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1What millennials want: online retail in the Amazon eraExecutive Summary 2Research sample 3Headline findings 4Research Commentary 6Pricing and the perception of value 6Shopping with intent 13Shopping for inspiration 19Concluding Remarks 24Appendix 26Contributors 26About Inviqa 27About Magento Commerce 27About Vision One 27Ecommerce services at Inviqa 27Contents12Executive SummaryForecast to represent 35% of spending by 2030, millennials will become the mainstream consumer within a decade. Theyre pushing the boundaries of customer experience and theyre spending more on Amazon, with 79% of millennials having made a purchase on the platform in the past month compared with 62% of Gen Z, the demographic after millennials.In the shadow of Amazons growing dominance, online retailers across multiple industries are on the defence in a shrinking retail space. And as they strive to give consumers compelling reasons to shop from them directly, identifying and understanding the needs and behaviours of the millennial demographic will be critical to their survival.Amazon is the default ecommerce destination for this demographic, with 59% of 16-36 year-olds heading to Amazon before any other ecommerce website, according to our research. And so Amazons main propositions convenience, value, and product inventory clearly speak to millennials. Amazon Prime, offering fast, free shipping and one-click purchasing, forms the backbone of Amazons cost proposition and has attracted more than 100 million members globally who spend nearly 50% more on the platform than non-members. The retail giants easy returns process and vast inventory have also contributed to its market dominance. From the outset Amazon positioned itself as the Everything Store and 23% of millennials say the main reason theyd shop with Amazon rather than another site is because of its range of products and categories.This breadth of offering, which continues to widen, is hugely daunting for retailers, and Amazon has been ruthless in using data from its customers, sellers, and competitor brands to test consumer appetite for particular products and price points. Its used this insight to roll-out more than 70 private-label brands, earning itself a reputation for using the sales data of its own sellers to drive them out of business. Amazon is good at being an ecommerce company, but even better at making new ecommerce companies that sell new things, using its scale and data to move overnight and disrupt a growing number of industries. In the words of customer experience expert Shep Hyken, Amazon has become the master of being anticipatory, using data from millions of Amazon shoppers (purchasing from a product inventory of millions) to spot trends and make predictions with uncanny success.But the retail Goliath is a black box when it comes to sharing data with retailers, and so customer insight Amazons greatest asset is the very thing retailers must be prepared to sacrifice when selling on the platform.In this report, based on a nationally-representative sample of 1,000 UK millennials, we aim to help retailers understand how they can adapt ecommerce experiences to better meet the needs of millennial shoppers, and to survive and thrive in the Amazon era. 3Research sampleThis report analyses the online shopping preferences and behaviours of 1,000 UK millennials (defined as UK citizens born 19822001). The nationally representative sample consists of consumers aged 16-36 years old who have made at least one online purchase within the past three months (as of May 2018). The multiple-choice survey was conducted using an online questionnaire produced by consumer research company Vision One. The qualified sample was split evenly by gender and by older and younger millennials (defined as 26-36-year-olds and 16-25-year-olds respectively). 1,000 UK millennials4Headline findings Amazon is the number-one retail destination for millennials. Price is king for UK millennials. 16-36-year-olds shop with intent. Amazon is transactional, not inspirational. Reviews are integral to the ecommerce journey. 5Amazon is the number-one retail destination for millennials. 1 in 5 millennials always head to Amazon first when looking to make an online purchase; 59% always or often start their online shopping journeys on Amazon.Price is king for UK millennials. Price is the resounding number-one consideration for millennials when it comes to online retail. The leading reason millennials choose Amazon over other ecommerce sites is the perception that its products are often cheaper. Price is also the primary reason why millennials would shop with any ecommerce website again. A massive 87% of price-savvy millennials are very likely (41%) or likely (46%) to look at several different websites or apps to see where they can get the best price for a product.16-36-year-olds shop with intent. Asked what best defines a positive ecommerce experience, millennials say its when they know what they want and can find it quickly and easily. But ecommerce websites are making this difficult by failing at the basics, from site performance to product information. The most common problem millennials encounter when shopping online is a lack of product information and / or reviews followed by the site being too slow or containing errors. Amazon is transactional, not inspirational. Almost 1 in 10 millennials say the reason they would choose to not shop with Amazon in some instances is because they dont always know what theyre looking for and its hard to find inspiration on Amazon. Amazon is the default shopping destination for millennials shopping with strong intent to buy, but providing experiences that allow consumers to enjoy the discovery of products, not just the fulfillment of what they know they want, is the greatest opportunity for retailers battling Amazon for millennial customers.Reviews are integral to the ecommerce journey. A massive 93% of millennials are very likely (56%) or likely (37%) to read product reviews before making an online purchase. Offline research is dead, with just 1% of millennials saying they research offline before making purchases. Mobile is king for research, and desktop / laptop is king for purchases.The remainder of this report explores the findings in full, offering analysis and commentary from Inviqa business consultants on how online retailers can exploit Amazons weaknesses and better cater to the needs and behaviours of millennial shoppers. 