The truth about online consumers - KPMG

The truth about online consumers - KPMG
The truth
about online
consumers
2017 Global Online
Consumer Report




kpmg.com/onlineconsumers
The truth about online consumers - KPMG
Foreword
Enabled by technology, the continued year over year growth in online shopping has
been fueled by a new generation of consumers who want greater convenience,
value and options. For consumer businesses, this trend poses both challenges and
                                                                                                                                                        In this report
significant opportunities.                                                                                                                              How do companies target
Competition is no longer limited to local shops during business hours. Consumers                                                                        Millennials who no longer
today are shopping all the time and everywhere; and in a truly global online                                                                            trust traditional advertising?
marketplace, products can easily be purchased from retailers and manufacturers                                                                          How important are payment
located anywhere in the world—or from those with no physical retail locations at all.                                                                   options in India? Which
Consumer demand for richer experiences and greater convenience means that                                                                               countries are most likely to
retailers need to rethink their strategy, both online and in stores. Having the right                                                                   buy from foreign websites?
product mix is no longer sufficient to attract the new wave of consumers including                                                                      Where are consumers
Millennials, who are entirely focused on one transaction—theirs. Creating an online
                                                                                                                                                        willing to buy groceries
shopping experience enhanced by technology such as augmented and virtual reality
or 3D is becoming at least as important as providing convenient and personalized
                                                                                                                                                        online? In this report we
ordering, payment and delivery options.                                                                                                                 answer these and other
                                                                                                                                                        questions that can help
However, despite the rise of online shopping, ecommerce still makes up a relatively
small percentage of total retail spending. Retailers’ brick and mortar strategies also
                                                                                                                                                        inform an online strategy
need to evolve to continue to draw customers into their stores, and to compete                                                                          that is more targeted,
with the online retailers opening their own physical outlets. Increasingly, we are                                                                      effective and customer-
seeing innovative marketing strategies, as well as new technologies such as smart                                                                       centric.
shelves, robots, self-checkout, and interactive and virtual reality, being deployed in
stores as retailers strive to compete on all fronts.
Finding the ‘right’ strategy starts with one question: Given your brand promise,
where do you want to compete? Only once a company understands their goals,
customers and those customers’ needs can an appropriate strategy be designed.
And the key to a sustainable strategy is being able to understand and meet customer
needs both today and tomorrow, across geographies, and across generations.
In this report, we aim to raise and answer some questions about your company’s
approach to ecommerce. Our global research on online consumer behaviors,
preferences and attitudes can be leveraged by consumer companies seeking to
improve their approach towards winning and retaining customers online.
I hope you find this report interesting and insightful. I would like to thank the survey
respondents, company executives, and KPMG professionals who invested their
time and insights to make this study possible.
To learn more about this research, please visit kpmg.com/onlineconsumers or
contact a member of KPMG directly.
Sincerely,




Willy Kruh
Global Chair, Consumer Markets
KPMG International




 ©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
The truth about online consumers - KPMG
Contents
                                                                     What do consumers really want?.......................................................2
                                                                       The dilemma......................................................................................2
                                                                       What 18,430 consumers told us........................................................3
                                                                     Online purchase behavior....................................................................4
                                                                       Online shopping as a rising trend.......................................................4
                                                                       Product category trends....................................................................6
                                                                       Rise of international trade and e-tailers.............................................8
                                                                       Device preference trends.................................................................12
                                                                     The path to purchase journey............................................................14
                                                                       Stage 1 — Awareness: triggers and influencers..............................15
                                                                       Stage 2 — Consideration: product and company research..............16
                                                                       Stage 3 — Conversion: deciding where and when to buy...............20
                                                                       Stage 4 — Evaluation: experience and feedback.............................22
                                                                       Cycle duration..................................................................................24
                                                                     Understanding consumer attitudes and motivations.....................27
                                                                       What’s driving the shift to online?....................................................27
                                                                       Overcoming the hurdles to selling online........................................28
                                                                       Winning the online consumer..........................................................29
                                                                       Payment options need to be regionally tailored...............................30
                                                                       Building consumer trust...................................................................33
                                                                       Are experience and trust enough to earn consumer loyalty?...........34
                                                                     How KPMG can help..........................................................................35
                                                                     About KPMG.......................................................................................36
                                                                     Contact us.......................................................................................Back




                                                                                                                                                             2017 Global Online Consumer Report 1
©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
What do
                                                                          consumers
                                                                          really want?
                                                                          Advances in technology, logistics, payments and
                                                                          trust — coupled with increasing internet and mobile
                                                                          access and consumer demand for convenience —
                                                                          have created a US$1.9 trillion global online shopping
                                                                          arena, where millions of consumers no longer ‘go’
                                                                          shopping, but literally ‘are’ shopping — at every
                                                                          moment and everywhere.

                                                                          A recent report by KPMG International                                  The dilemma
                                                                          titled ‘Seeking customer centricity                                    The burning question is, how can
                                                                          through omni business models’1, looked                                 consumer and retail companies achieve
                                                                          at how consumer and retail businesses                                  this nirvana of consumer mindreading?
                                                                          are transforming to adapt to the shift                                 How can they identify and keep pace
                                                                          from traditional shop-centric business                                 with the behaviors and preferences of
                                                                          models to a new world where the                                        customers today and tomorrow? How
                                                                          customer is increasingly at the center                                 can they ensure their online strategy
                                                                          of a perpetual shopping experience. In                                 is acutely tailored to attract and win
                                                                          this ‘customer-centric’ reality, retailers                             the diverse and dynamic customer
                                                                          need to be exceptionally sensitive                                     segments they serve?
                                                                          and responsive to when and where
                                                                          their potential customers are making
                                                                          purchase decisions (both consciously
                                                                          and subconsciously) throughout their
                                                                          ‘always on’ shopping journey.




                                                                          1
                                                                              https://www.kpmg.com/cmsurvey

2 2017 Global Online Consumer Report
     ©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Baby Boomers                                                              Generation X                                                         Millennials
               Born 1946-1965                                                           Born 1966-1981                                                       Born 1982-2001

What 18,430 consumers told us                                         The ultimate purpose of this research                                  ways to filter and classify the data is
During 2016, KPMG conducted an                                        was to provide consumer goods and                                      too copious to summarize in a single
international study on consumer                                       retail companies with the global and                                   report, so in the following sections
behaviors and preferences related to                                  local insights into the specific behaviors                             we provide an overview of the global
online shopping. The research was                                     and preferences of the customers                                       results, highlighting the most significant
largely based on an online survey of                                  they want to target. By understanding                                  or interesting trends and comparisons
18,430 consumers living in more than                                  the uniqueness of different customer                                   among the major demographic groups
50 countries. The respondents were                                    segments, companies can tailor their                                   and product categories.
between the ages of 15 and 70, each                                   online strategies for maximum success.
                                                                                                                                             Executives interested in receiving more
having purchased at least one consumer                                The depth of the data collected for this                               detailed insights are invited to contact
product online in the past 12 months.                                 study makes it possible for companies                                  KPMG to have a member of our team
In addition to scrutinizing their online                              to analyze and forecast the behaviors                                  filter and analyze the full set of data
shopping behaviors, preferences, and                                  and preferences of their customers                                     according to your specific requirements
decision processes, the study also                                    by geography, generation (Millennials,                                 or target markets.
explored consumers’ plans for future                                  Generation X or Baby Boomers) and/
online purchases, factors affecting trust                             or product category. The number of
and loyalty towards certain brands, and
their sentiments and attitudes towards
the companies that they do, or don’t,
choose to buy from.




