The 10 Myths of Retailing

Myth #1: Social media will soon become an indispensable tool in ecommerce promotion.

On its own, social media networks will hardly ever play a significant part in retail. However, popularity of social media increases year after year and it delivers consumers into shops across all channels, so it is certainly to be noted in e-commerce optimization.

The analysis of survey data allows talking about media breakthrough as a sales channel anytime soon. Indeed, the growth of Facebook and other social media networks was explosive over the last years. Indeed, only few of those surveyed mentioned they used social sites to make online purchases. Here are some of the survey results related to social networking:

• 60% of the respondents use social networking sites to connect with brands and retails, while only 10% surveyed consumers told that interaction with brands through social medial led them to certain online shops. 

• Using social networking sites for online shopping is a Chinese trend: 56% of surveyed Chinese consumers responded they made purchases via social network platforms, while the average % of social networkers who make online purchases in the rest of the world equal to 24%.

• 49% of the respondents answered they accessed the social media every day.

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Myth #2: the main role of stores will be limited to showrooms in the future.

The majority of consumers indicate they may use social media networks to make online research, but they still do their shopping at physical stores.

A real physical store always was and is going to remain the main place in a shopping process. The surveyed were asked to answer some questions within the context of 11 product categories, and for9 in11 categories offline shops were chosen as place for both researching and purchasing. In addition to this:

• 23% of the respondents research consumer electronics online and after that go to an offline shop to make a purchase, as opposed to only 2% of those who act quite the opposite.

• Over the next 12 months consumers plan to make far more purchases in offline shops than online (using a tablet or a smartphone).

• Even in case with consumer electronics that is most often searched and bought online, 26% of the respondents still come to physical stores to do shopping.

• 73% of the respondents pointed out the main reason for offline shopping was possibility to see, to touch, and to try the goods. There is no such possibility while online shopping.

Myth #3: tablets will soon be the preferred online shopping devices.

Preferred devices for online searching and shopping always were and still are personal computers. Tablets and smartphones are not going to overtake PCs in the nearest future. However, the importance of these devices in online shopping process increases.

On their own, tablets become of great importance in consumers’ life: three-quarters of those who have got such devices use them at least once per day, and almost one-half of those users who access the media via tablets spend more than 11 hours a week in front of their devices screens. According to the survey results:

• Only 9% of the respondents claimed they began using their tablets for online shopping.

• Only 11% suppose they are about to start using their device more often for online shopping.

• On the other hand, more than one in three respondents all over the world are going to spend more time in front of their PCs browsing online shops

• In China 87% of internet shoppers use their PCs for Internet shopping every month.

Myth #4: consumers all over the world are getting alike.

Regardless of the fact that nowadays consumers shop across borders with more global retailers than ever before, their behavior and habits differ from country to country.

The world-wide reasons for making purchases online are low prices, free shipping, and ease of goods comparison. Offline stores attract by possibility to try and fit goods on. But in all other respects consumers from different countries differ. For example:

• Nearly half of the Chinese offline shoppers make their purchases with pleasure and consider it is fun.

• Less than half of online shoppers in China are driven to online shops in search of a particular brand or product. The mature markets’ consumers (Canada, France, Germany, Holland, Switzerland, UK and USA) know what exactly they are looking for in online shops.

Myth #5: online retail will develop in accordance with China model.

China is certainly the setter of some key trends, however, multichannel and online retail will hardly follow the same scenario as China follows.

Last year’s survey showed that Chinese consumers got used to Internet shopping faster than the rest of the world. However, only 30% of respondents from China mentioned they used social networks for online shopping for more than 5 years, while this figure for the rest of the world is 44%.

This year Chinese consumers continue surprising us. The Heavenly Empire habitants are more active tablets or smartphones users in Internet shopping than users from other countries. But some factors indicate that China is not going to be the future model of online retail. In particular:   

• From a demographic point of view, a Chinese online shopper is younger and works more. These peculiarities can influence the purchasing behavior.

• The rapid evolution of wire communications and other parts of the infrastructure may be the reason why the Chinese get to using new technologies faster than anyone else.

Myth #6: domestic retailers will always have the “home field” advantage.

Consumers are increasingly fond of foreign retailers. Retail is a prerogative of local companies since long ago. In 2011 the majority of consumers top-rated Internet and offline shops located in a country they live in. In 2012 global retailers found their way into the list of favorite shopping places of consumers who are beyond the borders of other countries. For example:

•3 in10 favorite Canadian multichannel retailers are American companies.

• In Switzerland the list of 10 most popular shopping networks includes companies from other European countries (Ikea, Weltbild etc.).

• Respondents from Germany give preference to the three foreign retailers: Espirit, H&M, and C&A.

Myth #7: global Internet shops such as Amazon will always have a volume advantage over the local sites with online shopping carts.

Many local online retailers that work within the bounds of their countries manage to successfully hold their customers. Despite of the apparent dominance of such giants as Amazon and eBay, – in Germany, for example, 89% of online shoppers made purchases at Amazon during last 12 months – local players may still feel well in their niches: Amazon is present in Germany for 15 years already but possesses just 13.8% of total internet sales in the country. According to PwC researches local retailers have more chances of earning local consumers’ loyalty.

Myth #8: sellers are in better stead than manufacturers (brands).

It is believed that retailers stand directly in front of buyers and manufacturers stand behind the retailers. However, the survey demonstrates that many customers do shopping directly from manufacturers and many of them do not distinguish between sellers and their favorite brands.

In the nearest 5 years, direct sales may turn to be one of the most significant phenomena both for producers and sellers. If the respondents participated in the survey are believed to be a reliable representative sample, one may say that consumers actively use the possibility of direct interacting with manufacturers in the Internet:

• 35% of the respondents made purchases directly from brand websites.

• China (56%) and USA (52%) are the leaders in “direct shopping”.

• 29% of all respondents mentioned the reason of going directly to brand sites was brand loyalty. This is a bad sign for retailers, because dealing with brand loyalty by means of low prices is unlikely to work out.

Myth #9: Online shops “lay hands on” on sales from other channels.

As a matter of fact, consumers not just go from one channel to another one, but spend more time with multichannel retailers in general. According to the survey results consumers have their favorite multichannel retailers they prefer. Almost every1 in5 respondent claimed that his/her favorite retail gets 25% more time in the structure of multi-channel shopping than the others. The task of retails is to get into the list of favorite stores, as 95% of respondents mentioned there are no more than 5 networks they visit online and offline. The rest sellers do not attract their attention.

Myth #10: low price is the main shopping driver.

While making purchases in their favorite stores – regardless of the channel – consumers more value quality and innovative brand propositions over prices.   

• The price is not of critical importance while shopping. Low prices may help a retailer to become one of the favorite shopping places, but low prices won’t make customers spend more money on a consistent basis. 

• The decor of the store and kindness of the stuff has no significant effect on the behavior of customers and the amount of money they spend.

• As soon as the shop becomes a favorite multi-channel source of goods, 4 factors matter: fast and safe delivery, favorable return policy, exclusive or early access to products, and innovativeness of products.

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The 10 Myths of Retailing

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