Author: Mintel Group Ltd.
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Online Shopping - US - May 2009

SCOPE AND THEMES
What you need to know
Definition
Data sources
Sales data
Consumer survey data
Abbreviations and terms
Abbreviations
Terms
EXECUTIVE SUMMARY
Explosive growth in online retail curbed by recession
Fastest-growing categories not tech-related
Amazon leads online retail by large gap
Web-only retailers benefit from increasing consumer comfort
Growth in online shopping driven by multiple key value propositions
E-retailers focus on internet-based advertising strategies
Shipping fees and privacy primary barriers to adoption
Early adopters on board for mobile shopping
E-commerce continues to evolve through innovation
INSPIRE INSIGHTS
Trends
How trends will impact the market
INSIGHTS AND OPPORTUNITIES
Retailer must differentiate on factors other than price and familiarity
Emotional branding increasingly important in price-competitive market
Cell phone commerce in early adoption
TV becomes a purchasing tool
Women value the internet for selection and availability
Under-45s like to find their bargains themselves
MARKET SIZE AND FORECAST
Recession brings explosive growth to a halt
Figure 1: Total U.S. ecommerce retail sales, 2003-13
Figure 2: Total U.S. ecommerce retail sales, at inflation-adjusted prices, 2003-13
Substantial growth still ahead
Figure 3: The internet shopping experience, 2002-08
COMPETITIVE CONTEXT
Online share growing but may see a plateau
Figure 4: E-commerce sales as a percentage of total retail, 2000-08
Internet purchases come from respondents who already order by mail or phone
Figure 5: Incidence of internetand mail/phone purchase in past 12 months and amount spent, May 2003 -June 2008
Online second-hand market grows in recession
eBay
Craigslist
Amazon.com
SEGMENT ANALYSIS
Fastest-growing categories are not tech-related
Figure 6: U.S. retail sales at electronic shopping and mail order houses, by type of merchandise, 2004 and 2006
Purchases of apparel draw most new buyers since 2006
Figure 7: Categories of internet purchase, January 2002-December 2008
LEADING RETAILERS
Amazon maintains significant lead
Recent initiatives
Office supply chains see increasing share of sales from online
Recent initiatives
Manufacturer direct computer vendors draw visitors but convert fewer
Recent initiatives
Figure 8: Sales and related statistics of top 10 internet retailers, 2008
BRAND QUALITIES
Brand promise of satisfaction can overcome physical presence
Figure 9: Online sales of top 500 sites, by category, 2008
Category leaders share key internet value propositions
Figure 10: Leading retailers by merchandise category, 2008
Netflix: Price, selection, and convenience beat immediacy
Drugstore.com
Blue Nile Jewelry
PayPal an established brand in all of online retail
Competition
INNOVATION AND INNOVATORS
Widgets make online marketing entertaining and useful
TrialPay increases visitor conversion with transactional advertising
Ikan offers time saving and convenience for higher-income shoppers
Free content on YouTube linked to retail
ADVERTISING AND PROMOTION
 TELEVISION ADVERTISING
TiVo offers in-program advertising options
eBay
Figure 11: eBay – awards show win, January 2008
1800Flowers.com
Figure 12: 1-800-Flowers – Jimmy Kimmel Live, February 2009
Amazon.com
Figure 13: Amazon – Indie Spotlight, October 2008
Figure 14: Amazon – Girl in Africa, November 2008
 INTERNET ADVERTISING
Search engine ads focus on more likely targets
Search engine optimization (SEO)
Targeting evolves
Smart shoppers drawn by online coupons
New distribution for coupons
Females, whites, and 18-24-year-olds more push-resistant
Figure 15: Clicking on internet ads, by gender, age, and race/Hispanic origin, February 2009
New ShopAds banners allow direct purchase
MARKET DRIVERS
Recession causes pullback in consumer spending
Internet offers several value propositions to shoppers
Figure 16: Motivations behind online shopping, February 2009
Web facilitates price comparison
Shop in-store + compare online
Figure 17: Price comparison online after store visit, by age and HH income, February 2009
Wider range of products available
Gifting made easier by wish lists and registries
High gas prices keep consumers at home
Figure 18: Impact of gas prices on online shopping, by gender and household income, February 2009
Online shopping is part of a green lifestyle
Figure 19: Online shopping and the environment, by gender and household income, February 2009
High-speed internet penetration facilitates download purchases
Figure 20: U.S. household penetration of PCs and broadband internet, 2003-07
Free shipping promotions overcome consumer hesitancy
USAGE
Online consumer base continues to grow
Figure 21: Incidence of internet purchase and amount spent, January 2002-June 2008
Penetration of online retail skews by gender, age, and household income
Men lag behind women
Online shopping just as probable among Boomers
Higher household income respondents more likely to shop online
Figure 22: Incidence of internet purchase, by various demographic factors, January 2006-December 2008
Online purchases are made on a weekly basis
Figure 23: Relationship between online, on phone and in-store shopping, research and delivery, February 2009
MOTIVATIONS
Shoppers head to internet to save time and money, buy hard-to-find products
Figure 24: Motivations behind online shopping, February 2009
Women value the internet for selection and availability
Figure 25: Motivations behind online shopping, by gender, February 2009
Over-$100Ks looking to save time and get exactly what they want
Figure 26: Motivations behind online shopping, by household income, February 2009
