Small Business Patronage Consumer Survey Results Sharon Brant Head of Market Insights March 2, 2018

Online survey conducted with Socratic Technologies through an online consumer panel in February 2018 502 Consumers Ages 18+

Key Takeaways In terms of overall shopping patterns, Millennials and Gen X are more likely than other ages (including Gen Z) to say they prefer shopping online to in-stores Yet, younger generations (Gen Z, Millennials, and Gen X) are more likely to say they intend to purchase from small businesses, including through online and offline channels Older generations Boomers and Retirees are more likely to say it does not matter whether they purchase from small business or large chains and choose by price instead For small businesses to be competitive: They must sell through Amazon.com Marketplace – it is the leading shopping channel across ages They must offer a satisfaction money back guarantee – it has the greatest impact on willingness to buy from smaller, independent businesses Shopper reviews are important – both the number of times a small business has been rated and the ratings/stars from other shoppers are highly impactful on willingness to buy from smaller, independent businesses It is also highly helpful if shoppers see that the business owner responds to online reviews Charitable giving from profits is a more influential benefit if the small business is targeting Gen Z and Millennial consumers Consumers across ages are open to purchasing from small business websites (and not just through Amazon) as long as they believe it is competitively priced Consumers do not want to pay extra for shipping and are not likely to complete an online order with a smaller, independent business if they have to pay for shipping When looking at differences between genders, Men and women are similar in their preferences for shopping online versus shopping in-store Men are more likely to say they intend to shop at small businesses through online sources like small business websites, auction sites, search engines, online classifieds, banner ads, and social media Women are more likely to say it does not matter to them whether they purchase from large national chains or small businesses – rather, they are more interested in choosing by price

Generation Comparison

Which statement best describes your overall opinion about shopping for products online? Millennials and Gen X are more likely to say they prefer to shop online compared to Boomers and Retirees Interestingly, Gen Z are more like Boomers than Millennials with regards to shopping habits Overall Opinion About Online Product Shopping Gen Z (a) Millennials (b) Gen X (c) Boomers (d) Retirees (e) Total, n= 100 101 99 I prefer to shop in-stores but will sometimes shop online for a specific reason (e.g., save time, specialty item, get best price, etc.) It is a normal and preferred way that I shop I avoid shopping online and will only do so if I have no other choice I never shop online bc de e Letters denote significant differences at the 95% confidence level. M350. Which statement best describes your overall opinion about shopping for products online?

In the next 6 months, how likely are you to purchase from a small, independent business by each of the following? Amazon.com Marketplace is the leading small business shopping channel across ages Younger generations are more open to purchases from small, independent businesses through a variety of channels Likelihood to Purchase from Small Business (Definitely / Probably will – on 5pt scale) Gen Z (a) Millennials (b) Gen X (c) Boomers (d) Retirees (e) Total, n= 100 101 99 Through Amazon.com Marketplace, provides goods from small businesses In-store at a smaller, independent business Through discount websites / apps, like Groupon On a website owned by the smaller, independent business Through specialty online marketplaces, like Etsy Through auction sites, like eBay, QuiBids or DealDash Through online search engines, like Google’s shopping tab Through online classified ad sites, like Craigslist or Letgo Through a social media site, like a Facebook store By clicking a banner ad / online advertising e e e e e e e e de de de e e de e e de de de e e cde e e e de e e cde cde de e de cde de e cde cde e Letters denote significant differences at the 95% confidence level. M351. This next question is about different ways to purchase from smaller, independent businesses. In the next 6 months, how likely are you to purchase from a small, independent business by each of the following?

Which type of retailer would you typically prefer to purchase? Shoppers across ages generally do not have a preference for the type of store they use Price is a primary motivation for all generations, particularly for Boomers and Retirees Preference/ Indifference to Purchasing from Small Businesses Online Gen Z (a) Millennials (b) Gen X (c) Boomers (d) Retirees (e) Total, n= 100 101 99 e e e e ■ Would prefer to purchase from smaller, independent business Would prefer to purchase from large, national chain. Does not matter to me; I simply choose by price d d b b Letters denote significant differences at the 95% confidence level. M352. For this question, assume that you have the choice to buy a product online from a smaller, independent business or from a large, national chain. In this situation, from which type of retailer would you typically prefer to purchase?

