The truth about online consumers

kpmg.com/onlineconsumers

The truth

about online

consumers

2017 Global Online

Consumer Report

In this report

How do companies target

Millennials who no longer

trust traditional advertising?

How important are payment

options in India? Which

countries are most likely to

buy from foreign websites?

Where are consumers

willing to buy groceries

online? In this report we

answer these and other

questions that can help

inform an online strategy

that is more targeted,

effective and customer-

centric.

Foreword

Enabled by technology, the continued year over year growth in online shopping has

been fueled by a new generation of consumers who want greater convenience,

value and options. For consumer businesses, this trend poses both challenges and

signiﬁcant opportunities.

Competition is no longer limited to local shops during business hours. Consumers

today are shopping all the time and everywhere; and in a truly global online

marketplace, products can easily be purchased from retailers and manufacturers

located anywhere in the world—or from those with no physical retail locations at all.

Consumer demand for richer experiences and greater convenience means that

retailers need to rethink their strategy, both online and in stores. Having the right

product mix is no longer sufﬁcient to attract the new wave of consumers including

Millennials, who are entirely focused on one transaction—theirs. Creating an online

shopping experience enhanced by technology such as augmented and virtual reality

or 3D is becoming at least as important as providing convenient and personalized

ordering, payment and delivery options.

However, despite the rise of online shopping, ecommerce still makes up a relatively

small percentage of total retail spending. Retailers’ brick and mortar strategies also

need to evolve to continue to draw customers into their stores, and to compete

with the online retailers opening their own physical outlets. Increasingly, we are

seeing innovative marketing strategies, as well as new technologies such as smart

shelves, robots, self-checkout, and interactive and virtual reality, being deployed in

stores as retailers strive to compete on all fronts.

Finding the ‘right’ strategy starts with one question: Given your brand promise,

where do you want to compete? Only once a company understands their goals,

customers and those customers’ needs can an appropriate strategy be designed.

And the key to a sustainable strategy is being able to understand and meet customer

needs both today and tomorrow, across geographies, and across generations.

In this report, we aim to raise and answer some questions about your company’s

approach to ecommerce. Our global research on online consumer behaviors,

preferences and attitudes can be leveraged by consumer companies seeking to

improve their approach towards winning and retaining customers online.

I hope you ﬁnd this report interesting and insightful. I would like to thank the survey

respondents, company executives, and KPMG professionals who invested their

time and insights to make this study possible.

To learn more about this research, please visit kpmg.com/onlineconsumers or

contact a member of KPMG directly.

Sincerely,

Willy Kruh

Global Chair, Consumer Markets

KPMG International

©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member ﬁrms of the KPMG network are afﬁliated.

2017 Global Online Consumer Report 1

Contents

What do consumers really want? ......................................................2

The dilemma .....................................................................................2

What 18,430 consumers told us .......................................................3

Online purchase behavior

...................................................................4

Online shopping as a rising trend ......................................................4

Product category trends....................................................................6

Rise of international trade and e-tailers.............................................8

Device preference trends ................................................................12

The path to purchase journey

...........................................................14

Stage 1 — Awareness: triggers and inﬂuencers ............................. 15

Stage 2 — Consideration: product and company research .............16

Stage 3 — Conversion: deciding where and when to buy ..............20

Stage 4 — Evaluation: experience and feedback ............................22

Cycle duration .................................................................................24

Understanding consumer attitudes and motivations

....................27

What’s driving the shift to online? ................................................... 27

Overcoming the hurdles to selling online........................................28

Winning the online consumer .........................................................29

Payment options need to be regionally tailored ..............................30

Building consumer trust ..................................................................33

Are experience and trust enough to earn consumer loyalty? .......... 34

How KPMG can help

.........................................................................35

About KPMG

......................................................................................36

Contact us

......................................................................................Back

©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member ﬁrms of the KPMG network are afﬁliated.

2 2017 Global Online Consumer Report

What do

consumers

really want?

Advances in technology, logistics, payments and

trust — coupled with increasing internet and mobile

access and consumer demand for convenience —

have created a US$1.9 trillion global online shopping

arena, where millions of consumers no longer ‘go’

shopping, but literally ‘are’ shopping — at every

moment and everywhere.

A recent report by KPMG International

titled ‘Seeking customer centricity

through omni business models’

1

, looked

at how consumer and retail businesses

are transforming to adapt to the shift

from traditional shop-centric business

models to a new world where the

customer is increasingly at the center

of a perpetual shopping experience. In

this ‘customer-centric’ reality, retailers

need to be exceptionally sensitive

and responsive to when and where

their potential customers are making

purchase decisions (both consciously

and subconsciously) throughout their

‘always on’ shopping journey.

The dilemma

The burning question is, how can

consumer and retail companies achieve

this nirvana of consumer mindreading?

How can they identify and keep pace

with the behaviors and preferences of

customers today and tomorrow? How

can they ensure their online strategy

is acutely tailored to attract and win

the diverse and dynamic customer

segments they serve?

1

https://www.kpmg.com/cmsurvey

©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member ﬁrms of the KPMG network are afﬁliated.

2017 Global Online Consumer Report 3

What 18,430 consumers told us

During 2016, KPMG conducted an

international study on consumer

behaviors and preferences related to

online shopping. The research was

largely based on an online survey of

18,430 consumers living in more than

50 countries. The respondents were

between the ages of 15 and 70, each

having purchased at least one consumer

product online in the past 12 months.

In addition to scrutinizing their online

shopping behaviors, preferences, and

decision processes, the study also

explored consumers’ plans for future

online purchases, factors affecting trust

and loyalty towards certain brands, and

their sentiments and attitudes towards

the companies that they do, or don’t,

choose to buy from.

The ultimate purpose of this research

was to provide consumer goods and

retail companies with the global and

local insights into the speciﬁc behaviors

and preferences of the customers

they want to target. By understanding

the uniqueness of different customer

segments, companies can tailor their

online strategies for maximum success.

The depth of the data collected for this

study makes it possible for companies

to analyze and forecast the behaviors

and preferences of their customers

by geography, generation (Millennials,

Generation X or Baby Boomers) and/

or product category. The number of

ways to ﬁlter and classify the data is

too copious to summarize in a single

report, so in the following sections

we provide an overview of the global

results, highlighting the most signiﬁcant

or interesting trends and comparisons

among the major demographic groups

and product categories.

Executives interested in receiving more

detailed insights are invited to contact

KPMG to have a member of our team

ﬁlter and analyze the full set of data

according to your speciﬁc requirements

or target markets.

Baby Boomers

Born 1946-1965

Generation X

Born 1966-1981

Millennials

Born 1982-2001

©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member ﬁrms of the KPMG network are afﬁliated.

4 2017 Global Online Consumer Report

Online

purchase

behavior

The digital age and rise of online

shopping have driven an unprecedented

business model shift for consumer

product manufacturers and retailers.

Many traditional consumer businesses

and new start-ups alike are moving

away from models that are shop-

centric or geographically-focused, to

ones that are customer-centric and

virtually borderless. To help inform

companies tackling this transformation,

KPMG International’s recent survey of

18,430 consumers provides a unique,

comprehensive index of consumer

online shopping behaviors and

sentiments across countries, products

and generations.

Online shopping as a

rising trend

The frequency of online purchases

varies considerably by geography.

Consumers in Asia, North America and

Western Europe are most likely to shop

online, while per capita online purchases

in Eastern Europe and Russia, Latin

America, and the Middle East and Africa

are less frequent (Figure 1.0).

A Generation X are the most

active online shoppers

Among the different age groups,

Generation X consumers (born between

1966 and 1981) made more online

purchases last year than any other age

group, averaging nearly 19 transactions

per year. Interestingly, despite the

common belief that the upswing in

online shopping is largely driven by

the younger and more ’tech-savvy‘

Millennials (born between 1982 and

2001), Generation X consumers in fact

made 20 percent more purchases last

year than their younger counterparts.

Stage of life and income levels are

certainly primary factors driving

both online and ofﬂine shopping,

and Generation X consumers, many

ofwhichare more established in

their careers and building homes

Survey respondents were

required to have purchased

at least one consumer

product online in the past

12 months.

“There is a little Millennial in each of us. A number

of Baby Boomers are starting to understand and

appreciate the technology that is out there. They’re also

trying to appreciate and experience the convenience of

buying online.”

