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7 Factors That Influence Online Purchasing Decisions

message for new generationThe e-commerce industry continues to grow larger and more encompassing with each passing year. In 2013, online business-to-consumer sales in the U.S. topped $322 billion, up from $289 billion the year prior – and that’s only factoring sales made in the U.S. A report published by eMarketer suggests that global e-commerce sales could reach $1.5 trillion by the end of the year.

Privacy/Security

With all of the recent security breaches involving Home Depot, Target and JP Morgan, consumers today are more hesitant than ever to submit their credit card number and other personal information online. E-commerce websites with lacking security may shy away some potential customers. This is why it’s important to display a clear privacy policy that states exactly how visitors’ information will be used.

You can also set up your website with Hypertext Transfer Protocol Secure (HTTPS) encryption for an additional level of protection. Seeing the “https” prefixed in their web browser will give visitors the peace of mind knowing their information is secure. HTTP uses a digital handshake, so to speak, to create a secure connection between the visitor and the website. While it’s not foil-proof, it offers stronger protection against malicious attacks and prying eyes than unencrypted HTTP.

Website Speed

Another factor that directly influences a consumer’s decision to purchase a product or service over the Internet is the website’s speed. Amazon conducted a study several years ago in which it found that every 100ms increase in load times led to a 1% decrease in sales. That may not sound like much, but we’re talking about the world’s largest online retailer. Amazon reportedly generated $74.45 billion in net sales last year, meaning a 1% decrease would translate into roughly $744 million (source).

In a study conducted by Google, the Mountain View company found that every 0.5 second increase in load times resulted in a 10% decrease in traffic. Does this mean you’ll lose 10% of your site’s traffic if user load times increase by half a second? Not necessarily, as each and ever site is different. The bottom line, however, is that load times affect both traffic and sales to some degree.

Customer Reviews

It should come as no surprise that customers reviews influence online purchasing decisions. A survey conducted by the market research firm Dimensional Research found that 90% of respondents say positive reviews influence their purchasing decisions, while 86% said their decisions were directly influenced by negative reviews. Of the survey’s 1,046 respondents, nearly two thirds said they read online reviews on a regular basis.

Take advantage of this fact by encouraging customers to post reviews. Assuming you offer a quality product with a high level of customer service, you’ll likely receive far more positive reviews and negative ones.

Shipping Options

There’s a reason why Zappos is the world’s largest online shoe retailer, generating over $1 billion in annual sales: it offers free shipping both ways on all orders. Zappos doesn’t charge to ship its products to the customer, nor does it charge the customer if he or she wants to return the product by shipping it back. Many consumers choose Zappos solely for its flexible, user-friendly shipping.

Offering to ship products to customers for free may cost you more upfront, but it will pay off in the long run. And even if you don’t want to take the route of free shipping, you can offer customers several different types of shipping options to accommodate their needs.

Return Policy

Another element that influences online purchasing decisions is the website’s return policy. Consumers typically feel more confident purchasing items in store. If something is wrong with the product, they can take it back to the store for a hassle-free return (in most stores, at least). When you purchase a product online, however, you are at the mercy of the website’s return policy.

No one wants to deal with the hassle (and financial loss) of fulfilling returned products. It’s a painstaking process that eats into your time. However, going the extra mile with your company’s return policy sends the impression that you care about your customers, and as a result, you’ll benefit from more repeat customers along with positive reviews.

Ease of Checkout

According to an infographic published at hubspot.com, 24% of consumers say ease of checkout holds the most influence when making online purchases. If visitors are forced to randomly click around the website in an attempt to checkout, they may take their money elsewhere. If you run an e-commerce website, perform usability tests to ensure it offers a smooth checkout for your customers.