Consumer satisfaction in online retail is increasing. In particular, online auctions and international shops are gaining more and more importance. Many shoppers still have security concerns. However, with increasing use of online retail the fear of misuse is decreasing. Good customer service and fast delivery are important, while price only plays a subordinate role. Electronic payment methods such as online transfer are taking over from conventional methods. Such are the conclusions derived from the representative study “eCommerce 2004”, which Postbank commissioned in the fall of 2004.

Men are the driving force in bargain hunting at auctions

Online auctions in particular have gained in importance among internet users: 67.5% of all online shoppers have already made one purchase at an auction; meanwhile, one in every four Euro spent on the internet goes to virtual auction houses. Thus, they have almost managed to catch up with the online shops in Germany which have already been used at least once by 81.5% of all online shoppers.

Table 1: Shopping platforms used by online shoppers in Germany

Lovers of virtual auctions are generally men (72.7%) as well as younger age groups: 64.4% of 18-29 year olds and 74.8% of 30-39 year olds are the most active customers. The search for bargains means users of online auctions are on the internet more frequently than other online shoppers: 13.5% of all people interviewed bought something at auction at least five times in the last three months, 11.5% have shopped at least five times in shops in Germany (international shops: 1.7%).

Internet stimulates cross-border retail

Almost a quarter of all shoppers (22.3%) already shop abroad. Among these there is a high number of people in good jobs and high-income earners who particularly value the large selection and time saving of online shopping. These are mostly men, over 30 years old and belong to the most intensive users of the internet as a sales channel.

In contrast, women are more cautious in their buying. They limit themselves more to shopping within country borders. There are even more women than men (79.8%) who shop in German shops – 83.6% have already bought at least once in German shops.

High potential for internet pharmacies / Will video stores soon have empty shelves?

High potential for internet pharmacies / Will video stores soon have empty shelves? The range of products bought over the internet, both now and in the future, will become even greater. The forecasts are especially good for mail-order pharmacies: 8.8% of those interviewed had already ordered medication over the internet once before, and 23.7% would buy medication online in case of need. Only retailers in office goods will have even better opportunities as measured by current sales. 28.4% of online shoppers have already ordered office supplies, 37.8% plan to do so in future.

In terms of digital goods, software downloads and specialist articles are the main items ordered online. Both product groups will also lead the market in the future. Film and music downloads have also spurred a huge interest: 45.5% and 57.3% would be happy to buy music and videos over the internet in the future and to save time. In this way, the internet is becoming an increasing source of competition not only for music businesses but also for video stores.

Frequent online shoppers are more open to change and have fewer security concerns

As people gain more experience in shopping, they are more willing to try out new things and to compare prices more intensively, and the fear of internet misuse drops. Inexperienced internet users do not always exhaust the potential of the internet – security concerns cause them to cling to traditional methods.

Based on the number of internet sales two groups can be identified:
a) Occasional shoppers (512), who have bought up to four times in the last three months.
b) Frequent shoppers (246), who have bought at least five times over the internet in the same period of time.

Men usually buy more frequently than women. 36.8% of men are frequent shoppers. In contrast, 24.1% of woman are frequent shoppers.

Differences can be seen in terms of age and income. The prototypical frequent shopper is aged between 30 and 39, or 50 and 59, earns more than €3,000 per month and works very often in management or is self-employed.

High-income earners are very busy and thus value the specific advantages of the internet more than other groups, such as saving time and not having to worry about opening times. This is also reflected in the high affinity to online banking and online brokerage. In general, cost saving is becoming less important.

Online shoppers have fixed shopping habits and requirements – speed is important

As with weekend shopping, shoppers have also developed fixed shopping habits on the internet. Almost three quarters of shoppers primarily visit already used shops. They go straight to these homepages. 42.3% of shoppers use price comparison portals to search for a product (frequent shoppers: 56.5%), 60.8% use search engines (frequent shoppers: 72.4%).

It can generally be said that people are not very willing to discover new things. The majority of shoppers are geared towards a small number of well-known shopping platforms. 68.8% always buy in the same shops. Frequent shoppers are somewhat more willing to experiment: 31.3% (21.5% of occasional shoppers) are happy to try out new providers. Since the Euro was introduced, 15% (occasional shoppers: 11.1%) shop abroad.

When selecting a shop, customer service as well as time factors play a key role. 92.4% state that the fast delivery of goods is important.

