The Millennial generation has grown up online. They seek information from Google searches and Wikipedia entries, interact with friends through social media sites, and find their entertainment on video-sharing sites. But one thing they do not do—and something that should be of great concern to marketers—is buy things.
The reason is pretty simple actually. Only about 6 percent of U.S. teens have credit cards, the primary means of payment in online contexts. Without credit, teen shoppers lack a means to buy the items they chat about and find trendy. Instead, these 30 million U.S. consumers distribute the $200 billion they spend annually to brick-and-mortar stores that accept the cash they have earned or borrowed from their parents.
In this sense, teenaged shoppers are a massive and untapped market. Both eBay and Facebook hope to access that market by allowing 13–18-year-old users to set up payment accounts. PayPal and several banks already provide teen-oriented checking accounts, but in those cases, parents must approve each purchase—not something widely appreciated among independence-seeking adolescents. Thus, less than 15 percent of teens indicate that they prefer to buy online.
Instead, they appear to be engaging in a remarkable sort of reverse free-riding: They scan the Internet for fashion ideas and peer approval, then visit the mall to make the purchase. Furthermore, despite the widespread use of social media to interact, teens still rely on the mall as a social meeting space, where they can shop with their friends, away from their parents. A short skirt or risqué t-shirt might never make it past mom and dad’s online radar, but they can still get stuffed into a mall shopping bag, so the folks never know.
- Why is it difficult for teens to shop online?
- What are retailers doing to ease the situation?
Source: Quentin Fottrell, “Why Teens Snub Online Retail,” The Wall Street Journal, July 26, 2012
C Arias said:
Because teens need credit cards to shop online they are unable to make independent decisions on purchases. The need of a credit card automatically requires that a parent or guardian approves the decision to buy. Therefore, retailers are setting up payment accounts like paypal to increase online sales to teenagers.
This is an interesting observation about a specific demographic so it will be interesting to see how marketers take advantage of this info. To increase online sales companies will need to find a way to not only make it possible for teens to buy online but also to make it cool to shop online with friends. Until this point arrives I think it is important for marketers to use the info to improve their in-store experience. To do this they should advertise their local store on their website and related sites and then remind the customer of what they saw online while they are in the mall.
Kyle T. said:
Although I agree that teenagers are an untapped market in online shopping, I understand why parents are cautious to give their teenage children credit cards. Doing so could lead to overspending which would mean more money than intended coming from parents’ wallets going towards large purchases from the teenagers. Without certain securities in place to ensure that the credit cards are not being abused, I do not see it being a possibility for more children to get their hands on credit cards. Instead, I think debit cards which only have a certain amount of money on them are what will allow teenagers to enter the online marketplace and become more avid virtual shoppers.
Courtney F. said:
The top reason why teens are unlikely to purchase products on the internet is because many teens are typically irresponsible and because of this fact do not have their own credit cards. Almost always, the only way to purchase something online is with a credit card. Therefore, whenever teens want to purchase something on the internet, a growing market, they need the permission of an adult or someone who has a credit card. The only place that teens usually have the option to purchase a product with only cash is in a store. The online retailers should promote their actual stores so that students recognize that the internet is not the only place to purchase a particular product.
Laura Haime said:
Apps are also greatly affecting payment methods, as companies find ways to make it easier and simpler for consumers to choose them over their competitors. The other day I was at Starbucks, and noticed that a woman paid using her phone, since Starbucks now has an app in which people can put credit for the store, and pay with their phones. This could also be an interesting technique to reach the teen market, as parents might find it adequate to give their children access to a particular restaurant or location, while restricting their ability to a credit card that could ultimately be used anywhere. It allows the parents control over their kid’s purchases, while enabling teenagers the means to specific products. All the while, the companies that provide these services benefit greatly as they capture this market.