Kibo Consumer Trends Report 2018 - Kibo Commerce

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2018 CONSUMERTRENDS REPORTEngaging the Informed Consumer

CONTENTSThe Tide is Turning 3The Rise of Shopping Experiences4Researching and Buying 7Content that Completes the Purchase9The Changing Role of Personalization11Importance of Inventory Visibility and Fulfillment13The State of Buy Online Pickup In-Store14The New Role of Stores15Conclusion 17Kibo - 2018 Consumer Trends Report 2018 Kibo Software, Inc. 2

THE TIDE IS TURNINGProliferating touchpoints and the meteoric rise of online-only merchants haveforced the retail industry into a race to the bottom. Competition has been fierceto offer the lowest prices, the steepest discounts, and the fastest free shipping— often to the detriment of small and mid-sized merchants whose lower ordervolume can’t make up losses in margins.But the Kibo 2018 Consumer Trends Survey suggests that the tide is turning.In a world where sales and discounts are ubiquitous year-round, shoppers areincreasingly looking beyond price to distinguish what sets merchant apart.Among the offerings survey participants identified as crucial to today’s shoppingexperience: ich online content that incorporates peer reviews and early transparencyRinto inventory and fulfillment options ersonalized experiences that factor in shoppers’ purchasing historyPand other past interactions with the brand tore experiences that deliver optimal experiences for each shoppers’Sneeds, from concierge service to ultra-efficient curbside pickupNEXT UP: THE RISE OF SHOPPING EXPERIENCESKibo - 2018 Consumer Trends Report 2018 Kibo Software, Inc. 3

THE RISE OF SHOPPINGEXPERIENCESYEAR-OVER-YEAR CHANGES TOKEY CONSUMER PURCHASING FACTORSNew survey data gives hope to mid-sized retailers and branded manufacturers asthey compete for shoppers’ attention and loyalty. While price remains a primarypreoccupation, shoppers increasingly acknowledge the importance of stores asresources, and they give top marks to sellers whose online offerings serve as ahub of product and service content. 12.8%PricingWith Amazon and Walmart maintaining a strong presence in the retail world, noone is surprised that consumers are used to discounts and deals, and now expectthem year round, instead of simply on a holiday weekend like Black Friday. Thisstatus quo has gotten some retailers into trouble as they race to the bottom, andother retailers or manufacturers feel they simply can’t compete. But the tide ischanging. 6%Speed of FulfillmentThe importance of price as a purchasing factor has actually dropped 12.8% yearover year. A trend we have seen in the industry that our research supports, is theshopping experience is gaining importance. The importance of the consumer’sonline shopping experience has actually doubled year over year. This is whereretailers and branded manufacturers can really shine. As they are given theopportunity to show consumers they understand their needs - welcoming thecustomer with personalized and dynamic content on the eCommerce site. 4%Online ShoppingExperience 4%Variety of FulfillmentOptionsKibo - 2018 Consumer Trends Report 2018 Kibo Software, Inc. 4

With price as a purchase factor decreasing, and the customer experience as apurchase factor increasing, merchants should not be threatened that 85% ofconsumers regularly price check against competitors. Consumers want to beinformed, and after they gather all of the information, only then will they maketheir decision. But a word of warning: consumers can easily see if prices forproducts are inconsistent across channels, and it is imperative that organizationsemploy technology and processes that allow for consistent pricing across online,in-store, social media, or call center.Retailers and brands selling online have another opportunity: the variety andspeed of fulfillment options rose in importance by 1.3x and 3x, respectively. Theobsession with free shipping is at a plateau, with just under half of shopperssaying they’ll add items to the cart to get it, and more shoppers saying they’rewilling to pay for it. This is another side effect of Amazon’s Prime Membership.People want their products quickly, but are not willing to pay more than what theyhave already bought into. Consumers are teaching us over and over again thatmultiple, easy to use fulfillment options are now table stakes.“CONSIDERING YOUR ONLINE BEHAVIOR, WHICH FACTOR IS THEMOST IMPORTANT WHEN CONSIDERING YOUR PURCHASE?”61%PRICEBRAND OF PRODUCT10%ONLINE SHOPPING EXPERIENCE8%SPEED OF DELIVERY8%RANGE OF DELIVERY OPTIONS7%BRAND OF WEBSITE/RETAILER6%Kibo - 2018 Consumer Trends Report 2018 Kibo Software, Inc. 5

