The Favorite 50 2016

This article was published in the September 2016 issue of STORES Magazine.

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Some repositioning, but familiar names remain at the top

Amazon, yes. Walmart, yes. We know those are big players in the online world. They continue to dominate the top online retailers, according to the Prosper Insights & Analytics 2016 ranking of the Favorite 50 shopping websites.

But they are far from the only stories happening in online retail. Before diving into what the survey of nearly 7,000 consumers revealed, know that responses were written in, with no merchants’ names listed or suggested, providing a more accurate insight into actual consumer behavior.

The Favorite 50: 11 Retailers that rose in the e-commerce rankings in 2016 from NRF on SlideShare
“Amazon has capitalized on the digital shopping trifecta for modern shoppers: low prices, fast and free shipping and excellent customer service,” says Pam Goodfellow, Prosper’s director of consumer insights.

“Amazon has capitalized on the digital shopping trifecta for modern shoppers: low prices, fast and free shipping and excellent customer service,” says Pam Goodfellow, Prosper’s director of consumer insights.

Amazon still No. 1 …

Amazon continues to control the world of online retail, ranked by 66 percent of this year’s survey respondents as their top online shopping destination, up from 60 percent last year. “Amazon just continues to collect loyal customers who love the shopping experience,” says Pam Goodfellow, Prosper’s director of consumer insights. “Amazon has capitalized on the digital shopping trifecta for modern shoppers: low prices, fast and free shipping and excellent customer service.” In 2014, Amazon earned 56 percent share among those 18 and up.

While it might seem obvious, the data backs up the notion that this figure is likely to continue to grow. Millennials (73 percent) rank Amazon even higher — up from 60 percent just last year.

“Their count with Millennials is growing, and that’s what any retailer in general would want — the next generation of shoppers to be so loyal,” Goodfellow says. Amazon stretched its lead among Baby Boomers, too.

… But Walmart has plenty to be happy about

While there is a big separation between No. 1 Amazon and No. 2 Walmart, Walmart also increased its share, named the favorite by 14 percent of respondents, up from 12 percent in 2015.

Ranked No. 2, Walmart’s share among Millennials is a bit higher than the overall average.

Ranked No. 2, Walmart’s share among Millennials is a bit higher than the overall average.

“Walmart is definitely holding its own,” Goodfellow says. “It’s not been a case of Amazon stealing Walmart’s shoppers for its own growth. It’s a case of growth among the top two.”

Goodfellow notes that Walmart’s share among Millennials is a bit higher than the overall average. “While Millennial shoppers are incredibly loyal to Amazon, they still have some interest in Walmart, too.”

She sees potential in Walmart’s ShippingPass program, which offers free two-day shipping for a $49 annual fee. “It might be encouraging shoppers to take a second look at Walmart.com,” she says, noting the popularity of membership programs in general. “To online shoppers, free shipping is almost as important as low prices.”

In general, free shipping helps ease the fear of online shopping among older shoppers while “among Millennial shoppers, online shopping is almost old hat. It’s what they’ve always done.”

Kohl’s swapped positions with Best Buy to move up to No. 3.

Kohl’s swapped positions with Best Buy to move up to No. 3.

Meet the new No. 3

While Amazon and Walmart are entrenched in the top spots, the remainder of the Top 10 includes a slight bit of repositioning — but not necessarily much growth. Kohl’s came in at No. 3, swapping spots with No. 5 Best Buy, by increasing its share from 6.5 percent to 6.6 percent. Best Buy, on the other hand, dropped from 7 percent to 6 percent.

Best Buy wasn’t the only Top 10 retailer to lose ground from 2015. Macy’s (down 0.8 percentage points) and Target (-0.1) dipped from 2015, though not significantly enough to change their rankings. Also dipping slightly was eBay (-0.6) which, though not a true retailer, is highly ranked each year because shoppers view it as an e-commerce portal.

Only JCPenney (0.7), Old Navy (0.3) and Sears (0.2) increased their shares among the rest of the Top 10. Old Navy’s growth, albeit slight, was enough to move it into the Top 10 from No. 11 in 2015.

Just shop it

Outside of the Top 10, the shares are so small that a slight gain or drop can result in meaningful swings in the rankings. Nike vaulted from No. 33 in 2015 to No. 17 this year, increasing its share from 0.3 percent to 0.7 percent. Goodfellow cites “a strong brand, but [it’s] also indicative of the athleisure trend. Nike is like Coca-Cola: Familiar to everyone, these types of super brands have storied connections with consumers. This type of implicit trust gives shoppers the confidence to interact with brands like Nike directly in the digital arena.”

Nike, the only brand wholesaler whose direct-to-consumer website made the Top 50,  vaulted to No. 17 this year.

Nike, the only brand wholesaler whose direct-to-consumer website made the Top 50,  vaulted to No. 17 this year.

Nike also holds another distinction: It is the only brand wholesaler whose direct-to-consumer website made the Top 50.

“Nike has created such a strong brand awareness, making them top of mind for many consumers in the athletic wear. And Nike is certainly helped by the fact that this is such a hot category among shoppers right now,” Goodfellow says. “A lot of brands are attempting that same feat.”

Hello, newcomers

The survey often reveals some coming trends. This year is no different, thanks to the addition of a number of new entries. Wish.com, which ships directly from China, leapt to No. 24, commanding a 0.5 percent share. Wish.com offers millions of items from 100,000 manufacturers; most of the goods are not branded. The shipping model can’t compete with online giants: The company often promises delivery in weeks, swimming against the Amazon-driven tide of delivery in days — or even hours.

