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Digital Shopping Statistics 2012
1. d i g i ta l
shoppING
W H AT YO U N E E D TO C O N S I D E R
OCTOBER 2012
2. Meet the
d i g i ta l
shopper
connected, savvy and actively
seeking choice, convenience
and value for their doll ar.
Success in the digital shopping environment requires a deep
understanding of shopper needs, how a product category gets shopped
and the ability to cost effectively deliver a product to the consumer.
The digital revolution has transformed industries like music, books and
travel almost entirely because e-commerce solutions delivered shopper
needs in ways that traditional channels couldn’t match. Gone are the days
where we had to buy an entire album because of a particular track. With
iTunes, it is so much easier and economical to customize a personal music
library and deliver it digitally. It is much more convenient to visit travel
sites like Expedia or Travelocity to research, compare and make purchases,
rather than visiting a travel agency. In publishing, Amazon’s endless book
selections, authentic reader reviews, personalized book recommendations
and e-book options are hard for brick-and-mortar bookstores to match.
Amazon’s edge in giving shoppers tailored and relevant choices as well as
highly competitive prices has forced traditional booksellers like Borders
to close, and has set Amazon on pace to own more than half of the books
business in the United States across all formats by the end of 2012.i
So are consumer packaged goods (CPG) next in line? Is technology a
friend or a foe to retailing in CPG? What does it take for CPG marketers
to be shopper centric in a digital world? This paper provides a thorough
assessment of the impact of digital on the CPG industry, and outlines key
principles for marketing success in a world where digital is a new normal.
While we acknowledge that both shopper understanding and economic
considerations dictate success in the digital world, this paper focuses
primarily on the former: the shopper, their category needs and the digital
touchpoints that influence their behavior.
2 DIGITAL SHOPPING | WHAT YOU NEED TO CONSIDER
4. shopper
N EEDS
Fundamental truths
about shopping
Digital technology is widely pervasive today and will only continue to grow
at a rapid pace into the future. Over 274 million Americans have access
to the Internet. ii As of March 2012, 117 million people had smartphones,iii
and approximately 80 percent of them were using smartphones for
shopping activities like finding stores, making lists, checking prices,
researching products, sharing content and purchasing.iv
Amidst these activities, people continue to want to satisfy three
fundamental needs when they shop: convenience, choice and value for
their money. Convenience is the ability to deliver a shopping solution
that requires less time and effort. Choice is simply more variety to cater
to a broader set of consumer needs. Price-value is the level of quality
delivered at a certain price point. For nearly two centuries now, retail
formats have evolved to better address these needs.
RETAIL FORMATS EVOLVED AROUND FUNDAMENTAL SHOPPER NEEDS
natural/specialty
food stores hypermarkets/
mass merchandisers
CHOICE
warehouse
club stores
pharmacies
supermarkets PRICE - VALUE
dollar stores
CONVENIENCE
convenience stores
4 DIGITAL SHOPPING | WHAT YOU NEED TO CONSIDER
6. W HERE
PEOPLE
BUY
The role that category
pl ays in e-commerce
While e-commerce may not account for a dominant share of CPG sales
today, it is still the fastest growing retail channel. Less than four percent of
people in America buy CPG products online in any given monthii, but we
project e-commerce to grow at a 25 percent annual rate through 2015 and
more than double its current share of total CPG sales.
Online CPG sales will continue
to grow at a robust rate
US online CPG sales ($Billions)
2% of CPG sales 5% of CPG sales
te
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25
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%
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25
16
14
12
2010 2011 2012 2013 2014 2015
Source: Nielsen NetView Panel and Nielsen Analysis, 2012
6 DIGITAL SHOPPING | WHAT YOU NEED TO CONSIDER
8. Barriers and Enablers
to E-Commerce
Urgency Barrier
Some categories face a pronounced urgency barrier, the seeking CONVENIENCE
overwhelming shopper desire to buy and use at once, without waiting
to have the product delivered. For confections, the consumption urgent needs
need is often immediate. Convenience can be paramount and the immediate consumption
nearest store suffices for that shopper mission. low delay tolerance
Inspection Barrier
This barrier is especially relevant to perishable food such as fresh
seeking choice
produce and food requiring refrigeration. Concerns about spoilage
can discourage online purchasing because they negatively affect the check quality in store
product value proposition if items get discarded. The need to inspect difficult to return
certain products drives people to a store and they tend to buy sensory product choice
other products that they need while they are there. Therefore the (e.g. smell)
inspection barrier has a secondary effect on the entire basket.
Stock-Up Enabler
Products with predictable consumption rates and a long shelf life
such as diapers or dog food lend themselves to online purchasing
programs such as Amazon’s Subscribe and Save. Shoppers enrolled seeking CONVENIENCE
in such programs are automatically shipped specific products
on a periodic basis, and also provided with other incentives such steady use-up rate
as preferred customer discounts, coupons and new product willing to stock up
information. Meanwhile, retailers and manufacturers enjoy the
ancillary benefit of building brand loyalty via these automatic
replenishment systems.
Price Enabler
As for price factors, online retailers enjoy several cost advantages seeking price-value
over brick-and-mortar operations, particularly related to overhead.
Lower costs of doing business often convert directly into lower high price to weight ratio
consumer prices or steeper discounts for digital shoppers, which (low shipping costs)
allows marketers to retain price sensitive shoppers in a more
profitable way. Considerations affecting the digital investment product margin
decision for retailers include how online delivery charges and overall (room for discounting)
pricing align with offline retail alternatives.