— Mark Larson, Head of Consumer and Retail, KPMG in the US

©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member ﬁrms of the KPMG network are afﬁliated.

2017 Global Online Consumer Report 5

0

5

10

15

20

25

19

9.2

18.4

11.9

22.1

16.1

11

North America

Latin America

Western Europe

Africa & Middle East

Eastern Europe & Russia

Asia

Australia & New Zealand

$203

$190

$173

Baby

Boomers

Generation X Millennials

and families, are likely buying more

consumer goods than the younger

Millennials overall. As Millennials

continue to enter the workforce and

adopt new lifestyle priorities, however,

their online shopping activity is

expected to surge and even far surpass

levels currently exhibited by older

generations.

Don’t underestimate

the Baby Boomers

Compared to the digital-ﬁrst Millennial

generation, it is reasonable to presume

that Baby Boomers (born between

1946 and 1965) are less inclined to shop

online. However, the Baby Boomers

surveyed in fact shopped online

just as frequently as the Millennials.

Furthermore, the Baby Boomers on

average spent more per transaction

than either of the two other younger

generation groups (Figure 1.1). This

Figure 1.0

Average number of online

transactions (per person per year)

Figure 1.1

Average amount spent per

transaction (USD)

generation was more likely to buy

healthcare products, wine, household

goods and appliances, categories which

tend to have higher price points.

Men spend more online than

women

While men and women shopped with

about equal frequencies, on average,

the men spent more per transaction—

US$220 vs. US$151 for women—on

their most recent purchase. This can

largely be attributed to the fact that

the male consumers were more

likely to buy items in higher priced

categories such as luxury goods (55

percent of luxury transactions were

by men) or electronics (72 percent of

electronics transactions were by men),

while women were more likely to buy

in lower-priced categories such as

cosmetics or food.

15.1

18.6

15.6

Baby

Boomers

Generation X

Millennials

Source: Global Online Consumer

Report, KPMG International, 2017

Source: Global Online Consumer

Report, KPMG International, 2017

©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member ﬁrms of the KPMG network are afﬁliated.

6 2017 Global Online Consumer Report

Top online

products by

geography

In most countries, media,

electronics, and apparel are

among the 5 products most

often purchased online.

Product category trends

The online shopping landscape is

gradually changing in terms of the

types of products being bought online.

Generally, consumers’ planned online

purchases indicated a year over year

increase for most product categories

(Figure 1.2). These results signal a

higher willingness to buy new product

categories online, particularly those

more traditionally sold in shops. For

example, greater options for shipping

and delivery have made it easier and

more common to buy bulkier products

online—including furniture, appliances

and even vehicles. Meanwhile, although

‘easier to ship’ products such as books,

music, electronics, accessories and

apparel remain the most popular online

categories, relative growth in these

segments is expected to be minimal.

In fact, we see a possible downward

trend for books and music, currently

the number one online category,

asMillennials purchase these items

online less often than the older

generations. It will be worth watching

this particular category over the

next few years to see if Millennials’

preference for streaming

2

vs buying

media continues to put downward

pressure on online sales of books and

music, since even as Millennials get

older this is one area where buying

habits are unlikely to change.

On the other hand, bigger items such

as household goods and appliances,

furniture, home décor and sporting

goods show some of the highest

growth potential. According to

respondents’ planned online purchases

for the coming year, online sales of

household goods and appliances are

expected to increase by 3.5 percentage

points, furniture and home décor by

4.3 points and sporting goods and

equipment by 4.4 points. Telecom

products and fragrances are categories

that are also expected to grow, by 4.5

and 2.8 percentage points respectively,

as are wine, liquor and art.

In general, growth categories tend to

be those which do not need trial and/or

where consumers can have relatively

more faith in product quality.

Books and

music

Electronics

Apparel

2

https://www.purposegeneration.com/buzz/article/streaming-the-future-millennials-and-media

“Clearly, ecommerce has been growing globally

across many ‘usual suspect’ categories like apparel,

books, and music. But what we are now starting

to see, and where we expect more growth, is from

categories where showrooming often occurs, such as

mobile phones and laptops, as well as furniture and

decoration items. Even in the grocery retail market we

see opportunities. Very few retailers get their online

grocery model right, but when they do, it can be very

successful. Winning companies in this segment have

focused on Millennials and young professionals,

where the focus on prepared fresh meals has been a

growth driver.”

— Willy Kruh, Global Chair, Consumer Markets,

KPMG International

©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member ﬁrms of the KPMG network are afﬁliated.

2017 Global Online Consumer Report 7

Apparel

53

0.5

(0.6)

1.0

3.5

(1.0)

2.3

1.4

1.7

0.8

4.3

4.4

2.0

4.5

2.2

54

47

40

41

36

39

40

39

34

36

33

34

29

31

30

31

26

31

26

30

27

29

23

27

25

27

Books/

Music

Growth in

% points

Electronics/computers/

peripherals

Apparel –

women

Household goods

and appliances

Accessories

Apparel –

men

Food/

groceries

Toys/games/

video games

Cosmetics/

skin care

Furniture/

home décor

Sporting goods/

equipment

Shoes –

women

Telecommunications/

phones

Shoes –

men

22

23

20

21

18

21

20

21

15

17

13

15

12

13

14

13

12

11

12

9

11

10

5

6

Apparel –

children

0.8

1.5

2.8

1.6

2.7

1.3

0.7

(1.0)

0.8

1.0

1.5

0.8

1.1

Bags/

leather goods

Perfume/

cologne

Pharmacy/

healthcare

Wine

Shoes –

children

Fine jewelry/

watches

Baby

products

Eyewear

Pet food

and supplies

Liquor

Beer

Artwork

Figure 1.2

Actual vs planned online purchases:

Last year vs next year

Percentage that purchased the

product in the past 12 months

Percentage planning to purchase

the product in the next 12 months

Wine

Australia and

Belgium

Accessories

US, Indonesia and

Turkey

Telecom products

and men’s

footwear

India, Russia, and

the UAE

Cosmetics

Asia-Paciﬁc, Russia

and CEE

Pharmacy and

healthcare

products

Brazil and Greece

Household

goods

Africa and the

Middle East

Groceries

UK and China

Sporting goods

Finland

Children’s

clothing, toys

and games

France

The following products were

also among the top 5 in these

geographies:

Source: Global Online Consumer

Report, KPMG International, 2017

©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member ﬁrms of the KPMG network are afﬁliated.

8 2017 Global Online Consumer Report

Generational trends —

a closer look

When looking at differences by age

group to spot trends, further analysis is

required to determine when an apparent

trend indicates sustainable future

behavior, versus when it is simply due to

a difference in age or income.

For example, contrary to the earlier

example suggesting that media sales

may continue to decline even as

Millennials mature, the interpretation of

this generation’s similar lower tendency

Figure 1.3

Expected category growth by

generation: Percentage point difference

between last year and next year

to buy a category such as household

goods (Figure 1.3) is different. In this

case, fewer household goods purchases

by younger age groups is more likely

due to the ‘age effect’ or ‘cohort effect’

3

,

where behaviors are tied to age or stage

of life rather than to lasting attitudes.

In fact, as Millennials grow older, the

potential for buying household goods

online is probably quite strong.

Artwork is a small category in terms

of the percentage of total consumers

buying it online, however this category’s

online sales seem to be growing quickly

among Millennials. As Millennials’

interest in art, comfort with buying

art online, and disposable incomes all

grow, we see this as another category

showing solid potential.

Rise of international trade and

e-tailers

Cross-border shopping is on the rise

globally, driving international retail trade.

As part of this study we looked at the level

and nature of online purchases made

outside consumers’ own countries.

1.1

1.5

Baby Boomers

Generation X

Millennials

Eyewear

–.7

.5

1.9

Fine

jewelry/

watches

–2.1

.9

2

Pharmacy

/healthcare

2.5

2.1

.6

Perfume/

cologne

1.8

3.1

Bags/

leather

goods

–.7

1.4

2.8

Furniture/

home décor

2.6

4.8

4.7

1.5

1

.3

.4

2.2

2.6

5.9

3.6

2

Cosmetics/

skin care

Shoes —

women

Household

goods and

applicances

.7

–.6

–2.2

Acces-

sories

1.6

.8

–.3

Books/

music

Artwork

3

https://en.onpage.org/wiki/Cohort_Analysis

“Much of the future growth in ecommerce will be millennial-driven. In 2 or 3 years,

Millennials are forecasted to be the largest demographic in North America. As

Millennials delay leaving their parents’ house and delay getting married, they spend their

money on other things. Brands like Uber and Apple, and the craft beer industry have all

to some degree been ignited by Millennials. Grocery spending, on the other hand, has

been eclipsed by restaurant spend. Millennials like to share meals with friends—it’s all

about shared experiences.”

