Consumer direct spending, which encompasses catalogs, direct mail, interactive television, and online marketing, amounted to $133 billion in 1999, up from $115 billion in 1998, according to a new study.
At this level, consumer direct made up nearly 5% of all retail sales in 1999, and will jump to 12% by 2010, according to “Consumer Direct: Shopping Behavior in the Age of Interactivity,” which was co-released by Peppers and Rogers Group Institute for the Future. But its impact will be even more widely felt, as the boundary between traditional retail purchases and direct sales is blurred.
“Consumers are learning to bundle consumer direct and bricks-and-mortar shopping experiences to make their buying decisions, so even though a purchase may occur at a local store, the actual product selection might take place online or through a catalog,” said the project’s director, Peppers and Rogers Group employee David Halek.
The study further found that 83% of U.S. consumers made a direct purchase during 1999. Of those, one-quarter bought products online. Among those that didn’t make such purchases during the past year, one-fifth said they were open to catalog-based shopping in the future. Other findings include:
* Cash-strapped dot-coms are consolidating as the consumer direct channel matures to meet growing consumer need through personalized, one-to-one offerings.
* Remaining online merchants are building scalable logistics and delivery models to suit the changing needs and expectations of their customers while sustaining their own growth.
* Interest in automatic replenishment among the most sophisticated group of consumer direct shoppers ranges from 40% for household items to 60% for prescription medicines. Automatic replenishment services can either remind the consumer about items they are likely to run out of soon, or can automatically purchase and send the items the consumer needs. Consumers generally are more interested in a automatic replenishment model in which they maintain control by receiving a reminder of items they are likely to run out of soon and have the opportunity to accept or decline shipment of that item.
* Consumers are coming to expect companies to deal with them as one customer across all channels.
* Drugstore shoppers are the most likely group to search for an item online but complete the purchase in a store or on the phone.
* Increasing numbers of U.S. consumers are trying consumer direct channels for the first time for many reasons, including:
Unique Items. 72% of catalogue/mail shoppers and 50% of online shoppers said one of the top two reasons they tried the channel for the first time is because it offers items they cannot find at stores
Free shipping. 35% of catalogue/mail shoppers and 24% of online shoppers were also enticed by free shipping offers
Time savings. 84% of consumers who have tried online grocery delivery services such as Peapod said that one of the top two reasons was to save time shopping
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