                                                                                                                                                              2017 Global Online Consumer Report 3
 ©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Online
                                                                          purchase
                                                                          behavior
    Survey respondents were                                               The digital age and rise of online                                     in Eastern Europe and Russia, Latin
    required to have purchased                                            shopping have driven an unprecedented                                  America, and the Middle East and Africa
                                                                          business model shift for consumer                                      are less frequent (Figure 1.0).
    at least one consumer
                                                                          product manufacturers and retailers.
    product online in the past                                            Many traditional consumer businesses                                   A Generation X are the most
    12 months.                                                            and new start-ups alike are moving                                     active online shoppers
                                                                          away from models that are shop-                                        Among the different age groups,
                                                                          centric or geographically-focused, to                                  Generation X consumers (born between
                                                                          ones that are customer-centric and                                     1966 and 1981) made more online
                                                                          virtually borderless. To help inform                                   purchases last year than any other age
                                                                          companies tackling this transformation,                                group, averaging nearly 19 transactions
                                                                          KPMG International’s recent survey of                                  per year. Interestingly, despite the
                                                                          18,430 consumers provides a unique,                                    common belief that the upswing in
                                                                          comprehensive index of consumer                                        online shopping is largely driven by
                                                                          online shopping behaviors and                                          the younger and more ’tech-savvy‘
                                                                          sentiments across countries, products                                  Millennials (born between 1982 and
                                                                          and generations.                                                       2001), Generation X consumers in fact
                                                                                                                                                 made 20 percent more purchases last
                                                                          Online shopping as a                                                   year than their younger counterparts.
                                                                          rising trend
                                                                          The frequency of online purchases                                      Stage of life and income levels are
                                                                          varies considerably by geography.                                      certainly primary factors driving
                                                                          Consumers in Asia, North America and                                   both online and offline shopping,
                                                                          Western Europe are most likely to shop                                 and Generation X consumers, many
                                                                          online, while per capita online purchases                              of which are more established in
                                                                                                                                                 their careers and building homes



                                                                         “There is a little Millennial in each of us. A number
                                                                          of Baby Boomers are starting to understand and
                                                                          appreciate the technology that is out there. They’re also
                                                                          trying to appreciate and experience the convenience of
                                                                          buying online.”
                                                                            — Mark Larson, Head of Consumer and Retail, KPMG in the US




4 2017 Global Online Consumer Report
     ©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Figure 1.0
Average number of online
transactions (per person per year)
                           19                                                           18.4                                                                  22.1



                                                                                                                                                11.9
                                                                                                                                                                                                                        18.6




                                                                                                                      Eastern Europe & Russia
                                                                                                                                                                                                                                                15.6
                                                                                                                                                                                                          15.1
                                                                       Western Europe
           North America




                                                                                                                                                                                                                                                                     Report, KPMG International, 2017
                                                                                                                                                                                                                                                                     Source: Global Online Consumer
                                                                                                                                                                                               16.1
                                                                                                                 11




                                                                                                                                                       Asia
                                                                                          Africa & Middle East




                                                9.2




                                                                                                                                                                     Australia & New Zealand
                                Latin America




                                                                                                                                                                                                          Baby     Generation X   Millennials
                                                                                                                                                                                                         Boomers




and families, are likely buying more                                  generation was more likely to buy                                                                                        Figure 1.1
consumer goods than the younger                                       healthcare products, wine, household                                                                                Average amount spent per
Millennials overall. As Millennials                                   goods and appliances, categories which                                                                              transaction (USD)
continue to enter the workforce and                                   tend to have higher price points.
adopt new lifestyle priorities, however,
their online shopping activity is                                     Men spend more online than
expected to surge and even far surpass                                women
levels currently exhibited by older                                   While men and women shopped with
generations.                                                          about equal frequencies, on average,
                                                                      the men spent more per transaction—                                                                                       $203
Don’t25underestimate                                                  US$220 vs. US$151 for women—on                                                                                                        $190
the Baby Boomers                                                      their most recent purchase. This can                                                                                                                $173

Compared     to the digital-first Millennial
                                                                                                                                                                                                                                  Report, KPMG International, 2017




                                                                      largely be attributed to the fact that
                                                                                                                                                                                                                                  Source: Global Online Consumer




        20
generation, it is reasonable to presume                               the male consumers were more
that Baby Boomers (born between                                       likely to buy items in higher priced
1946 and15
           1965) are less inclined to shop                            categories such as luxury goods (55
online. However, the Baby Boomers                                     percent of luxury transactions were
surveyed10
           in fact shopped online                                     by men) or electronics (72 percent of
just as frequently as the Millennials.                                electronics transactions were by men),
Furthermore, the Baby Boomers on                                      while women were more likely to buy
average5 spent more per transaction                                   in lower-priced categories such as                                                                                        Baby     Generation X   Millennials
                                                                                                                                                                                               Boomers
than either of the two other younger                                  cosmetics or food.
generation groups (Figure 1.1). This
           0




                                                                                                                                                                                                          2017 Global Online Consumer Report 5
 ©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Product category trends
                                                                                                                                                               Top online
                                                                             preference for streaming2 vs buying
    The online shopping landscape is                                         media continues to put downward
    gradually changing in terms of the                                       pressure on online sales of books and


                                                                                                                                                               products by
    types of products being bought online.                                   music, since even as Millennials get
    Generally, consumers’ planned online                                     older this is one area where buying
    purchases indicated a year over year                                     habits are unlikely to change.
    increase for most product categories
    (Figure 1.2). These results signal a
    higher willingness to buy new product
                                                                             On the other hand, bigger items such
                                                                             as household goods and appliances,
                                                                             furniture, home décor and sporting
                                                                                                                                                               geography
    categories online, particularly those                                                                                                                      In most countries, media,
                                                                             goods show some of the highest
    more traditionally sold in shops. For                                                                                                                      electronics, and apparel are
                                                                             growth potential. According to
    example, greater options for shipping                                                                                                                      among the 5 products most
                                                                             respondents’ planned online purchases
    and delivery have made it easier and                                                                                                                       often purchased online.
                                                                             for the coming year, online sales of
    more common to buy bulkier products                                      household goods and appliances are
    online—including furniture, appliances                                   expected to increase by 3.5 percentage
    and even vehicles. Meanwhile, although                                   points, furniture and home décor by
    ‘easier to ship’ products such as books,                                 4.3 points and sporting goods and
    music, electronics, accessories and                                      equipment by 4.4 points. Telecom
    apparel remain the most popular online                                   products and fragrances are categories
    categories, relative growth in these                                     that are also expected to grow, by 4.5
    segments is expected to be minimal.                                      and 2.8 percentage points respectively,
    In fact, we see a possible downward                                      as are wine, liquor and art.
    trend for books and music, currently                                     In general, growth categories tend to
    the number one online category,                                          be those which do not need trial and/or
    as Millennials purchase these items                                      where consumers can have relatively                                                           Books and
    online less often than the older                                         more faith in product quality.                                                                  music
    generations. It will be worth watching
    this particular category over the
    next few years to see if Millennials’




    “Clearly, ecommerce has been growing globally                                                                                                                                                                       A
     across many ‘usual suspect’ categories like apparel,
     books, and music. But what we are now starting                                                                                                                        Electronics
     to see, and where we expect more growth, is from
     categories where showrooming often occurs, such as
     mobile phones and laptops, as well as furniture and
     decoration items. Even in the grocery retail market we
     see opportunities. Very few retailers get their online
     grocery model right, but when they do, it can be very
     successful. Winning companies in this segment have
     focused on Millennials and young professionals,
                                                                                                                                                                              Apparel
     where the focus on prepared fresh meals has been a
     growth driver.”
      — Willy Kruh, Global Chair, Consumer Markets,
    		 KPMG International



    2
        https://www.purposegeneration.com/buzz/article/streaming-the-future-millennials-and-media



6 2017 Global Online Consumer Report
        ©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
The following products were                                                                           Figure 1.2
      also among the top 5 in these                                                                         Actual vs planned online purchases:
      geographies:                                                                                          Last year vs next year                                                                 Growth in
                                                                                                                                                                                                   % points