— Willy Kruh, Global Chair, Consumer Markets, KPMG International

Source: Global Online Consumer

Report, KPMG International, 2017

©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member ﬁrms of the KPMG network are afﬁliated.

2017 Global Online Consumer Report 9

0

10

20

30

40

50

14

44

15

43

21

35

50

North America

Latin America

Western Europe

Africa & Middle East

Eastern Europe & Russia

Asia

Australia & New Zealand

Figure 1.4

Percentage of online purchases

imported from other regions

Figure 1.4 shows the percentage of online

purchases that consumers made outside

their own region. North American and

European consumers made the fewest

international purchases,14 and 15

percent respectively of their total online

purchases—not surprising given the

maturity of these markets, where the most

popular products can already be sourced

domestically at competitive prices.

Asian consumers’ imports averaged 21

percent—although it varied signiﬁcantly

by country. While Hong Kong, Singapore

and Vietnam had signiﬁcant imports at

31, 43 and 55 percent, respectively, of

their online purchases, other countries

such as Indonesia, Japan and India each

imported only 12 percent or less of their

online buys outside Asia. China, with 20

percent imports from outside Asia, lay

somewhere in the middle.

In Australia and New Zealand, the

percentage of online purchases

imported from outside this region

was 35 percent, with 25 percent of

those imports from North America

and Europe. The geographically more

remote location of these countries is

likely one of the key drivers.

The bottom three regions in Figure 1.4

are the markets most likely to make

international purchases online. In

Eastern Europe and Russia, 43 percent

of all online purchases were imported,

mainly from Asia (15 percent), Western

Europe (13 percent) and North America

(8 percent). In Latin America, 44 percent

of online purchases were imported,

with nearly 60 percent of those imports

from North America. African and Middle

Eastern consumers were the most likely

to import consumer products bought

online (50 percent of purchases). This

is particularly true in the UAE, where

58 percent of online purchases were

imported—with 80 percent coming from

Asia, North America and Western Europe.

In many countries, the tendency to

buy internationally is highest among

Millennials. This could indicate potential

growth for cross-border online shopping

as consumers increasingly seek unique

or specialized products from other

countries. In the US, for example,

15percent of Millennials’ recent

purchases were imported, compared

to 9 percent for Generation X and just

3 percent for Baby Boomers. It will be

interesting to see how the new US

administration’s proposed focus on

domestic protectionism might affect

the trend for younger US consumers to

shop outside the country.

Source: Global Online Consumer

Report, KPMG International, 2017

©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member ﬁrms of the KPMG network are afﬁliated.

10 2017 Global Online Consumer Report

Case study

10 2017 Global Online Consumer Report

Nespresso

Roger Staeheli, Country Manager, Hong Kong

Nespresso SA was

founded by Nestlé 30

years ago, to introduce

a revolutionary system

of coffee machines and

portioned encapsulated

coffee. Initially in 1986,

the company focused

on the corporate ofﬁces

market, and a few years

later expanded to selling

direct to consumers.

Today, Nespresso’s

450 retail boutiques

can be found in 64

countries throughout

the world. Nespresso’s

boutiques are an

important branding and

sales channel for the

company, although the

fastest-growing part of

their business in some

countries such as Hong

Kong, is online.

Nespresso’s omni-channel

evolution

Roger Staeheli, Nespresso’s Country

Manager for Hong Kong, explains that

Nespresso operates autonomously

from Nestlé, due to its unique direct-

to-consumer (B2C) model that requires

the company to have their own sales

channels. The company’s four B2C

channels include: retail boutiques, an

online boutique, coffee machine trade

points, and call centers called Customer

Relationship Centers, where more than

1,000 coffee specialists offer support to

Nespresso Club members.

Nespresso’s sales channel evolution

evolved in the opposite way than

that of many similar long-standing

retailers. After initially selling through

its Customer Relationship Centers,

Nespresso launched its Nespresso

website in 1996, began to take orders

online in 1998, and opened its ﬁrst retail

boutique in 2000 in the city of Paris.

According to Staeheli, this progression

from online to retail shops was born

out of necessity, rather than choice.

“Thirty years ago, coffee that was sold

at retailers was instant coffee. So we

decided to retail our own products

ourselves. We ﬁrst established the

call centers then evolved into different

channels from there.”

Staeheli says the goal today is to offer

a consistent experience to customers

across all channels, both ofﬂine and

online. “It’s about consistency in the

product, price and promotion.”

©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member ﬁrms of the KPMG network are afﬁliated.

Integrated channels and

customer relationships

The company is very clear on the role

of each of its channels, he says. “Retail

is very much about delivering the brand

experience. Online is about Nespresso

‘anytime, anywhere’. Trade is focused on

machine sales and is a channel through

which we can recruit new members. The

Customer Relationship Center, which

used to be a transactional channel,

today is about building relationships.”

Typically, new customers that are initially

recruited through a Nespresso boutique,

then become online customers.

Subsequently, these customers are

regularly invited back into the boutique

or shop to try new coffee innovations

to enable Nespresso to engage directly

with them. Since in most cases,

customers are also members of the

Nespresso Club, the company is able

to gain a good understanding of their

individual customers’ behaviors and

preferences, therefore enabling them to

tailor their marketing campaigns or offer

customers personalized experiences.

Ofﬂine vs. online in Hong Kong

Despite the fast growth of Nespresso’s

online channel, Staeheli highlights the

two main challenges to ecommerce

in Hong Kong. “We want to offer our

online customers greater convenience,

but going out to the shops in Hong

Kong is already very convenient, since

most households are within ﬁve to ten

minutes of a mall. So to better serve

our online customers, we offer same-

day delivery during a certain period of

the day. The other challenge for Hong

Kong then becomes the high cost of

distribution.”

2017 Global Online Consumer Report 11

“ Overseas born Australians have been a contributing factor to ecommerce growth. In

cities like Sydney, Melbourne and Brisbane with large percentages of overseas born

nationals, consumers have always been comfortable buying goods online as it was

often the only way to get the products they liked.”

— Trent Duvall, Head of Consumer Markets, KPMG in Australia

E-tailers dominate the online

marketplace

The rising power of e-tailers such as

Taobao, Alibaba or Amazon, to name

a few, is apparent around the world.

Their dominance is particularly evident

in China and India—where over 80

percent of online purchases were

from e-tailers—as well as in Japan

(69 percent), Italy (68 percent) and

South Africa (65 percent). The share for

e-tailers in these countries is far above

the global average of 50 percent.

A trend of younger consumers being

less likely than Baby Boomers to buy

from e-tailers could indicate a future

slowdown in this platform’s growth.

Fifty-four percent of Baby Boomers,

who are less prone to shop around for

price and who prefer to buy from familiar

websites, made their most recent

purchase from an e-tailer, compared to

Millennials with e-tailer purchases at 48

percent. Conversely, Millennials were

30 percent more likely than the Baby

Boomers to buy directly from a retail

shop’s website (Figure 1.5).

Figure 1.5

Where most recent purchase was made (%)

An online-only retailer

0

20

40

60

80

100

120

0

20

40

60

80

100

120

Retailer’s website

Manufacturer or brand’s website

Other

5

8

10

5

11

34

12

10

33

5

7

18

42

46

5

11

10

11

43

45

16

29

51

28

56

45

70

36

6

13

27

54

7

10

34

50

6

10

35

48

Baby

Boomers

Generation X Millennials

6

13

27

54

7

10

34

50

6

10

35

48

Baby

Boomers

Generation X Millennials

North America

Latin America

Western Europe

Africa & Middle East

Eastern Europe & Russia

Asia

Australia & New Zealand

Source: Global Online Consumer

Report, KPMG International, 2017

©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member ﬁrms of the KPMG network are afﬁliated.