6Pricing and the perception of valuePrice is king for millennials. The main reason 16-36-year-olds would opt to shop with Amazon over another site is the perception that the products theyre looking to buy are often cheaper on Amazon (28%). An additional 19% of millennials say theyd head to Amazon first because theyre Prime account holders and do not have to pay a delivery charge each time they make a purchase.Product pricing is the primary reason millennials would shop again from any ecommerce website, and a huge 87% of millennials are very likely (41%) or likely (46%) to look at several different websites or apps to see where they can get the best price for a product.Research CommentaryWhats the main reason you would shop with Amazon rather than another site?The products Im looking to buy are often cheaper on AmazonThe number of product categories and range of productsIm an Amazon Prime account holder so dont have to pay a delivery charge each time I purchase somethingProducts Ive purchased can be delivered quickly and convenientlyIts fast and simple to checkout e.g. one clickOther 1%23%14%15%19%28%7Even as theyre looking for other values such as product authenticity, millennials are highly driven by price something Amazon, as a very transactional website, caters to with its prominent product pricing information and the ability to easily compare products and suppliers at different price points. This transparency has certainly contributed to Amazons reputation for competitive pricing. But does Amazon always offer millennials the best value for money? The answer is no, with almost a third of UK millennials (30%) telling us that price is the main reason they would avoid shopping with Amazon in some instances, because the products theyre looking for on Amazon are not always cheaper there.What is the main reason you wouldnt shop with Amazon? The products Im looking for are not always cheaper on Amazon I worry about being sold a product that isnt authentic I dont always know what Im looking for and its hard to find inspiration on Amazon Other retailers reward me for my purchases e.g. loyalty points I can find a better range or quality of products elsewhere I can get products just as quickly and easily elsewhere online I prefer to shop directly from brand manufacturers (e.g. Nike) I prefer to support smaller or ethical businesses Other I need more content to help me decide whether to make a purchase5%6%9%7%15%7%8%4%30%9%8With Prime Amazon has found a way to cater to price-conscious, frequent buyers, and it has done so by understanding consumers perception of value.In offering consumers free shipping on every purchase, Amazon Prime has become central to Amazons cost proposition today. Many consider Amazon Prime to be a shipping programme, but its best thought of as a very sticky pay-to-play loyalty programme that takes price into consideration, ensuring customers get the items they want, when they want, at a reasonable cost.Kantar research shows the value of this cost-centric approach to loyalty; Prime customers become more loyal over time, with 41% of Prime customers tending to check Amazon before anywhere else in the first year of their membership rising to 60% after being a member for three years.We know many millennials are seeking discounts as the price of their loyalty, and the second-most-popular reason (17%) why millennials would shop with a website again is where incentives in the shape of points and discounts are on offer. Whats more, the majority of millennials engage with retail brands on a least one social media platform in order to get discounts.Millennials clearly view loyalty programmes as a way to save money, but its critical for retail brands to understand how to offer real value to them as individuals. Transforming millennial shoppers into brand advocates requires a lot more than the discounts that loyalty schemes are largely still focused on. According to KPMG research, younger consumers tend to be more loyal to companies that offer personalised interactions, and Forrester research has shown that emotion is a strong loyalty driver, so investing in understanding the actions and motivations of your customers across different points in the customer journey is key.Providing value to the millennial shopperThe most effective loyalty programmes offer personalised benefits that go beyond simply offering discounts towards future purchases. Keeping a millennial customer engaged is about understanding what improves their individual satisfaction. Just as different customers will want to purchase in different ways, customers respond to different types of loyalty schemes and rewards. Its about identifying and offering real value to individuals, from advanced access to new products and services, to events and exclusive content. Brett Lawrence, Business consultancy director, Inviqa 9As Forrester senior analyst Emily Collins explains, discounts drive short-term behaviours, but can cut into a brands ability to add value in the longer term. Its only where a retailer truly understands the emotions they need to elicit from consumers that they can work towards engendering real loyalty.Achieving this hinges on a retailers ability to incentivise consumers to identify themselves, because capturing their data is key to providing better products and services (and, ultimately, to driving more revenue). Loyalty programmes have typically been the tool to capture this insight; a retailer offers something in exchange for the customer identifying themselves. But a retailer must do more than simply reward the consumer for sharing their data; the true goal here is to continually learn more about that user and use that insight to deliver better experiences.Appealing to the loyalty of price-conscious millennials is about more than rewards; its about giving loyal customers the best experiences and the best of what the brand has to offer. A massive 86% of UK shoppers say they would volunteer personal data for improved privacy, faster shipping, and greater discounts and deals, and retailers really need to be continually mining and applying that insight to deliver compelling, personalised customer experiences. 37% of millennials say they would like ecommerce sites to change the content and products they see based on their personal tastes, interests, and past purchases, but 49% of millennials are still undecided on this, so theres a clear opportunity here for transparent, two-way communication that helps consumers see the value and services that are delivered when they consent to share their data.
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