2018 Global Ecommerce Study - Summary Report
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The 2018 global ecommerce study highlights a peak in US domestic ecommerce adoption with increased shopping frequency, emphasizing the significance of post-purchase experiences. Consumers value brand-driven experiences and fast, free shipping, with notable dissatisfaction during the holiday season impacting retailer reputations. Additionally, the report notes a shift toward marketplaces for e-commerce transactions and the rising importance of subscription services for brand discovery among consumers.
2018 Global Ecommerce Study - Summary Report
- 1. 2018 Global Ecommerce Study Summary Report
- 2. TABLE OF CONTENTS US domestic ecommerce // 3-28 Cross-Border ecommerce // 29-43 Pitney Bowes | 2018 2
- 3. Pitney Bowes | 2018 3 Consumer Surveys Retailer Surveys 13,022 consumers in Australia Canada China & Hong Kong France Germany India Japan Mexico South Korea United Kingdom United States 655 retailers in United States United Kingdom Australia Scope of Global Ecommerce Study
- 4. US DOMESTIC ECOMMERCE Opportunity & battleground: brand-driven post- purchase experiences Pitney Bowes | 2018 4
- 5. 46% 23% 36% 25% 47% 28% 18% 0% 10% 20% 30% 40% 50% Children in Household No Children in Household Men Women Millennials Gen X Boomers We’ve reached peak ecommerce adoption. Now US consumers are buying more frequently. Pitney Bowes | 2018 5 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2016 2018 Change, last 2 years Shop online daily/weekly +10pp Ever shop online +0pp % Shopping online daily/weekly, by segment Total population
- 6. Gender Generation US region Household income Children Education Where are consumers making purchases? Marketplaces are the market, no matter who’s shopping Pitney Bowes | 2018 6 60% 62% 59% 61% 62% 60% 62% 58% 60% 62% 61% 60% 59% 60% 61% 61% 60% 60% 61% 0% 20% 40% 60% 80% 100% Total Men Women Millennials GenX Boomers Northeast Midwest South West <$35k $35-50k $50-75k $75-100k >$100k ChildreninHH NochildreninHH HSgraduate Collegegraduate % of shopping with online marketplace % of shopping with online retailer/brand
- 7. How do consumers decide where to buy? We divided shopping behaviors into two “mindsets” and four “scenarios” Pitney Bowes | 2018 7 Brand conscious shopping I know what brand I want 61% of online purchases Brand agnostic shopping I don’t know what brand I want 39% of online purchases I know the brand and product I want I know the brand, but not the product I know the product, but not the brand I don’t know what I want to buy Ex: Acme Elite Plus in Charcoal Grey Ex: Acme footwear Ex: Grey sneakers Ex: Just browsing 46% 15% 23% 16% MINDSETSCENARIO
- 8. Where consumers buy based on mindset Brand conscious shopping offer retailers & brands at minimum a level playing field Pitney Bowes | 2018 8 Purchase from online retailers & brands Purchase from online marketplaces Know brand AND product Know brand NOT product Know product NOT brand Don’t know what to buy 26% 8% 7% 6% 20% 7% 15% 11% Brand conscious Brand agnostic
- 9. When consumers know what brand they’re shopping for… A clear opportunity arises for retailers & brands. Pitney Bowes | 2018 9 Purchase from online retailers & brands Purchase from online marketplaces 34% 13% 27% 26% Remarkable post-purchase experiences: The opportunity & battleground for retailers & brands to combine brand-driven experiences with post-purchase convenience Brand conscious Brand agnostic Value brand-driven experiences more than price. Value price and convenience above all else. Want to learn more about the brand before purchase. Value comparison shopping, price and convenience.