12 2017 Global Online Consumer Report

Figure 1.6

Preferred device for shopping online (%)

0

20

40

60

80

100

120

0

20

40

60

80

100

120

29

6

59

6

5

60

24

7

6

63

71

5

6

18

59

5

10

27

48

19

8

25

54

5

8

33

North America

Latin America

Western Europe

Africa & Middle East

Eastern Europe & Russia

Asia

Australia & New Zealand

54

11

6

29

55

8

9

28

67

4

10

20

Laptop or PC

Smartphone

Tablet

No preference

Baby

Boomers

Generation X Millennials

or laptops, while 17 percent said they

preferred to use a mobile device and 27

percent had no preference (Figure 1.6).

Device preferences varied signiﬁcantly

by region, with Asian consumers being

more than twice as likely (19 percent) as

the global average (8 percent) to shop

on a smart phone. This was particularly

Device preference trends

Despite the global proliferation of

mobile smart phones and tablets,

the majority of consumers still prefer

traditional desktop PCs or laptops when

shopping online. More than half (57

percent) of online purchasers globally

said they prefer to use desktop PCs

evident in China, where 26 percent

favored a mobile device. As expected,

Millennials were the generation most

likely to use a smartphone for shopping

(11 percent of recent purchases)

although 54 percent of them still used

a laptop or desktop PC for their most

recent online purchase.

“One of the reasons that China is so mobile-centric is because third-party payment

systems using mobile apps are widely accepted in China both online and in shops.

Chinese consumers are unique in their high conﬁdence in third-party payment systems.

Another reason is the high penetration of smartphones—largely due to the number of

local manufacturers and competitive prices. Lastly, a lot of people have leapfrogged to

ecommerce because of the lack of shops or brands available to them. The smartphone

literally brings shops to rural consumers for the ﬁrst time.”

— Jessie Qian, Head of Consumer Markets, KPMG in China

Source: Global Online Consumer

Report, KPMG International, 2017

©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member ﬁrms of the KPMG network are afﬁliated.

2017 Global Online Consumer Report 13

Smart phones keep ofﬂine

shoppers connected

While mobile may not be the most

preferred online sales channel, over two-

thirds of the consumers said they had

used a smartphone for product research

while in a physical shop (Figure 1.7).

This was particularly common in

Singapore (83 percent), Brazil

(79 percent), CEE (78 percent) and the

US (77 percent), whiles many European

consumers are about 10 to 15 percent

less likely than average to look up

products online while out shopping.

Millennials in all regions were more

likely than their older counterparts to

look up information on a smartphone

while out shopping (77 percent).

However, even half of the oldest

generation of respondents said they

had checked their mobile devices while

in a shop.

What were consumers looking up?

Comparing prices was the main reason

for doing online research while out

shopping, followed by looking up

product information and checking online

reviews (Figure 1.8).

“Companies should be channel agnostic, meaning it does not matter if they start with

online or ofﬂine, what matters is that all channels are interlinked to give consumers the

convenience they need. Online plays a major part in the customer journey or ROPO

(research online, purchase ofﬂine). The most successful multi-channel companies

established their online channels as early as the late nineties, went on to establish ‘click

and collect’, eradicated silos across the entire organization and established a channel

agnostic incentive program so retail staff do not consider online as a separate business.”

— Paul Martin, UK Head of Retail, KPMG in the UK

50%

70%

77%

Baby

Boomers

Generation X Millennials

Figure 1.7

Percentage of consumers that have

used their smartphone to look up a

product while in a shop

Figure 1.8

Percentage of consumers that looked

up the following information about a

product while in a shop

Price comparison with

other retailers

65%

Product information/

specifcations

61%

Online

reviews

49%

Product options

(e.g. color, size, style, etc.)

35%

Store inventory/

availability

16%

Source: Global Online Consumer

Report, KPMG International, 2017

Source: Global Online Consumer

Report, KPMG International, 2017

©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member ﬁrms of the KPMG network are afﬁliated.

14 2017 Global Online Consumer Report

The path to

purchase

journey

The ‘path to purchase’ is a traditional

shopping concept that has evolved

signiﬁcantly over the past decade due

to the internet, digital innovation and

the subsequent rise of online shopping.

Although the digital revolution hasn’t

altered the fact that consumers

still experience the same stages of

awareness, consideration, conversion

and evaluation, the journey itself has

changed. Instead of a path to purchase

that is traditionally linear, it has

become more of a cycle or even a web.

Consumers move through and back and

forth between the stages, inﬂuenced

by a myriad of both ofﬂine and online

factors at every stage.

In order to investigate the drivers,

motivators and inhibitors affecting

consumers’ decisions during a typical

online transaction, a simpliﬁed cyclical

path to purchase model was used for

this study (Figure 2.0). Respondents

were asked to describe their behavior

during their most recent online

transaction at each of four stages:

Awareness

When they ﬁrst became aware of or had

a desire for the product

Consideration

When they were researching the

product online or ofﬂine

Conversion

When they were deciding where and

when to buy the product

Evaluation

After they made the purchase

“To create loyalty with Millennials, brands need to ﬁrst cover

the basics—that means top notch customer service and

quick, individualized responses, through the channels they

use such as social media and messaging. But beyond that,

brands need the right content strategy. They need to engage

Millennials with communications that are both entertaining

and informative. Elements of gamiﬁcation or exclusivity can

work well. Some of the footwear brands that are popular

with Millennials use limited editions to create product and

brand buzz. Millennials will line up physically and digitally to

get their hands on these exclusive products.”

— Joel Benzimra, Global Advisory Lead for Consumer Markets,

KPMG International

©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member ﬁrms of the KPMG network are afﬁliated.

2017 Global Online Consumer Report 15

In an online shop

16.7

30

Online: 59% Offline: 52%

1515

10

7

10

22

15

13

9

8

12

In an advertisement

In an online review

In a social media post or blog

In an email promotion

In an online article or magazine

In a physical shop

Talking with my friends

Talking with my family

I saw a friend with it

in a print magazine or newspaper

I saw it on TV or in a movie

Online shop

30%

Any online

channel: 59%

Any offline

channel: 52%

15%15%

10%

7%

10%

22%

15%

13%

9%

8%

12%

Online

Online review

Social media post or blog

Email promotion

Online article or magazine

Physical shop

Talking to friends

Talking to family

Saw a friend with it

Print magazine or newspaper

On TV or in a movie

Stage 1 — Awareness:

triggers and inﬂuencers

When comparing the impact of

online versus ofﬂine touchpoints in

creating the ﬁrst trigger moment, it is

interesting to observe that 52 percent

of consumers cited at least one ofﬂine

channel as a source of initial awareness,

and 59 percent cited one or more online

channels (Figure 2.1).

Using a multi-channel strategy

to create awareness

Retail websites or online shops were

the most common source of initial

product awareness, cited by nearly

a third of consumers, and online

advertisements were cited by 15

percent. At the same time, physical

shops were the second most popular

source of awareness, cited by

22 percent of consumers.

Ecommerce is clearly far from being

an online-only affair. Both online and

Figure 2.0

Simpliﬁed path to purchase

Stages of the online purchase journey

Figure 2.1

Channels where consumers saw the product before purchasing

ofﬂine channels are effective in creating

consumer awareness and demand,

especially when they are used together.

This is true for both corporate-controlled

channels (shops, websites, advertising),

as well as third-party sources of

information. After websites, shops or

online advertising, the most common

sources of product awareness were

online reviews (cited by 15 percent),

talking with friends (15 percent), social

media (13 percent) or seeing a friend

with it (12 percent).

Consideration:

product and

company

research

Conversion:

deciding where and

when to buy

Awareness:

triggers and

inﬂuencers

Evaluation:

experience

and

feedback

Awareness:

triggers and

inﬂuencers

1.

Conversion:

where and

when to buy

3.

Evaluation:

experience

and feedback

4.

Consideration:

product and

company research

2.

Source: Global Online Consumer

Report, KPMG International, 2017

©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member ﬁrms of the KPMG network are afﬁliated.

16 2017 Global Online Consumer Report

Consumers’ increasing reliance on

peers or ambassadors means that

customers are among the most

inﬂuential promotional conduits for

companies. Both online and ofﬂine,

the frequency of peer opinions as

top awareness inﬂuencers highlights

the signiﬁcance of creating brand

ambassadors and delivering a positive

customer experience.

