Would you believe older men with lower incomes are the new drivers of online sales growth?
Online sales continue to grow at double-digit rates, and there are some new factors in play driving it — not all of which are named Amazon.com. Ken Cassar, vice president of strategic insights at Rakuten Intelligence, and Nikki Baird, vice president of retail innovation at Aptos, discussed what new e-commerce shoppers looks like and how various segments of the retail industry should react to these new buyers in a RetailWire webinar yesterday. [View the recording.]
According to statistics presented by Mr. Cassar, two years ago the average online buyer was spending $1,700 per year, whereas more recently that number has increased to about $2,000.
It is increased buying frequency, however, not increased basket size, that is leading to these results. In fact, the average basket size has shrunk during the same timeline, dropping from $54 dollars two years ago to $50 this year.
Regarding the new emerging type of e-commerce customer, Mr. Cassar noted that 56 percent of the 36 million shoppers who began using e-commerce in the past two years are male, older and in lower income brackets. Their spending habits tend more toward electronics, automotive and sporting goods than earlier e-commerce shoppers. And perhaps surprisingly, only 27 percent of these new e-commerce shoppers are going to Amazon, compared to 34 percent of old e-commerce shoppers.
Because of this, Mr. Cassar pointed to the value channel as a possible path to e-commerce success.
“There’s a clear opportunity here in the dollar channel, which collectively has not done an awful lot online,” said Mr. Cassar.
Ms. Baird noted that the Amazon buying experience, while familiar, is in reality not that simple and that selling on the marketplace can be quite risky, presenting possible openings for CPG companies looking to find other online avenues to new shoppers.
“Where they can differentiate is in that simplicity of the buying process,” Ms. Baird said.
Mr. Cassar pointed to the need for brands to think creatively about how to incentivize purchases in order to increase average order size. Ms. Baird praised the predictability of the subscription model and saw room for brands to assess and react to pain points to make the subscriptions more valuable to customers.
DISCUSSION QUESTIONS: How focused should retailers and brands be on trying to court the “new” e-commerce shopper? Do you see opportunities for other retailers or brands to take significant share from Amazon in the coming years despite the popularity of Prime?