Ecommerce Across Countries: Similarities and Differences Between US and UK Ecommerce Markets
Jumpshot recently held its first thought leadership mini-conference in London — a packed event with a great audience, interesting new data, and insightful panelists. You can check out:
And read on for my perspective on some of the biggest takeaways… including key differences between the US and UK eCommerce markets, as well as a framework for digital purchase journeys that works on both sides of the pond…
Steve Kraus, Head of Digital Insights, Jumpshot Inc
The eCommerce Landscape: How eCommerce Markets Differ Across the Pond
Our event began with an overview of the UK eCommerce landscape in a global context. As a starting point: government statistics show that the population in the US is about 6.5 times bigger than the UK; interestingly enough, our Jumpshot data shows that the US has just about 6.5 times more digital transactions than the UK.
Research geek digression: The results didn’t have to turn out that way — it’s not “baked into the statistical mix” in the sense that we don’t arrive at our market projections by starting with one’s country’s population and ratcheting other country’s data up or down by a simple multiple. Instead, we calculate our market projections separately by country, calibrating results from our panel (composed of millions of digital devices) to known “sources of truth” (e.g., websites for which usage data is available via secondary sources, clients, etc.). So that fact that these two figures — the population of the US and the number of digital transactions in the US — are both 6.5X the same figures for the UK is an interesting finding. It reflects that the eCommerce marketplace in both countries is generally about the same scope and level of maturity.
Although the typical UK consumer makes about the same number of digital transactions as the typical US consumer, there are some revealing differences in eCommerce behavior between the two countries.
UK & US Consumers Have Distinct eComm Category Preferences:
The typical UK consumer makes about 50% more food-related digital transactions than their counterparts in the US. Population density likely plays a role — while the US has 6.5X the UK population, the UK has 31X the population density of the US. Lots of people in close geographic proximity certainly makes food and grocery delivery easier to execute, and it’s a category that UK retailers jumped on early, with key players entering the market there as early as the mid-1990s. Other categories that are more “digitally mature” in the UK include women’s clothing, appliances, and home. On the flip side, US consumers make more digital transactions per capita related to automotive supplies, health, pets, and sports/outdoors. That sounds about right — we Americans like our cars, dogs, diet pills and baseball caps. 🙂 (Beyond the obvious snarkiness of that last statement, the data does make me wonder about how much Chewy.com has done to advance the entire online pet category in the US, but that’s a topic for another blog post.)
Amazon is Less Dominant in the UK:
Across the 22 major categories at the core of our analysis, Amazon’s market share averages ten percentage points higher in the US (~75%) than in the UK (~65%). Relative to the UK, Amazon in the US has a stronger hold on categories such as food, appliances, and clothing, whereas these categories are more “up for grabs” in the UK. Retailer Argos, for example, has been taking advantage, exhibiting growth of nearly one-third over the past year, likely fueled by its acquisition by Sainsbury in 2016. (For more on the growth of Argos, and deeper perspective on UK retailers, check out our data report on The Competitive State of the UK eCommerce Market).
At our event, panelist Stuart Johnston, Global Commerce Director for Zenith, summed it up this way: “The good news for retailers and brands is that it’s not time to power down the laptop and go home… We hear in the press that the high street is dying. We hear about the dominance of Amazon… But we know there are categories where the market is growing faster than Amazon. There is great opportunity… and this kind of data helps us identify the winners of tomorrow”
Ecommerce Similarities Across Countries: Two Varieties of Digital Journeys
The insights highlighted above use our data to quantify transactions across all digital marketplaces and underscores differences between UK and US consumers. Our data also reflects complete purchase journeys, from search to conversion, and here our analysis underscores a great eCommerce similarity between US and UK consumers. Specifically, in both countries, there are two broad types of digital purchase journeys.
Simply put, paths to purchase for lower-engagement, utilitarian offerings are characterized by straightforward journeys – quick-converting, minimally-researched, often beginning and ending on Amazon. Headphones, for example, are a low-engagement utilitarian purchase for most consumers. In the UK, 82% of digital headphone purchases happen on Amazon, typically starting with generic category searches (keywords like “headphones” or “earbuds”), and progressing with relatively little research to purchase on Amazon, with few “side trips” to other sites.
When consumers are more engaged in the category and have stronger brand preferences, purchase journeys are often quite different – longer, more circuitous, with more stops at Google and branded sites. Continuing with our example: while headphones are a utilitarian offering and value-oriented purchase for most consumers, there is a small segment of consumers who are highly engaged in the category. These consumers often begin their shopping on Google with branded searches (such as “Bose headphones” or “Airpods”), which then leads them to an exploration of branded sites or tech review sites. These consumers typically visit Amazon during their journey but often end up purchasing higher-priced headphones on specialty sites.
This utilitarian vs. branded distinction is obviously a continuum, and this example of headphones reflects a bit of eCommerce complexity — the category skews utilitarian for most consumers but is higher engagement for a smaller segment. As a whole, CPG categories will tend to be utilitarian for most consumers (and not coincidentally, Amazon will tend to perform particularly well in those categories). In contrast, categories like travel and fashion will have larger segments of highly-engaged consumers, and those categories will tend to be more brand-focused and less Amazon-centric.
Looking Ahead: Bifurcating eCommerce Paths to Purchase
The utilitarian vs. branded distinction sheds light on the digital path to purchase, and even more fundamentally, it underscores two distinct paths to brand development and connecting with consumers.
Warren Mackay-Smith, Global Director of People Relationship Marketing for Unilever, spoke at Jumpshot’s thought leadership mini-conference and underscored the branding implications of today’s bifurcating marketplace: “I think the utilitarian/branded distinction is going to exaggerate over time. Either you become a data-driven brand (and organization) that finds gaps in the marketplace – that is agile, nimble, and builds bottom-up based on consumer needs… Or you are a brand with purpose. I think that middle ground over time will disappear. This is really important for brands to realize. Either get agile fast – and launch and learn and create that culture within your organization. Or be really damn good at marketing, and understanding how to meet consumer needs through purpose. Brands that stand for something will get noticed and win. It’s not just what the brand is – its what contribution are you making to the world. When you can match those two, consumers will be drawn to you.”
From a digital perspective, there are certainly similarities between US and UK consumers. They make roughly equal numbers of digital transactions, and they approach those transactions from the same basic perspectives; in a sense, eCommerce is equally integrated into their lives. But there are differences between the two markets, and as a result, different opportunities for brands and retailers. Category maturity and growth opportunities differ across countries, and more broadly, UK markets are less Amazon-centric and more “up-for-grabs.”