Awareness triggers by

generation

Millennials are not only more likely than

the older generations to be inﬂuenced

by online sources such as social

media or peer reviews—they are also

more likely to be inﬂuenced by ofﬂine

channels. Millennials were 25 percent

more likely than Baby Boomers to have

seen their most recent purchase in a

shop, nearly 50 percent more likely

to have talked to a friend about it, and

more than twice as likely to say they

saw a friend with it (Figure 2.2).

Although Millennials are certainly digital

natives ﬁrst, they are also at least as

active and inﬂuenced as their parents

are beyond the digital world.

Stage 2 — Consideration:

product and company

research

During the consideration stage, the

importance of online channels continues

to prevail, with the top two channels for

research being online reviews (cited by

55 percent of respondents) and company

websites (47 percent) (Figure 2.3).

Ofﬂine channels are also a signiﬁcant

source of information, with 26 percent

of consumers saying they visited a

physical shop during the research stage

and 23 percent saying they spoke to

friends or family about the product.

Figure 2.2

Ofﬂine channels where consumers saw the

product before purchasing, by generation

Figure 2.3

Percentage of consumers using the following channels to

research products they bought online

Online search for reviews and

recommendations

Visited the

company website

Visited physical stores

to see, try or ﬁt the product

Spoke with my friends

or family about it

23%

55%

47%

26%

18%

22%

24%

Baby Boomers

12%

13%

17%

8%

11%

17%

Physical shop Talking with friends Saw a friend with it

Generation X Millennials

Source: Global Online Consumer

Report, KPMG International, 2017

Source: Global Online Consumer

Report, KPMG International, 2017

©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member ﬁrms of the KPMG network are afﬁliated.

2017 Global Online Consumer Report 17

Case study

Ryohin Keikaku (Muji)

Kenji Takeuchi — Executive Ofﬁcer

©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member ﬁrms of the KPMG network are afﬁliated.

Muji, founded in the

1980s, is a globally

renowned Japanese

retail brand selling more

than 7,000 household

goods, apparel and food

items. Their products

are sold both through

their online store, and in

over 700 shops around

the world—mainly in

Japan, as well as in over

26 other countries. As

an Executive Ofﬁcer at

Ryohin Keikaku (RKJ),

Kenji Takeuchi is in charge

of Muji’s corporate

planning, ﬁnance and IT.

Japan business leads in

ecommerce

Ecommerce is a key part of Muji’s

business, although there is still

room for growth in their online sales,

especially outside of Japan. According

to Takeuchi-san, “In Japan, Muji’s online

transactions account for around 10

percent of total sales, whereas in other

countries it is lower; in Germany and

China for example, only about 4 percent

of sales come from online.”

Targeting different segments

Muji’s target market is not based solely

on demographics, but on market size

and respective consumer behaviors.

“We target customers who are

trend-conscious and are leading total

consumer spending in each region. For

example, Generation X are the main

target in Japan because they have a high

interest in shopping, and also have the

disposable income.”

In China, on the other hand, “Millennials

are the main target because we regard

them as the most up-to-date on trends

and they are highly engaged digitally”,

says Takeuchi-san. He also notes that,

“In Japan, where the retail market

is very mature, there are not many

differences between generations in

terms of online shopping. The only

difference Muji sees is that Millennials

contribute to information diffusion,

while Generation X consumers lead in

consumption.

Muji is a true omni-channel

retailer

Muji actively pursues synergies

between its ofﬂine and online channels,

and they have formal key performance

indicators (KPIs) in place that ensure

these synergies are maximized.

According to Takeuchi-san, “The number

of customers that visit our shops is a

KPI for our ecommerce division. One of

the objectives of that group is to direct

consumers shopping online to come

into our physical locations.”

In addition to online to ofﬂine, Takeuchi-

san discusses how their customers

also go from shopping ofﬂine to online.

“Furniture is a category that people

often prefer to shop for in person, so

they can see and touch the products.

However, the ﬁnal purchase decision

may not be made until the consumer

goes home and is able to measure and

see if it will ﬁt in their space. To allow

customers to then purchase the items

online, we ensure that they can be

easily ordered and quickly delivered.”

Communicating content instead

of speciﬁc products

Muji does not advertise their speciﬁc

products but instead relies on

consumers seeking new trends, styles,

and information. According to Takeuchi-

san, “Our advertising style is focused

on the communication of a concept.

We use our online asset ‘MUJI.net

community’ and online loyalty program

‘MUJI passport’ to communicate

concepts and provide information

that can be shared on Facebook or

Instagram, to entice consumers to visit

our website or stores.”

Muji uses its loyalty program to

encourage customers to provide

feedback and promote the company’s

products online. Members receive

‘MUJI Miles’ not only for making

purchases, but also for checking into

stores, posting product comments or

participating in other promotions.

Online community is a point of

differentiation

The MUJI.net community is considered

to be an area of differentiation for

Muji. The brand has developed a loyal

member base through this community,

with which they regularly communicate

regarding trends and products. Takeuchi-

san explains, “We provide interactive

content, and columns to publish our

views on social issues, and we engage

customers in product development by

asking for their ideas and opinions. This

contributes to building loyalty among

our customers.”

18 2017 Global Online Consumer Report

“Consumers are ﬁrmly in charge today and they are looking at personalization of services.

Today’s consumer is more similar to the 1920’s consumer with a personal relationship

with shopkeepers. Therefore, big data is important – retailers should understand

what individual consumers buy and what they do. They should cater to consumers as

individuals.”

— Paul Martin, UK Head of Retail, KPMG in the UK

Millennials are 50 percent more

likely than Baby Boomers to

visit a store

As in the awareness stage, Millennials

are more likely than both Generation X

and Baby Boomer consumers to use

ofﬂine channels during the consideration

stage. While online reviews and product

websites are most frequently consulted,

Millennials were also nearly 50 percent

more likely than Baby Boomers to

research a product by visiting a store or

talking to friends and family (Figure 2.4).

Trust in online reviews vs

company websites varies by

region

In Asia, Eastern Europe and Russia,

consumers seem to put a much heavier

reliance on online reviews vs corporate

websites than other regions (Figure

2.5). This comparatively lower trust

in corporate content can be a risk for

companies in these regions since they

lack control over messaging and product

information contained in consumer

reviews. In addition to having informative

websites, these companies need to pay

particular attention to ensuring that have

favorable reviews on social media and

other third party forums.

Factors driving ﬁnal product

decisions

Overall, price or promotions (identiﬁed

by 27 percent of respondents) were

the factors most likely to inﬂuence

consumers’ decision regarding which

product or brand to buy online. After

price and promotions, product features

(23 percent) or brand reputation (22

percent) were also commonly identiﬁed

as the top considerations when making

a ﬁnal product choice (Figure 2.6).

Product decision factors varied by

category. For fashion, food and

luxury items, brand reputation was a

particularly important consideration,

although price was still the top decision

factor (especially for luxury items, cited

by 33 percent). For cosmetics, however,

brand reputation and online reviews

were the leading considerations (27

and 21 percent respectively), and for

electronics, product features were most

important (25 percent), closely followed

by price, brand reputation and online

reviews (each cited by one-ﬁfth of the

electronics buyers).

Figure 2.4

Channels used to research online purchases — by generation

Baby Boomers

Did online search for

reviews & recommendations

Visited the

company website

Online channels

Offline channels

Generation X

Millennials

52%

56%

45%

48%

Visited physical stores to see,

try or fit the product

Spoke with my friends or

family about it

20%

30%

26%

19%

27%

20%

Source: Global Online Consumer

Report, KPMG International, 2017

©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member ﬁrms of the KPMG network are afﬁliated.

2017 Global Online Consumer Report 19

Did online search for

reviews & recommendations

Online channels

Offline channels

Visited the

company website

Visited physical stores to see,

try or fit the product

Spoke with friends or

family about it

42

44

52

32

25

55

49

28

20

55

50

22

50

48

22

19

49

53

20

16

66

42

3131

5

11

64

44

30

25

North America

Latin America

Western Europe

Africa & Middle East

Eastern Europe & Russia

Asia

Australia & New Zealand

Figure 2.5

Percentage of consumers using the following

channels to research online purchases — by region

Figure 2.6

Factors driving purchase decisions

27% Price/promotions

23% Product features

22% Brand

17% Online reviews

5% Newest trends

or arrivals

4% Peer inﬂuences/

recommendations

2% Complementary

products

Decision factors by region

Consumers in Australia, New Zealand,

Canada, France, Belgium and South

Africa were most likely to be inﬂuenced

by price or promotions. In these

countries, more than 38 percent of

consumers said price and promotions

were the factors that drove their most

categories

made same day

Telecommunications/phones

10%

Furniture/home decor

14%

Electronics/computers/peripherals

15%

Household goods and appliances

18%

Fine jewelry/watches

18%

Sporting goods/equipment

18%

Source: Global Online

Consumer Report, KPMG

International, 2017

©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member ﬁrms of the KPMG network are afﬁliated.

