When we think of online shopping, we picture Millennials and Gen Y consumers clicking up a storm.
But they are not the most enthusiastic online shoppers according to recent research that has implications for the way businesses sell online.
A global survey
by Big Four professional services firm KPMG reveals Baby Boomers spend more online than Millennials.
In fact, Baby Boomers on average spent more per transaction than either of the two other younger generation groups: $278 compared to $260 for Gen X and $237 for Millennials, according to KPMG’s 2017 Global Online Consumer Report, The Truth about Online Consumers.
Trent Duvall, National Leader, Consumer Markets at KPMG in Australia, says the difference is mainly because Baby Boomers have a higher disposable income than the other groups.
This is borne out by the spending data. Baby Boomers are twice as likely to spend in the $1000 to $2000 category than the other groups. They tend to combine online research and store visits for their product research before purchasing via a website. “If it’s a washing machine or a fridge or a TV, for example, they go on and look up the best price and purchase it online,” he says.
Millennials, by contrast, are more likely to spend up to $50.
For retailers, the data means they have to gain a better understanding of their consumers, says Duvall. “Who’s the consumer that they’re targeting? There’s not many retailers that can target all of those age demographics at the same time. They need to know who they’re most focused on and make sure they’ve got the right offer and a targeted customer experience to maximize their penetration into their target customer base,” he says.
“Know your consumer, know how they’re going to spend, and make sure you’ve got your offer properly targeted for them rather than trying to address a potentially wider addressable market.”
Having a payment option that the customer feels comfortable with is important
Millennials use less credit
Millennials are less likely to pay with credit cards and instead rely more on debit cards. The report stated that it wasn’t clear whether this was due to a reduced appetite among Millennials for credit or that they had less access to credit.
Nonetheless, it concluded: “The key takeaway is that companies need to include both cash/debit and credit as payment options in order to attract younger buyers.”
Duvall said this was a key overall factor in purchasing decisions. “Having a payment option that the customer feels comfortable with is important. I think that would be a stopper to a purchase if someone didn’t feel that the website was secure or the payment options that they were comfortable with wasn’t available,” he says.
In Australia, 9 per cent of consumers said payment options was the key factor in their purchase decision, compared with just 6 per cent for the rest of the world.
For local consumers, the top three purchase factors were price (17 per cent), returns policy (13 per cent) and delivery options (11 per cent).
Interestingly, a bricks-and-mortar store relationship is more important to Australians than other parts of the world.
Some 35 per cent of Australians bought from an online-only store, compared with 50 per cent globally, while 44 per cent of Australian’s bought from a retail store’s online site, compared with 33 per cent globally, the survey found.
While Millennials spend comparatively modestly, Duvall says this will change and they will drive an upsurge in online spending.
“I don’t doubt at all that Millennials are going to continue to grow and increase in their online penetration,” he says. “The oldest Millennial is 34 years of age so a lot of them have passed their schooling now. They’re into jobs, have probably paid off a lot of their HECS debts. There’s a lot of them now at least starting to come into some more substantial money and are setting up homes for themselves and their families.”
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