Retailers ignore customer security concerns

Retailers ignore customer security concerns Well-known shops and trusted brands are an important orientation focus on the internet. Security concerns also play a primary role in this. First-time shoppers consider the clear communication of security advice to be of prime importance. 77.3% have security concerns for shops which have not been used until now, 75.5% for unknown payment methods. If no security advice is provided, 75.2% do not proceed with the order transaction.

However, customer uncertainty and sensitivity is only recognized by about one third (31.8%) of retailers. Investments are thus escaping into other channels: ex-panding the product range (65.1%) and developing marketing (62%) take first priority. Despite the high potential which could be produced from optimizing the payment portfolio, only 28.1% are willing to invest in this. Not taking into account the fact that 72.8% of online shoppers have already discontinued their order transactions due to complex, exotic or simply inefficient payment methods.

Frequent shoppers prefer online transfer

Frequent shoppers prefer online transfer Payment systems which are easy-to-use and well-known are most in demand. In-voicing and online transfer are usually the most frequent payment methods while credit cards are in third place. In terms of payment, frequent shoppers consider convenience to be most important but are geared more towards easy-to-use elec-tronic payment methods. Over 60% of online shoppers (frequent shoppers: 72.4%) use online banking – and prefer transfer as a payment method for the internet. The greater trust in the security of online banking is being projected by users onto online buying: 49.3% are of the opinion that payment over the internet has probably become safer (offline bankers: 41.6%).

Retailers value payment by transfer (usually advance payment) due to the low risk of default. However, they very rarely offer their customers the option of carrying out the transfer directly through a form on their shop webpage.

Prompt confirmation that the money has been received could reduce payment default and shorten the delivery time of goods from between one to three working days.

Lack of customer service for auctions – leading decision judgment by Federal Court of Justice promises remedy

Lack of customer service for auctions – leading decision judgment by Federal Court of Justice promises remedy The quality of goods and customer service also leaves much to be desired: 35.2% of those interviewed have been annoyed at least once because received goods did not correspond to the goods in the pictures or descriptions. For online auctions, fault was found with the lack of customer service, in particular the often absent right to exchange goods. 16.8% of those interviewed reported that delivered goods could not be returned or exchanged. However, this should change thanks to the new leading decision judgment by the Federal Court of Justice on the right of return for commercial offers in auction portals.

Seniors are catching up

It is not only young target groups who are increasingly buying over the internet, but also seniors. There are still many reservations among the over 60's. However, positive experiences help to quickly overcome these reservations. 25.9% of older online shoppers have bought items over the internet more than five times in the last three months. They are thus among the group of frequent shoppers. 63% say that their personal security concerns have probably decreased the more experience they have gained in online shopping, 21.2% risk virtual shopping abroad, 55.6% use online auctions. The main reason for online shopping is to save time (44.4%), obtain better selection and cheaper prices (40.7% respectively). However, price comparison portals are used a lot less frequently than in other age groups. Only 25.9% have used a price comparison portal.

Summary:

In the coming years, the internet will continue to gain importance over stationary retail. The growth in sales is primarily being generated through the expansion of the product range as well as more marketing for the sales channel.

Executives, the self-employed and high-income earners particularly value internet shopping and belong to the increasing number customers frequenting interna-tional online shops. Online auctions are on the fast track and are mainly being used by young age groups and men. In addition to the big sellers like books and CDs, there is a particularly bright future for virtual medication retail, as well as film and music downloads.

Furthermore, the internet does not necessarily have to be cheaper than stationary retail – online shoppers mainly value other qualities: time saving and freedom of opening times as well as customer service, and sometimes fast delivery or goodwill for the exchange of goods.

Existing security concerns decrease the more one uses the internet, and as familiar electronic payment methods become more popular.

Information on the study: random sampling, statistical methods, publication

This investigation was carried out by Europressedienst Research, Bonn, and was commissioned by Postbank in September 2004. In total, 1,020 private individuals and 264 online retailers throughout Germany were interviewed. Private individuals were interviewed in person. The basis of the survey was a questionnaire of standardized questions and item specifications. Companies were selected according to a specific sectoral distribution for internet shops. This was also based on a ques-tionnaire of standardized questions and item specifications. There may be minor deviations in individual statistics resulting from numbers which have been rounded off.

The study in German language is available for downloading at www.postbank.de/presse.