Demystifying the online shopper Study results for further discussion

1. www.pwc.com/r&c Demystifying the online shopperStudy results for further discussion April 2014

2. A truly global piece of research Demystifying the online shopper

3. Myth: Social media will soon become a primary sales channel 1 Demystifying the online shopper

4. 60% use social media to follow, discover and give feedback on brands and retailers Q. 75% of online purchasers use social media, with various purposes… Followfavourite brand / retailer Give feedback Discover new brands Interactwithfavourite brand Influencedmypurchase Drove a purchase Don’tfollowany brands / retailers Sample : 8 376 social media users out of the 11 067 online shoppersresponding Demystifying the online shopper

5. 2 Myth: Stores as we know them, are deadStores of the future will be more like showrooms Demystifying the online shopper

6. Online buyers still want to shop in stores – for some categories more than others... Q. Which method would you most prefer for researching and buying? Research and buy online Research online, buy in store Research and buy in store Sample : Full sample of online shoppers (11 067) Demystifying the online shopper

7. 17% of online users don’t buy online - they simply prefer to shop in stores Q. What are the most important factors that attract you to shopping in a physical store? Sample : Full sample of online shoppers (11 067) Sample : 17% of respondent out of 13 410, which corresponds to quasi non online shoppers « Never shop online » and « once ever » Demystifying the online shopper

8. Myth: The tablet will overtake the PC as preferred online shopping device 3 Demystifying the online shopper

9. Device penetration for online purchases: tablet 28% vs PC 97% Q. How often do you go shopping using the following shopping channels? Stores Online - PC Catalogue Smartphone Online - tablet TV Social media Sample : Full sample of online shoppers (11 067) Demystifying the online shopper

10. Differentmaturitylevels – or isit consumer appetite? Q. What is the proportion of online shoppers doing online purchases daily-weekly or monthly via…? Online shopping via tablet PC Online shopping via smart phone Sample : Full sample of online shoppers (11 067) Demystifying the online shopper

11. 4 Myth: As the world gets smaller, global consumers are getting more alike Demystifying the online shopper

12. Consumer behavior online and in-store is actually quite specific to each country Practical user Bargain hunter Online behavior Social addict Shopping lover Bargain hunter Practical shopper In store behavior Sample : Full sample of online shoppers (11 067) Demystifying the online shopper

13. Myth: China is the future model for online retail 5 Demystifying the online shopper

14. Chinese shoppers are ahead of the curve in terms of new devices and social media usage • 58% of Chinese online consumers have alreadyshopped via PC tablet and 62% via smartphone • 24%of Chinese online consumersthinktheywill use tablets or smartphonesmore in the nexttwelvemonths to shop • Global average : 28% and 30% • 56%of Chinese online consumers have alreadyshopped via a social media platform • Global average : 11% • Global average : 24% Sample : Full sample of online shoppers (11 067) Demystifying the online shopper

15. However the model is not necessarily replicable: online shopping habits are very different and unique to China • Only 21% of Chinese online consumers use search results (Google, Bing) to visit a specific online store For Chinese customers #1 and #2 factors of attraction on a given online shop are vouchers/coupons sites and friends/experts’ recommendations • Global average : 36% • Global average :#5 and #6 • Only 36%of Chinese online consumers are attracted by free shipping when shopping on a specific online store For Chinese customers #1 and #2 factors of attraction on a given physical store are the fact they always enter the store when they are around and friends/experts’ recommendations • Global average : 56% 95% of Chinese online shoppers have shopped with their local leading online pure player (Taobao in China) over the past twelve months • Global average :#2 and #4 • Global average : 72% Sample : Full sample of Chinese shoppers out of total sample of the survey (full sample and online only) Demystifying the online shopper

16. 6 Myth: Domestic retailers will always enjoy an intrinsic advantage over global retailers Demystifying the online shopper

17. In most mature markets, local multi-channel retailers are indisputably leading the way... Q. Who are your top 3 favorite multi channel retailers? Mature markets US UK Germany France Netherlands Hong Kong Sample : Full sample of online shoppers (11 067) Demystifying the online shopper

18. ...and in most emerging markets, foreign players are gaining a strong foothold Q. Who are your top 3 favorite multi channel retailers? Emergingmarkets (BRICs) China Turkey Brazil Russia Foreignmultichannelretailers Sample : Full sample of online shoppers (11 067) Demystifying the online shopper

19. Myth: Global pure players always have an advantage over domestic pure players 7 Demystifying the online shopper

20. Looking specifically at pure players, foreign leaders are mainly limited to Amazon and eBay Number of foreign online pure players among each country’s Top10 online pure players Number of foreign online pure players Demystifying the online shopper

21. Conclusion : a varied competitive environment across countries. Local and global players share the space Leaders in each country… Multi-channel players Leading foreign giants Domestic champions only Domestic champions only Leading foreign giants Online pure players Sample : Full sample of online shoppers (11 067) Demystifying the online shopper

