WALTHAM, MA and MENLO PARK, CA and HERZILYA, ISRAEL--(Marketwire - Oct 25, 2012) - Battery Ventures, an investment firm focused on venture, growth and buyouts in technology, today released its e-commerce survey, Social Commerce: Buying Behavior and Influence Online, which reveals insights about trust online and purchasing trends within social commerce. Commissioned by Battery and conducted by Kelton Global, the survey brings to light three major pillars of influence for consumer purchasing habits online: who has the most influence, the worth of customer service, and the power of reviews.
Key survey findings include:
- Celebrity affiliation does not build trust: Before giving a celebrity equity to become a spokesperson, a company might consider that it's better to just grab someone off the street as an endorser. Celebrities (30 percent) ranked higher than strangers (19 percent) and advertisements (15 percent) on the list of America's least-trustworthy source for product or service recommendations.
- Service is king: One of the primary benefits of purchasing online is convenience. Companies should remember that when selling through a keyboard and mouse, ensuring a great experience is key to the promise of convenience. Nearly three in four (73 percent) Americans would be willing to pay extra for a product or service they buy online if it ensures perfect customer service. In fact, nearly one in three (32 percent) of this group would pay at least an additional 20 percent for this guarantee.
- Family trumps friends. It's no surprise that friends and family rank highly as the most trusted source of recommendations for products and services. With Facebook as the primary data source for social connections, it begs the question of whether social commerce sites are missing an opportunity to draw more interaction within families around purchases. Americans are 62 percent more likely to name Family (34 percent) as the most trustworthy source versus Friends (21 percent).
Additional behavioral trends identified include:
- Shoppers fear missing out. In the next 12 months, close to one in three (32 percent) would be likely to buy a product or service online that they need or want because there is a limited time to make the purchase, such as with a flash sale. One quarter (25 percent) would make such a purchase based on seeing others buy something they need or want.
- Friends are the new personal shoppers. In the next year, one-third (33 percent) of Americans would be likely to encourage a friend to make an online purchase because they found a great deal. In turn, more than one in four (27 percent) would likely buy a product or service online that they were encouraged to purchase by a friend because a great deal is attached.
- Out with the old, in with the new. Marketplaces have been a go-to spot for over two-thirds (67 percent) of Americans to purchase or rent products or services over the last two years. More than three-quarters (77 percent) of them have purchased a new product, while far fewer bought a used item (41 percent).
The full findings from Battery's e-commerce survey, Buying Behavior and Influence Online can be found here: www.battery.com/ecommerce_survey/index.html.
Battery believes the survey data underscores a few major forward-looking trends in e-commerce, and anticipates that companies will be created to leverage these learnings and deliver new and differentiated experiences online. For example, by focusing on superior service and building an authentic experience that doesn't need celebrity support to encourage friends and family to endorse, new companies can charge a premium while still converting buyers. The Consumer Services category represents a large and growing opportunity for investment. According to Dow Jones VentureSource, in 2011 alone, nearly $7B was invested in the category, up from $2.8B in 2006.
Battery has made 22 investments into the e-commerce and retail sectors over the past 24 months, with the majority of companies funded in the Seed and Early stages. Recent investments include: Backplane, Dollar Shave Club, Glassdoor, Gogobot, H. Bloom, HotelTonight, J. Hilburn, Joor, Relay Foods, Serena & Lily, STELLAService, TradeKing, Viddy, Wayfair, Weddington Way, and Wikets, as well as several companies in stealth mode. Prior investments that form Battery's base of experience in these markets include: Angie's List (IPO), Bazaarvoice (IPO), ChoiceVendor (acquired by LinkedIn), Fashionstake (acquired by Fab.com), Groupon (IPO), Send the Trend (acquired by QVC) and Skullcandy (IPO).
Brian O'Malley, General Partner, Battery Ventures
"As a former entrepreneur, I'm excited by the opportunity today to use technology, not to be a software company, but to use best practices to build better consumer products and services. This really expands the opportunity for innovation across almost every category of consumer spend, literally $3 trillion every year. Today's e-commerce businesses have tools, like subscriptions, social endorsement, marketplace features, and data assets that can help them build a better product. Armed with this survey data, we feel confident that we can help entrepreneurs pick the right tools to address each of these market opportunities."
Jordy Leiser, Founder and CEO, STELLAService
"We're building our business around one core belief that Battery's survey surfaced -- that people will pay extra for flawless service. In today's rapidly changing e-commerce world, where pricing changes by the second, and more and more products and services are just one click away, businesses have to execute flawlessly or they will lose their edge. Consumers have the advantage today, and the good news is that they're admitting they'll pay a bit extra to be treated really well."
About Battery Ventures:
Since 1983, Battery has been investing in technology and innovation worldwide. The firm partners with entrepreneurs and management teams across technology sectors, geographies and stages of a company's life, from seed and start-up financing, to growth and buyouts. Battery has supported many breakthrough companies around the world, including seven companies who have IPO'd in the past fourteen months. The firm's existing portfolio includes several emerging and high growth companies, such as: BrightEdge, Coupa, Gogobot, HotelTonight, J. Hilburn, Marketo, Neolane, Pursway, Sprinklr, Viddy and Wayfair.
Battery invests worldwide from offices in Boston, Silicon Valley and Israel. The firm has raised more than $4B since inception, and is currently investing a $750M fund. For more information, visit www.battery.com. Follow Battery on Twitter @BatteryVentures.
About the Survey:
The Battery Ventures Social Commerce Survey was conducted by Kelton between April 17th and April 24th, 2012 using an email invitation and an online survey. Quotas are set to ensure reliable and accurate representation of the total U.S. population ages 18 and over. Results of any sample are subject to sampling variation. The magnitude of the variation is measurable and is affected by the number of interviews and the level of the percentages expressing the results. In this particular study, the chances are 95 in 100 that a survey result does not vary, plus or minus, by more than 3.1 percentage points from the result that would be obtained if interviews had been conducted with all persons in the universe represented by the sample.