• by Jack Loechner , Staff Writer @mp_research, June 13, 2013

Online retail growth continues to significantly outpace that of overall retail, making a competitive online shopping experience essential for retailers seeking to capture their share of the thriving e-commerce market.The study goes beyond topics covered by other studies, which tend to focus on purchase or web usability, and provides  insights from pre-purchase to check-out to post-purchase.

Accorcding to the UPS Pulse of the Online Shopper study In 2012, retail e-Commerce spending in the U.S. surged 15% to reach $186 billion, its second consecutive year of growth in the mid-teens. To put that growth rate in perspective, it was seven times greater than the corresponding growth rate for total U.S. retail spending. In the fourth quarter last year, retail e- Commerce reached 10% of all discretionary spending for the first time ever. UPS has commissioned research with comScore for the second consecutive year on what elements of the online shopping customer experience drive brand preference, customer loyalty, and recommendations.

In addition to retaining satisfied customers and acquiring uncommitted potential customers, another way retailers can increase their business is through customer advocacy and referral. When asked what has led to a shopper recommending a particular retailer, the availability of free shipping or discounted shipping was cited as the top factor, followed by timely arrival of shipments, and free or easy returns.

Drivers of Positive Recommendations (% of Respondents; Multiple OK)

• Free shipping   68%
• Receiving my product when expected   47%
• Free returns   34%
• Easy returns and exchanges   34%
• Tracking Services   29%
• Fast credits/refunds if I return products   25%

Returns play an even larger role for online retailers because online shoppers want to lower risk for goods purchased without the opportunity to see, touch, or feel them. While returns and exchanges represent the last phase of the consumers’ purchase process, it is often their first consideration when visiting a new  retailer site. Two-thirds of customers say they look for the return policy prior to making a purchase online, suggesting that retailers risk losing customers without an easy-to-find policy on their website.

Evidence also suggests that returns are becoming a more important part of the online shopping experience, says the report. 62% of online shoppers  said they have returned a product purchased online, up 11 percentage points in the past year alone.

Other factors drive a poor customer experience that leads to negative word-of-mouth.  The top such factor was shipping costs being too high based on the product price. Other important factors include shipping costs being too high based on the expected delivery date,  products arriving damaged, and delivery taking longer than promised.

Drivers of Negative Recommendations (% of Respondents)

• Shipping costs too high based on product price   59%
• Shipping costs were too high based on expected delivery date   45%
• Products arrived damaged due to shipping/ packaging   43%
• The delivery took longer than I was told   40%
• I could not get a refund, only credits   37%
• Bombarded with e-mail offers I didn’t want   35%
• Getting a refund/credit took too long   34%
• Unreliable shipping made it hard to anticipate delivery dates   31%
• Could not find a phone number to contact customer service   31%
• Dealing with the retailer on returns was too cumbersome   29%
• Difficulty getting package because I am not home to sign for it   27%
• Check-out process was way too long   24%

When examining aspects driving likelihood to shop with a retailer, shoppers demonstrated a distinct preference for retailers who deliver an integrated omnichannel experience – both in terms of online/instore working together and availability of mobile shopping features. The single most important factor, cited by 62% of respondents, was the ability to buy online and make returns in-store, while the third most  important factor was availability of in-store pickup.

Regarding mobile, 47% of smartphone owners said they were likely to shop with a retailer who provides location-enabled coupons or promotions to their smartphone, while 41% of tablet owners said the availability of a tablet app increased their likelihood to shop with a retailer. Further emphasizing the desire for an integrated omnichannel experience, more than one-third of shoppers want to be able to purchase in store with their mobile device and want a mobile application for their smartphone.

Aspects Driving Likelihood to Shop with a Retailer (Top 1 or 2 in scale of 7)

• The ability to buy online and then make returns at the store   62%
• The push of a coupon/promotion to my smartphone   47%
• The ability to buy online and pickup in store   44%
• The availability of an application designed specifically for a tablet   41%
• The option to conduct one-click check-out online   40%
• The ability to complete a purchase in store using mobile device   37%
• The availability of a mobile application for a smartphone   36%
• The availability of an in-store kiosk to browse products   25%
• The ability to start a purchase online and then complete the purchase in store   23%
• The ability to make an appointment for an in-store consult after researching online   18%

“Ship to store” services tend to be viewed by consumers as a means to avoid shipping costs, while leading to incremental sales gains for retailers. 51% of all online shoppers have selected “ship to store,” and 38% of those said they have purchased other items while in the store,  highlighting an incremental sales opportunity for retailers with the availability of this option.

 Attitudes Toward “Ship to Store” Service (% of Respondents; Top 2 Choices)

• I choose ship to store to qualify for free shipping   38%
• Convenient if the retailer has a store nearby   37%
• Inconvenient - I shop online because it means I don’t have to go to a store   25%
• Convenient for some items but not for others   21%
• Not Important to me   17%
• It decreases convenience, but I like having the option   14%
• Neither convenient nor inconvenient since shopping for best price/ deals is my #1 priority   12%

According to the report, the past year saw mobile media consumption grow exponentially as smartphone adoption surged nearly 30% to more than 130 million owners, while tablets emerged as one of the fastest selling devices in history to reach nearly 50 million owners.

While smartphones are becoming disruptive to the traditional retail environment through showrooming,  ablets are changing shopping behaviors in somewhat different ways. Because their functionality more closely resembles that of computers, tablets are not influencing the in-store shopping experience as much as they are driving in-home shopping behavior. In fact, tablet users were significantly more likely than smartphone owners to engage researching product features and  comparing prices. Most importantly, tablet users were twice as likely to purchase items on their devices (38%) than smartphone owners (19%), according to the report.

Of the shoppers surveyed, 59% had a smartphone and 40% owned a tablet. Among those who own a tablet, 59% make purchases on the tablet in a typical three month period compared to 49% of  smartphone owners. 7% of the shoppers surveyed are the commerce equivalent of “cordcutters”; all of their digital purchases occur via mobile devices and none on PCs.

Also noteworthy is that nearly 7 in 10 online shoppers prefer to access multi-channel retailers via digital channels. Of those who shop on a mobile device, 30% prefer to access their favorite retailer via smartphone or tablet. 59% of the online shoppers surveyed who use a smartphone make purchases on a smartphone in a typical three-month period, and nearly 60% of online shoppers surveyed  who use a tablet do so on a tablet. Given the relatively high buying penetration within these channels, it has never been more important for retailers  to ensure they are at the forefront of mobile commerce strategies.

As today’s e-commerce spending increases, so do the expectations of online shoppers, concludes the report:

• Increased need for more convenience and control
• Increased desire for easy returns
• Increased demand for free shipping – and returns
• Increased call for social and mobile channels to work harder
• Increased desire for all retail channels to work together seamlessly

For additional information from comScore, and access to the PDF study file, please visit here.