2017 Global Online Consumer Report 27

Understanding

consumer attitudes

and motivations

What drives a customer to buy online

or ofﬂine in the ﬁrst place? Why do they

trust some companies or websites over

others? And what motivates someone

to become a repeat customer or loyal

ambassador? Understanding these

consumer sentiments is critical for

companies when formulating their

brand, market positioning and overall

experience offering.

What’s driving the shift to

online?

When consumers were asked what

factors motivated them to buy online

instead of going to a shop, the top

reasons were time ﬂexibility and cost

savings (Figure 3.0).

Consumers also said they preferred

shopping online to avoid the negative

experiences associated with going

out to shops—these consumers in

Figure 3.0

Reasons consumers shop online

instead of in stores

Ability to shop 24/7

Ability to compare prices

Online sale/better prices

To save time

Convenience of not

going to shops

Greater variety/selection

Free shipping offers

Convenience of

everything in once place

To locate hard to ﬁnd items

To avoid crowds

Products are not sold in

my city/country

To avoid checkout lines

Convenience

Price-related

Push from offline

Ease of selection

Free shipping

Only option to buy

58%

54%

46%

40%

39%

29%

27%

20%

15%

11%

Source: Global Online Consumer

Report, KPMG International, 2017

©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member ﬁrms of the KPMG network are afﬁliated.

28 2017 Global Online Consumer Report

Figure 3.1

Percentage of consumers who shop

online to avoid crowds — by country

a way are ‘pushed’ online by the

inconveniences of traveling to a

shop, being in a crowd, or standing in

checkout lines. This was particularly

evident in some countries with densely

populated cities. Consumers in China,

India and Singapore (Figure 3.1), for

example, were the most likely to say

crowd avoidance was a top motivator to

shop online.

Another key driver for some who are

buying online is access to products

not otherwise available in local shops.

Although on average this was one of

the least common reasons for shopping

online, in certain regions such as Latin

America and Asia-Paciﬁc, it was cited as

a top reason by a quarter to nearly half

of all consumers surveyed.

The countries where consumers

were most likely to shop online out

of necessity tend to be those where

product availability or selection is limited,

or where much of the population lives

in remote areas with limited access to

shops or certain goods.

Overcoming the hurdles to

selling online

Although the percentage of total retail

sales made online is unquestionably

growing, on average, the majority of

consumer purchases are still made in

shops (Figure 3.2).

Figure 3.2

Online retail sales as a percentage

of total retail sales

(US$ trillions) 2015-2020

Ecommerce sales

Source: eMarketer, Aug 2016

2015 2016 2017 2018 2019 2020

$1.9

$1.5

$3.4

$2.4

$2.9

7

$4.1

Ecommerce as a percentage of total retail sales

0

10

20

30

0

10

20

30

7.4%

8.7%

10.0%

11.5%

13.0%

14.6%

“ As more advances in technology such as

blockchain or payment apps emerge, the

move to cashless societies will create

new ways for retailers and online brands

to offer beneﬁts to customers. Banks

and other payment technology providers,

including credit card companies, need

to be aware of these changes and join

the game, or risk losing their leading

positions.”

— Willy Kruh, Global Chair, Consumer Markets,

KPMG International

Source: Global Online Consumer

Report, KPMG International, 2017

©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member ﬁrms of the KPMG network are afﬁliated.

2017 Global Online Consumer Report 29

Figure 3.3

Reasons consumers shop in stores

instead of online

I want to see/touch

item ﬁrst

I want to try

the item on

Concerned products

look different

Delivery takes

too long

Shipping costs are

too high

Product is too valuable

to buy online

Enjoy the experience of

going to the shops

I have to go to the

shop anyway

I want to verify

the authenticity

Return process is

too complicated

Do not trust

online security

I want to talk

to a salesperson

Touch/try product

Shipping

Enjoy experience

Other

56%

55%

41%

34%

25%

24%

23%

16%

15%

14%

13%

11%

“ As part of an integrated

customer-centric business

model, customers expect

that goods can be delivered

or picked up wherever they

are located. They want their

orders consolidated, they want

shipping bundled with service,

and they want to be able to

return things easily. In order to

meet these growing demands,

companies need either better

distribution systems or partners

that can do it better for them.”

— Julio Hernandez, Global

Customer Lead, KPMG

International

Only 23 percent of consumers said

they prefer visiting shops to enjoy the

shopping experience. Most often, it is

because they want to see, touch, try

on, or verify the appearance or features

of a product before buying (Figure 3.3).

Retailers looking to drive online sales of

products that consumers are less willing

to buy sight unseen may use strategies

to persuade them to shop online. These

might include providing comprehensive

sizing and measuring charts, detailed

photographs with 360° and zoom

viewing, free fabric swatches by mail,

satisfaction guarantees, or easy returns,

to name a few.

As consumers continue to shift their

shopping to online, retailers who

understand the factors motivating them

to shop online or in-store will be better

positioned to create sales channels that

meet their customers’ evolving needs

and preferences.

Winning the online consumer

As explained in the previous chapter,

during the conversion stage, having the

most competitive price won’t guarantee

a sale. Although price was cited by 57

percent of consumers as a top factor

in deciding which website to buy from,

the next key attributes were enhanced

delivery options and easy return policies

(Figure 3.4).

Figure 3.4

Most important company attributes when deciding where to buy

The lowest price I can ﬁnd

Enhanced delivery options

Easy return policy

Payment options

Ability to see if the

product is in stock

Information about product

ingredients/sources

Consistent & seamless shopping

experience across channels

Incentive program or reward for new

customers

A promotion that is

tailored for me

Ability to buy online

and pick up

A limited time promotion

Social media presence

57%

43%

40%

34%

33%

26%

23%

21%

20%

16%

10%

Source: Global Online Consumer

Report, KPMG International, 2017

Source: Global Online Consumer

Report, KPMG International, 2017

©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member ﬁrms of the KPMG network are afﬁliated.

30 2017 Global Online Consumer Report

In China, delivery options ranked even

higher than price, and in India and

Turkey, easy return policies was the

most commonly cited attribute.

Millennials less willing to wait

for delivery

Millennials have a much higher

demand for instant gratiﬁcation than

older generations. Although younger

consumers are increasingly comfortable

Figure 3.5

Reasons consumers shop in stores instead of online — by generation

Delivery takes too longI want to see/touch the

item ﬁrst

Baby

Boomers

Generation X

Millennials

62%

57%

53%

Baby

Boomers

Generation X

Millennials

23%

33%

39%

with buying products online without

seeing them ﬁrst, they are almost twice

as likely to say they’d rather visit shops

to get their product right away, rather

than buy online and await delivery

(Figure 3.5).

Companies will need to continually

innovate to shorten delivery times

and satisfy increasingly demanding

consumer expectations.

“ The majority of payments for

online purchases in India at the

moment are cash on delivery

(COD). This is driven by the

high proportion of unbanked

population, and the low credit

card penetration. However,

there has been an increase

in use of credit cards, debit

cards and e-wallets in the past

one and a half years since the

government has announced

the demonetization move, a

big push to curb black money

in India. The banks as well are

educating their customers

and driving them to use other

methods of payment. Still

though there is a long way to

go because the online payment

systems are not yet well

developed.”

— Rajat Wahi, Head of Consumer &

Retail, KPMG in India

Payment options need to be

regionally tailored

Payment options ranked fourth (by

one third of consumers) among key

consideration when selecting a vendor.

Consumers in Eastern Europe and

certain Western European countries

such as Germany, Belgium and Greece,

as well as in Russia, India and Latin

America, were especially likely to say

a company’s payment options are

important, and in many cases even

more important than their options for

delivery or returns.