- 10. Shipping, delivery, & capitalizing on brand-driven post-purchase experiences Pitney Bowes | 2018 US DOMESTIC ECOMMERCE 10
- 11. 56% of US consumers feel let down during the holidays Due to issues in the post-purchase experience. A 20pp increase YoY. S10 (2016/2017)/S14 (2018): What is the top challenge you faced last year when purchasing items online during your most recent holiday season? (Base = Ever shop online domestically) Pitney Bowes | 2018 11 I didn’t face any challenges, 44% Shipment arrived late, 15% Shipping too expensive, 12% Wrong address/lost in the mail, 7% Shipping tracking inaccurate, 6% The wrong item shipped, 6% Return policies not clear, 4% Gift item poorly packaged, 4% Other, 2% Experienced an issue, 56%
- 12. It only takes one bad experience to lose a customer 36% of consumers shop somewhere else after one poor experience Retailers & brands are more impacted than marketplaces Pitney Bowes | 2018 12 Purchase from online retailers & brands Purchase from online marketplaces 25% never purchase from that site again 14% purchase less often from that site 18% never purchase from that site again 16% purchase less often from that site
- 13. The network effects of one poor experience 60% of millennials share their bad post-purchase experience with others Pitney Bowes | 2018 13 32% 30% 30% 36% 9% 12% 8% 6% 9% 11% 8% 7% 4% 7% 4% 2% 0% 10% 20% 30% 40% 50% 60% 70% Total Millennials Gen X Boomers Write a complaint Tell friends Leave negative review Post on social media
- 14. Use the post-purchase brand promise to attract customers Free shipping is the #1 criteria when consumers are deciding where to shop. Pitney Bowes | 2018 14 Below is a list of reasons why you may choose WHERE to shop online. Please select up to 5 REASONS that are MOST important to you. 80% 66% 49% 43% 38% 37% 32% 22% 22% 7% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Free shipping Fast shipping Free easy returns Better tracking of deliveries Confidence in accuracy of delivery date Better overall experience after purchase Fast refund on returns Post purchase price match guarantee Higher quality product packaging Free gift wrapping Men Women Millennials Gen X Boomers Total
- 15. Consumers still prefer free over fast If they had to chose. But that’s slowly changing with younger shoppers. Pitney Bowes | 2018 15 86% 79% 76% 81% 65% 80% 91% 66% 84% 79% 83% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2017 Total 2018 Total Men Women Millennials Gen X Boomers Children in HH No Children in HH Shop mostly on marketplaces Shop mostly with retailers/brands Free shipping with slower delivery Faster delivery at a cost
- 16. Pitney Bowes | 2018 16 Purchase from online retailers & brands Purchase from online marketplaces 14% choose not to purchase 43% purchase from a marketplace 91% of consumers leave When shipping isn’t free or fast enough. Nearly half (43%) go to marketplaces. 34% purchase from another retailer
- 17. What does “fast and free” mean, anyway? 2-day free shipping is now the prime option—while 3- and 4-day is acceptable 0% 20% 40% 60% 80% 100% Same Day 1 Day 2 Days 3-4 Days 5+ Days Please select whether you consider the following delivery timeframes fast, acceptable, or slow when shipping is free for your online purchase Pitney Bowes | 2018 Opportunity to lower the cost of “free” shipping while 3-4d is still largely acceptable Fast Acceptable Slow 17
- 18. The sweet spot in speed vs cost of free shipping Most popular free shipping options offered by high-growth vs low-growth retailers 0% 20% 40% 60% 80% Same Day 1 Day 2-3 Day 4-5 Day 6-7 Day >7 Day Which of the following delivery window options do you offer to your customers? MOST POPULAR Pitney Bowes | 2018 18
- 19. Shipping doesn’t always have to be free 66% of consumers expect to spend at least $25 to qualify for free shipping US millennials and parents are more reasonable about the cost of ”free” Pitney Bowes | 2018 To qualify for free shipping, what is the minimum you expect to spend on an order (i.e., minimum purchase)? 19 Total Millennials Gen X Boomers Children in HH No Children in HH 0% 20% 40% 60% 80% 100% No minimum
- 20. Returns & the post-purchase experience Pitney Bowes | 2018 20 US DOMESTIC ECOMMERCE
- 21. Return labelling/packaging Return pickup/drop off When you have returned unwanted online purchases, how do you prefer to return them? Consumers hate scheduling pickups for returns For online purchases. Only 9% call a carrier to arrange pickup. • Consumers prefer having returns labels included in the box • Postal returns are as popular as in-store returns Pitney Bowes | 2018 21 30% 26% 25% 23% 23% 19% 9% 0% 5% 10% 15% 20% 25% 30% 35% Use a shipping label included in the shipment Use original packaging for return Use a shipping label you have to print at home Drop off the package at a post mailbox or post office Return the item at the store Drop off the package at a carrier location Call a carrier and scheduled a pickup