                          Wine                                                                    Books/                                                                           53              0.5
                                                                                                   Music                                                                            54
                          Australia and
                                                                              Electronics/computers/                                                                        47                     (0.6)
                          Belgium                                                         peripherals                                                                       47
                                                                                               Apparel –                                                           40                              1.0
                                                                                                women                                                               41
                          Accessories                                                Household goods                                                         36                                    3.5
                                                                                       and appliances                                                          39
                          US, Indonesia and                                                Accessories                                                            40                               (1.0)
                          Turkey                                                                                                                                  39
                                                                                               Apparel –                                                  34                                       2.3
                                                                                                   men                                                     36
                          Telecom products                                                        Food/                                                  33                                        1.4
                                                                                               groceries                                                  34
                          and men’s                                                        Toys/games/                                         29                                                  1.7
                          footwear                                                         video games                                           31
                          India, Russia, and                                                 Cosmetics/                                          30                                                0.8
                                                                                               skin care                                          31
                          the UAE
                                                                                              Furniture/
                                                                                            home décor
                                                                                                                                             26                                                    4.3
                                                                                                                                                 31
                                                                                       Sporting goods/                                       26                                                    4.4
                          Cosmetics                                                         equipment                                           30
                          Asia-Pacific, Russia                                                   Shoes –
                                                                                                 women
                                                                                                                                              27                                                   2.0
                                                                                                                                                29
                          and CEE                                               Telecommunications/
                                                                                           phones
                                                                                                                                           23                                                      4.5
                                                                                                                                              27
                                                                                                 Shoes –
                                                                                                    men
                                                                                                                                            25                                                     2.2
                          Pharmacy and                                                                                                        27
                          healthcare                                                           Apparel –                                  22                                                      0.8
                                                                                                children                                   23
                          products
Apparel                                                                                           Bags/                                20                                                         1.5
                          Brazil and Greece                                               leather goods                                  21
                                                                                               Perfume/                               18                                                          2.8
                                                                                                cologne                                  21
                          Household                                                           Pharmacy/                                 20                                                        1.6
                                                                                              healthcare                                 21
                          goods                                                                     Wine                         15                                                               2.7
                          Africa and the                                                                                           17
                          Middle East                                                            Shoes –                        13                                                                1.3
                                                                                                 children                         15
                                                                                           Fine jewelry/                       12                                                                 0.7
                                                                                               watches                          13
                          Groceries                                                                                             14
                                                                                                   Baby                                                                                           (1.0)
                          UK and China                                                          products                       13
                                                                                                Eyewear                        12                                                                 0.8
                                                                                                                                                                                                             Report, KPMG International, 2017




                                                                                                                               12
                                                                                                                                                                                                             Source: Global Online Consumer




                          Sporting goods
                                                                                               Pet food
                                                                                           and supplies
                                                                                                                              11                                                                  1.0
                                                                                                                              12
                          Finland                                                                  Liquor                 9                                                                       1.5
                                                                                                                            11
                                                                                                     Beer                  10                                                                     0.8
                          Children’s                                                                                       10

                          clothing, toys
                                                                                                 Artwork            5                                                                             1.1
                                                                                                                     6
                          and games
                                                                                                                Percentage that purchased the               Percentage planning to purchase
                          France                                                                                product in the past 12 months               the product in the next 12 months



                                                                                                                                                                    2017 Global Online Consumer Report 7
       ©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Figure 1.3
    Expected category growth by
    generation: Percentage point difference
    between last year and next year                                                                                                                                   5.9


                                                                                                                        4.8 4.7



                                                                                                                                                                            3.6




                                                                                                                                                                                                                           Report, KPMG International, 2017
                                                                                                                                                                                                                           Source: Global Online Consumer
                                                                                  3.1 3.1
                                                                                                         2.8
                                                          2.5                                                     2.6                                          2.6
                                                                2.1                                                                                      2.2
                               1.9               2                                                                                                                                2
                                                                            1.8
          1.5                                                                                                                     1.5                                                                     1.6
                                                                                                   1.4
    1.1                                                                                                                                 1
                                            .9                                                                                                                                                                  .8
                                                                      .6                                                                                                                 .7
                          .5                                                                                                                        .4
                                                                                                                                             .3
                    –.7              –2.1                                                    –.7                                                                                              –.6 –2.2               –.3
   Artwork                Eyewear           Fine          Pharmacy          Perfume/               Bags/          Furniture/      Cosmetics/         Shoes —         Household                           Books/
                                            jewelry/     /healthcare        cologne                leather       home décor        skin care          women           goods and                           music
                                            watches                                                goods                                                             applicances       Acces-
                                                                                                                                                                                        sories




                                                                             Baby Boomers                      Generation X                 Millennials




    Generational trends —                                                    to buy a category such as household                                    among Millennials. As Millennials’
    a closer look                                                            goods (Figure 1.3) is different. In this                               interest in art, comfort with buying
    When looking at differences by age                                       case, fewer household goods purchases                                  art online, and disposable incomes all
    group to spot trends, further analysis is                                by younger age groups is more likely                                   grow, we see this as another category
    required to determine when an apparent                                   due to the ‘age effect’ or ‘cohort effect’3,                           showing solid potential.
    trend indicates sustainable future                                       where behaviors are tied to age or stage
                                                                             of life rather than to lasting attitudes.
                                                                                                                                                    Rise of international trade and
    behavior, versus when it is simply due to                                                                                                       e-tailers
    a difference in age or income.                                           In fact, as Millennials grow older, the
                                                                             potential for buying household goods                                   Cross-border shopping is on the rise
    For example, contrary to the earlier                                     online is probably quite strong.                                       globally, driving international retail trade.
    example suggesting that media sales                                                                                                             As part of this study we looked at the level
    may continue to decline even as                                          Artwork is a small category in terms                                   and nature of online purchases made
    Millennials mature, the interpretation of                                of the percentage of total consumers                                   outside consumers’ own countries.
    this generation’s similar lower tendency                                 buying it online, however this category’s
                                                                             online sales seem to be growing quickly


    “Much of the future growth in ecommerce will be millennial-driven. In 2 or 3 years,
     Millennials are forecasted to be the largest demographic in North America. As
     Millennials delay leaving their parents’ house and delay getting married, they spend their
     money on other things. Brands like Uber and Apple, and the craft beer industry have all
     to some degree been ignited by Millennials. Grocery spending, on the other hand, has
     been eclipsed by restaurant spend. Millennials like to share meals with friends—it’s all
     about shared experiences.”
         — Willy Kruh, Global Chair, Consumer Markets, KPMG International


    3
        https://en.onpage.org/wiki/Cohort_Analysis

8 2017 Global Online Consumer Report
        ©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Figure 1.4
Percentage of online purchases
imported from other regions                                                                                                                                            43




                                                                                                                                        50




                                                                                                                                             Eastern Europe & Russia
                                                                           44                                   15
                                                  14                                                                                                                               21




                                                                                               Western Europe
                                  North America




                                                                                                                                                                                                                    35




                                                                                                                                                                            Asia
                                                                                                                 Africa & Middle East




                                                                                                                                                                                          Australia & New Zealand




                                                                                                                                                                                                                         Report, KPMG International, 2017
                                                                                                                                                                                                                         Source: Global Online Consumer
                                                       Latin America




Figure 1.4 shows the percentage of online                                       In Australia and New Zealand, the                                                           online (50 percent of purchases). This
purchases that consumers made outside                                           percentage of online purchases                                                              is particularly true in the UAE, where
their own region. North American and                                            imported from outside this region                                                           58 percent of online purchases were
European consumers made the fewest                                              was 35 percent, with 25 percent of                                                          imported—with 80 percent coming from
international purchases,14 and 15                                               those imports from North America                                                            Asia, North America and Western Europe.
percent respectively of their total online                                      and Europe. The geographically more
                                                                                                                                                                            In many countries, the tendency to
purchases—not surprising given the                                              remote location of these countries is
                                                                                                                                                                            buy internationally is highest among
maturity of these markets, where the most                                       likely one of the key drivers.
                                                                                                                                                                            Millennials. This could indicate potential
popular products can already be sourced
                                                                                The bottom three regions in Figure 1.4                                                      growth for cross-border online shopping
domestically at competitive prices. 50
                                                                                are the markets most likely to make                                                         as consumers increasingly seek unique
Asian consumers’ imports averaged 21                                            international purchases online. In                                                          or specialized products from other
percent—although it varied significantly
                                   40
                                                                                Eastern Europe and Russia, 43 percent                                                       countries. In the US, for example,
by country. While Hong Kong, Singapore                                          of all online purchases were imported,                                                      15 percent of Millennials’ recent
and Vietnam had significant imports at                                          mainly from Asia (15 percent), Western                                                      purchases were imported, compared
31, 43 and 55 percent, respectively,
                                   30 of                                        Europe (13 percent) and North America                                                       to 9 percent for Generation X and just
their online purchases, other countries                                         (8 percent). In Latin America, 44 percent                                                   3 percent for Baby Boomers. It will be
such as Indonesia, Japan and India each                                         of online purchases were imported,                                                          interesting to see how the new US
                                   20
imported only 12 percent or less of their                                       with nearly 60 percent of those imports                                                     administration’s proposed focus on
online buys outside Asia. China, with 20                                        from North America. African and Middle                                                      domestic protectionism might affect
percent imports from outside Asia,10lay                                         Eastern consumers were the most likely                                                      the trend for younger US consumers to
somewhere in the middle.                                                        to import consumer products bought                                                          shop outside the country.

