Contents

1. 2. 3. Executive Summary .............................................................................................................................................3 Objectives ............................................................................................................................................................4 Main Findings ......................................................................................................................................................4 3.1 Current online shopping behavior................................................................................................................4 Most common online shopping products and services.........................................................................4 General reasons for not shopping online..............................................................................................5

3.1.1 3.1.2 3.2

Demographic profiles of online shoppers and non-shoppers.......................................................................6 Online shoppers: ..................................................................................................................................6

3.2.1 3.3

Psychographic profiles of online shoppers and online non-shoppers ........................................................10 Risk-taking tendency and Innovativeness:.........................................................................................10 Variety-seeking and Impulse-buying .................................................................................................11 Brand consciousness and Price-consciousness: .................................................................................12 Convenience-seeking .........................................................................................................................14

3.3.1 3.3.2 3.3.3 3.3.4 3.4 4. 5.

Promotional strategy for online shoppers ..................................................................................................14

Summary of key learnings based on study findings...........................................................................................17 References..........................................................................................................................................................18

Appendix 1: Data collection methodology ................................................................................................................19 Appendix 2: Tabular Results .....................................................................................................................................20 Appendix 3: Questionnaire .......................................................................................................................................23

Page 2 of 28

1. Executive Summary
Online shopping is gaining popularity, especially in categories where aspects like information sourcing, variety or scarcity are dominant motivations. Globally, online shopping forms an important part of the retail market. It is thus important to gain an understanding of the type of person who would be open to shopping online as this form of shopping is different to conventional shopping in a number of ways. It is also important to understand the reasons for not shopping online, the limitations experienced with this form of shopping and then also, the types of shopping that is most popular for doing online. Apart from behavioral and attitudinal differences between online shoppers and those who do not shop online, there are also demographic differences between shoppers and non-shoppers. It must be kept in mind that we have a low penetration of online access in South Africa, limited mainly to the higher LSM (Living Standards Measure) population. The method of payment is another aspect limiting online shopping. As credit cards are the main form of payment, and credit cards are mostly available to higher income individuals, online shopping can be expected to remain limited to higher socio-economic levels of society. This aspect was confirmed in the data collected amongst a sample of online shoppers and online non-shoppers. However, as online access increases, possibly via mobile networks, and payment methods become safer and easier, it can be expected that this situation will change and the online shopping market will become more mature and less experimental. As a result, it can be expected to become more important that businesses retain and grow this valuable source of business. In this assignment, the demographic as well as psychographic differences between online shoppers and online non-shoppers were investigated. The sample of respondents was drawn, using a convenience sampling method to ensure that the results consist of an equal spread of online shoppers and online non-shoppers. Respondents were selected from the economically active South African population and requested to complete a short questionnaire on demographics, shopping habits and rating a battery of attitudinal and behavioral attributes. The empirical results of this survey form the basis of the assignment, the conclusions around the online shopper market and how to attract these shoppers by means of a promotional campaign most likely to appeal to them. It was interesting to note that the attitudes and behavior of South African online shoppers correlate with those in other parts of the world, notably the US, UK, Brazil and China.

Page 3 of 28

2. Objectives
The main objective of this assignment was to obtain information on the following: Six products and services mostly shopped for online by shoppers; Six common reasons given by shoppers for not shopping online; Demographic profiles of online shoppers and online non-shoppers; Psychographic profiles of online shoppers and online non-shoppers; A promotional strategy for online shoppers.

3. Main Findings
3.1 Current online shopping behavior 3.1.1 Most common online shopping products and services
The six items most often shopped for online are as follows: Most common online shopped products and services Airline tickets Books Event/concert tickets CDs & DVDs Accommodation Movie tickets
Table 1

Number of responses 14 12 6 6 6 5

Percentage of online shoppers (n=40) 35% 30% 15% 15% 15% 13%

According to a Nielsen study conducted on global online shopping trends, the most popular items shopped for online include: Books (41%), Clothing/Accessories/Shoes (36%), Videos / DVDs / Games (24%), Airline Tickets (24%) and Electronic Equipment (23%).
(http://www.multilingual-search.com/world-statistics-on-the-number-of-internet-shoppers/28/01/2008/)

Interestingly, South African preferences coincide with shoppers world-wide, except for clothing, accessories and shoes. Findings show later that one of the main reasons for not shopping online was that clothing and shoes cannot be tried on or its quality inspected by touching the merchandise.
Page 4 of 28

