In a wide-ranging study examining the current e-commerce marketplace, comScore Networks looked at a diverse set of shoppers' behaviors and attitudes. Entitled "The Ascent of the Precision Shopping Machine," the new study tracked factors like the effect of broadband usage, shopping differences between new and experienced Net users, and trends that point to e-commerce's future.
The study was authored by comScore vice president Dan Hess, with assistance by comScore analyst Graham Mudd. Mudd spoke with E-commerce Guide about the study's data.
First, a big picture snapshot: online shopping continues to grow at a healthy clip. It reached a total of $65 billion last year, jumping 26 percent higher than the previous year. (See Figure 1)
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| Figure 1 |
Especially noteworthy in e-tailing's growth curve is the role of the fourth quarter. As online shopping spikes every holiday season, it pulls the rest of the year up with it. "In every year, it brings people online to buy, and so those people shop again the next quarter," Mudd notes. So the fourth quarter, "is important not only because it's as big as it is, but because it exposes the population to e-commerce more than any other."
Hope for Newer Merchants
For those newer e-tailers who wonder if shoppers will give them a chance, comScore data indicates the answer is 'yes.'
Newbie online shoppers tend to cling to the familiar. They are 81 percent more likely than experienced shoppers to shop only at sites they've shopped at in the past.
However, as the graphic suggests (See Figure 2), willingness to shop at new sites increases among users with more experience online. The comScore study concludes: "As experience and comfort grows, spending increases." Research data indicates that 75 percent of online shoppers are willing to try a new Internet merchant.
Contributing to the ability of consumers to find new online stores is the increased use of search and comparison shopping marketing, Mudd says. "Both of those marketplaces provide visibility to the unfamiliar site."
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| Figure 2 |
"Four or five years ago, it was somewhat difficult for a no-name to find their way onto the desktop of a consumer," Mudd says. Today, though, if a new merchant "is able to bid up a keyword high enough, or if they're able to compete effectively in price, which is the primary means of ranking on comparison shopping engines, they can find themselves displayed pretty prominently."
As a related point, the growth in online spending is fueled by more transactions per user, as opposed to more total users. (See Figure 3) "The experienced buyer will always spend more online, but it's not that they're buying more expensive products," Mudd says. "It's that they buy more often."
The Search Boom
Usage of search engines continues to grow at a remarkable clip. Between March 2004 and March 2005, the number of searches performed at search engines grew a whopping 45 percent.
Avid searchers are more likely to be buyers, according to comScore. (See Figure 4) Users who are "heavy searchers" a group that makes up just 16 percent of the online population, spend a hefty 35 percent of total online dollars. "Medium searchers," a group that comprises 23 percent of the Net population, spends a substantial 34 percent of total online dollars.
Moral of the story: if an e-commerce site wants to get in front of eager shoppers, it needs to be highly visible in search engines.
Comparison Engines The comScore data indicates that comparison shopping engines are growing ever more important to shoppers: One in three Internet users visits a comparison shopping site in a typical month.
The growth of these sites is most dramatic among consumer electronics shoppers. Back in 2002 Q1, 59 percent of electronics shoppers visited comparison shopping sites. By 2005 Q1, this figure had grown to a jaw-dropping 93 percent. For electronics merchants, these sites are hardly optional.
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| Figure 3 |
The sellers most likely to use these sites are "retailers who are selling what you could call 'commodity goods,'" or goods that are largely price-driven, Mudd says.
The most popular comparison shopping site is Shopping.com, with 22.6 million monthly visitors in April 2005, according to ComScore. In this same period, visitor totals were: Shopzilla, 14.0 million; Yahoo Shopping, 11.5 million; Nextag 8.7 million; Shop.com, 6.0 million.
The Broadband Revolution
Fueling the sharp increase in search engine usage is a dramatic increase in broadband usage. Based on comScore's research, fully 55 percent of Internet users now have broadband access at home. That figure jumps to 99 percent in the workplace.
Not surprisingly, broadband users are far more likely to shop online: while households with narrowband connection spent an average of $217 per quarter online, households with broadband spent $311, or 43 percent more.
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| Figure 4 |
Furthermore, "Broadband users spend 70 percent more time online, and view something like 120 percent more pages than a narrowband user," Mudd says. As the Internet population continues migrating to broadband, "we can expect them to increase their shopping."
Cutthroat Competition
"There's no doubt that the amount spent online is growing and will continue to grow, but what is growing even faster is the competition for every one of those dollars," Mudd says.
"Broadband, increased user experience, search, and comparison shopping — all of these make it easer and easier for a consumer to shop a number of retailers before making a purchase," he says.
The number of sites that shoppers visit before making a purchase is rising, according to comScore. In the apparel segment, using 2002 as the base year for comparison, total number of sites visited increased 2 percent in 2003, 11 percent in 2004, and 21 percent in 2005.
The consumer electronics segment saw a similar rise in sites visited prior to purchase; increasing by 8 percent in 2003, 22 percent in 2004, and 23 percent in 2005.
This increase in sites visited prior to purchase is particularly true for "categories where price is really important, and where people are most often shopping for the brand of the product, and don't care as much as the brand of the retailer," Mudd says. This is true in a number of categories, he says, including music and movies (not download sites, but e-tailers that sell CDs and DVDs), and the home and garden segment.
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