While some are inventing drones to robotically deliver our every material desire to our doorsteps, the fact remains that only 10 percent of shopping happens online. Why? Slice Intelligence reports that frustrations about shipping fees and returns top the list of reasons that deter U.S. consumers from shopping online.
“It’s ironic that the top source of frustration, by a wide margin, is a loathing for shipping fees, despite the fact that a significant proportion of online orders are shipped for free,” observed Ken Cassar, principal analyst, Slice Intelligence, who unveiled the results of a survey of 1,501 online shoppers at the inaugural Rakuten Experience event in New York. “This helps explain why Amazon Prime has accelerated Amazon’s dominance of the U.S. e-commerce sector.”
The inconvenience and expense of returns are the second and third leading sources of frustration among online shoppers that buy electronics, health and beauty, and groceries online. Slice also surveyed online shoppers that shop each of these categories offline, but not online to understand what is keeping them from buying online. The survey results show that the inability to physically evaluate products before purchasing apparel, electronics, and grocery items is one of the leading inhibitors to buying online.
“Consumers lament the costs and effort associated with returns,” said Cassar. “Despite efforts by merchants to improve product imagery with the ability to zoom and rotate products and an abundance of online product reviews, consumers still feel like they are gambling when they buy online. Merchants and brands that can innovate and to mitigate that risk are going to reap significant rewards.”
The survey results offer a silver lining for retailers: consumers now say that the principal reason they shop online is convenience, which may allow them to charge a premium for the benefit.
“Online shoppers initially started shopping because they could get better prices across a broad selection of products than in brick and mortar stores,” said Cassar. “Over time, though, the convenience of the channel has risen to the top. The good news for merchants is that there may be opportunity to ratchet prices up without losing customers if they can deliver on consumers’ expectation that online shopping will make their lives easier.”
But first, Cassar advises, retailers need to address the fundamentals of the online retail channel.
“The message to merchants is clear,” advised Cassar. “Keep on innovating, keep on surprising us. We’ve come a long way, but there are still many more hurdles to clear before e-commerce reaches its potential.”
This post was first published in the Slice Intelligence blog. Slice is an independent, wholly-owned subsidiary of Rakuten.