SMELLIE ON SME's: Online shoppers exposed

Jan. 21 (BusinessDesk) - This column talked last week about the growing importance of understanding and harnessing mobile technology for business success.

This week, a new report from global accounting firm PwC takes that thinking a bit further by exposing what it says are 10 commonly held myths about online shoppers and what makes them tick.

Here's what PwC's research says those myths are:

Myth 1: Social media will soon become an indispensable retail channel. Maybe one day, but yet. Just 10 percent of those surveyed said they'd been led to an online store by a social media channel. On the other hand, 60 percent said they used social media to "follow, discover, and give feedback" on brands and retailers;

Myth 2: Stores will become mainly showrooms in the future. Actually, there's some life in the good old human interface model of shopping. In fact, one in five shoppers has no interest in buying anything online, preferring instead to make in-store purchases;

Myth 3: The tablet will overtake the PC as the preferred online shopping device. Nope. The tablet is many things, but it's not yet as convenient to use for the fiddly business of online shopping as the common or garden personal computer. The same goes for smartphones. People may look up goods and services on tablets and phones, but they're not tending to make purchases with them;

Myth 4: As the world gets smaller, global consumers are getting more alike. You'd be forgiven for thinking this is true, given the capacity for anyone from Dubai to Dunedin to turn up in a Billabong t-shirt and jeans. However, PwC says there are marked differences between markets, and particularly between advanced and developing economies. For instance, Chinese shoppers like going to physical stores, citing it as a source of entertainment and pleasure. For some countries, price is everything, in others consumers want a lot of product detail, in others it may be free shipping that is prized;

Myth 5: China is the future model for online retail. Despite the findings in Myth 4, it is true that Chinese consumers have taken to online shopping faster than any other major market. However, their characteristics as consumers aren't automatically transferable as a model to every other market. In a sense, Myth 5 is the validation of Myth 4;

Myth 6: Domestic retailers will always enjoy a ‘home field’ advantage over global retailers. Well, actually, this does still seem to be true in many markets, but PwC's point is that this is changing fast, and that the trends differ from market to market. In France, for instance, not one global retailer is among the top 10 online retailers. But that's a rarity;

Myth 7: Global online pure players like Amazon will always enjoy a scale advantage over domestic online pure players. Perhaps the best local example of this being untrue is the New Zealand success of Trade Me, which dominates a market where in some other countries the American equivalent auction site, eBay, has cleaned up. Strong local execution and existing brand loyalty see a lot of local-only online retailers holding their own;

Myth 8: Retailers are inherently better positioned than brands, as they are closest to the consumer. The brand and the retail outlet are not inextricably linked in consumers' minds. Especially as consumers start shopping directly with manufacturers, the idea of the trusted retailer as intermediary will face big challenges;

Myth 9: Online retail is cannibalising sales in other channels. Not so. If anything, on a global basis, customers are buying more of their favourite brands through a wider range of channels, whether online or in person in a store;

Myth 10: Low price is the main driver of customer spend at their favourite retailers. That's too great a generalisation, and as with Myth 9, the key point is that people treat their favourite brands differently from any old brand. Innovation, service and quality matter more than price to shoppers returning to their favourite brands.



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