By all accounts, the e-commerce sector is poised for another blockbuster holiday season, with forecasters calling for another year of double-digit growth and sales of about US$27 billion for the fourth quarter, according to Forrester Research.
Most retailers are already well underway with plans to capitalize on that growth, putting in motion plans crafted throughout the year to maximize sales. New research, however, may offer some additional insight into where some of that growth is occurring and how e-commerce companies can best capture it.
A recent survey conducted by Harris Research found that a sizeable number of consumers are making so-called “spontaneous,” or unplanned, purchases. These shoppers set out on their Web journeys without intending to become buyers, but before they can close their browser windows, they’ve made at least one purchase.
The research is an effort to better understand where the billions of dollars in online spending is coming from, said economist Jim Glassman, a fellow at the American Enterprise Institute who worked with Harris on the survey, which was commissioned by eBay’s PayPal online payment system.
The survey found that 46 percent of the people who bought online recently made at least one unplanned purchase — in other words, they went online to do something else and ended up buying something.
“The numbers jumped out at us because this represents a lot of potential and there are clearly ways that Web sites can make sure they’re capturing some of these sales,” Glassman said.
The notion of unplanned buying comes as more attention is being lavished on the Web’s increasing role in offline retail purchases, with a growing number of consumers using the Internet to research purchases but still finalizing their buys — particularly of big ticket and consumer electronics items — at offline stores.
The survey about spontaneous buying can’t be compared to earlier times in the evolution of e-commerce, since the question wasn’t asked of shoppers in the past, Glassman noted. Still, it makes sense that people would be more likely to buy on the spur of the moment today, when consumers are more likely to trust a variety of Web sites and more comfortable buying on the Web in general.
E-commerce firms can take three steps to ensure they capture as much of the spontaneous buying market as possible this holiday season, according to Glassman.
Seasonal sales and special promotions are probably the most powerful tool for leveraging unplanned purchases, he said. “You may go online to buy a book and a merchant might be suggesting that maybe you’ll like this book as well,” Glassman explained, noting that Amazon has long been considered the class of the industry when it comes to suggesting purchases.
“People need some kind of an incentive to make that unplanned purchase,” he noted. Strong offers can even bring additional sales because of the ease of having shoppers share them with friends, he added.
Another suggestion is to offer more tie-ins and related purchase deals, something Glassman said even smaller e-commerce companies can do well. For instance, offering to sell someone buying shoes a spare set of laces, or ensuring that upgraded headphones are available to shoppers looking at iPods.
“In the bricks-and-mortar world, this is something that happens all the time if you’ve got a good salesperson, but in the online world in some ways it’s even easier,” with several popular software programs available to help suggest purchases.
Finally, Glassman said, all sites need to ensure they are up to date with their site security, including seamless and secure payment systems.
“There have been studies that show that more than half of purchases abandoned halfway through were left unfinished because of security concerns,” he noted. Indeed, in some ways a spontaneous purchase may be more easily abandoned than one that’s been long-planned and researched.
Some have expressed concern that the rise in identity theft connected to the Web — and a list of database breaches that is now approaching 100 million individual record exposures in the past two years due to hacking and human and technical errors — has the potential to slow the growth of e-commerce.
“[Consumers have] shown they’re willing to accept some risk because of the convenience of online shopping,” said Forrester Research analyst Carrie Johnson. “The risk remains over time, but so far, e-commerce growth of all sorts has powered past any concerns about the risks.”
The rise of spontaneous buying also raises the stakes for e-tailers to have products in stock, Glassman declared. “It’s critical to have inventory and to make it clear up front that’s the case,” he said. “Shoppers can become very frustrated with retailers when they start down the buying path only to find they can’t get what they set out to buy.”
This story was originally published on Oct. 31, 2006, and is brought to you today as part of our Best of ECT News series.