How to Crack the Channel Code: Mapping Where Customers Shop and Why

Ecommerce is now a fiercely competitive industry, and many retailers are wondering how to stand out when competing with retail giants like Amazon and Walmart. To successfully carve out a market niche, it’s essential to understand where customers shop and why they choose these channels over others. We recently compiled data and valuable insights on customer shopping behavior to answer these questions.

Retailer Preferences and Customer Shopping Trends

We surveyed 1,000 online shoppers in March 2024 and found over 40% of customers are comfortable buying from at least six types of retailers. These are the retailers that respondents reported purchasing from in the past year:

  • Walmart: 79%
  • Amazon: 78%
  • Target: 54%
  • Specialty retailers: 47%
  • Department stores: 44%
  • Warehouse clubs: 41%
  • Direct-to-consumer brands: 20%
  • Online-only sellers: 16%
  • Luxury retailers: 12%

We also asked shoppers to rank the top three retailers where they shopped the most. Amazon and Walmart were neck and neck for the number one pick among respondents, far exceeding other store types:

But why are customers so drawn to Amazon in particular? Our survey revealed some interesting insights.

Unpacking Amazon’s Dominance

Amazon has become synonymous with convenience, vast product selections, and a seamless shopping experience. However, understanding why customers shop there requires a deeper dive into their preferences and decision-making processes.

Our survey found that 1 in 3 shoppers typically buy from Amazon and a handful of other retailers. For shoppers 55 and older, that ratio was even higher. We discovered four main reasons behind Amazon’s appeal:

  1. Free shipping: 46% of respondents said this factor was top of mind.
  2. Convenience: 44% of shoppers cite convenience as a high priority, and 30% said they use Amazon as a search engine to check product availability and pricing.
  3. Speed: 36% mentioned getting their products quickly was important.
  4. Brick and mortar avoidance: 34% use Amazon as an alternative to visiting a physical store.

However, to better understand online shopping behavior, we must recognize that priorities tend to differ across age demographics.

The Age Factor: What Customers Value

Our survey revealed some distinct differences in customer values across age groups. When shopping online, older shoppers were more concerned with fundamentals such as time, convenience, and savings. In contrast, younger shoppers were more concerned with innovation and personalization.

Key differences in older shoppers (65+) vs. younger shoppers (18-29):

  • 56% of older shoppers said they buy from Amazon and a handful of other retailers, while only 26% of younger shoppers said the same.
  • 66% of older shoppers considered touch and feel an important factor in choosing brick-and-mortar stores over online stores compared to 23% of younger shoppers, who were more likely to opt for technological alternatives.
  • Only 9% of older shoppers said personalization made for a superior shopping experience vs. 37% of younger shoppers.
  • Only 2% of older shoppers said they purchased products based on influencer marketing and recommendations, as opposed to 20% of younger shoppers.

Strategies for Expanding Market Share

Competing directly with Amazon may be challenging, especially with the age factor. But by prioritizing customer needs, you can encourage shoppers across age segments to switch between ecommerce channels.

Key finding: Customers pivot to direct-to-consumer channels when they’re offered exclusivity, variety, and better product knowledge:

The strategies you prioritize will obviously vary depending on the age demographic you’re targeting. However, we’ve identified four key areas that are worth focusing on.

1. Pricing

Prices and promotions are crucial for staying competitive in the market. When we asked customers what influenced them to switch shopping channels, 59% named pricing as a factor. This doesn’t always mean being the cheapest option but providing the best overall deal when considering product quality, customer service, and additional benefits.

Pricing doesn’t stop there — customers also care about minimizing shipping and return fees. In our survey, 46% of shoppers named free shipping as why they chose Amazon, while 23% said easy and free returns were top of mind. Many consumers have come to expect free shipping as a standard service, and it can be a deciding factor when choosing between similar products. Meanwhile, offering free returns lowers the risk for the customer and can increase their confidence, making them more likely to convert. One recent survey found that 87% of shoppers would consider not shopping at a retailer that eliminated free returns.

2. Product

Customers place a high value on product availability and information. According to our survey, 42% of shoppers were influenced by product availability when selecting their shopping channel, while 24% valued the quality of product information. Other recent data found that 67% of consumers consider inventory visibility an important service. Showcasing in-stock products, offering detailed information, and using high-quality images with accurate product representation are all good practices in this area.

3. Shopping Experience

Most customers appreciate a personalized shopping experience, particularly younger shoppers ages 18-29. Overall, 61% saw personalization as a positive, but this number jumped to 81% for younger shoppers.

Customers want to feel valued. One survey showed that 72% of shoppers expect retailers to recognize them as individuals and know their interests. But focusing on personalization tactics doesn’t have to be a huge undertaking. A good place to start is your search functionality — you want your customers to find what they’re looking for quickly and efficiently. This could simply mean the ability to turn vague searches into useful product recommendations or intuitive filtering and sorting options designed to guide customers to what they need.

4. Customer Service

As we know, customers want to feel appreciated and valued, and customer support plays a huge role in achieving this. A key aspect to consider is your delivery services. According to our survey results:

  • 36% of shoppers use Amazon for fast delivery.
  • 33% say delivery time would influence them to switch shopping channels.
  • 17% say customer service quality would entice them to swap channels.

Make sure you deliver products quickly and as promised, with processes in place to assist the customer promptly if something goes awry. Being proactive in these areas will help ensure satisfaction and build customer loyalty.

Final Thoughts

To succeed in the competitive world of ecommerce, retailers must understand and adapt to customer preferences and behaviors. Our survey has highlighted the importance of several factors in attracting and retaining customers, including pricing, product availability, personalized experiences, and exceptional customer service. It’s also crucial to recognize that age plays an important role in determining which strategies to prioritize, with older shoppers valuing fundamentals like convenience and savings, while younger shoppers lean more toward innovation and personalization.

By focusing on these fundamentals and tailoring strategies to different age demographics, retailers can differentiate themselves from mass merchants, build customer loyalty, and ultimately increase their market share.

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