                                                                       0




                                                                                                                                                                                        2017 Global Online Consumer Report 9
 ©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Case study




    Nespresso
    Roger Staeheli, Country Manager, Hong Kong

                                                                          Nespresso’s omni-channel                                               Integrated channels and
    Nespresso SA was
                                                                          evolution                                                              customer relationships
    founded by Nestlé 30                                                  Roger Staeheli, Nespresso’s Country                                    The company is very clear on the role
    years ago, to introduce                                               Manager for Hong Kong, explains that                                   of each of its channels, he says. “Retail
                                                                          Nespresso operates autonomously                                        is very much about delivering the brand
    a revolutionary system                                                from Nestlé, due to its unique direct-                                 experience. Online is about Nespresso
    of coffee machines and                                                to-consumer (B2C) model that requires                                  ‘anytime, anywhere’. Trade is focused on
                                                                          the company to have their own sales                                    machine sales and is a channel through
    portioned encapsulated                                                channels. The company’s four B2C                                       which we can recruit new members. The
    coffee. Initially in 1986,                                            channels include: retail boutiques, an                                 Customer Relationship Center, which
                                                                          online boutique, coffee machine trade                                  used to be a transactional channel,
    the company focused                                                   points, and call centers called Customer                               today is about building relationships.”
                                                                          Relationship Centers, where more than
    on the corporate offices                                              1,000 coffee specialists offer support to
                                                                                                                                                 Typically, new customers that are initially
                                                                                                                                                 recruited through a Nespresso boutique,
    market, and a few years                                               Nespresso Club members.
                                                                                                                                                 then become online customers.
    later expanded to selling                                             Nespresso’s sales channel evolution                                    Subsequently, these customers are
                                                                          evolved in the opposite way than                                       regularly invited back into the boutique
    direct to consumers.                                                  that of many similar long-standing                                     or shop to try new coffee innovations
    Today, Nespresso’s                                                    retailers. After initially selling through                             to enable Nespresso to engage directly
                                                                          its Customer Relationship Centers,                                     with them. Since in most cases,
    450 retail boutiques                                                  Nespresso launched its Nespresso                                       customers are also members of the
                                                                          website in 1996, began to take orders
    can be found in 64                                                    online in 1998, and opened its first retail
                                                                                                                                                 Nespresso Club, the company is able
                                                                                                                                                 to gain a good understanding of their
    countries throughout                                                  boutique in 2000 in the city of Paris.                                 individual customers’ behaviors and
                                                                                                                                                 preferences, therefore enabling them to
    the world. Nespresso’s                                                According to Staeheli, this progression
                                                                                                                                                 tailor their marketing campaigns or offer
                                                                          from online to retail shops was born
    boutiques are an                                                      out of necessity, rather than choice.
                                                                                                                                                 customers personalized experiences.

    important branding and                                                “Thirty years ago, coffee that was sold                                Offline vs. online in Hong Kong
                                                                          at retailers was instant coffee. So we
    sales channel for the                                                 decided to retail our own products                                     Despite the fast growth of Nespresso’s
                                                                          ourselves. We first established the                                    online channel, Staeheli highlights the
    company, although the                                                 call centers then evolved into different                               two main challenges to ecommerce
    fastest-growing part of                                               channels from there.”                                                  in Hong Kong. “We want to offer our
                                                                                                                                                 online customers greater convenience,
    their business in some                                                Staeheli says the goal today is to offer                               but going out to the shops in Hong
                                                                          a consistent experience to customers                                   Kong is already very convenient, since
    countries such as Hong                                                across all channels, both offline and                                  most households are within five to ten
    Kong, is online.                                                      online. “It’s about consistency in the                                 minutes of a mall. So to better serve
                                                                          product, price and promotion.”                                         our online customers, we offer same-
                                                                                                                                                 day delivery during a certain period of
                                                                                                                                                 the day. The other challenge for Hong
                                                                                                                                                 Kong then becomes the high cost of
                                                                                                                                                 distribution.”




10 2017 Global Online Consumer Report
     ©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
“Overseas born Australians have been a contributing factor to ecommerce growth. In
 cities like Sydney, Melbourne and Brisbane with large percentages of overseas born
 nationals, consumers have always been comfortable buying goods online as it was
 often the only way to get the products they liked.”
  — Trent Duvall, Head of Consumer Markets, KPMG in Australia




E-tailers dominate the online                                              (69 percent), Italy (68 percent) and                                                                    who are less prone to shop around for
marketplace                                                                South Africa (65 percent). The share for                                                                price and who prefer to buy from familiar
The rising power of e-tailers such as                                      e-tailers in these countries is far above                                                               websites, made their most recent
Taobao, Alibaba or Amazon, to name                                         the global average of 50 percent.                                                                       purchase from an e-tailer, compared to
a few, is apparent around the world.                                                                                                                                               Millennials with e-tailer purchases at 48
                                                                           A trend of younger consumers being
Their dominance is particularly evident                                                                                                                                            percent. Conversely, Millennials were
                                                                           less likely than Baby Boomers to buy
in China and India—where over 80                                                                                                                                                   30 percent more likely than the Baby
                                                                           from e-tailers could indicate a future
percent of online purchases were                                                                                                                                                   Boomers to buy directly from a retail
                                                                           slowdown in this platform’s growth.
from e-tailers—as well as in Japan                                                                                                                                                 shop’s website (Figure 1.5).
                                                                           Fifty-four percent of Baby Boomers,


Figure 1.5
Where most recent purchase was made (%)



                                                                                     5
                            5                                                                                                                   12
                                                                                     11                                                                     5
                            8                                                                                                                   10          7
                                                                                                                                                                                                      6           7             6
                                                                                                                                                            18                                       13          10             10

                                                                                     34                                                         33
                                                                                                                      Eastern Europe & Russia




                                                                                                                                                                                                                                     Report, KPMG International, 2017
                                                                                                                                                                                                                                     Source: Global Online Consumer
                            42
                                                                                                                 5                                                                                   27
                                                                                                                                                                                                                 34             35
                                                                    Western Europe




                                                                                                                 11
                                                 10
            North America




                                                                                                                                                                                           10
                                                 16                                  51                                                         45
                            45                                                                                                                                                             11
                                                                                                                                                     Asia




                                                                                                                 28                                         70

                                                                                                                                                                                                     54          50             48
                                                                                          Africa & Middle East




                                                                                                                                                                                                   Baby   Generation X Millennials
                                                                                                                                                                                                  Boomers
                                                                                                                                                                 Australia & New Zealand




                                                 46                                                                                                                                        43         An online-only retailer
                                 Latin America




                                                                                                                                                                                                      Retailer’s website
                                                                                                                 56
                                                                                                                                                                                                      Manufacturer or brand’s website
                                                 29                                                                                                                                                   Other
                                                                                                                                                                                           36




                                                                                                                                                                                                2017 Global Online Consumer Report 11
 ©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Figure 1.6
    Preferred device for shopping online (%)




