Three Fundamental Trends Shaping the Future of Online Shopping

Digital experience with brands has become an important curative factor when it comes to shopping. And as mobile technology witnesses an outstanding development and adoption rate, online shopping also becomes a native part of one’s life. Hence, it is important for businesses to be able to shift their focus towards digital and adapt new ways of engagement with customers through heavily used devices like PCs and the ones experiencing a massive adoption and usage growth rates (like smartphones and wearables).

Recognizing the importance to measure the trends in online shopping habits, a day ago, UPS released results of a study called UPS Pulse of the Online Shopper, emphasizing the three fundamental trends that have a pervasive impact across the board.

Digital channels fuel future growth

We have been emphasizing this trend for a while now and the study from UPS proves that one of the fundamental trends of modern world is that digital channels fuel future growth.

Moreover, for the first time, online shoppers report that more than half of their purchases were made online. While desktop remains a major ‘tool’ fueling online shopping, 25% of shoppers are projecting more shopping on smartphones and tablets.

As for particular groups of shoppers, the study suggests that millennials make 54% of purchases online vs 49% of non-millennials. Overall, all online shoppers make a little more than half (51%) of their purchases online.

Smartphones are the driving force in retail change

As mobile is becoming one of the primary channels of online shopping, businesses start to recognize the importance of shifting focus and optimizing business models to leverage the trend. Online customer experience is an extremely important success factor for retailers. What is more important is, the study found that customers are often using their smartphone as the glue that connects all shopping interactions — from PC to tablet to store.

Impressively, UPS suggests that 4 out of 10 mobile users have used their smartphones for online purchases. And while tablet purchasing went down 2% from 2015 reaching 44% among devices, smartphone purchasing increased 3% this year to reach the same 44%.

Millennials appear to be the group particularly prone to smartphone purchasing (63% are shopping on smartphones). The significantly lower adoption of smartphones as shopping channels is among Baby Boomers (19%) and Seniors (8%). Gen Xers, however, are not very far with 41% making purchases on smartphones.

Nonetheless, desktops and laptops are still dominating as devices used to research and complete online purchase (95% use for research and 95% complete the purchase on desktops and laptops). Moreover, the desktop shopping satisfaction rate is the highest among these channels – 85%.

Smartphones and tablets are falling behind but still showing an impressive rate. 56% of users perform research and 44% complete the purchase on smartphones, while for tablets the numbers are 58% and 44% respectively. As for the satisfaction rate, smartphone shopping satisfaction rate experienced the highest boost in comparison to 2015 (8% growth) and reached 73%. With a lower growth rate in comparison to 2015 (4% growth), the tablet shopping satisfaction rate reached 78% in 2016.

Cross-channel purchases are growing

Multichannel shopping has grown from 36% in 2015 to 38% in 2016. But most importantly, 42% of purchases are made using only an online channel for searching and buying.

Single-channel shopping, however, dominates, with either only in-store or only online – 62% of all online purchases were made through single channel. Store-only purchases are on the decline and are reported to lose 2% from 2015, reaching 20% this year.

Source: UPS Pulse of the Online Shopper

Millennials: The first generation of digital natives

A particular group deserves special attention when it comes to online shopping. Millennials have a disruptive effect on retailers as they shape the shopping trends.

Millennials, classified as individuals 18–34 years old, have distinguished themselves with their prowess in using technology. This first generation of digital natives has grown up with these tools and tends to use them as their default option. Retailers should evaluate their customer base to understand the impact of this behavior on their business model, merchandising and the overall customer experience.

This group is more likely to start a product search with a retail app and brush through social media for ideas, advice and ratings. Product reviews, Q&A sections, photos submitted by customers and brand videos are reported to be important influence points for millennials.

Millennials, in addition, are power users of technology as they are more likely to shop on all three devices – PC, smartphone and tablet.

There is a range of other important and interesting hallmarks of this group of population that study draws attention to. But what should share a development direction for businesses, is that rapidly emerging technology like wearables, connected TV and smartphones, of course, has the highest adoption and usage rate among millennials. In fact, wearables are reported to be of the strongest interest among males and millennials.

As stated in the report, Millennials are adopting devices and participating more in technology services overall, including shopping-related activities, resulting in consumer behavior shifts that have implications for all retailers. These tech natives will become even more prevalent in years to come as Generation Z emerges with even more of the same tendencies.