Technology making online shopping popular but trust will be the biggest driver: PwC study

  • 93 per cent place trust as main motivator for choice of retailer
  • 86 per cent go by loyalty programmes offered by retailer

Mumbai, 5 February 2014 – Online shoppers in India are almost at par with their global peers in their shopping habits, despite online shopping being a recent phenomenon in India. This is owing to the growing popularity of technologies such as social media, smart-phones and tablets. Out of a total of 1,006 respondents surveyed as part of the PwC study from India, 34 per cent opt for making purchases through the internet on a monthly basis, with the global average being 33 per cent.

While clothing, footwear, consumer electronics, household appliances, books, DVDs are the top product categories for online shopping, buyers in India are now increasingly opting to purchase product categories such as furniture, homeware, grocery and do-it-yourself or improvement items through the online medium, which traditionally were purchased in-store. This is different from their global counterparts who still have not opened to buying grocery or sports equipment items through the online medium.

These findings are part of a PwC report titled ‘Total retail: A change is underway’ that gives insights into buying behaviour of shoppers in the retail space, the key factors that influence the medium of purchase (online vs. brick-and-mortar). 

Rachna Nath, Retail and Consumer leader, PwC India said, “For too long, the customer has been of interest only to Sales and Marketing department. Today, that is changing. Consumers empowered by technology are now making sure that their shopping experience is not what companies want to give but what the consumer wants. This changing behaviour is driving a change in the business models. It is no longer about having multiple channels but about making them work across seamlessly, where a consumer browses online and buys in-store or vice versa. This again has to be supported by a strong supply chain, the strategy for which needs to be built into the business model. This concept of ‘Total Retail’ will drive buyer behaviour going forward.”

Indian online shoppers believe in choosing from abundance. The number of e-commerce retailers that Indians shopped from within the last one year is more than ten. This figure is way above the developed economies, where people restrict themselves to two to five retailers.

The report states that  the main reason for buyers to opt for online shopping vis-a-vis traditional brick-and-mortar stores are  lower price, full range or more choices, stock availability, better warranty / guarantee and better service.  

Driving customer stickiness

Although technology has helped in making online shopping popular, it is trust that will drive the business. Ninety-three percent respondents placed trust as the primary reason for shopping from their favourite retailer or brand in-store. This was closely followed by price, merchandising and the location of their stores. A great loyalty programme was sixth in the list, with 86 per cent placing this factor as the reason why they shopped from their favourite retailer. However, what made them come back or loyalty in its true sense, developed only when retailers were able to build an element of trust.

Around 36 per cent buyers said they do not trust the delivery process and hence do not make online purchases.

Some of the key factors apart from trust & loyalty programmes that influence the choice of retailer are proximity, price-points, product spread, in-store assistance, friendly returns policy and social media presence.

Evolving eco-system

Buyers are now increasingly expecting online retailers to cater to consumer requirements as well as preferences by customisation, making customer analytics a key area of focus for retailers. Consumers are also expecting retailers and brands to engage, comment as well as affect change through social media.

Kumar Rajagopalan, CEO, Retailers Association of India said, “Are customers leading and creating new trends for retailers to follow or are retailers changing the way customers consume? This question worries many retailers. Retailers get impacted with new technology, new infrastructure and competing products for share of wallet.”

Customers are no longer reticent about their feedback and the total retailer must have a robust mechanism of constantly interacting with the customers, making responsiveness coupled with agility will be crucial in order to create the differentiation.

“While online retailers has been able to overcome the barriers of physical infrastructure and real estate, issues such as logistics and supply chain continue to be an issue and should be addressed to keep buyers coming back for more”, Nath added.

Notes to the Editor:

  1. Survey Methodology:

    PwC’s Global Retail and Consumer practice, in conjunction with the International Survey Unit (ISU), administered a global survey to understand and compare consumer shopping behaviours and the use of different retail channels across 15 territories: Brazil, Canada, China/Hong Kong, France, Germany, India, Italy, Middle East, the Netherlands, Russia, South Africa, Switzerland, Turkey, the UK and the US. A team of subject matter specialists representing each participating territory developed the survey based on last year’s survey. Research Now, an external provider, carried out the survey in July and August 2013, resulting in 1,000 completed responses in every territory.

    The demographic profile of the respondents was defined by the age, gender, employment status and region. In India alone, the geographical spread covered 32 states with the household income ranging from Rs 20,000 to over Rs 5 lakhs per annum.

  2. Graphs from the report:

     


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