22. 8 Myth: Retailers are inherently better positioned than brands, as they are closest to the customer Demystifying the online shopper

23. More than one in three consumers have shopped directly from a brand’s website Q. Have you ever bought directly from a consumer brand or manufacturer online? NO YES Global Sample : Full sample of online shoppers (11 067) Global average 35% Demystifying the online shopper

24. Brands selling direct attract both brand lovers and deal hunters Q. What made you choose to buy directly from the brand, rather than from a shop selling lots of brands? Brand lovers Deal hunters Practical shoppers Sample : 3 871 respondent (=35% of “Yes” to prior question) Demystifying the online shopper

25. Myth: e-commerce is cannibalising retail sales 9 Demystifying the online shopper

26. Over 50% of consumers spend more with those select few since they have started shopping across channels Q. Do you think you have spent more with your favourite retailer since you started shopping across multiple channels? 48% 52% 58% Sample : Respondents who provided their 3 favourite retailers (9 427, 5 122, 2 928, ) Demystifying the online shopper

27. Myth: Lower prices is the best way to get customers to spend more 10 Demystifying the online shopper

28. Price is high on the list of consumers’ reason to shop at a retailer in the first place Q. Why do you shop at your top 3 favourite multi-channel retailers/brands? Sample : Full sample of online shoppers (11 067) Demystifying the online shopper

29. However, if you look more closely, increasing your share of wallet should be sought in other attributes Q. What makes existing customers spend even more at their favourite retailers (multi channel)? Estimation model: multinomial logistic regression. Significant coefficients are indicated via or Sample : Online shoppers who provided favorite multichannel retailers (8 619) Demystifying the online shopper

30. Demystifying the online shopper

31. Eight key customer expectations emerged from the survey 2014 Survey says Implications • #1 reason people shop at their favorite retailers: “I trust the brand” • #2 reason (81%) for customers to select a retailer is the “store, location and staff” • Engage in consistent conversations with customers • Instill the brand message to employees through hiring and training A compelling brand story that promises a distinctive experience 1 • Enable personalized offerings, payments and loyalty programs in all channels • Protect against potential cyber-attacks by increasing defenses on customer databases • Customers want personalized offerings and to interact with retailers 24/7 • 67% used a coupon received via smartphone Customized offerings based on my totally protected personal preferences and information 2 • Customers are multi-device users • PC is still the preferred method of online purchasing, but not by much • Customer information must “travel” with each device and still be secure • Experience across devices does not need to be identical An enhanced and consistent experience across all devices 3 Demystifying the online shopper

32. Eight key customer expectations emerged from the survey 2014 (continued) Survey says Implications Transparency, real time, into a retailer’s inventory • 46% of respondents want the “ability to check other store or online stock quickly.” • Inventory tracking tool can fulfill this customer desire and also enable faster decision-making across the supply chain 4 • Customer loyalty is at risk when a familiar channel closes • Customer loyalty is subject to change when encountering subpar experience in any sales channel Favorite retailers are everywhere • Customers want an ‘always-on’ experience 5 • Growing enthusiasm for mobile shopping • Many retailers have not invested heavily into apps • Mobile apps is an attractive investment, as it is a tool to improve customer experience To maximize the value of mobile shopping, apps must improve 6 Demystifying the online shopper

33. Eight key customer expectations emerged from the survey 2014 (continued) Survey says Implications Two-way social media engagement • Retailers should be active online, ready to interact at any hour • 59% follow favorite brands or retailers via social media • Investing in social media is a journey toward increasing internal capability and true consumer engagement 7 • Increase partnership between retailers and manufacturers, such as private label • Few distinctions between manufacturers and retailers when purchasing • 70% of U.S. participants made purchases directly from manufacturing brands “Brands” act like retailers, and we'll treat them that way 8 Demystifying the online shopper

34. Total Retail: Buildingthenextretailbusinessmodel Demystifying the online shopper

35. http://www.pwc.com/r&c Mag. Andreas Plamberger Senior Manager Technology Consulting Erdbergstrasse 2001030 Wien M:+43 (0) 676 83377 2837 andreas.plamberger@at.pwc.com • ® 2014 durch PwC. PwC Österreich unterstützt Unternehmen als auch Organisationen dabei, Wert zu schaffen. Das tun wir an acht Standorten in ganz Österreich und als Mitglied im weltweiten Netzwerk von PwC. Wo immer Sie auf uns treffen, rund 180.000 Mitarbeiterinnen und Mitarbeiter haben ein gemeinsames Ziel vor Augen: Mit unseren Dienstleistungen Wirtschaftsprüfung, Steuerberatung und Unternehmensberatung wollen wir Ihnen Mehrwert bieten. Sagen Sie uns, was für Sie von Wert ist. Und erfahren Sie mehr auf www.pwc.at. Demystifying the online shopper