Source: Global Online Consumer

Report, KPMG International, 2017

©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member ﬁrms of the KPMG network are afﬁliated.

2017 Global Online Consumer Report 31

10

Bank credit card

PayPal

Debit card

Bank transfer

COD

Gift card

5

8

5

11

5

7

10

11

43

42

6

67

40

23

30

9

4

3

6

15

25

35

79

8

14

20

30

24

77

42

71

51

5

9

29

36

16

15

5

11

13

3

32

11

54

75

8

Africa & Middle East

North America

Latin America

Eastern Europe & Russia

Asia

Australia & New Zealand

Western Europe

65

49

39

4

13

8

Globally, credit cards are the most

common payment method—more

common than the next two popular

payment methods combined, PayPal

and debit. PayPal is a close second to

credit cards in the more developed

countries and is widely used in most

other countries with the exception of

Asia (Figure 3.6). In most of Asia, PayPal

is hardly used, compared to Alipay and

WeChat in China, and credit cards in

most other Asian countries. India is the

Asian exception, where consumers

prefer to pay cash on delivery (COD)

or by debit card, rather than on credit,

similar also to Russia, where consumers

are the least likely of any nation to use

credit at all.

Younger consumers are less

likely to pay with credit

Millennials are less likely than other

generations to pay with credit compared

to debit cards, COD or prepaid gift cards.

Whether this trend indicates a sustained

lower appetite for buying on credit, or is

simply reﬂective of younger consumers

currently having less access to credit,

is uncertain (but likely the latter).

Regardless, the key takeaway is that

companies need to include both cash/debit

and credit as payment options in order to

attract younger buyers (Figure 3.7)

Figure 3.7

Percentage of consumers that use payment

method — by generation

Bank credit

card

74

73

64

Baby Boomers

Generation X

Millennials

PayPal

33

35

32

Debit card

21

26

35

Bank transfer

13

15

Alipay

9

11

12

COD

7

10 10

Gift card

6

7

9

Source: Global Online Consumer

Report, KPMG International, 2017

Source: Global Online Consumer

Report, KPMG International, 2017

Figure 3.6

Percentage of consumers that use payment

method — by region

©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member ﬁrms of the KPMG network are afﬁliated.

32 2017 Global Online Consumer Report

Case study

ZALORA

Tito Costa, Managing Director

Founded in 2012,

ZALORA is a leading

fashion ecommerce

company in Southeast

Asia, with presence in

Singapore, Indonesia,

Malaysia, The Philippines,

Hong Kong and Taiwan.

Tito Costa is ZALORA’s

Managing Director, who

joined the company after

launching several internet

businesses in Europe

and Asia when he was

with Rocket Internet—

one of the early investors

in ZALORA’s parent

company Global Fashion

Group.

Southeast Asia growth

Costa is very optimistic about growth in

his region: “Ecommerce in Southeast

Asia is still at an infancy stage with

online retail accounting for roughly 1-2

percent of total retail sales. Given a lack

of traditional retail infrastructure outside

of the tier one cities, we expect that

over time ecommerce will comprise an

even larger share of retail sales when

compared to the US or Europe. We

also believe that customer experience,

breadth of higher quality assortment and

relevant content will play an increasingly

important role. Deal-seeking behavior

or discount-focused discovery will only

be one of many drivers of ecommerce’s

future potential.”

Leveraging both online and

ofﬂine channels

As an online retailer, ZALORA sees

ofﬂine channels as important for

acquiring customers and building

brand trust, says Costa, “We have

been experimenting with ofﬂine retail

through pop-up stores since late 2014.

Customers at our pop-up stores are

able to see our products, try them on

and then scan the barcode in order to

process their purchase at the self-serve

checkout. Not carrying inventory in the

store (the stores have samples in each

size only) frees our shop assistants from

managing inventory in favor of spending

time advising customers.”

In addition, Costa explains how pop-

up stores help the brand connect with

customers emotionally: “Trust has

always been a big challenge for online

fashion retailers, since customers want

to touch and try on products before

they make their ﬁrst purchase. Having

physical locations helps us address this

issue and engage with our customers in

a deeper and more emotional way.”

Ofﬂine to online conversion

examples

Costa gives two examples of leveraging

more traditional marketing channels:

“We have used out of home (OOH)

advertising in the past where we put

a voucher code on billboards in a few

prime locations. This code serves as a

tracking tool and allows us to monitor

the conversion from ofﬂine to online

during the campaign.

Another example is when we open a

pop-up store in Singapore, we partner

with transportation apps like Grab (an

online car hailing service in Southeast

Asia) where we leverage geo-fencing

technology to drive footfall to our store.

During a promotion, customers using

Grab to commute to an area near our

pop-up store will receive an automated

push notiﬁcation with a voucher code

from ZALORA inviting them to come to

the store and make a purchase.”

Localized delivery options

crucial in Southeast Asia

“We have invested heavily in logistics

and in our own warehouse and delivery

ﬂeet in most of our markets. Additionally,

we have a strong partnership with

convenience store chains like 7-Eleven,

where customers can pick-up their

orders. This allows us to boost

customers’ conﬁdence in online

shopping and make it a more viable

alternative to brick-and-mortar stores.”

Customer engagement and

loyalty

ZALORA’s target customers are 25 to

35-year-old young professionals. Costa

explains how they build loyalty with

this group: “The way we are engaging

with them is mainly through mobile

and social media. Since mid-2014 until

now we’ve seen a very dramatic shift

in trafﬁc from desktop browsing to the

mobile app, which now makes up more

than 50 percent of our business. More

than just a singular channel, we have

found social media to be an important

branding tool where we can have a two-

way conversation with our customers,

which is on one hand, providing

customers with fresh, highly relevant

content about our offerings, and at the

same time, receiving feedback from

customers in real-time and being able to

quickly act on it.”

©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member ﬁrms of the KPMG network are afﬁliated.

2017 Global Online Consumer Report 33

Building consumer trust

Given the nature of online shopping,

where consumers are buying products

sight unseen, providing personal data

online, and often paying in advance,

having a brand and website that

consumers trust is critical. Competitive

prices or delivery options can be

a deciding factor when potential

customers are choosing a vendor, but at

the end of the day consumers will only

buy from websites they trust.

When we asked consumers about

the attributes of the companies or

websites they trusted most, over 50

percent cited websites that make it

easy for customers to contact people

at the company (Figure 3.8). This was

especially true in Canada, the UK and

South Africa, where as many as 64

percent of consumers said it was a top

trust factor.

Being open and honest about negative

news and events ranked second among

trust enablers, especially in China and

Japan, where consumers were likely

to say it was even more important than

being able to contact people at the

company. Having control over how their

personal data is used was next most

important to consumers, especially in

North America, Europe and South Africa.

Consumers in the BRIC (Brazil, Russia,

India and China) countries were 25 to

50 percent more likely than the global

average to say they trusted companies

that educated consumers about their

products.

While most of these attributes are well

within a company’s ability to offer and

manage, some of the most signiﬁcant

threats to maintaining customer trust

come from outside of the organization.

Regardless of how many attributes a

company has that will earn the trust of

their customers, not having the right

systems in place to protect that trust

can be catastrophical. At the top of that

list, companies need to sufﬁciently

protect consumer data and ensure the

quality and safety of the products they

manufacture or sell.

“ CEOs are aware that providing a positive and unique experience is one of the

biggest bases of competition that they can deploy. However, their greatest

concern is around customer loyalty. Customers compare companies and expect

the same level of experience from one to another, resulting in a perpetual

increase in expectations. Companies want to provide relevant and meaningful

experiences, but how to do that in a proﬁtable way is the challenge.”

— Julio Hernandez, Global Customer Lead, KPMG International

Figure 3.8

What do the companies that consumers

trust most have in common?

Make it easy to contact

people at the company

Are open and honest about

negative news or events

Let consumers control how their

data is used

Educate consumers about

their products

Ask consumers how to

communicate with them

Are transparent about the use of

consumers’ info

Are socially

responsible

Send personalized

communications

Are transparent about

subsidiaries/afﬁliations

Have credible

spokespeople

51%

43%

41%

39%

35%

27%

23%

17%

16

10

Source: Global Online Consumer

Report, KPMG International, 2017

©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member ﬁrms of the KPMG network are afﬁliated.

