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Online consumers are driving economy

Online consumerism is on the rise AFP

A boom in online shopping has pushed internet sales up by nearly 50 per cent in the last two years, with experts predicting greater momentum in the years to come.

This content was published on March 28, 2011 - 21:31
swissinfo.ch

A study has billed e-commerce as one of the strongest growth areas for the Swiss economy, particularly as it catches on with the more affluent over-55 age group, or so-called “silver surfers”.

Online consumers shelled out SFr8.68 billion ($9.48 billion) last year, an increase of 48 per cent on the 2008 figure of SFr5.87 billion, according to a report by the University of St Gallen published on Monday.
 

The recession-defying boost to the economy has been largely driven by increasing numbers of people getting hooked up to the web. Some 14 per cent more people in Switzerland were online last year compared to five years ago – with more than four fifths of the population now using the internet.

“Internet consumerism continues to be the growth motor of trade in Switzerland,” said Thomas Rudolph, professor of retail management at the University of St Gallen. “In a global comparison, Switzerland is one of the most advanced and technology friendly countries in the world.”

Racing ahead

As in common with many other countries, e-commerce growth in Switzerland has outstripped that of physical high-street shopping. From a virtual standing start ten years ago online shopping has grown by around 25 per cent every year.

Swiss online food retailer LeShop, part of retail chain Migros, reported a 15 per cent increase in turnover last year with three per cent more households ordering deliveries from the comfort of their homes.

But online shopping in Switzerland still only represents a little over five per cent of total retail sales, compared with ten per cent in Britain and other some European countries.

The record growth in sales in the last two years reflects a higher growth in the population, fuelled by rising immigration, and by the greater willingness of women and the older generation to buy goods and services online.

The average annual spend of the over-55 age group more than doubled from 2008 to SFr1,862 last year. The St Gallen report pointed out that affluent silver surfers represented the best opportunity for sales growth as they currently spend more, but less often, than younger age groups.

Convenience and bargains

“Online trade in this target group should represent the strongest growth area in future,” the report stated.

But anyone expecting the rise of online consumerism to bring down the price of goods in Switzerland should think again, according to Rudolph. Although internet shopping has reduced the cost of some appliances, such as computers and electronic goods, consumers are not just going online to find bargains.

The St Gallen survey of 1,000 online consumers found, unlike four years ago, the prime motivation for internet shopping was not to search out the best prices for goods.

While bargain hunting is still a strong incentive for logging on and spending, the principle motivation is now convenience and finding the widest range of goods without the stress of walking through crowds to several shops.

“Online consumers in Switzerland are not as price conscious as in other countries, Rudolph told swissinfo.ch. “They are more concerned about finding the best quality and the best service.”

Networking opportunities

Internet shoppers also confine their purchases to a relatively narrow range of goods. Electronics and cosmetics are popular choices, but most go online to book holidays and flights, order tickets to events, buy software or for financial advice.

The biggest growth in internet usage last year was not for shopping, but for social networking through websites such as Facebook and YouTube.

But traders can even take advantage of these trends by using such websites to promote their goods and services. Many companies post their adverts on YouTube where some become big viewing hits, while other firms could target Facebook users to offer gifts on birthdays.

The online consumer revolution is still developing and Swiss consumers appear turned on and tuned in to the trend.

Online consumer survey

The University of St Gallen conducts its online consumer survey every two years. Last year it surveyed 1,000 online consumers across Switzerland.

Since 2008, some 300,000 extra people have hooked up to the internet, which now reaches 82% of the Swiss population.

More than three quarters of those surveyed said that they had at least six years experience of browsing through the internet.

The most browsed websites in Switzerland are Google, Facebook, YouTube, Hotmail and Bluewin.

The most popular shopping websites are Amazon, books.ch, online shop BOL, supermarket chain Migros (which has the online food shop LeShop) and easyJet.

Some 85% of internet users said they went online to shop (nearly the same proportion as in 2008). But the increasing number of users means that online shoppers as a percentage of population rose from 65% to 69%.

The average annual spend for internet shoppers has moved up to SFr998 ($1,088) – from SFr337 in 2000 and SFr800 in 2009.

Only 29% of internet users said their primary purpose of logging on to the web was to make purchases.

The main reasons were communication (71%), amusement (54%), to find out the news (52%) and education (52%).

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