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21/11/2024

Decoding the contradictions: 8 surprising facts about Gen Z's e-commerce behaviour

E-Commerce Retail & Consumer Goods Blog article

Author: Denis Wildschütz

A person in a yellow jacket interacts with a digital display showcasing virtual clothing items in a brightly lit, futuristic setting.

In e-commerce, understanding customer behaviour is essential to make the difference between a conversion and a bounce. So it's only natural that online sellers increasingly try to decipher 'Generation Z', the youngest demographic cohort in e-commerce and the most digitally native generation yet. Born between the mid-1990s and early 2010s, this demographic is growing up in a world where online shopping is the norm, and their purchasing habits are shaped by the abundance and accessibility of digital platforms. What does that mean for the Generation Z online shopping behaviour?

Understanding Gen Z shoppers

Being at the forefront of technological advances, shouldn’t Gen Z consumers be much more susceptible to ‘new’ ways of engaging with a brand, like gamification techniques? And doesn’t everybody know that this generation is much more environmentally conscious than previous ones, preferring brands that align with their values and make a positive impact on the world?

Yes and no.

While it’s true that Gen Z is always anxious to try out new technologies, and while animal welfare, climate change, and air pollution indeed are major concerns for many Gen Z consumers, it’s often not so easy to define what exactly makes them tick compared to other generations of shoppers. In fact, their e-commerce behaviour is marked by striking contradictions that can sometimes leave both marketers and commerce professionals scratching their heads.

At IBM iX, we’ve tried to identify some of the most interesting complexities of Generation Z’s shopping behaviour, uncovering eight surprising facts that may seem to contradict each other. Still, together they give a good picture of what is relevant when trying to sell to Gen Z, and, at second sight, are not that puzzling at all:

 

Fact #1:
Gen Z prioritises sustainability, but still buys fast fashion

Gen Z is known for their eco-consciousness, with 71% of them saying they prefer sustainable products. Environmentally committed brands stand to benefit from these consumers seeking products and brands that align with their values. However, fast fashion remains a significant part of their shopping habits, with 62% of Gen Z consumers buying fast fashion items at least once a month. This contradiction highlights the need for e-commerce businesses to prioritise sustainability while still offering affordable, trendy products.

 

Fact #2:
Autonomy is key, but influencers hold more sway

Gen Z consumers care a lot about autonomy, independence and ownership. However: Online celebrities hold significant influence over their purchasing decisions, with 70% of Gen Z consumers saying they’re more likely to buy from a brand endorsed by an influencer they trust. Platforms such as TikTok, Instagram, and YouTube exert considerable sway over potential buyers through formats like product reviews, hauls, GRWMs (Get Ready With Me), or unboxing videos. Thus, collaborative partnerships between brands and popular social media figures constitute a potent marketing tool capable of resonating deeply with Gen Z audiences.

 

Fact #3:
Gen Z loves social media, but is concerned about the time they waste online

54% of Gen Z spends at least four hours daily on social media, and 38% spends even more time than that, making it an ideal platform for e-commerce businesses to reach them. However, they are gradually acknowledging the possible adverse effects of excessive social media consumption, for example, mental health concerns like anxiety, depression, and a sense of insufficiency. Gen Z is gaining a deeper understanding of the significance of digital well-being, which encompasses regulating the time dedicated to screens and online platforms.

 

Fact #4:
Physical stores are making a comeback, but only if they’re experiential

Although Gen Z enjoys the convenience offered by online shopping, they appreciate the tactile experience provided by physical stores. A surprising finding is that Gen Z shops in brick-and-mortar locations more frequently than any other age group. However, these stores must offer immersive, experiential experiences to attract Gen Z shoppers.

71% of Gen Z consumers say they’re much more likely to visit a physical store if it offers interactive experiences, such as virtual try-ons, workshops or a blend of shopping and hospitality spaces.

Fact #5:
Gen Z values speed, but is willing to wait for the right product

Gen Z consumers prioritize convenience, with almost all of them (96%) considering same-day or next-day delivery important. However, roughly two thirds said they’d be willing to wait for sales and deals before a purchase, reflecting their commitment to the idea that good things come to those who wait.

 

Fact #6:
Gen Z values authenticity over perfection, but also love flawless brands

When it comes to visual appearance of products, brands, and people on social media, Gen Z appreciates candidness and imperfection in contrast to the meticulously crafted feeds of earlier generations. They prioritise truthful self-expression and resonate with creators who appear relatable and sincere. When asked about their most loved brands, however, there is an interesting overlap with ‘classic’ preferences of older generations. In Forrester’s most recent Brand Energy report, for example, premium audio equipment manufacturer Bose was listed among the top five brands for Gen Z – a brand especially known for their sleek, minimalist, high-quality look and feel, both in product and in marketing.

 

Fact #7:
Gen Z has significant spending power, but also prioritizes price

Despite possessing huge economic potential (they represent an estimated $450 billion purchasing power), Gen Z demonstrates marked price sensitivity. Economic instability and escalating living expenses compel members of this generation to seek cost-effective solutions, including discount offers, promotional codes, second-hand shopping, and affordable alternatives. Hence, implementing dynamic pricing models and experimenting with new formats like live shopping for exclusive discounts emerges as a strategic priority for attracting and retaining Gen Z customers.

 

Fact #8:
Gen Z loves personalised experiences, but values data privacy

Gen Z consumers expect personalised experiences, with 77% of them saying they find personalisation important. However, they’re also fiercely protective of their data, with 66% of Gen Z consumers saying they’re more comfortable engaging with brands that use advanced digital identity security measures. Leaning on advanced analytics tools and machine learning algorithms, e-commerce retailers are well positioned to craft customised product offerings and targeted marketing campaigns designed specifically for Gen Z – but only if they also put a strong focus on transparency and the protection of consumer data.

 

Generation Z online shopping habits: What to do about it?

Gen Z’s e-commerce behaviour is marked by contradictions that can be challenging to navigate. At the same time, the generation’s significance is only increasing, both in terms of purchasing power as well as their role as trendsetters for future developments.

Feels daunting? For many brands, it sure does.

There’s no way around learning to cope with this uncertainty: It becomes more and more imperative for brands to let go of old beliefs and to embrace a certain flexibility when adjusting to Gen Z’s ever-changing digital habits and choices – for example by experimenting with new partners, formats and upcoming channels, or by “learning to learn”, using social listening, advanced analytics and customer research.

At the same time, there are still some fundamental truths that hold true. ‘Fixing the basics first’, such as a great customer experience through a user-friendly, hassle-free, and mobile-centric shopping environment, will still go a long way with Gen Z. And all other audiences, in fact.

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Consumers today want it all: holistic shopping experiences across all channels, personalised offers and sustainability. At IBM iX, we develop and orchestrate digital customer experiences end-to-end.

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Denis Wildschütz
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