Record Web Shopping Even for Those Wanting to In-Store Shop
Even consumers more inclined than others to return to physical stores during COVID-19 are buying online more than ever, Sucharita Kodali, Forrester Research vice president-principal analyst, told the National Retail Federation’s NRF NXT All Access virtual event Monday. Forrester estimates about 40% of U.S. consumers are in that category, compared with 53% who prefer to continue sheltering at home and are fearful the economy is reopening too quickly, she said.
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Of those who say they want to go back to stores, 30% "are choosing to purchase online,” said Kodali. “Almost half of them are purchasing their groceries online. This is an important observation because among people who may want to go back to stores, you’re still seeing them consuming online.” That’s the factor that’s “certainly driving e-commerce forward, but continues to be a challenge for physical stores.”
Consumers are as “frugal as ever,” said Kodali. “They don’t want to pay for shipping.” Forrester found 37% of consumers “don’t want to pay anything” even for a same-day transaction, she said. Another 22% said they are willing to pay $3-$6 for same-day delivery but not more, she said.
That the average same-day transaction costs U.S. retailers about $20 a package and 37% of consumers won’t pay anything means “someone has to absorb the cost of that transaction,” said Kodali. A number of same-day delivery services that are “venture-capitalized” are absorbing it, she said. “In some cases, you even have some of the retailers absorbing it. But what we know is that consumers for the most part don’t want to absorb it.”
With the e-commerce supply chain stretched to the limit during the pandemic, Forrester estimates 22% of consumers experienced late deliveries during the crisis, said Kodali. “That has also led to greater dissatisfaction with players like Amazon.” Of the Amazon Prime members Forrester canvassed about their satisfaction amid late deliveries and out-of-stock items, 24% said they were “frustrated” with the service, she said. Dissatisfaction was 10 percentage points higher among Generation Z respondents, she said. Amazon didn’t comment Monday.
Consumer resentment toward Amazon during the crisis “has provided oxygen” for other e-commerce giants like Walmart and Target, said Kodali. Though Amazon’s Q1 e-commerce sales were 25% higher than in the 2019 quarter, Walmart’s were up by 77% and Target’s 141%, she said. “What you have is these other players gaining even more share” from Amazon, she said.
The pandemic hastened retailer investment in various e-commerce “omnichannel” fulfillment strategies, said Kodali. “What that has resulted in is a significant uptick in curbside pickup,” she said. Curbside was 18% of e-commerce transactions before the COVID-19 outbreak and grew to 25% after, she said. The increased share came despite some very sloppy curbside execution at some retailers, she said.