3.1.2 General reasons for not shopping online

Based on the findings of the research (see Table 2 in Appendix 2), it was found that the general reasons for not shopping online focus on three broad themes: the need for a tactile experience when shopping, especially for clothing and shoes, the need for a social experience as part of the shopping excursion and concerns around the safety aspect of buying online. The six main reasons for not shopping online are as follows: Non-shoppers prefer to touch and feel the merchandise they are buying; They are not sure whether it is safe to pay online or they feel uncomfortable to provide their financial details online to pay for their purchases; Not being able to try items on before buying; The lack of a social experience as part of the shopping experience; No access to a credit card; Unable to check the quality of the merchandise, e.g. expiry dates. These findings correlate with what has been documented in literature on online shopping: Internet retail is still hampered by the fact that you still cant really shop online, if by that we mean look at and touch vast amounts of merchandise. But the web is a great place to buy certain things such as books, videos, software, appliances, electronics, toys, anything for which you have a fairly sure notion of what you want. (Underhill, 2004:207) There are three big things that stores alone can offer shoppers: touch, trial and any other sensory stimuli, immediate gratification, and social interaction (Underhill, 2000:218) Because of the problems of providing touch-and-feel information, apparel retailers experience return rates of more than 20% on purchases made through an electronic channel but only 10% for purchase made in stores (Grewal and Levy, 2010:510) Similarly it is natural for many shoppers to take advantage of the Internets convenience and lower prices arising from the ease of comparing prices it is perhaps surprising that the shopping centre was ahead on positive image. consumers value the social and experience aspects of shopping (Dennis, Harris & Sandhu, 2002:281).

Page 5 of 28

For a small number of respondents, ignorance regarding what the internet offers is creating barriers to online shopping, e.g. the perception that the variety of items is limited or that online buying requires a credit card.

3.2 Demographic profiles of online shoppers and non-shoppers 3.2.1 Online shoppers:
Online shoppers are mostly between 25 and 3 years of age. It is interesting to note that a higher proportion of 35-49 year olds are online shoppers than those not shopping online (Figure 1). Even though the younger set is classified as youth and are noted to be in touch with the latest technology and trends, the bias towards online shopping amongst the older set is in line with the findings of Dr. Joshua Changs article on Internet shopper demographics and buying behavior in Australia, where he mentions that while internet users tend to be younger, internet shoppers tend to be older in age as they possess higher purchasing power with access to a credit card. (Chang and Samuel, 2004:171). Figure 2 below reflects that both online as well as those not shopping online are mostly female.

Figure 1: Age

Figure 2: Gender

More than 85% of both online and online non-shoppers shoppers are either single or married/living together as portrayed in Figure 3 below.

Page 6 of 28

Figure 3: Marital Status

Figure 4: Household Size

Figure 4 reflects a higher percentage of online shoppers having one to two people residing in a home, while online non-shoppers have a higher percentage of three to four people living in a household. It would seem as if bigger households tend to go out to malls/stores and make the shopping experience an inclusive family trip, as noted by Underhill: Online shopping plays to the heart of the mall audience middle class, middle aged and younger, pressed for time, already in front of the computer every day (Underhill, 2004:206). Figure 5 and 6 below show that a larger proportion of online shoppers work full time and online shoppers reflect roughly the same level of education as online non-shoppers.

Page 7 of 28

Figure 5: Level of Education

Figure 6: Working Status

Figure 7 and 8 indicate that there is a link between job level and income bracket. Online shoppers tend to earn more and have a higher job level. This finding corresponds with the results from Brashear for the US, New Zealand, England and Brazil (Brashear, Kashyap, Musante & Donthu. 2009:267).

Figure 7: Job Level

Figure 8: Annual Household Income

Page 8 of 28

Online shoppers spend more time on the internet compared to online non-shoppers. Shoppers spend an average of 14.3 hours per week online, as compared to the 9.84 hours per week spent by online nonshoppers (See Table 4 in Appendix 2). In Fig. 9, is shows that 90% of both online and online non-shoppers use the internet to access email and more online non-shoppers are active on social media, indication that they are comfortable with the internet, yet prefer not to do shopping there. In addition, it is interesting to note that at least 60% of online non-shoppers use online banking yet they have concerns about the security of purchasing online. Over the past 5 years two of the major banking companies in the country have had security breaches. It would seem as if the concerns around payment online is based on ignorance. Credit card payments are still the most convenient method of paying by online shoppers.

