. What we have seen is massive growth in home shopping by younger consumers, as those under 45 have vastly boosted their home shopping spend over the last five years and adopted the internet as their primary purchasing point. Meanwhile, those aged 45 and over are spending less overall on home shopping – the total spending among the over 75s contracting by nearly a third over the five-year period – but spending more on the web.”

“The customer journey has become a more subtle and complex process, led by the web. The range of influences and options consumers employ today – made ever more complicated by the opportunities opened to shoppers by smartphones, tablets and other portable devices – means that, for retailers, tracking and making sense of customer behaviour in the multi-channel landscape is no easy task. As the range of touch points grows, and economic unease lingers, it is perhaps more important than ever for retailers to pull together, analyse and use all customer data they have to hand in order to make sense of the behaviour of customers choosing to shop from home – and effectively target them with appropriate marketing communications and offers.”

Green concludes: “We’ve seen that, overall, consumers’ comfort level with home shopping has improved as purchasers have taken to digital technology, especially younger customers. But it’s more than just that: many retailers have also found that cross-channel print activity – catalogues, flyers, brochures – has helped establish their brands in the minds of consumers and prompted home shoppers to go online to make purchases. This sort of cross-pollination is one of the main reasons why, as the additional research shows, multi-channel consumers are bigger spenders.”

 

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