8 DIGITAL SHOPPING | WHAT YOU NEED TO CONSIDER
10. inspection barrier
I love researching
new products online
but I don’t buy my
BODY LOTION online
because I like to
smell it in the store.
10 DIGITAL SHOPPING | WHAT YOU NEED TO CONSIDER
12. URGENCY BARRIER
I buy aspirin
at my local
drugstore
because when
I have a
headache
I need it
right away.
12 DIGITAL SHOPPING | WHAT YOU NEED TO CONSIDER
14. HO W
PEOPLE
SHOP
The importance of touchpoints
in digital shopper marketing
E-commerce in the CPG industry is in its nascent stages. However, digital
technology does present significant potential for timely and personalized
marketing. Shoppers do engage in other activities like checking prices and
researching products online. Moreover, rapid proliferation of technology
certainly provides marketers with a myriad of ways to interact with
shoppers.
Amidst this increasingly complicated marketing landscape, where should
you invest in digital? Are websites more effective than coupon sites?
Should you prioritize social media engagement over developing mobile
apps? These are indeed difficult questions to answer.
Nielsen’s recent research in Q2 2012 set out to answer these questions
in the CPG industry. Our results illuminated the role that various digital
touchpoints (websites, social media sites, blogs and coupon sites) play in
influencing shoppers’ purchase decisions for various CPG products. We
discovered that shoppers often default to only using certain touchpoints
depending on what they are purchasing. It is important for marketers to
understand what the relevant touchpoints are for their products, and the
specific shopping decisions they influence.
There are interesting differences across categories and people in terms
of whether emails, blogs or websites work best. Based upon our analysis,
several key principles emerged:
• People utilize a variety of media and sources of information, and
these vary by category and demographics.
• An integrated approach, leveraging traditional and digital
touchpoints, is most effective. Focusing solely on a social or mobile
strategy is not prudent.
• Strategies must recognize which digital touchpoints are effective.
Using them judiciously in concert with traditional marketing efforts is
key to success.
14 DIGITAL SHOPPING | WHAT YOU NEED TO CONSIDER
16. Shoppers prefer
different
touchpoints for
different categories
% shoppers Top 3 Digital
utilizing DIGITAL Touchpoints
for category shopping for High Digital Usage Categories
Carbonated Beverages
Source: Nielsen Digital Shopping Study, Q2 2012
16 DIGITAL SHOPPING | WHAT YOU NEED TO CONSIDER
18. When planning
a trip to
the store,
convenience,
choice and
price-value are
always top
of mind.
PATH TO PURCHASE
PLAN
PLACE
PURCHASE
18 DIGITAL SHOPPING | WHAT YOU NEED TO CONSIDER
20. Diapers vs. Baby Food
An examination of the path to purchase for diapers versus baby
food provides an interesting perspective into the different role
of digital technology for two seemingly related categories. At
first glance, more shoppers use digital media when shopping for
diapers (62%) compared to baby food (54%). This suggests that
diapers are more successful in digital shopper marketing.
However, a closer look reveals baby food utilizes multiple digital
touchpoints more effectively compared to diapers. It suggests
that marketers of diapers have room to further optimize their
digital strategy, either by trying to make certain touchpoints,
e.g. websites and social networks, work better for their products,
or by focusing on a smaller set of more influential touchpoints,
e.g. blogs. Similarly, baby food marketers that have evidently
enjoyed some success in digital shopper marketing might
have even more opportunity to influence certain decisions or
activities along the path to purchase, e.g. planning trips and
accessing deals.
MORE SHOPPERS USE DIGITAL WHEN SHOPPING FOR DIAPERS, BUT BABY
FOOD UTILIZES MULTIPLE DIGITAL TOUCHPOINTS MORE EFFECTIVELY
DIAPERS BABY FOOD
62% 54%
of
category
shoppers that
use digital
Source: Nielsen Digital Shopping Study, Q2 2012
20 DIGITAL SHOPPING | WHAT YOU NEED TO CONSIDER
22. Diet Aids vs. Skin Care
A similar analysis of the diet aid and skin care categories
suggests that a good barometer of success in digital shopper
marketing is the extent to which marketers influence key
decisions along the path to purchase, rather than penetration
alone.
Diet aids (53%) trump skin care (42%) in terms of the
percentage of overall shoppers that use digital touchpoints
while shopping for these products. However, skin care products
utilize digital touchpoints more effectively to engage shoppers.
Marketers of diet aids can potentially learn how to make
websites more influential by analyzing how skin care marketers
use websites to engage with shoppers. They could also improve
on helping shoppers to make better decisions earlier along the
path to purchase, e.g. discovering new products.
We live in a digital world and digital marketing can provide
significant opportunities to connect with shoppers on a personal
and relevant level. However, the increasingly complex multi-
platform retail environment requires mastery of online, mobile,
social, traditional and in-store media vehicles and the ability
to assemble the right tactical mix. Marketers tuned-in to the
digital advantage will bolster consumer engagement and involve
shoppers in a more vital, authentic way at every decision point
along the path to purchase. In the future as shoppers begin to
want continuity between the online and offline experience, they
will exercise their online expectations in offline environments.
THOUGH DIET AIDS HAS MORE DIGITALLY ENGAGED SHOPPERS, SOME
TOUCHPOINTS ARE NOT AS USEFUL TO SHOPPERS
DIet aids skin care
53% 42%
of
category
shoppers that
use digital
Source: Nielsen Digital Shopping Study, Q2 2012
22 DIGITAL SHOPPING | WHAT YOU NEED TO CONSIDER