Figure 9: Internet Usage

More than 57% of the sample has access to the internet at home as well as work. Affordable internet connectivity has been boosted, with state-owned telecommunications company, Telkom, offering affordable ADSL and broadband services. Neotel, the second landline operator has also entered the market, and cellular operators like Vodacom, MTN and Cell C offer 3G cards, HSDPA and wireless broadband services. The world is literally at ones fingertips.

Page 9 of 28

3.3 Psychographic profiles of online shoppers and online non-shoppers 3.3.1 Risk-taking tendency and Innovativeness:
As seen in Figure 10, online non-shoppers tend to have a lower risk-taking tendency, with higher ratings for the attributes I would rather be safe than sorry, I want to be sure before I purchase anything and also I avoid risky things. The strongest differentiator is the attribute I would rather be safe than sorry.

Figure 10: Risk-taking tendency

Figure 11: Innovativeness

This finding is in line with the results from Brashear et al for the US, New Zealand, England and Brazil (Brashear, et al 2009: 267). Online shoppers with a higher level of risk-taking will be more open to try, sample and experiment with new products and ideas than online non-shoppers, making the online marketplace an excellent place for test markets. As it was shown that repeat purchase for certain items e.g. clothing and footwear and the food and drink sectors is particularly low (Dennis et al, 2002: 281), care should be taken not to disappoint a market segment with a tendency to risk and thus making them more risk averse in future as a result of a disappointing experience: therefore, it can be predicted that consumers with a favorable attitude towards e-shopping will be more willing to shop and spend time browsing e-tailers for their needs can be expected to re-patronize frequently (Jayawardhena, 2004: 127) On the whole, online shoppers tend to be more innovative, a characteristic that ties in well with having a risk-taking tendency. Fig. 11 above shows that online shoppers are particularly interested in
Page 10 of 28

experimenting with new ways of doing things, so it is important to keep web pages fresh, full of new ideas. Online shoppers will also be less skeptical of gimmicks. These findings correlate with the attitudes of shoppers in all six countries investigated by Brashear et al. It was also noted that domain-specific innovativeness reflects personal innovativeness and is conceptualized as the degree and speed of adoption of innovation by an individual (Lassar, Manolis & Lassar, 2005: 176). This confirms again that online shoppers will be more likely to try new products and adopt new ideas. The online shopper market is thus a suitable channel to launch new products or product ideas. This is in line with a stream of research that shows that those who have knowledge of and opinions about a particular domain are more likely to be adopters and users of commercial innovations (Rogers, 1995). As these shoppers might be regarded as thought leaders, it can be a fruitful breeding ground for any epidemic to spread around a new idea or concept: if you plot that progression on a graph, it forms a perfect epidemic curve starting slowly, tipping just as the Early Adopters start , then rising sharply as the Majority catches on (Gladwell. 2000:197).

3.3.2 Variety-seeking and Impulse-buying

In addition to being more innovative, shoppers indicate in Fig. 12 below that they tend to have a stronger desire to seek variety, try different things and new and different styles. Both innovativeness and varietyseeking point towards a strong desire to be at the forefront of new developments an aspect that lends itself well to online shopping. The challenge for the online retailer is to ensure that the online shopper is not disappointed in his/her expectation of what is for sale online. On the contrary, online non-shoppers indicated a strong dislike in trying new and different things, preferring to maintain the status quo.

Page 11 of 28

Figure 12: Impulse-buying

Figure 13: Variety-seeking

In terms of buying on impulse, there is at once a clear difference between shoppers and online nonshoppers, shown in Fig. 12 above. As seen in the study by Brashear et al, shoppers often make unplanned purchases and have a lower tendency to think twice before committing themselves. Non-shoppers have a stronger tendency to stick to their shopping lists.

3.3.3 Brand consciousness and Price-consciousness:

There is less differentiation between online shoppers and online non-shoppers in terms of brand consciousness, particular around the issue of purchasing brand name products. As illustrated in Fig. 14 below, both shoppers and online non-shoppers indicated a preference for brand name products. However, online non-shoppers feel less strongly about the inferiority of store brands and agree that there is little differentiation between brands. These findings correlate with what Brashear found to be true in the US, UK, Brazil, China and New Zealand (Brashear. et al., 2009: 267).

