Retailers offering personalized services to combat online price wars, UPS says

Retailers need to offer more personalized services as a way to compete against online price wars, as U.S. shoppers flock to international e-commerce sites, according to a study from global parcel-delivery giant UPS Inc.

The study found that 81 percent of avid U.S. online shoppers cite price as the most important factor when searching for and selecting products online, according to the sixth annual UPS "Pulse of the Online Shopper" study. UPS collaborated with the polling firm comScore Inc. to conduct the survey of more than 5,000 U.S. online shoppers, reached during the first quarter of 2017.

That rising focus on price is driving many shoppers to buy from vendors in other countries, mainly in Asia. Nearly half (47 percent) of survey respondents said they had purchased from an international retailer, choosing vendors based in China (61 percent), the U.K. (23 percent), Canada (15 percent), and Japan (14 percent), UPS found.

Two other factors driving the fast growth of global e-commerce are the increasing use of online marketplaces such as Amazon.com instead of specific retailers and a consumer preference for shopping on retailers' smartphone apps instead of their websites.

The trend is projected to accelerate in coming years, with New York-based market research firm eMarketer forecasting that global cross-border e-commerce will strongly outpace domestic e-commerce, UPS said. The consulting firm said global online sales are forecast to grow at 22 percent from 2015 to 2020, compared to just 15 percent growth for U.S. online sales.

"The lines that separate domestic and international retailers continue to disappear," Alan Gershenhorn, UPS' chief commercial officer, said in a release. "Retailers are now competing across the globe. In order to win, retailers can distinguish themselves by providing value through personalized experiences."

To staunch the bleeding, retailers are turning to their brick and mortar stores to offer more personalized experiences, UPS found. Online shoppers in the survey said that physical stores are important because they enable them to touch and feel products (59 percent), solve immediate problems (54 percent), receive better customer service than they get online (52 percent), and participate in rewards or loyalty programs (52 percent).

Another benefit of physical stores is their ability to act as distribution points for "ship-to-store" fulfillment patterns, where shoppers make purchases online, then collect the merchandise in person at the nearest brick-and-mortar store. The UPS survey showed that half of all online shoppers (50 percent) have used ship-to-store this year.

"Online shoppers are able to shop the world's boutiques and bazaars with ease," Gershenhorn said. "We're witnessing a glimpse of the future, when retailers and their customers will be defined less by geographic location and more by how they connect with each other. The challenge is to best provide shoppers with the choice, control, and convenience they desire."