This year’s research has shed some light on consumer shipping expectations,with 40% of consumers claiming that delivery that takes more than 2 days wouldprevent them from making a purchase, but at the same time 63% expect deliverywithin 3 days as standard.It seems that while consumers are on the path to purchase they are looking forquick fulfillment options, yet express a little more leeway once their trackingnumber is in the mail. Certainly one way to offer consumers quick fulfillmentoptions is to offer buy online pickup in-store even before the consumer gets tothe cart.40%Consumers claimingdelivery 2 days wouldprevent them frommaking a purchaseKibo - 2018 Consumer Trends Report 2018 Kibo Software, Inc. 6

RESEARCHINGAND BUYINGFor both men and women, the first place they turn to research brands, products,or services they’re considering buying is a search engine at 69%, and thenAmazon.com at 61%. As shown in the chart below, visiting a retailer or brandedmanufacturer’s website isn’t at the top of the list, however, these sources ofinformation are still very important for a consumer’s research and buying journey.The good news is that consumers are still employing the use of the search engineas their first line of research, meaning smaller retailers or manufacturers havethe opportunity to really let their SEO shine. Investing in SEO services within aneCommerce platform or outside of it will greatly help merchants rank higher onsearch engine results. Additionally websites will rank higher if they have freshcontent, which means it is important to have a platform that enables easy ways topublish content, and the agility to easily promote and change promotions.“WHICH OF THE FOLLOWING SOURCES OF INFORMATIONDO YOU TYPICALLY USE TO RESEARCH BRANDS, PRODUCTS,OR SERVICES YOU’RE CONSIDERING BUYING?”69%SEARCH ENGINE61%AMAZON54%VISIT A RETAIL STORE52%WORD OF MOUTH51%VISIT A RETAILER'S WEBSITE40%CONSUMER REVIEW WEBSITE38%VISIT BRANDED MANUFACTURER'S WEBSITEVISIT TO BRANDED MANUFACTURER'S SOCIAL MEDIA PAGEKibo - 2018 Consumer Trends Report18% 2018 Kibo Software, Inc.7

Mass retailers like walmart.com, amazon.com, and bestbuy.com are showingstrongly in both the researching and buying process. The interesting thing isthat regarless of whether the consumer already knows the brand they want, or ifthey are still in the exploratory process, their buying preferences are basically thesame. For those consumers who already know the brand they want to purchase,65% prefer to go to a retailer’s website to make the purchase, and over 31% preferto purchase from the manufacturer’s website.When consumers are researching online without a specific brand name inmind, they still largely turn to major retailers first, at 66%, with 25% preferringto purchase from the branded manufacturer’s website once the desired brandhas been identified. Looking at these consumer preferences, it’s important toremember that both SEO and paid search initiatives can move the needle forbrands and retailers, and help offset this consumer behavior.“WHEN SHOPPING ONLINE FOR PRODUCTS, WHAT IS YOUR PREFERREDMETHOD OF PURCHASE FOR THE PRODUCT?”Online on aretailer’s websiteIn-store ata major retailer47%Online on the brandedmanufacturer’s website31%Online ona marketplace65%66%Online on aretailer’s website41%27%In-store ata major retailer25%Online on the brandedmanufacturer’s website26%Online ona marketplaceOtherIn-store at a brandedmanufacturer's store24%1%20%In-store at a brandedmanufacturer's storeNEXT UP: CONTENT THAT COMPLETES THE PURCHASEKibo - 2018 Consumer Trends Report 2018 Kibo Software, Inc. 8

CONTENT THATCOMPLETES THEPURCHASEThe content on a website needs to do everything from ranking high in searchengine results to converting customers. But what content actually influencesconsumers to complete a purchase?that consumers want even more information than what is simply in the productdescription, and they want to know what other users have discovered about theproduct once they have got it home. Make sure to provide space for consumers toreview products, and make it easy for them to do so.This year, 74% of consumers are somewhat,very, or extremely influenced to completea purchase due to interactive content thatallows them to engage and learn more abouta product. While 74% is a very high number,it should be noted that this is actually downfrom last year. Last year was a big year forinteractive content, as 92% report theywere influenced by it when completing apurchase. The decline could be due to therising importance of the peer review.Our research indicated that productreviews only continue to grow in popularity,suggesting that authentic recommendationsand ratings from shoppers are a key playerin completing a purchase online. Going evenfurther, 91% of shoppers have relied on thesereviews in the past 6 months. This indicatesKibo - 2018 Consumer Trends ReportInteractive content thatallows me to engage andlearn more about theproduct 2018 Kibo Software, Inc. 9