While Wish.com is new, others come on and off the list with some frequency. This year, HSN, REI, Hot Topic, Burlington Stores and Groupon all returned to the Favorite 50. Dropping off were Dillard’s, The Children’s Place, Jos. A. Bank and Eddie Bauer.

Goodfellow suggests not reading too much into those departures. “To see that kind of variability that far down in the list is not that surprising,” she says.

But they were not alone. Yahoo and Bing also dropped out of the Top 50, while Google fell out of the Top 10. Yahoo’s drop was particularly steep; it was No. 28 in 2015. The decline of all the search engines may again point to the strength of Amazon. “It’s a de facto search engine for a lot of shoppers,” Goodfellow says. “When researching products online, people are more likely to head to Amazon than Google.”

Generation gaps and trends

The survey not only ranks the Top 10 websites for all adults, it also looks at Millennials and Boomers. There are some key differences. Millennials put Target as their No. 3 while Boomers place Kohl’s there. Best Buy comes in at No. 4 for Boomers; Millennials prefer eBay. Forever 21 and Old Navy also make the Millennials’ list of favorites, while Boomers prefer L.L.Bean.

Lane Bryant has some serious competition in women’s wear. After the online retailer dropped 22 spots in 2015, it dropped two more places this year to No. 44. Woman Within dropped from No. 21 to No. 22, but Roamans jumped from No. 46 to No. 40.

Digging more deeply into the rankings, another trend emerges: the popularity of bazaar sites. Zulily jumped from No. 30 to No. 20, increasing its share from 0.4 percent to 0.6 percent. Zulily, the last of the strong flash sale sites, flies in the face of increasingly generous return policies. It offers them only in rare circumstances.

Wayfair used its free shipping policy to leap from No. 49 to No. 26, increasing its share from 0.2 percent to 0.5 percent. Ubiquitous advertising may have played a role, but Goodfellow notes that its success has come by “selling items that usually have a shipping surcharge on them. Free shipping is almost like a gateway drug for online shoppers. They love it.”

Consumer Characteristics

Quick: What does a Walmart shopper have in common with an Amazon shopper? And what can we learn about those who prefer Kohl’s?

Diving more deeply into the behavior of those who shop the three top-ranked online retailers in the Favorite 50 reveals a lot.

Here’s a brief look, with comments from Pam Goodfellow, Prosper’s director of consumer insights.

57 percent of Kohl’s shoppers say they are more likely to research clothing online.

57 percent of Kohl’s shoppers say they are more likely to research clothing online.

  • Amazon shoppers tend to look a lot like the overall shopper age 18 and over. About half of Amazon shoppers say they research apparel in-store rather than online. That’s slightly lower than Walmart and Kohl’s shoppers. Surprisingly, 57 percent of Kohl’s shoppers say they are more likely to research clothing online compared with 45 percent of Walmart shoppers and 42 percent Amazon shoppers. All of those shoppers are higher in online apparel research than the overall average for adult shoppers (35 percent).
  • It is no surprise that Kohl’s shoppers — with their love for Kohl’s Cash — are most influenced in apparel purchases by coupons (53 percent), in-store promotions (45 percent) and email advertising (45 percent). These figures were significantly higher than the influence that these promotions held for Walmart shoppers, Amazon shoppers and the overall adult group. “This is consistent with the M.O. for Kohl’s shoppers: Never pay full price,” Goodfellow says. While in-store promotion was the top influence for apparel purchases for all three, the percentages were much lower.
  • In beauty, more shoppers do no research before purchasing. However, Kohl’s shoppers show a greater propensity to research online compared with Walmart and Amazon shoppers. Some 33 percent of Kohl’s shoppers say they research on a desktop or laptop before purchasing. That compares with 29 percent of both Amazon and Walmart shoppers. Walmart shoppers were slightly more likely to research in the store.
  • Home décor shows a similar lack of research, though again, Kohl’s shoppers are slightly more likely to head to the computer (37 percent) than Walmart (33 percent) and Amazon (31 percent) shoppers. All three groups are higher than the overall adult shopper average (27 percent). “Home categories can be tricky for online shoppers, who miss out on the tactile experience when browsing these items digitally,” Goodfellow says. “Retail websites and social media outlets like Pinterest, though, have certainly provided potential buyers with a plethora of visual inspiration that drives shoppers online to browse.”
  • With big ticket electronics, online research dominates all three groups of shoppers — and they are all more likely to conduct online research than the overall group of adult shoppers. Again, Kohl’s shoppers are more likely than any group to conduct online research, with 56 percent saying they do. Still, Walmart shoppers (54 percent) and Amazon shoppers (54 percent) are both more likely to do so than the overall group (44 percent).
  • The same general trend is mirrored with smaller electronics, with all three groups outpacing the overall adult category in online research. This time, though, Walmart shoppers (51 percent) are more likely than Amazon (49 percent) and Kohl’s (49 percent) shoppers to research online.
  • When it comes to the overall electronics category, word of mouth is the biggest influence on purchases among all three shopper groups and the overall adult shoppers. It is followed by in-store promotions, though in this category, Kohl’s shoppers rank lower than the other two groups and the overall. Walmart and Amazon shoppers are slightly more likely than average to be influenced by reading an article about a product. Walmart shoppers are more likely than average to be influenced by advertisements on TV/broadcast and on the Internet. Kohl’s shoppers are significantly less likely to be swayed by a radio ad (8 percent, half the overall rate of 16 percent) and cable (9 percent, compared with 16 percent of overall adults).