New vs. true customers – who’s more valuable for Digitec Galaxus?
Never before have digitec and Galaxus gained so many customers in such a short time as they have since the outbreak of Covid. From April 2020 through March 2021, a good 2.15 million individuals and over 145,000 businesses made purchases from the two online shops. A year earlier, the company was looking at 1.4 million individuals and 100,000 businesses. This represents an increase of 54 and 45 per cent respectively.
However, the over 770,000 newly acquired customers don’t explain the overall growth of the company. In fact, its sales grew by 59 per cent to 1.83 billion Swiss francs in 2020. This means that existing digitec Galaxus customers not only bought more but also shopped more frequently at both shops. Does this make the coronavirus year a big exception or are long-standing customers simply buying more from digitec and Galaxus? Here’s the breakdown.
The sales numbers speak for themselves: the average digitec and Galaxus customer shops more from both online stores with every year. To give you an example: on average, customers who opened an account between 1 January and 31 December 2015 (2015 cohort) spent 20 per cent more four years after signing up and 57 per cent more after five years compared to their first year.
«Due to the pandemic, online retail in Switzerland has fast-forwarded through a development period that would normally take several years,» says Florian Teuteberg, CEO of Digitec Galaxus. «Many consumers have discovered the benefits of online shopping in recent months. And many are likely to stick with it.» Since 2015, but especially since 2018, digitec Galaxus has greatly expanded its range. Today, the online retailer has more than 2.5 million products in its range.
Women are catching up
This Covid-fuelled rise in online purchases is particularly noticeable in women. Typically, female customers spend less than half of what men do in their first year after registering with digitec and Galaxus. The reason for this? Men buy more gaming PCs, drones and other high-priced electronics. The amount women spend in subsequent years also increases more slowly than with men – with the exception of the last year shown in the table below. For many customer groups, that year covers at least part of the pandemic. Coronavirus saw women of all groups spend increasingly more than men.
This spending growth shows that female customers have started to shop more online. Their shopping carts include everyday items such as shampoo, pasta or coffee beans as well as less ordinary things including children’s books, boxing gloves or gas grills. The fairly obvious reason for this shift in behaviour being the lockdown and social distancing measures. This saw sales of the online department store Galaxus grow more strongly than sales of the IT and electronics specialist digitec. «I’m assuming women will drive growth at Digitec Galaxus more strongly than men in the next few years,» says Florian Teuteberg.
In Teuteberg’s opinion, Swiss online retailing still has huge potential. Today, Switzerland’s online trade has a share of around 12 per cent of the total retail business. If we exclude groceries, it’s a few per cent more. «We expect more than half of purchases in Switzerland to be made online in ten years’ time. Or possibly sooner due to the pandemic,» says Teuteberg. «We want to have the largest slice of this cake and aim to maintain our position as leading shopping platforms in Switzerland.»
The question remains who is more valuable for Digitec Galaxus: new or long-standing customers? For Teuteberg, the case is clear: «Customers who keep coming back! If someone shops with us just once, we've got something wrong.» In other words, Digitec Galaxus strives to turn new into true customers. «We do everything to make that happen.»
What do you particularly like about digitec and Galaxus? What could be improved to make you a happier customer? Thanks for sharing your opinion!