Purchasing problems are hindering e-commerce growth: study

Build it and they will come, but if you don’t get it right the first time they’ll be gone forever.

The latest e-commerce study by the Boston Consulting Group (BCG) revealed over 51 per cent of Internet users have made purchases on-line but purchasing failures, security fears and service frustrations are rampant.

According to the findings in Winning the On-line Consumer: Insights Into On-line Consumer Behaviour, the typical on-line purchaser completed 10 transactions and spent an average of $460 over the last 12 months. Yet 28 per cent of all attempted on-line purchases failed, and four out of five consumers who have purchased goods on-line experienced at least one failed purchase attempt over the same period. The report attributes these failures to a variety of factors from technical malfunctions to logistical and delivery problems.

“It’s a good news, bad news story,” said Eric Yolles, a consultant with BCG in Toronto. “There’s a significant shift to Internet users purchasing on-line…over half of all Internet users have tried to purchase on-line. What’s distressing is despite the good things about e-commerce people are still having a difficult time completing those transactions.”

The BCG study groups Internet surfers into three categories: pioneers, early followers, and first-of-the-masses. In doing so, Yolles said BCG has provided a detailed view of the consumers by examining the demographics of the on-line population, the patterns and progression of e-commerce behaviour, and a variety of other factors that drive current and future B2C trends.

“Traditionally, Internet surfers were young, male, affluent, educated technophiles. Now we’re seeing more users who are not male, less affluent, less educated, a real increase in heterogeneous groups of consumers who will have to be approached in different ways to attract them to shop on-line,” he said. “These people will have different product needs…a lot of people are coming on-line with different access devices to computers, such as televisions.”

The first wave of on-line consumers comprise the pioneers category with an estimated 23.2 million who have been on-line for three or more years and represent 29 per cent of the population. Nearly 39.6 million people have been on-line for more than one year but less than three years and represent half of the current on-line populace, earning them the distinction of being BCG’s early followers. The most recent consumers to get on-line comprise 22 per cent or 18 million of today’s on-line users and are identified by the first-of-the-masses category. One common thread that ties all three waves of consumers is the shared view the Internet is more about communication than commerce, with over 80 per cent of all Internet surfers going on-line for that very purpose. A measly two per cent stated they were motivated to go on-line to shop.

“The Internet is still viewed as a communications medium, shopping is merely an advantage but not the primary reason (to get on-line),” Yolles continued.

Other notable facts unearthed in the study showed user anxiety over credit card security was the main deterrent from making an on-line purchase. Purchase process breakdowns was another irksome dilemma dogging e-commerce sites as 23 per cent of those surveyed said they stopped purchasing from the site in question while an additional six per cent were so turned off by unreliable sites that they even stopped patronizing the retailer’s physical store.

“I’ve seen statistics that have shown an even higher rate of customer dissatisfaction,” remarked Gary Meehan, president of Onvia.com, a B2B e-marketplace for small business in Vancouver. “A lot of bricks and clicks [firms] seem to have the same attitude (towards customer service) on their Web sites as well as in their physical store. You have to be much better than that and exceed your customer’s expectations.”

David Hainline, vice-president of merchandising and marketing for Chapters Online in Toronto, took the study’s results with a grain of salt.

“This is a North American-wide survey,” he said. “I’ve seen recent polls in Canada that suggest around 82 per cent of Canadians rate their on-line purchasing experience as either excellent or good. However, bad service is bad service and with [the results of the BCG study], we (as an industry) can see the mistakes that have been made and hopefully will avoid making them.”

Yolles said the one aspect of the study that surprised him was the tiny margin of error consumers afford retailers.

“Retailers get one shot at a new customer, which means the first purchase experience of that customer is extremely important,” he said. “You have a situation where you have one chance to get it right. If you fail, you’ll lose that consumer and they’ll likely be unwilling to engage in e-commerce activity again for some time.”

The BCG report, conducted in late 1999,

was based on research with 12,000 consumers in the United States and Canada.