- 22. When you return an online purchase, what is the acceptable time frame for a refund to be credited back to you? Consumers expect fast refunds Most, except Millennials, willing to wait up to 4 days Pitney Bowes | 2018 22 0% 10% 20% 30% 40% 50% ≤1 day 2 days 3-4 days ≥5 days Total Millennials Gen X Boomers
- 23. Executives believe returns challenges are greater Than those closest to operations (except on the topic of cycle time) Pitney Bowes | 2018 Tracking of returns Recovery of inventory Time it takes to bring returns back into inventory Time to credit 3rd party cost too high Sending exchange of products 0% 5% 10% 15% 20% 25% VP or above Below VP 23
- 24. Subscription box services: A customer acquisition opportunity Pitney Bowes | 2018 24 US DOMESTIC ECOMMERCE
- 25. A silver lining among brand agnostic shoppers? A unique opportunity for brand discovery among certain consumers Pitney Bowes | 2018 25 Purchase from online retailers & brands Purchase from online marketplaces Know product NOT brand Don’t know what to buy 8% 6% 15% 10% Brand conscious Brand agnostic
- 26. More consumers are turning to subscription box services When they don’t know what brand or product they want. 11% YoY growth. 51% of millennials now enrolled. Subscription growth is increasing expectations around quality of packaging. 22 In the past year, have you subscribed to subscription-box services where you get regular shipments of products sent to you? Below is a list of reasons why you may choose where to shop online. Please select up to 5 reasons that are MOST important to you. Pitney Bowes | 2018 26 27% 51% 22% 9% 31% 24% 47% 19% 0% 10% 20% 30% 40% 50% 60% Total Millennials Gen X Boomers Men Women Children in HH No Children in HH Enrolled in at least one subscription box service Packaging quality is a top reason when choosing where to shop
- 27. Summary Pitney Bowes | 2018 DOMESTIC ECOMMERCE 27
- 28. What high growth (>25% YoY) retailers focus on More than their low-growth (<10% YoY) counterparts Pitney Bowes | 2018 Cater to high-value* customers (57% vs 26%) *Average domestic order value >$300 Offering day-definite guaranteed delivery (65% vs 40%) Offering subscription services (65% vs 25%) Adding fulfillment locations (89% vs 60%) 28
- 29. Building the post-purchase moat Versus marketplace competition Pitney Bowes | 2018 Infuse your brand into every step of the purchase-to- purchase journey Meet the expectations marketplaces have set for consumers Fulfillment Invest in higher-quality, more personalized packaging Move inventory closer to customers Delivery Use delivery tracking as a platform for brand communications Offer 2-day free shipping (with minimum purchase) and sitewide 3-5 day guaranteed free shipping Returns Make returns integral to the experience, not an exception. Act as if a return will happen with every purchase. Offer at-home pickup (without scheduling), labels in the box, and refunds in 3 days or less Customer acquisition Build or participate in subscription box services 29
- 30. CROSS-BORDER ECOMMERCE Rising expectations & FX: Post-purchase optimizations cut through the headwinds Pitney Bowes | 2018 30
- 31. Cross-border consumers are FX-savvy As the USD strengthens, fewer non-US consumers buy cross-border —while more US consumers shop globally Pitney Bowes | 2018 0.60 0.70 0.80 0.90 1.00 1.10 1.20 1.30 1.40 2017 Q4 2018 Q4 Forecast GBP EUR CAN AUD Key currencies relative to USD (from FOREX) -6% +2% -9% -2% -2% -4% -2% -7% +1% -6% +3% 0% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Total U S C anada M exico France G erm any U K A ustralia C hina India Japan S.K orea 2017 2018 - Cross-border ecommerce adoption, YoY 31
- 32. And yet, because economies are improving… Consumers who do shop cross-border are generally shopping more often * Exceptions due to government regulation (AUS, IN) and FX (CA). Pitney Bowes | 2018 -4% -2% 0% +2% +4% +6% +8% Total United States Canada Mexico France Germany UK Australia China India Japan S. Korea 32
- 33. Top reasons for cross-border cart abandonment Shipping cost/speed are top concerns. Except in Germany, where fraud ranks high. Pitney Bowes | 2018 Total US Canada Mexico France Germany UK Australia China India Japan S. Korea High shipping cost Slow delivery Suspicious checkout DDU only option available Complex returns Payment method not avail. Currency not localized Duties/taxes inaccurate Unrecognized shipping carrier High returns cost No mobile site Country callouts § Canadians prefer DDP and DDU options (and are particularly sensitive to shipping cost) § Mexicans don’t see enough localized payment methods § Germans rate “suspicious/fraudulent checkout” as top concern § Australians are generally only concerned with shipping cost (and not speed) § Indians don’t see prices in local currency often enough § Koreans are most concerned with slow delivery 33
- 34. Optimization strategies: Logistics & fraud management Pitney Bowes | 2018 CROSS-BORDER ECOMMERCE 34