CONSUMER EXPECTATIONS OFBRANDED MANUFACTURERSContent is where branded manufacturers can really shine. Branded manufacturersare perceived as authoritative sources of content, with 61% of shoppers sayingthey expect to find product reviews and 52% saying they expect in-depth contenton their website; in fact, the availability of in-depth product information is aleading reason shoppers would seek out a manufacturer site.This is all the more reason to invest in a scalable and business-user friendlyeCommerce platform that easily allows publishing new content to engageshoppers. Whether consumers buy from your site or go elsewhere, theexperience is what will capture their attention and remain stamped in theirhead when making a purchase.WHAT ARE CONSUMERS EXPECTING WHEN SHOPPING ANDPURCHASING ONLINE FROM BRANDED MANUFACTURERS?Product ReviewsCustomer loyaltyrewardsQuantity of productsavailable for purchaseAbility to purchaseonline and pickupin-storeIn-depth productinformationBetter post-salecustomer supportOtherNEXT UP: THE CHANGING ROLE OF PERSONALIZATIONKibo - 2018 Consumer Trends Report 2018 Kibo Software, Inc. 10

THE CHANGING ROLEOF PERSONALIZATIONConsumers have changed the way they shop – utilizing multiple channels in aneffort to find the most seamless, friction-free buying experience. While mobile andsocial channels continue to gain popularity, personalization strategies continue tohave significant influence on a buyer and should not be ignored.Alternatively, recommendations on the product page play a key role, with 64% ofshoppers saying tailored cross-sells impact purchasing decisions – up 45% fromthe prior year. When combined with the data above, this implies shoppers knowwhat they want and are bypassing the homepage to get straight to their desiredproduct page.Over 63% of shoppers state personalized recommendations on the homepageimpact purchasing decisions. While significant, as compared to 2017, thistechnique’s influence over the buyer has decreased by over 25%. Similarly, justover half of shoppers report recommendations in the shopping cart influence apurchase – down over 43% from 2017.63%PersonalizedRecommendations on HomepageKibo - 2018 Consumer Trends Report50% Shopping CartRecommendations64% Recommendationson Product Page 2018 Kibo Software, Inc. 11

The rise in mobile shopping may be the leading cause for this behavior, aslimited real estate on smaller format screens force retailers to make mobileexperiences oriented around product discovery and search instead of genericbrowsing – landing a shopper on a product page. Similarly, mobile shoppingcarts tend to prioritize conversion over cross-selling recommendations. With78% of consumers reporting a simple, streamlined shopping cart influences thecompletion of a purchase, merchants are wise to focus on removing friction atthis point in the buying journey.Lastly, promotions that take into account shoppers’ loyalty status areincreasingly important, with 86% saying loyalty discounts and offers are apurchase consideration – up from 55% last year. Furthermore, 41% say loyaltyrewards are expected from branded manufacturers – an expectation that haslong been around for retailers. These are all signs that personalized promotionsdrive return purchases.LOYALTY DISCOUNTS AND OFFERSIMPACT ON PURCHASING2017201755%2018201886%CONSUMERS EXPECTING LOYALTY REWARDSFROM BRANDED MANUFACTURERSAs merchants look to optimize their personalization strategy, high importanceitems for consumers should be top of mind. Robust search and productdiscovery, engaging content on product pages, and a high-quality loyalty orrewards program should be priority areas of investment. Personalization hasthe power to convert the casual browser into a buyer and transform a buyerinto a loyal brand advocate.41%NEXT UP: IMPORTANCE OF INVENTORY VISIBILITY & FULFILLMENTKibo - 2018 Consumer Trends Report 2018 Kibo Software, Inc. 12