                                                                                                                                                                                                                                     Report, KPMG International, 2017
                                                                                                                                                                                                                                     Source: Global Online Consumer
                                                                                                                             Eastern Europe & Russia
                                                                                            59                                                                     48
                                    60                                                      5                                                                                                                                  54
                                                                                                                                                       71                                                           55
                                    5
                                                                           Western Europe




                                                                                            10                                                          5          19                                                8
                                    6                                                                                                                                                                    67                    11
                                                                                                                                                        6
                    North America




                                                                                                                                                                   8                                      4          9          6
                                                                                                                                                                                                         10
                                                                                            27                                                         18
                                    29




                                                                                                                                                            Asia
                                                                                                                                                                   25
                                                                                                                        63                                                                               20         28         29
                                                                                                 Africa & Middle East




                                                                                                                         6                                                                              Baby   Generation X Millennials
                                                                                                                        7                                                                              Boomers
                                                         59
                                                                                                                                                                                                  54




                                                                                                                                                                        Australia & New Zealand
                                                          6                                                                                                                                               Laptop or PC
                                                          6                                                                                                                                       5
                                                                                                                        24                                                                        8       Smartphone
                                         Latin America




                                                                                                                                                                                                          Tablet

                                                         29                                                                                                                                               No preference

                                                                                                                                                                                                  33




    Device preference trends                                             or laptops, while 17 percent said they                                                         evident in China, where 26 percent
    Despite the global proliferation of                                  preferred to use a mobile device and 27                                                        favored a mobile device. As expected,
    mobile smart phones and tablets,                                     percent had no preference (Figure 1.6).                                                        Millennials were the generation most
    the majority of consumers still prefer                                                                                                                              likely to use a smartphone for shopping
                                                                         Device preferences varied significantly
    traditional desktop PCs or laptops when                                                                                                                             (11 percent of recent purchases)
                                                                         by region, with Asian consumers being
    shopping online. More than half (57                                                                                                                                 although 54 percent of them still used
                                                                         more than twice as likely (19 percent) as
    percent) of online purchasers globally                                                                                                                              a laptop or desktop PC for their most
                                                                         the global average (8 percent) to shop
    said they prefer to use desktop PCs                                                                                                                                 recent online purchase.
                                                                         on a smart phone. This was particularly




    “One of the reasons that China is so mobile-centric is because third-party payment
     systems using mobile apps are widely accepted in China both online and in shops.
     Chinese consumers are unique in their high confidence in third-party payment systems.
     Another120  reason is the high penetration
                                          120    of smartphones—largely due to the number of
     local manufacturers and competitive prices. Lastly, a lot of people have leapfrogged to
     ecommerce
            100
                     because of the lack of
                                          100
                                              shops or brands available to them. The smartphone
     literally
             80
                brings shops to rural consumers
                                           80
                                                  for the first time.”
     — Jessie Qian, Head of Consumer Markets, KPMG in China
                   60                                                                            60



                   40                                                                            40



                   20                                                                            20

12 2017 Global Online Consumer Report
     ©2017 KPMG International
                  0           Cooperative (“KPMG International”). KPMG International
                                                                                  0 provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
“Companies should be channel agnostic, meaning it does not matter if they start with
                        online or offline, what matters is that all channels are interlinked to give consumers the
                        convenience they need. Online plays a major part in the customer journey or ROPO
                        (research online, purchase offline). The most successful multi-channel companies
                        established their online channels as early as the late nineties, went on to establish ‘click
                        and collect’, eradicated silos across the entire organization and established a channel
                        agnostic incentive program so retail staff do not consider online as a separate business.”
                                   — Paul Martin, UK Head of Retail, KPMG in the UK



                       Smart phones keep offline                                                        (79 percent), CEE (78 percent) and the                                 generation of respondents said they
                       shoppers connected                                                               US (77 percent), whiles many European                                  had checked their mobile devices while
                       While mobile may not be the most                                                 consumers are about 10 to 15 percent                                   in a shop.
                       preferred online sales channel, over two-                                        less likely than average to look up
                                                                                                                                                                               What were consumers looking up?
                       thirds of the consumers said they had                                            products online while out shopping.
                                                                                                                                                                               Comparing prices was the main reason
                       used a smartphone for product research                                           Millennials in all regions were more                                   for doing online research while out
                       while in a physical shop (Figure 1.7).                                           likely than their older counterparts to                                shopping, followed by looking up
                       This was particularly common in                                                  look up information on a smartphone                                    product information and checking online
                       Singapore (83 percent), Brazil                                                   while out shopping (77 percent).                                       reviews (Figure 1.8).
                                                                                                        However, even half of the oldest


                             Figure 1.7                                                                Figure 1.8
                       Percentage of consumers that have                                               Percentage of consumers that looked
                       used their smartphone to look up a                                              up the following information about a
                       product while in a shop                                                         product while in a shop




                                                                            77%                                     65%                                          61%                                         49%
                                                         70%

                                                                                                          Price comparison with                         Product information/                                 Online
                                                                                                              other retailers                              specifcations                                    reviews
                                      50%
Report, KPMG International, 2017




                                                                                                                                                                                                                                   Report, KPMG International, 2017
Source: Global Online Consumer




                                                                                                                                                                                                                                   Source: Global Online Consumer




                                                                                                                    35%                                          16%



                                                                                                              Product options                              Store inventory/
                                                                                                        (e.g. color, size, style, etc.)                      availability
                                     Baby           Generation X         Millennials
                                    Boomers




                                                                                                                                                                                              2017 Global Online Consumer Report 13
                                   ©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
The path to
                                                                          purchase
                                                                          journey
                                                                          The ‘path to purchase’ is a traditional                                consumers’ decisions during a typical
                                                                          shopping concept that has evolved                                      online transaction, a simplified cyclical
                                                                          significantly over the past decade due                                 path to purchase model was used for
                                                                          to the internet, digital innovation and                                this study (Figure 2.0). Respondents
                                                                          the subsequent rise of online shopping.                                were asked to describe their behavior
                                                                          Although the digital revolution hasn’t                                 during their most recent online
                                                                          altered the fact that consumers                                        transaction at each of four stages:
                                                                          still experience the same stages of
                                                                                                                                                 Awareness
                                                                          awareness, consideration, conversion
                                                                                                                                                 When they first became aware of or had
                                                                          and evaluation, the journey itself has
                                                                                                                                                 a desire for the product
                                                                          changed. Instead of a path to purchase
                                                                          that is traditionally linear, it has                                   Consideration
                                                                          become more of a cycle or even a web.                                  When they were researching the
                                                                          Consumers move through and back and                                    product online or offline
                                                                          forth between the stages, influenced
                                                                                                                                                 Conversion
                                                                          by a myriad of both offline and online
                                                                                                                                                 When they were deciding where and
                                                                          factors at every stage.
                                                                                                                                                 when to buy the product
                                                                          In order to investigate the drivers,
                                                                                                                                                 Evaluation
                                                                          motivators and inhibitors affecting
                                                                                                                                                 After they made the purchase


                                                                          “To create loyalty with Millennials, brands need to first cover
                                                                           the basics—that means top notch customer service and
                                                                           quick, individualized responses, through the channels they
                                                                           use such as social media and messaging. But beyond that,
                                                                           brands need the right content strategy. They need to engage
                                                                           Millennials with communications that are both entertaining
                                                                           and informative. Elements of gamification or exclusivity can
                                                                           work well. Some of the footwear brands that are popular
                                                                           with Millennials use limited editions to create product and
                                                                           brand buzz. Millennials will line up physically and digitally to
                                                                           get their hands on these exclusive products.”
                                                                             — Joel Benzimra, Global Advisory Lead for Consumer Markets,
                                                                               KPMG International

14 2017 Global Online Consumer Report
     ©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Figure 2.0
Simplified path to purchase
Stages of the online purchase journey
                                                                                         1.          Awareness:
                                                                                                     triggers and
                                                                                                     influencers




                           4.             Evaluation:
                                          experience
                                          and feedback                                                                                                  2.             Consideration:
                                                                                                                                                                       product and
                                                                                                                                                                       company research


30                        Online: 59%                                                                                         Offline: 52%
                                                                                                      22