Page 12 of 28

Figure 14: Brand-consciousness

Figure 15: Price-consciousness

Although shoppers and online non-shoppers check prices and believe that one can save a lot by shopping for bargains, online shoppers tend to be more price-sensitive than non-shoppers. More online shoppers tend to buy the cheapest item and purchase items on sale only, as shown in Fig. 15 above: Sales by means of online purchase can be driven by means of a low-price strategy, promoting the notion that lower prices can be obtained online than in-store. If this can be done for branded goods, online shoppers can be expected to respond positively. This strategy should be feasible as online retailers do not have the same overheads as brick and mortar retailers, e.g. thus finding themselves in a shopping mall. It seems possible to use the price-consciousness of online shoppers to the advantage of e-tailing by promoting online savings, even for those who prefer regular shopping. As mentioned, many buyers go to real-world stores, find what they want and then shop the web for better prices. Lots of products will be bought this way, especially big-ticket standardized goods such as watches, mattresses and major appliances where deep discounts will make a big difference. Motivated shoppers will visit stores all day long, make their choices, then go home, log on and buy from a retailer who keeps prices low by not having to pay rent, overhead, insurance or labor costs (Underhill, 2000:217).

Page 13 of 28

3.3.4 Convenience-seeking
Even though convenience is a common desire amongst online shoppers and online non-shoppers, Fig. 16 shows that there is a marked difference (statistically significant at a 95% confidence level) between online hoppers and non-shoppers in terms of their preference for shopping from home. Online shoppers also dislike spending time

gathering information on products, so in terms of providing a positive experience to online shoppers,

Figure 16: Convenience-seeking

e-tailers must ensure that it is easy and simple to obtain information and make comparisons between products and product characteristics. As convenience is so important to shoppers, the transaction needs to be made as convenient as possible. Convenience as a benefit of online shopping can be emphasized as opposed to physically going to a store (Brashear. et al., 2009: 267).

3.4 Promotional strategy for online shoppers

The first step in working out a promotional strategy is to define the demographics of the on-line shoppers. The studys results show that young females, who are well educated, have full time jobs in junior management positions are the higher percentage on-line shoppers. The second step is to choose a suitable target market. A co-ordinated effort across several sites and venues commonly frequented by the customers is the most effective marketing campaign. Complementary sites can help cross-promote to visitors, which will provide excellent reinforcement of the business message. Airline websites, Computicket and websites selling books can be expected to be effective channels for our strategy. More than 80% of online shoppers in our sample visit sites that offer news and sports updates, so these would always be ideal sites to use in the promotional campaign. The last step is to work on the content for the promotional campaign. Internet marketing works best when focusing only on one or two aspects. Even though a business might have a variety of products, the business should choose one or two items that are good sellers and have a solid appeal to the female target market. It would make sense to communicate a promotional catalogue that offers a variety of both

Page 14 of 28

products and services. The message should communicate fun and a sense that the potential online shopper would experience a real high from the transacting online. As consumer attitudes remain an important predicator of consumer behavior (Jayawardhena, C. 2004: pg.267), it is important to understand online shopper attitudes in an effort to develop a promotional strategy to attract online shoppers. Childers, Carr & Peck, 2001 mentioned that online shopping motives include both utilitarian and hedonistic dimensions. This aligns well with the strong emphasis that online shoppers place on convenience and that shopping is fun (Fig. 18 below). In addition to hedonistic elements, a promotional strategy to attract online shoppers will emphasize information-rich, factual information, presented in a way that looks and feels very credible (utilitarian dimension).

Figure 17: Attitude towards advertising

Figure 18: Attitude towards shopping

Fig. 18 shows that the attitude towards shopping is very similar amongst online shoppers and online nonshoppers, with only a slight bias towards shopping being regarded as fun amongst non-shoppers. Online shoppers, on the other hand, are more inclined to see shopping as something that makes them happy and that gives them an emotional high. We see in Fig. 17 that online shoppers have a higher tendency to regard advertising as a source of useful information, even if they share the opinion that advertising is often deceptive. This is in line with online shoppers finding the search for books, videos and software acceptable, as these searches are regarded as factual search and thus regarded as useful (utilitarian dimension) information. Chat rooms and