34 2017 Global Online Consumer Report

A breach in either of these areas

can have serious and long-lasting

consequences in terms of consumer

trust. Particularly in an age of proliﬁc

mainstream and social media, news

of a data breach or production quality

issue can quickly spread out of control.

Companies not aptly prepared to prevent

or manage these risks can see their

hard-earned trust and brand reputation

extinguished overnight—sometimes

beyond repair.

Are experience and trust enough

to earn consumer loyalty?

While consumer trust can be the key

to a company’s success, the coveted

prize is to win customer loyalty. Ideally,

these customers not only develop

an allegiance to a company, but they

also become brand ambassadors,

encouraging others to follow suit.

What makes consumers loyal to

one company over another? Is a

good experience and company trust

enough to ensure they will return?

When consumers were asked about

the attributes of the companies they

were most likely to be loyal to, by far

the leading response (by 65 percent of

respondents) was ‘provides excellent

customer support’.

When shopping in-store, people have

certain service level expectations

of staff attentiveness or product

knowledge. In an online environment,

however, most transactions are

conducted with no personal contact or

service at all. So when online retailers

go the extra mile by reaching out to

their customers—with an unexpected

personal note or an extraordinary issue

resolution, for example—it gets noticed.

Finding ways to provide exceptional

customer support online can lead

to customer loyalty in an online

environment, where it can be difﬁcult to

stand out or be remembered.

Younger consumers are looking

for more engagement

Younger consumers, looking to be

treated as unique individuals, tend

to be less impressed than the older

consumers by excellent customer

support, and slightly more impressed

than their older counterparts with

company offers that have a personal

element, such as customized

promotions, recognition across channels

or an ability to anticipate needs

(Figure 3.9).

Providing excellent consumer support,

loyalty programs and beneﬁts, and a

forum for feedback, will all remain vital

to earning the loyalty of customers

across generations. However, in order

to attract the younger consumers,

companies need to offer more

personalized interactions, more

customized experiences and one-on-

one engagement.

As Millennials become a larger

proportion of the total consumer

market, excellent customer support and

loyalty beneﬁts will become minimum

expectations. Loyalty will be granted

to those companies that make their

customers feel like they are part of a

community, and one where they feel

important, unique and valued.

The bottom line is that to win and

retain online customers, companies

need to ﬁnd cost-effective ways of

providing the service and quality that

customers expect, while keeping prices

competitive. Consumers, depending

largely on their country, culture or age,

as well as on the type of product being

purchased, will each be more or less

willing to trade-off service or quality

forprice.

The companies that are able to identify

and segment their target customers

based on these factors, and develop

product offerings and online strategies

that are distinctly tailored for each

unique market, will be truly poised to

succeed in the online revolution.

Figure 3.9

Top ten attributes that drive customer loyalty

— by generation (%)

74

66

59

Baby Boomers

Generation X

Millennials

Exclusive

offers for

members

45

47

43

Has a loyalty

program

35

39

37

Listens to

customer

feedback

36

35

Customized

promotions

25

28

29

Easy to make

repeat

purchases

29

26

21

Suggests

products

based on

purchase

history

20

19

21

19

18

17

18

16

17

Is socially and

community

conscious

Recognises

customers

across

channels

Anticipates

needs based

on customer

profile

Provides

excellent

customer

support

Source: Global Online Consumer

Report, KPMG International, 2017

©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member ﬁrms of the KPMG network are afﬁliated.

2017 Global Online Consumer Report 35

How KPMG

can help

KPMG’s Global Consumer Markets

practice and Global Customer Center

of Excellence work together to uncover

the latest insights regarding the issues

that consumer and retail businesses

face, and the customers they serve.

Our specialized industry teams have

developed leading and innovative

business strategies and solutions which

are tailored to individual client needs.

Utilizing these insights and solutions,

KPMG member ﬁrm professionals

leverage their deep consumer and retail

experience to help companies achieve

and maintain the competitive edge they

need to succeed.

Customer strategy and digital

innovation

We want to help you reduce costs

and grow your enterprise. We’ll work

integrally with your business to deﬁne

which innovative customer and digital

propositions will drive enterprise value

and optimum customer engagement.

Customer experience

We bring an outside-in perspective

to help you understand what your

customers are experiencing. By

spotlighting your most critical customer

journeys, underpinned by customer

insights, we’ll help you deﬁne relevant

and engaging customer experiences to

drive customer retention, positive word

of mouth, services and, ultimately, sales.

Marketing sales and service

transformation

The front ofﬁce is being revolutionized

by digital disruption and rising customer

expectations. We can help you envision

the ecosystems and platforms you can

leverage and design customer-centric

service processes.

Customer data and analytics

Understanding and leveraging your

customer data is vital to business

transformation. This starts with a

master data management strategy

which we’ll help you deﬁne, alongside

the governance and tools you’ll need

to manage data securely across your

enterprise.

Customer technology solutions

The ecosystems of technology that

are the backbone of your business

are more important than ever. We can

help you source, develop and integrate

technology solutions to complement

existing business capabilities and create

commercial value.

A customer-centric organization

The edges of the organization are

blurring and digital is revitalizing the way

we want to engage in the workplace.

We can help you create a modern,

digitally enabled organization structured

around your key customer journeys.

©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member ﬁrms of the KPMG network are afﬁliated.

36 2017 Global Online Consumer Report

About the survey

KPMG International commissioned Intuit Research to conduct a survey of

global online shoppers regarding their purchase behavior, purchase drivers, and

perceptions and attitudes towards online shopping.

The sample consisted of consumers aged 15 to 70 years old who had made at least

one online purchase in the past 12 months, and who were within the top 65 percent

of income-earners in their country.

The survey was conducted using an online questionnaire. A total of 18,430

qualiﬁed responses were received from 51 different countries. Within each

country, the sample was weighted to the same age distribution to ensure that

country comparisons showed behavioral differences rather than those caused by

differences in demographic make-up of the population surveyed in each country.

The full report can be downloaded online at www.kpmg.com/onlineconsumers.

About KPMG

KPMG is a global network of professional services ﬁrms providing Audit, Tax and

Advisory services. We operate in 152 countries and have 189,000 people working

inmember ﬁrms around the world.

KPMG is organized by industry sector across our member ﬁrms. The Consumer

Markets practice comprises an international network of professionals with deep

industry experience. This industry-focused network enables KPMG member ﬁrm

professionals to provide consistent services and thought leadership to clients

globally, while maintaining a strong knowledge of local issues and markets.

We work with consumer and retail clients to help them succeed in the face of a rapidly

changing business environment. KPMG’s customer, digital strategy, data analytics,

cyber security, supply chain management, operations modeling and business

transformation practices are a few of the areas in which we have industry-leading

expertise and experience, which can help meet the most pressing needs of clients.

For more information, please visit kpmg.com.

About Intuit Research

Intuit Research is a market research consultancy that provides high quality research,

business insights, and thought leadership services to clients in the ﬁnancial, high

tech, and consumer industries. The company operates from ofﬁces in Hong Kong

and Singapore and has a team of highly experienced researchers that take a hands-

on approach to design, execution, and interpretation of market research, bringing to

clients the insights they require to make business decisions.

For more information, please visit www.intuit-research.com.

©2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member ﬁrms of the KPMG network are afﬁliated.

Contact us

KPMG International Contacts

Willy Kruh

Global Chair, Consumer Markets

KPMG International

[email protected]

Joel Benzimra

Global Advisory Lead,

ConsumerMarkets

KPMG International

[email protected]

Julio Hernandez

Global Lead, Customer COE

KPMG International

[email protected]

Dan Coonan

Global Executive, Consumer Markets

KPMG International

[email protected]

Elaine Pratt

Head of Global Marketing,

ConsumerMarkets

KPMG International

epratt@kpmg.ca

KPMG Regional Contacts

Mark Larson

Americas Leader, Consumer Markets

KPMG in the US

[email protected]

Anson Bailey

ASPAC Leader, Consumer Markets

KPMG in Hong Kong

[email protected]

Jessie Qian

Head of Consumer Markets

KPMG in China

[email protected]

Rajat Wahi

Europe, Middle East and Africa Leader,

Consumer Markets

KPMG in India

[email protected]

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The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to

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the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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The KPMG name and logo are registered trademarks or trademarks of KPMG International.

Publication name: The truth about online consumers

Publication number: 201701TW-G

Publication date: January 2017

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