                                                                                      3.
16.7
                                                                                                      Conversion:
                                                                                                              15
                                                                                                      where and
               15             15                                                                      when to buy                    13
                                                                                                                                                    12

                                                                                                                                                           9 are effective in creating
Stage 1 — Awareness:
                   10    10                                           Using a multi-channel strategy                                         offline channels        8
                                                                      to create awareness                                                    consumer awareness and demand,
triggers and influencers                                                  7
                                                         Retail websites or online shops were                                                especially when they are used together.
When comparing the impact of
                                                         the most common source of initial                            This is true for both corporate-controlled
online versus offline touchpoints in
                                                         product awareness, cited by nearly                           channels (shops, websites, advertising),
creating the first trigger moment, it is
                                                         a third of consumers, and online                             as well as third-party sources of
interesting     to observe that 52Inpercent                                   Awareness:
  In an online shop                   a social media postadvertisements
                                                            or blog         were  Incited  by 15
                                                                                     a physical
                                                                              triggers   and    shop                  information.     After
                                                                                                                           I saw a friend with websites,
                                                                                                                                                it          shops or
ofInconsumers      cited at least one   offline
     an advertisement              In an email promotion percent. At the same      time,with
                                                                                  Talking
                                                                               influencers physical
                                                                                                my friends            online advertising, orthe
                                                                                                                           in a print magazine     newspaper
                                                                                                                                                     most common
channel    as review
               a source of initial awareness,
                                   In an online article orshops
  In an online                                             magazinewere the second     most
                                                                                  Talking withpopular
                                                                                                my family                  I saw it on TV or in a movie
                                                                                                                      sources     of product awareness were
and 59 percent cited one or more online
                                                         source of awareness, cited by                                online reviews (cited by 15 percent),
channels (Figure 2.1).
                                                         22 percent of consumers.                                     talking with friends (15 percent), social
                                                                             Evaluation:                Consideration:
                                                                             experience
                                                                      Ecommerce is clearly far from being product and media (13 percent) or seeing a friend
                                                                                 and                       company with it (12 percent).
                                                                      an online-only affair. Both online and
                                                                                   feedback                                    research


                                                       Conversion:
Figure 2.1
                                                    deciding where and
Channels where consumers saw the product before purchasing
                                                       when to buy



Any online                                                                                  Any offline
channel: 59%                                                                                channel: 52%
30%
                                                                                             22%



                                                                                                          15%
                                                                                                                                                                               Report, KPMG International, 2017
                                                                                                                                                                               Source: Global Online Consumer




            15%         15%                                                                                           13%
                                                                                                                                  12%

                                    10%         10%                                                                                             9%
                                                                                                                                                            8%
                                                              7%




   Online shop                        Social media post or blog                                  Physical shop                      Saw a friend with it
   Online                             Email promotion                                            Talking to friends                 Print magazine or newspaper
   advertisement                      Online article or magazine                                 Talking to family                  On TV or in a movie
   Online review


                                                                                                                                                            2017 Global Online Consumer Report 15
 ©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Consumers’ increasing reliance on                                     by online sources such as social                                       Stage 2 — Consideration:
    peers or ambassadors means that                                       media or peer reviews—they are also
    customers are among the most                                          more likely to be influenced by offline                                product and company
    influential promotional conduits for                                  channels. Millennials were 25 percent                                  research
    companies. Both online and offline,                                   more likely than Baby Boomers to have
                                                                                                                                                 During the consideration stage, the
    the frequency of peer opinions as                                     seen their most recent purchase in a
                                                                                                                                                 importance of online channels continues
    top awareness influencers highlights                                  shop, nearly 50 percent more likely
                                                                                                                                                 to prevail, with the top two channels for
    the significance of creating brand                                    to have talked to a friend about it, and
                                                                                                                                                 research being online reviews (cited by
    ambassadors and delivering a positive                                 more than twice as likely to say they
                                                                                                                                                 55 percent of respondents) and company
    customer experience.                                                  saw a friend with it (Figure 2.2).
                                                                                                                                                 websites (47 percent) (Figure 2.3).
    Awareness triggers by                                                 Although Millennials are certainly digital
                                                                                                                                                 Offline channels are also a significant
    generation                                                            natives first, they are also at least as
                                                                                                                                                 source of information, with 26 percent
    Millennials are not only more likely than                             active and influenced as their parents
                                                                                                                                                 of consumers saying they visited a
    the older generations to be influenced                                are beyond the digital world.
                                                                                                                                                 physical shop during the research stage
                                                                                                                                                 and 23 percent saying they spoke to
    Figure 2.2                                                                                                                                   friends or family about the product.
    Offline channels where consumers saw the
    product before purchasing, by generation




                                                       24%
                                       22%                                                                             17%                                                              17%

                       18%
                                                                                                       13%
                                                                                       12%




                                                                                                                                                                                                    Report, KPMG International, 2017
                                                                                                                                                                                                    Source: Global Online Consumer
                                                                                                                                                                       11%

                                                                                                                                                        8%




                                  Physical shop                                             Talking with friends                                             Saw a friend with it

                                                                  Baby Boomers                        Generation X                      Millennials

    Figure 2.3
    Percentage of consumers using the following channels to
    research products they bought online
                                                                                                                                                                                                                            Report, KPMG International, 2017
                                                                                                                                                                                                                            Source: Global Online Consumer




                                                                                                                                     26%                                              23%

                                  55%                                                47%




     Online search for reviews and                                Visited the                                  Visited physical stores                           Spoke with my friends
          recommendations                                      company website                              to see, try or fit the product                         or family about it


16 2017 Global Online Consumer Report
     ©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Case study




Ryohin Keikaku (Muji)
Kenji Takeuchi — Executive Officer


                                                                      Targeting different segments
Muji, founded in the                                                  Muji’s target market is not based solely                               goes home and is able to measure and
                                                                      on demographics, but on market size                                    see if it will fit in their space. To allow
1980s, is a globally                                                  and respective consumer behaviors.                                     customers to then purchase the items
renowned Japanese                                                     “We target customers who are
                                                                      trend-conscious and are leading total
                                                                                                                                             online, we ensure that they can be
                                                                                                                                             easily ordered and quickly delivered.”
retail brand selling more                                             consumer spending in each region. For
                                                                      example, Generation X are the main                                     Communicating content instead
than 7,000 household                                                  target in Japan because they have a high                               of specific products
goods, apparel and food                                               interest in shopping, and also have the
                                                                                                                                             Muji does not advertise their specific
                                                                      disposable income.”
items. Their products                                                                                                                        products but instead relies on
                                                                      In China, on the other hand, “Millennials                              consumers seeking new trends, styles,
are sold both through                                                 are the main target because we regard                                  and information. According to Takeuchi-
their online store, and in                                            them as the most up-to-date on trends
                                                                      and they are highly engaged digitally”,
                                                                                                                                             san, “Our advertising style is focused
                                                                                                                                             on the communication of a concept.
over 700 shops around                                                 says Takeuchi-san. He also notes that,                                 We use our online asset ‘MUJI.net
                                                                      “In Japan, where the retail market                                     community’ and online loyalty program
the world—mainly in                                                   is very mature, there are not many                                     ‘MUJI passport’ to communicate
Japan, as well as in over                                             differences between generations in                                     concepts and provide information
                                                                      terms of online shopping. The only                                     that can be shared on Facebook or
26 other countries. As                                                difference Muji sees is that Millennials                               Instagram, to entice consumers to visit
an Executive Officer at                                               contribute to information diffusion,                                   our website or stores.”
                                                                      while Generation X consumers lead in
Ryohin Keikaku (RKJ),                                                 consumption.
                                                                                                                                             Muji uses its loyalty program to
                                                                                                                                             encourage customers to provide
Kenji Takeuchi is in charge                                           Muji is a true omni-channel                                            feedback and promote the company’s
                                                                                                                                             products online. Members receive
of Muji’s corporate                                                   retailer
                                                                                                                                             ‘MUJI Miles’ not only for making
planning, finance and IT.                                             Muji actively pursues synergies                                        purchases, but also for checking into
                                                                      between its offline and online channels,                               stores, posting product comments or
                                                                      and they have formal key performance                                   participating in other promotions.
                                                                      indicators (KPIs) in place that ensure
Japan business leads in                                               these synergies are maximized.                                         Online community is a point of
ecommerce                                                             According to Takeuchi-san, “The number                                 differentiation
                                                                      of customers that visit our shops is a
Ecommerce is a key part of Muji’s                                                                                                            The MUJI.net community is considered
                                                                      KPI for our ecommerce division. One of
business, although there is still                                                                                                            to be an area of differentiation for
                                                                      the objectives of that group is to direct
room for growth in their online sales,                                                                                                       Muji. The brand has developed a loyal
                                                                      consumers shopping online to come
especially outside of Japan. According                                                                                                       member base through this community,
                                                                      into our physical locations.”
to Takeuchi-san, “In Japan, Muji’s online                                                                                                    with which they regularly communicate
transactions account for around 10                                    In addition to online to offline, Takeuchi-                            regarding trends and products. Takeuchi-
percent of total sales, whereas in other                              san discusses how their customers                                      san explains, “We provide interactive
countries it is lower; in Germany and                                 also go from shopping offline to online.                               content, and columns to publish our
China for example, only about 4 percent                               “Furniture is a category that people                                   views on social issues, and we engage
of sales come from online.”                                           often prefer to shop for in person, so                                 customers in product development by
                                                                      they can see and touch the products.                                   asking for their ideas and opinions. This
                                                                      However, the final purchase decision                                   contributes to building loyalty among
                                                                      may not be made until the consumer                                     our customers.”