IMPORTANCE OFINVENTORY VISIBILITYAND FULFILLMENTConsumers will not tolerate any experience that doesn’t give clear visibility ofinventory available for a purchase. As a result, providing this data and a variety offulfillment options early in the decision process is important to conversion. Morethan three quarters of shoppers (76%) say having multiple fulfillment optionsinfluences purchasing, up from 64% the year before — an 18.75% increase.INVENTORY VISIBILITY INFLUENCES CONSUMER PURCHASES76%INFLUENCED BY MULTIPLE FULFILLMENT OPTIONS77%INFLUENCED BY SEEING QUANTITY OF ITEMS AVAILABLE78%LOOKED UP INVENTORY BEFORE STORE VISITSimilarly, overall inventory visibility is important, as 77% of shoppers say thatknowing the quantity of items available influences their purchase decisions — upfrom 64% the year prior. Additionally, 68% of consumers are less likely to orderfrom a site that doesn’t show in-stock store inventory availability, and 78% ofconsumers have looked up store inventory before a store visit. Shoppers want toknow if they will be able to get the quantity they want, or if it’s even worth gettingin the car to go down to the store.For branded manufacturers, this messaging is especially important, as nearly athird of shoppers (32%) say that a greater array of potential fulfillment options is areason to seek out manufacturer websites in the first place. 52% of consumers saythey expect a manufacturers site to have items in stock, and 45% say they seek outmanufacturer sites because they believe the manufacturer will have wider arrayof items in stock than a retailer. Additionally, over a third of consumers expect abetter warranty to be available to them if they purchase from a manufacturerssite.HESITATED TO ORDER WITHOUT STORE INVENTORY INFORMATION68%CONSUMERS HIGH EXPECTATIONS OF MANUFACTURERS52%45%Expect manufacturerwebsites to showquantity of productsavailable to purchaseBelieve manufacturerwebsites have a widerarray of items in stockNEXT UP: THE STATE OF BUY ONLINE PICKUP IN-STOREKibo - 2018 Consumer Trends Report 2018 Kibo Software, Inc. 13

THE STATE OF BUYONLINE PICKUP IN-STOREAttitudes toward BOPIS further highlight the centrality of stores and their growingrole as a solution for merchants to deliver flexible, free, and fast fulfillment. Actualusage of BOPIS (vs only as a purchase influencer) also remains strong; more than⅔ of shoppers have used it in past 6 months. While ⅔ is still a strong showing, itshould be noted that this is down by 15% from last year. This decline is possiblydue to a feeling of assurity the shopper has when they can research and checkinventory levels before heading to a store, as 86% of shoppers report that theyresearch products prior to store visit.The store is a key component in the future of retail. With 67% of consumers havingutilized BOPIS in the past 6 months, they are likely driven by four key shopperexpectations: free, flexible, tactile, and efficient.A note to manufacturers: When consumers are on a brand manufacturer website,39% expect to be able to order online and pickup at a nearby retailerFLEXIBILITY #2#1 FREE7%7%79%in 201778%in 201786%in 201885%in 2018The ability to pick up the product when they want itis second most popular reason to use BOPIS, at 85%(vs 78% last year) This flexibility is highlighted by the73% who stated they choose BOPIS because theydon’t need to be tied down at home waiting for apackage, up 2 percentage points from last year.As in prior years, avoiding shipping fees istop reason people use BOPIS, with 86% ofshoppers choosing it (vs 79% last year)EFFICIENCY#3 TACTILE5%9%68%in 201777%in 2018NEXT UP: THE NEW ROLE OF STORESKibo - 2018 Consumer Trends Report#4The “touch and try” aspect of stores rose tothird most important reason to choose BOPISthis year, with 77% of shoppers saying they use itbecause they want to see the product beforetaking it home, vs. 68% year prior.72%in 201776%in 2018A close fourth, 76% of consumers say they used BOPIS tosave time in the store, as they could proceed directly topick up counters. The percent of shoppers recognizing thisadvantage of BOPIS rose 5% compared with the priorsurvey, when the figure was 72% 2018 Kibo Software, Inc. 14

