The cost of living crisis slows the ecommerce boom

A significant section of the American public has pulled back on online shopping in the last six months, our latest direct-to-consumer (D2C) report shows. 

A quarter (25%) of American shoppers have spent less money online in the last six months, according to a nationally-representative survey of 2,000 of working-age Americans.

While the majority (42%) say they’ve spent the same amount of money over the same period of time, 33% admit to spending more, potentially due to rapidly rising costs across all consumer goods sold online.  

The Next Six Months Ahead

The research from Attest’s US direct-to-consumer (D2C) report 2022 shows that the booming growth seen by many online retailers during the pandemic looks set to be cut back down to size by the cost of living crisis. It also finds a mixed outlook in American consumer sentiment for online shopping for the next six months: 

• Spending levels will be uneven amongst Americans: A fifth (20%) of people think the amount they spend will decrease over the next six months, while 30% think it will increase, resulting in a net 9% of people who will be spending more online.
  
• The majority likely to have less purchasing power: And even for the 50% of people who say their spending will stay the same, their reduced spending power could lead to them being able to afford fewer purchases. 
  
• Some age groups expect to increase spending: The research finds that the biggest increase in spending is anticipated by those aged 35-44 and those aged 25-34. A net 13% of 35-44 year olds and 12% of 25-34 year olds predict a rise in expenditure in the coming months. 

How American consumers shop online

The yearly report aims to build a comprehensive picture of American consumers and how they shop online. We found:

1. Spending levels & frequency  

• Nearly 85% of Americans have shopped D2C in the last 6 months, and they’ve made an average of 3.3 purchases.
  
• The single largest percentage of people (23%) spend between $26-50 per month, while 12% spend less than this. The remaining 65% spend in excess of $50 buying goods online each month, with 30% spending more than $100.
  
• Currently, Americans are shopping online with high regularity; 47% buy items online at least once a week. People aged 25-34 are the most frequent online shoppers (27% shop more than once a week).
  

2. What they shop for & how

• There are some notable categories that Americans show a strong commitment to buying online; these are gifts (69%) and technology (59%).
  
• On the other hand, there are things they clearly prefer to buy in-store, among these are groceries (77%), furniture & homewares (65%), beauty & grooming products (58%) and pet products (53%). 
  
• Smartphone shopping, however, is massively popular; 66% of Americans say they most frequently use their mobile to research or make purchases online, rising to 79% in the 25-34 age range. Yet, older shoppers over-index for using desktop computers, laptops and tablets for visiting D2C sites.

3. What they value most

• With less money to spend online caused by inflation, it figures that people will be looking for the best possible value. In fact, according to this survey, price trumps all other factors with American consumers admitting it is the most important factor in their purchasing decisions (with quality far behind in second place).

D2C trends retailers need to know about

• Nearly a third think D2C means cheaper products: What is encouraging for D2C brands from the data is the perception that they’re cheaper than their main street counterparts; 31% of people believe the prices are more competitive. Building on this perception offers a key way for online retailers to score an advantage as the cost of living crisis worsens. 

• A segment of the public is prepared to wait for online deliveries: Delivery time was ranked as only the sixth-most important factor that drives Americans to make a D2C purchase. It seems that the pandemic and supply chain chaos has helped many consumers recognise the need for patience. In fact, 22% said they’d be happy with delivery in 6-8 days, while 9% are prepared to wait 9 days or more. However, brands should note that the majority (47%) of Americans expect to receive their package in 3-5 days.

• People will pay for delivery, but won’t go above $8: The research finds that people are prepared to pay for delivery of their goods – albeit not huge amounts. The average price point where Americans will start to be deterred from ordering is $5.13. A decisive 79% of people would not pay over $8 for delivery. 

• Marketplaces, like Amazon, remain top of the pile for product discovery: The bad news for D2C retailers is that the majority of Americans (52%) start their online shopping journeys in a marketplace. Search engines come far behind (at 25%), followed by brands’ websites (16%) and social media (6%). 

Jeremy King, CEO and Founder of Attest, said of the research: “This research finds that a sizable section of Americans have pulled back their online shopping within the last six months, spelling one of the first lulls in ecommerce since the pandemic boom. The outlook for the rest of 2022 sees an expectation from most consumers that they will either maintain or increase their spending but with weaker purchasing power due to inflation.

“Despite this environment, it is clear that Americans have also made D2C brands a key part of their shopping habits and the good news is that nearly a third of US consumers see these brands as more competitive on pricing than their main street competitors. This perception may be an essential differentiator for D2C brands during tough economic headwinds faced by consumers.”