Page 15 of 28

bulletins can offer valuable information and also add the more social element that shoppers miss in a virtual shopping experience. This finding is in line with the results from Brashear et al for the US, New Zealand, England and Brazil (Brashear et al. 2009:267). His survey results show that Internet consumers are more receptive to advertising and direct marketing. Managers can use this knowledge to target the Internet shoppers, knowing that they are more likely to be receptive to highly targeted marketing communications. Shoppers as well as non-shoppers feel very strongly that phone solicitations are an invasion of their privacy and they do not enjoy junk mail. In terms of recruitment, shoppers are significantly more receptive towards using catalogues to shop for products (Fig. 19). As consumer attitudes remain an important predicator of consumer behavior (Jayawardhena.C: 2004:127), it is important to understand shopper attitudes in an effort to develop a promotional strategy to attract online shoppers. Childers et al, 2001) mentioned that online shopping motives include both utilitarian and hedonistic dimensions. This aligns well with the strong emphasis that online shoppers place on convenience and that
Figure 19: Recruitment

shopping is fun (Fig. 17). In addition to hedonistic elements, a promotional strategy to attract online shoppers will emphasise information-rich, factual information, presented in a way that looks and feels very credible (utilitarian dimension). The content of advertising must be truthful and not misleading and any claims made must be backed up by evidence. The safety of transacting online with a credit card for payment should be emphasized. Promotional content can include discounts and coupons; giving away complimentary products (freebies), free shipping of purchases over certain value; consumption points for product changing and time-limited promotions. This will not only add fun but also motivate customers to revisit the shopping websites.

Page 16 of 28

(http://www.sbinfocanada.about.com/od/onlinebusiness/a/netcampaignpp_2.htm)

Underhill, 2000:216 recommends that the following aspects be considered as key differentiators in terms of online shopping: Limitless selection and ability to find items that one does not have easy access to in a mall or even a selection of malls; price comparison; convenience; speed grab and go and informationbrowsing is fun.

4. Summary of key learnings based on study findings

Four key learnings, based on the study are: South African online shoppers mostly share the same attitudinal differences with their global counterparts, mainly those in the US, UK, Brazil, China and New Zealand. Although the findings correlate with similar studies across the world, one should bear in mind that the sample was very small and not necessarily representative of the total South African population. Shoppers show a clear attitudinal profile they seek convenience, safety and a social and entertaining experience. Concern regarding safe payment methods is one of the most important reasons for shoppers not shopping online. This fear is largely based on ignorance and can easily be addressed with information and re-assurances regarding safe payment methods. A combination of online and conventional shopping seems to be the most effective way to offer the advantages and convenience of online shopping, with the stimulating and socially-desirable activities associated with conventional shopping.

Page 17 of 28

5. References
Brashear, TG. Kashyap, V. Musante, MD & Donthu, N. 2009. Profile of the Internet Shopper: Evidence from Six Countries, Journal of Marketing Theory and Practice. 17(3): pg. 267-281 Chang, J. Samuel, N. 2004. Internet Shopper Demographics and Buying Behavior in Australia, Journal of American Academy of Business, 5(1/2): pg. 171-176 Dennis, C. Harris, L & Sandhu, B. 2002. From Bricks to Clicks, Qualitative Market Research, 5(4): pg. 281 Gladwell, M. 2000. The Tipping point. London: Abacus Grewal, D. Levy, M. 2008. Marketing. 2nd ed. New York: McGraw-Hill/Irwin Jayawardhena, C. 2004. Personal values influence on e-shopping and behavior, Internet Research, 14(2): pg. 127-138 Lassar, W. Manolis, S and Lassar, S. 2005. The Relationship Between Consumer Innovativeness, personal Characteristics and Online Adoption International Journal of Bank Marketing, 23(2): pg. 176 Shim, S. Eastlick, M.A. Lotz, S.L. &Warrington, P. 2001. An online pre-purchase intentions model: the role of intention to search, Journal of Retailing, 77(3): pg. 397-416 Underhill, P. 2000. Why we buy - The Science of Shopping. London: Texere Publishing Limited. Underhill, P. 2004. Call of the Mall. New York: Simon & Schuster. Rogers, EM. 1995. The Diffusion of Innovations.4th ed. New York: Free Press. http://www.multilingual-search.com/world-statistics-on-the-number-of-internet-shoppers/28/01/2008/ http://www.sbinfocanada.about.com/od/onlinebusiness/a/netcampaignpp_2.htm) http://www.articlesbase.com/publishing-articles/comprehensive-guides-to-christmas-promotionstrategies-of-online-shops-3736664.html

Page 18 of 28