THE NEW ROLEOF STORESHeadlines all over the world are shouting about store closures, which sometranslate into the belief that stores are dead. Certainly we have seen proof to theopposite. Our research shows a 3.33x increase in the amount of consumers whowould chose to buy in store instead of online. Additionally, we are seeing more andmore retailers re-evaluating how consumers are interacting with their stores, andmaking decisions to adjust and optimize their stores based on consumer research.It is very clear that the consumer are using multiple touchpoints and expectingonline and offline channels to be connected. When in the store, the willingness toaccept store associates’ assistance with locating items that are out of stock onstore shelves and ordering them for home delivery has jumped by 18.75%, with57% of shoppers saying they’ve taken advantage of this service — up from 48%last year.Kibo - 2018 Consumer Trends Report 2018 Kibo Software, Inc. 15

The impact on purchases store associates can make it high, as 83% of shopperssay knowledgeable store associates influence their purchase decision. This iswhere retailers can really differentiate, winning the customer’s purchase now, andmaking a lasting impression with a unique shopping experience they cannot getonline.Consumers are utilizing the store associate, and 68% of shoppers expect storeassociates to access their order history in store; while this percentage is down 6%from the previous year, it still signals that the expectation for merchants to havebroken down barriers between touchpoints and equipped store associates withcustomer information, is there.Taking it a step further, the ability to complete transactions on the spot isincreasingly important. 50% of shoppers have used line busting in the past 6months, and event more the percentage of shoppers who’ve used it 7 times inthe past 6 months has doubled, suggesting it is becoming more available andbeing used more often.With multiple data security breaches in the last few years, it is becoming more andmore important for data to actually be secure, and for consumers to know theycan trust their personal information is safe.EMPOWERED STORE ASSOCIATES MAKE A DIFFERENCE83%68%Knowledgeable storeassociates influencepurchase decisionsConsumers expect storeassociates to access theircustomer history afterpurchasing onlineNEXT UP: CONCLUSIONKibo - 2018 Consumer Trends Report 2018 Kibo Software, Inc. 16

CONCLUSIONThe consumer’s expectation of retailers and manufacturers is constantlyevolving – but staying ahead of their expectations is entirely possible with theright omnichannel strategies. While price continues to play an important factor inpurchasing decisions, consumers are increasingly influenced by engaging digitalcontent, personalized recommendations, in-store associate knowledge, andflexible fulfillment options, such as free shipping and buy online, pick up in-store(BOPIS).Kibo - 2018 Consumer Trends ReportThe path forward is more predictable and understood than ever before. Merchantsare likely to thrive in an era dominated by Amazon if they make investments ineCommerce, order management, in-store engagement, and personalizationtechnology that enables seamless experiences between online and offline buyingtouchpoints. However, innovation for merchants is imperative; those looking tooutpace the industry must make the proper investments now to prevent a race tothe bottom in the future. 2018 Kibo Software, Inc. 17

DEMOGRAPHICSTOTAL RESPONDENTS: 3,000 U.S. CONSUMERSSurvey Produced and Administered by Watermelon ResearchKibo - 2018 Consumer Trends Report 2018 Kibo Software, Inc. 18

Kibo is a leading omnichannel commerce platform for retailers and branded manufacturerswith over 800 customers fulfilling orders in 75 countries. Clients achieve optimalperformance and loyalty through truly connected customer experiences acrosscustomer devices and retail touchpoints. Kibo’s unified approach includes a leadingeCommerce platform, big data 1:1 personalization, mobile POS, and distributed ordermanagement delivered via a modern, cloud-based infrastructure. The Kibo platformcan scale as clients grow their business while maintaining a low cost of ownership andfaster time to market than other solutions. Kibo enables you to reach higher peaks ofsales and customer loyalty. No matter the challenge, Kibo powers your success.To find out more visit kibocommerce.com or call Kibo at 877-350-3866Work SmarterStay AgileAchieve more with increased Quickly adapt to move at thecapability and less effortspeed of consumer demandsKibo - 2018 Consumer Trends ReportBe ConnectedDeliver seamlessexperiences with fullyaligned operations 2018 Kibo Software, Inc. 19

Kibo - 2018 Consumer Trends Report 2018 Kibo Software, Inc. 10 CONSUMER EXPECTATIONS OF BRANDED MANUFACTURERS Content is where branded manufacturers can really shine. Branded manufacturers are perceived as authoritative sources of content, with 61% of shoppers saying they expect to find pr

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