REASONS NOT TO SHOP ONLINE
Key barriers can be overcome through consumer education
Figure 27: Reasons not to shop online, February 2009
Older respondents still more resistant to cyberspace purchases
Figure 28: Reasons not to shop online, by age, February 2009
Under-$75Ks more opposed to shipping fees
Figure 29: Reasons not to shop online, by household income, February 2009
LIMITATIONS ON ONLINE SHOPPING
Majority of online shoppers feel safe enough to try the unfamiliar
Figure 30: Limitations of online shopping, February 2009
Younger respondents 18-24 more suspicious of the unfamiliar
Figure 31: Limitations of online shopping, by age, February 2009
Fear of unfamiliar lower in the more experienced $100k+ group
Figure 32: Limitations of online shopping, by household income, February 2009
USAGE OF SPECIFIC ONLINE RETAILERS
Amazon receives monthly business from a third of online shoppers
Figure 33: Usage of specific online retailers, February 2009
Younger respondents more likely to purchase at leading retailers
Figure 34: Usage of specific online retailers, by age, February 2009
ATTITUDES TOWARDS ONLINE SHOPPING
Internet becomes important source of product reviews and coupons
Figure 35: Attitudes towards online product feedback, promotions and gift shopping, February 2009
Female respondents more likely to trade opinions and look for sales
Figure 36: Attitudes towards online product feedback, promotions and gift shopping, by gender, February 2009
Under-45s more likely to use the web to find exactly what they want
Figure 37: Attitudes towards online product feedback, promotions and gift shopping, by age, February 2009
Higher-earning respondents more active users of online reviews
Figure 38: Attitudes towards online product feedback, promotions and gift shopping, by household income, February 2009
SHOPPING WITH CELL PHONES
Shopping via phone: Who’s buying now?
One in four shopping via phone or wanting to
Figure 39: Attitudes towards shopping with cell phones, by gender, February 2009
Under-35s best target for cell phone commerce
Figure 40: Attitudes towards shopping with cell phones, by age, February 2009
Higher-earning respondents more receptive to cell phone purchases
Figure 41: Attitudes towards shopping with cell phones, by household income, February 2009
RACE AND HISPANIC ORIGIN
Racial/ethnic bias in online purchasing reflects income disparity
Figure 42: Incidence of internet purchase and amount spent, by race/Hispanic origin, April 2007-June 2008
Minority respondents share attitudes of younger consumers
Figure 43: Limitations of online shopping, by race/Hispanic origin, February 2009
Hispanics more likely to stick with well-known branded retailers
Figure 44: Usage of specific online retailers, by race/Hispanic origin, February 2009
Online Hispanics want to find deals, not be told about them
Figure 45: Attitudes towards online shopping, by race/Hispanic origin, February 2009
Online English-language Hispanics more likely to shop with their cell phone
Figure 46: Attitudes towards shopping with cell phones, by race/Hispanic origin, February 2009
CLUSTER ANALYSIS
Online minimalists
Who they are
Opportunities
Online fanatics
Who they are
Opportunities
Bargain hunters
Who they are
Opportunities
Cluster characteristics
Figure 47: Relationship between online, on phone and in-store shopping, research and delivery, February 2009
Figure 48: Limitations on online shopping, by clusters, February 2009
Figure 49: Online shopping preferences, by clusters, February 2009
Figure 50: Use of feedback and couponing, by clusters, February 2009
Figure 51: Interest in gift cards and wish lists, by clusters, February 2009
Figure 52: Usage of specific online retailers in the past month, by clusters, February 2009
Figure 53: Motivations for shopping online, by clusters, February 2009
Cluster demographics
Figure 54: Online shopper clusters, by gender, February 2009
Figure 55: Online shopper clusters, by age, February 2009
Figure 56: Online shopper clusters, by household income, February 2009
Figure 57: Online shopper clusters, by race/Hispanic origin, February 2009
Figure 58: Online shopper clusters, by marital status and presence of children, February 2009
Cluster methodology
CUSTOM CONSUMER GROUPS
Marital status and children in the household
Figure 59: Incidence of internet purchase and amount spent, by marital status and children in the household, October 2007-December 2008
Figure 60: Attitudes towards online shopping, by marital status and presence of children, February 2009
Figure 61: Online shopping and gas prices, by marital status and children in the household, February 2009
Gender and presence of children
Figure 62: Incidence of internet purchase, by gender and children in the household, February 2009
APPENDIX: OTHER USEFUL CONSUMER TABLES
Motivations
Figure 63: Motivations behind online shopping, by age, February 2009
Reasons not to buy online
Figure 64: Reasons not to shop online, by gender, February 2009
Limitations
Figure 65: Limitations of online shopping, by gender, February 2009
Popularity of online retailers
Figure 66: Usage of specific online retailers, by household income, February 2009
APPENDIX: INCIDENCE OF LEAVING FEEDBACK RISING
Five-point difference from November 2008
Online feedback surveyed in November 2008
Figure 67: Leaving online feedback, by gender, November 2008
Figure 68: Leaving online feedback, by age, November 2008
Figure 69: Leaving online feedback, by household income, November 2008
Figure 70: Leaving online feedback, by race/Hispanic origin, November 2008
APPENDIX: TRADE ASSOCIATIONS

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