                                                                                                                                                            2017 Global Online Consumer Report 17
 ©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Millennials are 50 percent more                                       reliance on online reviews vs corporate                                price and promotions, product features
    likely than Baby Boomers to                                           websites than other regions (Figure                                    (23 percent) or brand reputation (22
    visit a store                                                         2.5). This comparatively lower trust                                   percent) were also commonly identified
                                                                          in corporate content can be a risk for                                 as the top considerations when making
    As in the awareness stage, Millennials
                                                                          companies in these regions since they                                  a final product choice (Figure 2.6).
    are more likely than both Generation X
                                                                          lack control over messaging and product
    and Baby Boomer consumers to use                                                                                                             Product decision factors varied by
                                                                          information contained in consumer
    offline channels during the consideration                                                                                                    category. For fashion, food and
                                                                          reviews. In addition to having informative
    stage. While online reviews and product                                                                                                      luxury items, brand reputation was a
                                                                          websites, these companies need to pay
    websites are most frequently consulted,                                                                                                      particularly important consideration,
                                                                          particular attention to ensuring that have
    Millennials were also nearly 50 percent                                                                                                      although price was still the top decision
                                                                          favorable reviews on social media and
    more likely than Baby Boomers to                                                                                                             factor (especially for luxury items, cited
                                                                          other third party forums.
    research a product by visiting a store or                                                                                                    by 33 percent). For cosmetics, however,
    talking to friends and family (Figure 2.4).                           Factors driving final product                                          brand reputation and online reviews
                                                                          decisions                                                              were the leading considerations (27
    Trust in online reviews vs
                                                                          Overall, price or promotions (identified                               and 21 percent respectively), and for
    company websites varies by                                                                                                                   electronics, product features were most
    region                                                                by 27 percent of respondents) were
                                                                          the factors most likely to influence                                   important (25 percent), closely followed
    In Asia, Eastern Europe and Russia,                                   consumers’ decision regarding which                                    by price, brand reputation and online
    consumers seem to put a much heavier                                  product or brand to buy online. After                                  reviews (each cited by one-fifth of the
                                                                                                                                                 electronics buyers).


 “Consumers are firmly in charge today and they are looking at personalization of services.
  Today’s consumer is more similar to the 1920’s consumer with a personal relationship
  with shopkeepers. Therefore, big data is important – retailers should understand
  what individual consumers buy and what they do. They should cater to consumers as
  individuals.”
   — Paul Martin, UK Head of Retail, KPMG in the UK

   Figure 2.4
   Channels used to research online purchases — by generation




    Online channels                                                                                             Offline channels




                  56%           56%
     52%
                                                                   48%           48%
                                                      45%
                                                                                                                                                                                                        Report, KPMG International, 2017
                                                                                                                                                                                                        Source: Global Online Consumer




                                                                                                                                            30%
                                                                                                                              26%                                                           27%
                                                                                                                20%                                             19%           20%




         Did online search for                                 Visited the                                     Visited physical stores to see,                    Spoke with my friends or
     reviews & recommendations                              company website                                          try or fit the product                           family about it

                                                                   Baby Boomers               Generation X              Millennials

18 2017 Global Online Consumer Report
     ©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Figure 2.5
                                   Percentage of consumers using the following                                                                                                                                                  64
                                   channels to research online purchases — by region                                                                                                                                                                        66
                                                                                                                                                               50
                                                                                            52                                                                   48
                                                                                                                                                                                                                                 44
                                                                                        44

                                                                                                                                                                                                      5                                                      42
                                                                                             42                                                                                                                                                                                                                                      Online channels




                                                                                                                                                                                                      Eastern Europe & Russia
                                                                                             32                                                                                                                                       30
                                                                                                                                                                                                      11
                                                                                                                                                                  22                                                                   25
                                                                                                 25                                                                 19                                                                                           3131                                                                      Did online search for
                                                                                                                                              Western Europe


                                                                                                                                                                                                55
                                                                                                                                                                                                                                                                                                                                           reviews & recommendations
                                                                            North America




                                                                                                                       55                                                                        50
                                                                                                                                                                                                                                                                                                                                           Visited the
                                                                                                                        49
                                                                                                                                                                                                                                                                                                 53                                        company website
                                                                                                                                                                                                                                                                                               49




                                                                                                                                                                                                                                                     Asia
                                                                                                                                                                         Africa & Middle East




                                                                                                                            28                                                                       2222
                                   Report, KPMG International, 2017




                                                                                                                                                                                                                                                                          Australia & New Zealand
                                   Source: Global Online Consumer




                                                                                                                             20
                                                                                                       Latin America




                                                                                                                                                                                                                                                                                                    20
                                                                                                                                                                                                                                                                                                      16
                                                                                                                                                                                                                                                                                                                                     Offline channels
                                                                                                                                                                                                                                                                                                                                           Visited physical stores to see,
                                                                                                                                                                                                                                                                                                                                           try or fit the product

                                                                                                                                                                                                                                                                                                                                           Spoke with friends or
                                                                                                                                                                                                                                                                                                                                           family about it




                                     Figure 2.6
                                     Factors driving purchase decisions                                                                                         Decision factors by region                                                                                In Asia, on the other hand, brand was
                                                                                                                                                                Consumers in Australia, New Zealand,                                                                      typically more important than price,
                                                                                                                                                                                                                                                                          particularly in China and India, where
Report, KPMG International, 2017




                                                                                                                 27% Price/promotions
                                                                                                                                                                Canada, France, Belgium and South
Source: Global Online Consumer




                                                                                                                 23% Product features
                                                                                                                                                                Africa were most likely to be influenced                                                                  brand reputation was cited twice
                                                                                                                 22% Brand                                                                                                                                                as often as price (31 percent vs 15
                                                                                                                                                                by price or promotions. In these
                                                                                                                 17% Online reviews
                                                                                                                                                                countries, more than 38 percent of                                                                        percent). Asian consumers, especially
                                                                                                                 5% Newest trends
                                                                                                                    or arrivals                                 consumers said price and promotions                                                                       in China, Japan, Hong Kong and India,
                                                                                                                 4% Peer influences/                            were the factors that drove their most                                                                    were also more likely than consumers
                                                                                                                    recommendations
                                                                                                                                                                recent product choice.                                                                                    in any other country to base their final
                                                                                                                 2% Complementary                                                                                                                                         product decision on online reviews
                                                                                                                    products
                                                                                                                                                                                                                                                                          (Figure 2.7).
                                      Figure 2.7
                                      Factors driving purchase decisions — by region


