An interesting study released yesterday by Toronto-based retail and marketing consulting firm J. C. Williams Group confirms what many know intuitively – that there's a strong link between online shopping and use of social networking - or Web 2.0 - tools.
A significant percentage of Canadians who shop online are also avid participants in social networking forums – such as blogs, wikis, community video and picture sites and more, the study sponsored by Visa and Yahoo! Canada revealed.
Conducted in April, the study polled a sample group of 1,500 online buyers and 500 offline buyers.
It compared the shopping habits of consumers who buy items online to those who use the Web, but make their purchases offline.
It indicated that online buyers use networking tools and channels to share opinions, insights, experiences and perspectives far more than offline shoppers.
For instance, compared to Web surfers who did not make online purchases, online buyers in the study were:
- More than twice as likely to have written a product review (29 percent versus nine per cent);
- Twice as likely to have posted video content to the Web (19 percent versus eight per cent); and, - Far more likely to have written a blog (35 per cent versus 21 per cent).
User generated content
The study revealed that online user-generated content is playing an increasingly vital role in shaping purchasing decisions.
Sixty percent of online buyers selected "consumer reviews" when asked to identify their most trusted information source, compared with 31 percent who indicated newspapers or magazines.
An executive from J. C. Williams Group offers his take on why consumers are turning to online communities or networks for buying advice, instead of the traditional mass media.
"It is indicative of the shift to an empowered consumer and the rapid fragmentation of media channels," according to Jim Okamura, senior partner at J. C. Williams. This trend, he says, "definitely presents a challenge for online marketers."
Social engagement and e-commerce
One key question is whether participation in these social networking forums increases the likelihood of someone shopping online. In other words: is Web 2.0 actually fuelling e-commerce?
One industry insider suggests this is indeed the case.
The information-sharing habits developed in online communities are creating a secondary benefit, by somehow raising propensity to shop online, according to Hunter Madsen, a former social scientist, who directs marketing for Yahoo!
Online shoppers are able to ask questions and get advice and information about intended purchases online and in real time.
"You could call it the Social Engagement Effect on E-Commerce," says Madsen.
This "effect", he says, is making social networking sites attractive targets for marketing dollars.
"Marketers have been somewhat hesitant up to now to advertise in the Web's community sites, for a variety of reasons," said Madsen. "But this study suggests that – other things being equal – social networking sites are where they'll find some of their most responsive shoppers."
Interestingly, more than half of the study respondents reported having used social networking tools for one year or less.
Considering that the 'social networking' phenomenon is just taking off in Canada, the potential benefits for online commerce in Canada look promising, Madsen noted.
Hot online purchases
According to the survey, more Canadian online buyers made purchases in categories such as:
- Clothing and accessories (23 per cent bought in the past six months, a gain of two per cent versus 2006);
- Consumer electronics (21 per cent; an increase of five percent);
- Tickets (24 percent; up four per cent); and,
- Furniture, home and garden (six per cent; an increase of two per cent versus 2006).
While Canadians are varying the types of purchases made online, the survey also revealed that more online buyers are taking the time to comparison shop.
It found 38 per cent of online buyers will visit more than one online store, an increase of four per cent over 2006, before finalizing a purchase and 37 percent use a search engine to find a retailer (also an increase of four per cent over last year's results).
Canadians are also spending slightly more than they did one year ago ($454 versus $447 in the past six months).