By John C. Beck and Andrew Phelps
June 2000
A new and powerful group of Internet customers is emerging, whose buying habits transcend culture and geography. As the trendsetters for all online consumers, they could have make-or-break influence over your eBusiness. It's time you got to know them.
They're relatively young (in their twenties or early thirties), highly educated and cosmopolitan. They're technologically savvy: The Internet is a natural part of their lives, both professional and personal. They've got money to spend. Who are they? Increasingly, they are your customers.
eBusinesses around the world and in every industry want to know more about them. From recent research done by various Internet analysts—eMarketer and Jupiter Communications, for example—a portrait of these customers and their buying habits is beginning to emerge.
The findings differ in their details and are sometimes at odds with one another, but one thing remains constant: As the global economy continues its relentless transition to a global eEconomy, a discrete class of pioneering Internet consumers is blazing the commercial trails that others will follow. At the beginning of 2000, the Accenture Institute for Strategic Change surveyed almost 10,000 people about their Internet habits: how often they are on the Internet, what kinds of online activities they engage in most regularly and, most important, what their spending patterns are.
The results of the survey confirm earlier research in broad demographic terms. What is remarkable about our findings is that they show that this emerging group of Internet users has even more commercial potential than industry analysts have suggested.
Leading edge
To risk an American football analogy, think of the flying wedge formation moving the ball up the field. At the base of our wedge would be a group of Internet users we call the Global Class. At the very tip or leading edge of the wedge is another, more select group, which we call the Internet Elite. Understanding the habits of both these groups of pioneering customers is essential to competing successfully in the eEconomy.
Our findings also validated something we've believed for some time—that the Internet "revolution" isn't a revolution at all. It is, in fact, an extension—admittedly, a dramatically accelerated extension—of basic trends that have been in place since the onset of the so-called information age in the 1970s. That era has seen the creation of new ways—fax, e-mail, modem—by which long-distance communication and distribution can take place.
Seen in this context, the Internet is simply a technology that increases the convenience, flexibility and reliability of information flows. This continuity means that an important basic rule about business that was true in the information age still applies: As always, a few pioneers set off for the great unknown and end up setting the standards for the rest of the world. Their behavior becomes best practice.
To find a representative sample of people who fit the profile of the Internet pioneer—young, well educated, affluent, technologically savvy—we turned to the professionals who make up the Accenture work force around the world. We extracted a subset of 10,000 employees on the basis of age and surveyed them on their Internet use and buying habits. The respondents were from 50 countries in Europe, the Middle East, North America, Latin America, Africa and the Asia Pacific region.
As a cross-check for validity and accuracy (and to reassure ourselves that we weren't just taking a snapshot in a mirror), we asked respondents to compare their Internet behaviors with those of their peers—as defined by nationality, age and level of education—outside their offices. More than 65 percent of respondents believed that they use the Internet to gather information or make purchases either about the same as or less frequently than their peers.
With that information, we were confident we had a representative sample of the Global Class.
Here is what we learned about these pioneering Internet consumers.
They're heavy Internet users
They go online primarily to seek information and to purchase packaged goods (rather than to chat or to sell). Eighty-six percent are on the Internet several days a week—and, in most instances, every day. An overwhelming majority use the Internet to gather information and purchase packaged goods: 98 percent use the Internet to find information; 90 percent use it to research travel; 85 percent to purchase books or music; 70 percent to research investments; 55 percent to make investments.
Two-thirds of the respondents from almost every area have purchased goods or services via the Internet. North American members of the Global Class lead the way, at almost 93 percent. But heavy online purchasing is also evident in Asia (62 percent of respondents) and Latin America (74 percent), which actually outpaces Europe (just under 70 percent) in this regard (see chart).
They're spending more than you think
The Global Class makes Internet purchases at a rate almost double that of the universe tracked by industry analyst eMarketer, which compiles figures for average annual purchases by region. North Americans within our group spend far more per year than respondents in any other region—more than twice what is spent in Europe and Australia/New Zealand, and more than three times what is spent in Asia and Latin America (see chart).
They're global
Regardless of nationality, they are all increasingly comfortable on the Internet. Among our users, there is little difference from country to country in the "comfort level" in accessing the Internet. On a five-point scale, with five representing the most positive attitude toward the Internet, the range was not statistically significant—from a low of 4.06 for the Middle East/India/Africa to a high of 4.28 for North America.
However, there is an increasingly American flavor to the Internet
Most respondents mentioned US sites as their favorite Web stops. Even 52 percent of non-US respondents said that their favorite site is American. A little more than one-third of respondents chose a site in their own country as their favorite.
They do have favorite sites
Nearly 80 percent of our respondents had a clear favorite Web site. Of those, 31 percent chose Yahoo!, the highest-scoring site in terms of popularity; AltaVista and Amazon.com were a distant second and third. And information portals are king: When asked for their favorite Web site, 80 percent indicated an information portal, a news site, a search engine or a travel site.
Brands are important to them on the Internet
In general, name recognition is important to these Internet trendsetters. Well over 70 percent believe that well-known brands mean more desirable products, for which they are willing to pay more.
