Annual ‘Favorite Online Retailers’ List Illustrates Shift in Shopper Mindset
Amazon.com tops the annual STORES Favorite 50 online retailers list, followed closely by Wal-Mart, eBay, Best Buy and J.C. Penney – the same merchants that ranked highest on this exclusive list a year ago. But the real news in STORES’ third annual ranking of consumers’ favorite online retailers isn’t necessarily about the list’s leaders: it’s about a palpable shift in the mindset of shoppers. Loyalty is taking a back seat to price as consumers are changing their buying patterns in favor of value-oriented options. For example, Craigslist made the list for the first time, debuting at No. 25. Although industry analysts don’t characterize Craigslist as a retailer, bargain hunters do. A recent survey by BIGresearch polled more than 8,600 consumers, asking them which websites they shop most often for apparel and non-apparel items – Craigslist bested Gap (No. 28) and customer-favorite Zappos.com (No. 38). “For a growing number of shoppers it’s not about the retail channel or the nameplate over the door – It’s about getting the best price, wherever they can find it,” says Wendy Liebmann, CEO of WSL Strategic Retail. “After years of buying and selling on eBay.com and similar sites, shoppers are comfortable bypassing traditional channels and buying something from a seller a few towns away.” Current economic challenges, she says, “have profoundly changed shoppers and have made them more willing to find new, smarter options. The same person who grimaced at a garage sale 18 months ago is now willing to buy a gently used coffee table from someone 40 miles away – and for the privilege of buying it, he’s willing to pay cash and drive there to pick it up. They don’t feel badly about it or compromised in any way.” In February, Forrester Research projected that U.S. online retail sales would grow 11% (to $156 billion) by the close of 2009. While growth of any measure is to be celebrated given the funk that consumers have been in since last fall, the figures represent an overall slowdown from the recent past. Online sales grew 13% from 2007 to 2008 and by 18% in 2006. “Even as companies continue to struggle, the important take-away is that [e-commerce] is continuing to grow,” says Forrester analyst Sucharita Mulpuru. “It’s taking wallet share away from the rest of the retail world.” Shoppers are accustomed to using the web to research purchases and pricing prior to buying – whether they ultimately spend their money online or in a store. And, in the coming months, e-commerce websites that provide transparency around shipping charges – particularly those that offer a flat shipping rate or establish a level of spending needed to achieve free shipping – are expected to be more successful at sustaining sales. Moreover, if gas prices continue to climb, the web will take on new importance as a means of managing costs. Looking ahead, Forrester analysts predict that U.S. online retail sales will reach $229 billion in 2013, with the market expanding at a compound annual growth rate of 10% over a five-year forecast period beginning in 2008. No longer in the burgeoning phase of growth, experts believe the online retail market is on the brink of a natural, early phase of maturation. Source: “STORES Annual Favorite 50 Online Retailers List,” conducted by the National Retail Federation (NRF), September 2009. Website: www.nrf.com.