How does the Internet influence Retail Buying Decisions in Malaysia

How does the Internet influence Retail Buying Decisions in Malaysia

This article examines how retail consumers in Malaysia use the internet to gain awareness when shopping for products, how they research them and eventually complete a purchase. The data given are based on “The Connected Consumer Survey 2014 / 2015” and “Consumer Barometer by Google” with data from 2014 and 2015. Research sample sizes vary, but the data sampling should clearly show the current trend within a small margin of error. Not all data shown will add up to 100% as some less significant data were omitted for the purpose of keeping this article comprehensive.

Accessing the Internet

To access the internet, a whopping 96% use a mobile phone to do so. In addition, 35% use computers (desktop, laptop and netbooks), and 14% use tablets.

Interestingly 40% of internet users go online using their smartphone while watching TV.

Product Awareness

20% of internet users gain awareness about a product or service from online discussions with other people, with the majority coming from in-person contacts and social media. Consumers who eventually purchased a product learned about the products online (48%) or in a physical retail store (41%).

Online advertising contributed 31% to gaining product awareness, compared to 21% TV advertising, 15% magazine advertising, and 2% radio advertising, the remainder being various other advertising channels.

Product Research

About equal amounts of customers did their product research moments before their purchase (18%), hours before purchase (19%), days before purchase (17%), and weeks before purchase (18%). 80% of customers used both online and offline channels to research their purchase, and the majority (30%) of customers were motivated to complete their purchase due to discount or promotion offered.

The major sources for online product research were search engines (74%), brand websites (42%), retailer websites (27%) and social media networks (24%).

The main reasons for customers to do online research before deciding on their eventual purchase were to compare products, prices and features online (55%), discover relevant brands (36%), getting ideas (33%) and looking for opinions, reviews or advice online (30%).

Product research was done mainly using computers (74%) followed by smartphones (45%) and tablets (16%), as well as combinations of these devices. Among the smartphone users, 23% did their product research within a physical store.

Purchasing Behavior

Internet users completed their purchase mostly in a physical store (58%) compared to an online purchase (30%) or phone orders (5%). Those who opted for an online purchase did so using their computer (72%), smartphone (20%) or tablet (6%).

Almost a third of customers (29%) who completed their purchase (both online and offline) shared their purchase experience via social media, and 16% posted reviews or ratings online.

Interesting Take-Aways

While the internet is accessed predominantly via smartphones their contribution to the shopping cycle is still much less prominent than computers.

Based on data not shown here (will be subject to a follow-up article) this may have to do with the lack of mobile friendly websites, which makes it inconvenient for smartphone users to do their online product research and purchasing. Concerns about secure online purchases via phones may be another reason.

Online product research and price comparison is a growing trend that poses substantial challenges for traditional retailers. Customers research products within a shop but use the internet to look for the same product online, hoping to get it at a lower price – a trend referred to as ‘showrooming’. With free price comparison apps on smartphones it becomes easy for consumers to ‘feel’ a product in a retail shop but to purchase it elsewhere cheaper.

Online advertising clearly outperforms traditional advertising channels like TV, print and radio. This is an ongoing trend that will likely become more polarized. In addition, some 40% of smartphone users go online while watching TV, quite likely during commercial breaks. This renders the effectiveness of TV ads questionable. It also indicates that advertisers who are currently using digital channels sparingly or not at all will need to re-align their marketing budgets to cater for this trend and invest more into i.e. online advertising. Since 74% of all online product research was started via a search engine it seems reasonable to allocate a share of the online advertising budget to search advertising, i.e. via Google AdWords.

A surprisingly high number of retail customers share their purchase experience via social media. This should be seen together with the data showing that about a quarter of online product research is also done thru social media. Consumers use this channel to give and take advice about products that are relevant to them, resulting in what is traditionally called ‘word-of-mouth marketing’. This makes proper customer engagement and brand monitoring an increasingly important factor of a retailer’s or brand owner’s social media tactics.

As always I welcome any comments or feedback. If you have your own experience with regards to the above data or conclusions please share them in the comments below for everybody’s benefit.

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