There's a catch-22 for marketers when dealing with Millennials. This tricky demographic is thoroughly enmeshed with the digital revolution. It's already been established that those between the ages of 13 to 18 are heavy users of social media - 81 percent, in fact - leading many marketers to believe that e-commerce should be their preferred avenue for purchasing. If Millennials are spending an extraordinary amount of time online, plugged into social networking sites like Facebook and increasingly Twitter, then making the leap to shopping online seems to be intuitive. The only problem is that it's just not the case. Business leaders and marketing professionals need to understand this age group is inherently worried about visibility. That includes maintaining a highly manicured Web presence, but it's far more important to engage in social activities, which include shopping in physical retail stores.
High Volume, Low Conversion In fact, a study recently conducted by NPD Group revealed 81 percent of Millennials spend their money in physical retail stores. At nearly 33 percent, this group represents one of the largest segment of consumers, but they're also the least likely to make a purchase. Their conversion rate in stores remains at 57 percent, meaning a little less than half of all Millennials entering a retail location are not going to make a purchase. However, the study also found this demographic is more likely to spend more online than in brick-and-mortar retail locations - $75 and $57 respectively. Moreover, this generation has a propensity for bulk suppliers, as opposed to national retail chains.
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Web Commerce Faces New Regulations FierceRetail recently emphasized the manner in which retail is changing. Government regulations can be seen as a harbinger of the way commerce is heading, as the proposed Marketplace Fairness Act takes aim at online retailers. The legislation would force e-commerce providers making more than $1 million annually to collect state sales tax. This means Web retailers are likely to take a major hit to their bottom line, right?
In actuality, no. According to the legislation, Amazon is exempt, as are Wal-Mart, Target and Macy's in states with physical retail facilities. Still, the push for regulations that attempt to take greater taxable revenue from e-commerce signals the growing popularity of online shopping platforms. With Millennials in mind, retailers have used social media as resources for marketing campaigns because of the ease to share and disseminate content pertaining to products and services. Moreover, social networks are integral to building a brand's narrative and awareness. However, there appear to be limits to what businesses can accomplish online with regard to this age group.
With this in mind, marketers have a lot of information about Millennials, but much of it seems contradictory. The key point is the differential in spending online. Do marketers go for the big score with fewer purchases online, or bank on a greater volume at a lower return rate? The answer may depend on whether Millennials can fully emerge from the economic recession with greater spending power.