                                                                      12%              19%                                             9%                                                                                        15%                                               13%
                                                                                                                                                                                                                                               27%                                                         22%
                                                                                                                                 12%
                                         22%                                                                                                                    38%                                                                                                     19%
                                                                                                                                                                                                      17%
                                                                                                 23%                             22%
                                                                                                                                                                                                                                                15%
                                                                                                                                                                                                                                                                          17%                               29%
                                                                      24%                                                                   19%                                                                                       26%

                                                                       Asia                                                         Australia or                                                                                     North America                        Eastern Europe
                                                                                                                                   New Zealand                                                                                                                               or Russia
                                                                                                                                                                                                                                                                                                                    Report, KPMG International, 2017
                                                                                                                                                                                                                                                                                                                    Source: Global Online Consumer




                                                                      11%                                                              9%                                                                                             9%
                                                                                                                                                                                                                                                                          Price/promotions
                                                                                             30%                                 13%                           29%                                      16%
                                          16%                                                                                                                                                                                                       34%                   Product features
                                                                                                                                                                                                                                                                          Brand
                                                                                                                                                                                                                                                                          Online reviews
                                                       18%                                                                       24%                                                                                   24%                                                Other
                                                                                      25%                                                     25%                                                                                            17%


                                                                 Western Europe                                                    Latin America                                                                                      Africa and
                                                                                                                                                                                                                                      Middle East
                                                                                                                                                                                                                                                                                                           2017 Global Online Consumer Report 19
                                                ©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Stage 3 — Conversion:                                                                       Figure 2.8

    deciding where and                                                                          Most important attributes when
                                                                                                deciding where to buy
    when to buy
    In the conversion stage of the online                                              Best                                                                            36%
                                                                                       price
    purchase journey, the consumer
    exercises two decisions: where, and                                           Preferred
                                                                                   website
                                                                                                                                                          30%
    when, to buy a product. In the online
                                                                             Best delivery
    shopping arena, however, successfully                                    options/price
                                                                                                                            17%
    engaging consumers during the first two
                                                                                      Stock                                                                                              40%
    stages of the purchase journey far from                                      availability
                                                                                                                      14%
    guarantees success in the third stage.                                             Peer                                                  35%
                                                                                     advice       2%
    Informed online consumers will not                                                          32%
                                                                                   Returns                                   31%
    hesitate to glean their inspiration and                                         policy       1%
    information from one or more sources,                                                                                                                               27%
                                                                                    Source: Global Online Consumer
    only to buy from another. Understanding                                         Report, KPMG International, 2017
    the priorities of different types of
    consumers during this critical stage
    can give companies the advantage they                                 Generally speaking, the decision factors     or being relatively more online savvy
    need to win the coveted final sale.                                   most often considered by consumers           or comfortable with online shopping in
    Deciding where to buy                                                 choosing vendors were consistent             general.
                                                                          across age groups, although Millennials
    As during the final product decision                                                                               Having a trusted website will always
                                                                          were considerably more likely than the
    stage, price remains as the most                                                                                   be important,Preferred
                                                                                                                                      but even asBest
                                                                                                                                                  Millennials’
                                                                          older generations to choose aPreferred
                                                                                                           vendor   Best
    common consideration when consumers                                                                    website     incomes grow,
                                                                                                                    price              competitive
                                                                                                                                     website    pricepricing
                                                                          based on price than website preference
    are deciding where to buy (Figure 2.8),                                                                            is expected to continue to rise in
                                                                          (Figure 2.9). This could partly be due to
    particularly in certain categories such                                                                            importance during vendor selection.
                                                                          Millennials’ lower disposable incomes,
    as electronics. Having a website that
    consumers like and/or trust is also
                                                                          Figure 2.9
    important, especially in Asia, where
    consumers said buying from a preferred                                Top attributes when deciding where
    website was more important than price.                                to buy — by generation
    In developed nations such as North
    America, Australia, New Zealand, and
    Western Europe, stock availability
    was a higher priority than in it was
    for consumers in other countries,
    particularly when buying fashion or                                                                                                                                                      27%
    luxury items. Consumers buying fashion
                                                                                                                                                                          31%
    items were also on average three times
                                                                              33%                                                                     33%
    more likely to choose a vendor based on                                                       31%
    their returns policy.
                                                                                                                     27%
                                                                                                                                                                                                        Report, KPMG International, 2017
                                                                                                                                                                                                        Source: Global Online Consumer




                                                                             Baby             Generation X        Millennials                        Baby            Generation X         Millennials
                                                                            Boomers                                                                 Boomers

                                                                                    Preferred website                                                               Best price



20 2017 Global Online Consumer Report
     ©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Case study




Grana
Luke Grana, CEO



                                                                     Winning and creating loyal
                                                                     online customers
                                                                     GRANA’s ‘fun and cheeky’ social media
Luke Grana is CEO                                                    presence boosts rapport and in turn,
                                                                     brand loyalty, with their customers. They
and Co-Founder of the                                                boast over 23,000 ‘likes’ on Facebook,                                 Returning customers comprise 50
                                                                     as well as over 24,000 followers on
innovative online fashion                                            Instagram. It is on these social media
                                                                                                                                            percent of GRANA’s sales. Luke
                                                                                                                                            attributes this loyalty to quality, pricing,
retailer, GRANA. He,                                                 platforms where they interact with their                               swift delivery and attention to customer
                                                                     core market of Millennials, in a way                                   service—such as the personalized
along with Pieter Paul                                               that goes beyond just showcasing their                                 handwritten thank you cards that are
Wittgen (COO and Co-                                                 fashions.                                                              included with each delivery, or the real-
                                                                                                                                            time live chat option available on their
Founder), have overseen                                              Never having invested in traditional
                                                                     advertising or promotion methods,                                      website.
the company’s growth                                                 GRANA instead relies on social media,
                                                                                                                                            Looking at the future
                                                                     digital campaigns and word-of-mouth
from a small startup                                                 recommendations to build brand                                         Initially, GRANA experienced most of
just two years ago to                                                awareness and drive online conversion.                                 their sales in Hong Kong where it is still
                                                                     To support their ecommerce platform,                                   strategically headquartered. However,
an international brand,                                              GRANA has also created over twelve                                     their highest growth market is now the
now shipping to twelve                                               pop-up stores in Australia, Hong Kong,                                 US. The company is planning to open
                                                                                                                                            their next pop-up showroom experience
                                                                     Singapore and the US, in addition to a
countries. GRANA’s core                                              flagship showroom called ‘The Fitting                                  in New York City, in an effort to increase
                                                                     Room by GRANA’, located in Sheung                                      their US customer base even further.
aim is to manufacture                                                Wan, Hong Kong.                                                        The startup also recently attracted
and sell high-quality                                                These physical locations serve a
                                                                                                                                            Alibaba’s Entrepreneur Fund as a new
                                                                                                                                            investor, and with their support, GRANA
clothing at affordable                                               dual purpose: they introduce the
                                                                                                                                            plans to enter the mainland China
                                                                     brand to those who have not already
prices, by cutting the                                               encountered it online, and they allow
                                                                                                                                            market in 2017, complete with a Chinese
                                                                                                                                            language website.
costs associated with                                                both new and existing customers to
                                                                                                                                            “We’re really excited to have investment
                                                                     feel the fabrics and try on clothing to
most traditional sales and                                           find the right fit. Although The Fitting                               support from Alibaba, and we’re looking
                                                                     Room and pop-ups carry no inventory,                                   forward to working closely with their
distribution channels.                                               the buying experience is easy for those                                team to enter the mainland market,”
                                                                     unaccustomed to online shopping, as                                    says Luke. “Chinese consumers have
                                                                     staff are at hand to help customers                                    already matured when it comes to the
                                                                     order items online, on the spot, for                                   adoption of online shopping, and we
                                                                     delivery to customers’ homes.                                          see tremendous potential there in the
                                                                                                                                            medium-to-long-term.”




                                                                                                                                                           2017 Global Online Consumer Report 21
©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
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