Frictionless consumer experience
Consumers buy online because they consider it to be cheaper, faster and more convenient. Our research demonstrates that 89% of consumers rate convenience and speed as the most important benefits of shopping online. Convenience also ranks second only to price in the factors that influence consumers’ choice of retailer.
The reasons why consumers shop online
How important are the potential benefits of buying products online, rather than in physical shops?
% among all online shoppers
Businesses wanting to launch D2C propositions need a clear understanding of consumers’ expectations before, during and after the point of purchase. There’s a temptation to build highly sophisticated eCommerce platforms with immense functionality – but that’s not always appropriate. For instance, companies selling household products may have greater success with a subscription model.
In all cases, the priority is delivering a frictionless experience. Companies can use a simple checklist to ensure that their D2C proposition meets consumers’ needs:
1. Do you have the product I want/need?
2. Is it competitively priced?
3. Can I buy it easily?
4. Can I choose a suitable delivery option?
5. Can I return it and get a refund if something isn’t right?
6. Do I trust you with my data?
7. Am I prepared to pay more for value-added services to improve any of the above?
Frictionless consumer experiences are a top priority for Amazon, which has pioneered many eCommerce developments over the past decade. In its 2020 annual shareholder letter2, Amazon revealed that:
- More than 40% (147 million) of US consumers have an Amazon Prime account
- 50% of purchases on Amazon are completed within 15 minutes, and
- 28% of transactions are completed within three minutes.
Consumers are willing to pay for convenience, but convenience goes beyond product range and flexible delivery. Ease of site navigation, targeted promotions, a hassle-free checkout (including saved payment and delivery details) and confidence in data integrity are all necessary in meeting consumers’ expectations. Get these right and the reward is a loyal consumer base that buys fast and frequently.
Speed does not necessarily mean same or next-day delivery
This is a common misconception in D2C. Many companies offer same or next-day delivery – but this comes at a cost to the business and/or to the consumer, and it’s not always the best way to meet customers’ needs. For instance, 42% of consumers count the need to pay for delivery as one of the top three disadvantages of shopping online. It’s a bigger bugbear than having to wait for the delivery, which was cited by 37% of consumers.
Key disadvantages of online shopping include the inability to physically check the product, delivery costs/times and the hassle of returns
% among all online shoppers
But even if consumers have to pay for delivery, they feel that they still get a good deal overall. 87% of them believe that shopping online is cheaper than conventional retail.
There are clear exceptions to this rule, such as food delivery, but the core principle is consistent. Understanding your consumers’ delivery expectations is critical to ensuring that cost and service are as closely aligned as possible.
Consumers are sensitive to product price, but happy to pay for convenience
Our research shows that price is the primary factor that influences consumers’ choice of retailer.
Price, convenience/speed and product quality are the key drivers of retailer choice for most categories
Top 5 factors influencing choice of retailer (last transaction in that category)
% among all online shoppers who have used relevant retailer in last month
However, this doesn’t mean that everything apart from the product needs to be free. Organisations that are winning in D2C are those that are exploiting the boundaries between the cost of the product and the ‘value’ of convenience, which typically significantly increases the total price to the consumer.
As an example, Deliveroo has cashed in on the convenience end of food retail, with customers paying service charges and delivery fees, for the convenience of delivery in under 60 minutes.
Personalisation is important but undervalued
When it comes to personalisation, companies face a conundrum. Consumers want online shopping to be personalised, but many don’t like organisations using their personal data. Only half of people who want personalised experiences are relaxed about retailers knowing more about them. This suggests a need for greater transparency in the data exchange between customers and organisations. From a D2C perspective, companies should clearly explain what data they need to drive a personalised experience, and how they collect it.
Interestingly, when we asked consumers about the benefits of shopping online, they put personalisation at the bottom of the list. They ranked convenience, price and self-service as more important. But we don’t think this tells the true story. Most consumers don’t realise the extent to which their online experiences are personalised. In other words, they only notice personalisation once it’s not there.
When personalisation is done well, it helps consumers quickly find and purchase the products and services they need. And we know that speed is something they do value. We believe that personalisation is key to any D2C strategy, but companies must ensure that consumers perceive it as valuable and unobtrusive.