- 35. 1 2 3 4 5 6 7 8 9 10 Generating demand Marketplace integration Site/marketing localization Logistics/carrier management Payment processing Calculating shipping cost Calculating duties & taxes Fraud prevention & management Processing returns Customer care & delivery tracking RankNew in 2018: Fraud rises to top of retailer concerns Optimizations (logistics, payment, etc.) also rise as customer acquisition strategies fall in importance Pitney Bowes | 2018 Which of the following most concern you when entering a new market? Please rank up to three areas, with 1 being your greatest concern. 2018 2017 35
- 36. Cross-border orders rejected due to (suspected) fraud Significantly higher than domestic average of 2.6% Pitney Bowes | 2018 36% 37% 33% 38% 23% 24% 22% 22% 20% 18% 25% 20% 14% 14% 13% 18% 5% 4% 7% 1% 3% 3% 1% Total US Retailers UK Retailers AUS Retailers <5% 6%-10% 11%-15% 16%-20% 21%-25% >25% Source: PB Global Retailer Study, 2018; domestic fraud: Merchant Risk Council Global Fraud Survey, 2017 36
- 37. Logistics: high growth retailers use multiple cross-border carriers 83% of high-growth retailers use 3+ carriers versus 53% of low-growth Pitney Bowes | 2018 6% 11% 30% 18% 20% 12% 17% 31% 27% 10% 11% 3% 1 2 3 4 5-10 11-20 Number of Carriers Used Low Growth High Growth How many carrier services do you use for your cross-border shipping network (including global and in-country/last mile carriers)? 83% 52% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% High Growth Low Growth % of Retailers using 3+ Carriers 37
- 38. Spotlight on China Pitney Bowes | 2018 CROSS-BORDER ECOMMERCE 38
- 39. Marketplaces dominate cross-border Even (slightly) more than with domestic purchases (except China & Japan) Pitney Bowes | 2018 0% 10% 20% 30% 40% 50% 60% 70% 80% Total US Canada Mexico France Germany UK Australia China India Japan S. Korea Cross-border marketplace Domestic marketplace Over the last 12 months, approximately how much of your international online purchases have been made via online marketplaces? 39
- 40. Chinese cross-border .com shoppers looking for different products Than their marketplace shopping counterparts. But apparel & accessories tops the ranked list for both groups. Pitney Bowes | 2018 .com Shoppers Marketplace Shoppers Clothing, footwear & accessories Sporting goods Beauty & cosmetics Home décor & furnishings Nutritional supplements Electronics Books, music & media Toys Jewelry Small appliances Baby supplies Clothing, footwear & accessories Beauty & cosmetics Electronics Nutritional supplements Sporting goods Books, music & media Baby supplies Small appliances Home décor & furnishings Jewelry Toys 40
- 41. Chinese .com shoppers value unique products more than price or selection Top reasons .com and marketplace shoppers buy cross-border Pitney Bowes | 2018 .com Shoppers Marketplace Shoppers Unique products Better quality Direct relationship w/ brand Brand not available in-country Better prices than domestic Better selection Product authenticity Better quality Brand not available in-country Unique products Better prices than domestic Direct relationship w/ brand Better selection Product authenticity 41
- 42. Summary Pitney Bowes | 2018 CROSS-BORDER ECOMMERCE 42
- 43. What high growth (>25% YoY) cross-border retailers focus on More than their low-growth (<10% YoY) counterparts Pitney Bowes | 2018 Diversifying the carrier network (83% vs 52%) Leveraging vendors’ turnkey marketing programs (83% vs 50%) Outsourcing fraud management services (41% vs 30%) Processing payments locally* (80% vs 69%) Source: PB Global Retailer Study, 2018 * in the customer’s country 43
- 44. Growing despite global headwinds Pitney Bowes | 2018 Focus on optimizing the post-purchase experience Outsource scale-intensive functions to focus on USP Customer acquisition Cater to the needs of your most valuable customers in each market (localized offers & assortment curation) Leverage your vendor’s marketing capabilities and loyalty programs (if they exist!) Payments & Fraud Accept more regional payment methods Reduce ‘false-positive’ fraud-flagged orders and process payments locally in top countries using a payments specialist Logistics Offer more choice in shipping (express, deferred) and D&T options (DDU, DDP) at checkout Diversify your carrier base by working with a partner who specializes in global & local networks 44
- 45. ABOUT PITNEY BOWES Pitney Bowes (NYSE:PBI) is a global technology company providing commerce solutions that power billions of transactions. Clients around the world, including 90 percent of the Fortune 500, rely on the accuracy and precision delivered by Pitney Bowes solutions, analytics, and APIs in the areas of ecommerce fulfillment, shipping and returns; cross-border ecommerce; presort services; office mailing and shipping; location data; and software. For nearly 100 years Pitney Bowes has been innovating and delivering technologies that remove the complexity of getting commerce transactions precisely right. For additional information visit Pitney Bowes, the Craftsmen of Commerce, at www.pitneybowes.com/ecommerce © 2018 Pitney Bowes, Inc. Pitney Bowes | 2018 45