Exclusive club
From our research, a portrait also emerged of that leading-edge subset of the Global Class Internet users, the Internet Elite. To be a member of this exclusive club, a user must:
Be experienced—that is, must have made a purchase on the Internet prior to 1999.
Be online every day.
Spend more than $100 per year via the Internet.
Just over 29 percent of our respondents fall into the Internet Elite category. When we compare them to the Global Class customers as a whole, we see some important differences:
More of them surf the Net from home
Ninety-two percent of the Elite have Internet access at home (compared with 73 percent of the Global Class as a whole).
They surf more often
Members of the Internet Elite spend 13 hours per week online (compared with 6 for the Global Class).
More of them invest online
They make an average of 31 percent of their investments online (compared with 14 percent). Twenty percent of them do all their investing online (compared with 10 percent).
They spend more online
This is one area where our research showed dramatic differences with the existing assumptions of analysts. Jupiter Communications has made the case, based on its research, that the average active Internet user made online purchases totaling $518 in 1999. By contrast, the amount spent by our Internet Elite (including business purchases) was $2,166; excluding business purchases, the figure was $1,069.
They have the same favorites...only more so
Thirty-seven percent of them named Yahoo! as their favorite site (compared with 31 percent).
Why should you care about the Internet Elite? Because members of this group are the trendsetters for the Global Class—and, ultimately, for all online consumers. These are the people actually recommending sites to others. They can strongly influence the success of a site trying to gain critical mass among the proliferation of eBusinesses by their valuable patronage and the pull they exert on other Internet customers.
If you are not trying to sell to this group, you are at a serious disadvantage. If a Web site doesn't appeal to the Internet Elite, it is unlikely to appeal to the Global Class as a whole.
Beyond the Web
The buying behavior of these Internet pioneers also provides companies with valuable information about the impact this technology is having on global business beyond the Web:
Global business is becoming increasingly US-centric
You must get the US market interested in your site (and maybe even be a US site) if you are going to develop a global presence. Although Internet use may be higher in some Scandinavian countries than in the United States, the United States continues to exert dominant influence over customer behavior in the international eEconomy. Why? Because it continues to be the source of technological innovation and standards.
This is partly due to the fact that the US companies Intel, Microsoft and Netscape constitute the backbone of the hardware and software that make the Internet work. The United States is also a main source of innovative excitement and seed money behind many Internet startups; consequently, America has been on the receiving end of a good deal of brain drain from other countries.
For example, when three Singaporeans started a company called ThirdVoice, which allows Web users to write and read a kind of Internet "graffiti" (third-party opinions placed on a site where others with the same software can read these opinions), they moved to Silicon Valley in California for the venture capital and to find the talent they needed to make their business work.
(One area where the United States lags behind Japan and parts of Europe, however, is mobile eCommerce—Internet use and electronic buying by way of mobile telephones. Our survey did not include this aspect of eCommerce.)
Global business is increasingly brand-conscious
Simply being a US site may not be enough in the future, however. New companies need to associate themselves quickly with a strong brand, regardless of its nationality, which is critical for building customer loyalty and spurring corporate growth.
There are a few Internet names that have made it into the brand big leagues. Yahoo!, Amazon.com, and E*TRADE are the most powerful; there are some important non-US regional portals as well, such as Italy's Virgilio, Brazil's UOL and Sina.com in China. However, the vast majority of the favorite sites listed in the survey were well-established brand names that have developed an Internet presence—CNN, the BBC, the Financial Times, Charles Schwab, ESPN, Spain's Bankinter and the Norwegian newspaper Dagsavisen's online version.
Global business is increasingly standardized
Certainly US-centrism has much to do with this phenomenon. Nonetheless, it is remarkable that in many respects, the world has spurned eclecticism and diversity. In fact, due in part to the Internet (but also, of course, to other forms of popular culture), the world is becoming more standardized.
There was a time when shopping experiences around the world had little in common—haggling in a Hong Kong street market and shopping at Harrods required two very different sets of skills. But on the Internet, the technology results in a linear buying experience that is the same wherever your computer may reside. You seek out information, you compare prices across Web sites, you select a delivery method, you enter your credit-card number... you pick and you click. Just ask our Global Class.
What is impressive about this new global buyer—from both a business and personal purchasing point of view—is that, given the range of their cultures, national infrastructures and traditional buying behaviors, there is a consistency of favorite sites, buying patterns and attitudes toward the Internet. All of this reinforces the conclusion that this new Global Class of Internet consumers not only transcends geographic and cultural boundaries, but represents a growing force around the world.
About the authors
John Beck is a Phoenix-based associate partner and a senior research fellow at the Accenture Institute for Strategic Change, where he currently directs research on global eCommerce. He is also a visiting professor at the Anderson School of Management at the University of California at Los Angeles, where he teaches courses on management consulting, globalization and leadership.
Andrew Phelps, a research associate on assignment at the Accenture Institute for Strategic Change, focuses on global eCommerce and information design. His work looks at Internet usage and online buying behavior, and their impact on business strategies and Web design. Mr. Phelps's articles have appeared in Computerworld and CIO
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