Reasons for Purchase Preference Which do you say that? (Type of retailer you would prefer to purchase from) The minority of those who prefer to shop at independent stores cite community support and personal ties, while national chain frequenters like their deals, trustworthiness, variety, and general ease of doing business with them Reasons for Purchase Preference Category Common Theme In their own words… Would prefer to purchase from smaller, independent business Want to support the community “I love to support small businesses, it is something that I pride myself on.” (Gen Z) “I like to think I'm helping the little guy.” (Gen Z) “Smaller, independent businesses are becoming very rare. They need my support whenever possible, or we'll only be left with large, national chain stores.” (Boomer) I own/ My family owns small business “My family used to own a business and I work at a small business. I like to support small businesses when I can get a chance as long as it is somewhere that I trust and has good reviews.” (Boomer) “I like to purchase from small business, because all the big business get all the rewards and take vital shoppers from the small business owner. My daughter is a small business owner and struggles to get customers from the cheep mega markets, not fair.” (Boomer) Would prefer to purchase from large, national chain Convenience/ Easier returns/ Customer service “Easier to use their apps.” (Retiree) “Easier to return, typically have cheaper shipping prices, reliable service.” (Millennials) “I think I would get a better deal at a national store. I think I would have better support if I had problems” (Gen X) Cheaper “They have more competitive prices.” (Gen Z) Trustworthy and Security “Because I know what I’m purchasing and I can trust them.” (Gen Z) “If I had a choice I prefer a national chain since I feel more secure making a purchase transaction.” (Gen X) Variety “A larger retailer has more options to choose from.” (Gen X) Does not matter to me; I simply choose by price Price is important “I choose by price and shipping amount. I want the best overall price I can get. If shipping is higher at one place then I will go somewhere else for lower shipping even if the price is a tad higher.” (Boomer) “Price is my most important consideration.” (Boomer) M353. Why do you say that?

For each of these scenarios presented below, please indicate what you would most likely do? Consumers across ages are open to purchasing from small business websites (and not just through Amazon) as long as they believe it is competitively priced Consumer are not likely to complete an online transaction with a small business if they have to pay extra for shipping The satisfaction guarantee is more important for Gen X and older consumers to complete a sale with a smaller business I Would Complete the Purchase Online From the Smaller, Independent Business Gen Z (a) Millennials (b) Gen X (c) Boomers (d) Retirees (e) Total, n= 100 101 99 Product is only being sold on the small business’s website versus a popular website like Amazon Price is within 5% of what you believe you can pay on other sites if you spent the time to search You are not familiar with the name of the smaller, independent business selling the product Product and price are good, but the business has not been rated by other buyers as many times as other businesses who sell through the same website Product and price are good, but the overall rating/number of stars the seller has received from other buyers is slightly lower than ratings for other businesses selling through the website The small business website forces you to create a profile or register to purchase the product You cannot tell if there is a “satisfaction guarantee” offered You have to pay extra for shipping (at standard rates) The small business website does not accept your preferred payment method (such as Paypal) e cde e cde cde e cde e de e Letters denote significant differences at the 95% confidence level. M354. For this question, assume you found a product online that you would like to purchase, and it is being sold by a smaller, independent business. For each of the scenarios presented below, please indicate what you would most likely do?

What impact, if any, would each of the following have on your likelihood to buy a product online from a smaller, independent business? Money back guarantees and online ratings are influential to shoppers of all generations, particularly to retirees Social media network “likes” are more important to younger generations, as are monthly drawing entries Charitable giving from profits is more important to Gen Z and Millennials than older shoppers Impact on Likelihood to Buy a Product Online from Small Business (Much more / Somewhat more– on 5pt scale) Gen Z (a) Millennials (b) Gen X (c) Boomers (d) Retirees (e) Total, n= 100 101 99 Business offers a money back guarantee Seeing the number of times the business has been rated online by other buyers Seeing the rating/stars the business receives online from other buyers Business has a professional looking website When you see that the business owner responds directly to customer reviews online (Amazon, Google or Yelp) Business accepts forms of payment other than my credit or debit card (such as Paypal) Business offers a loyalty program Business donates part of their profits to charity When you see that others in your social media network “like” the business Business has a social media page, like on Facebook or Instagram, that is updated regularly Purchasing with that business gets you entry into a monthly prize drawing Business sends an email newsletter with specials, news, featured items, etc. bd d e de d d d d de de de de cde de cde cde Letters denote significant differences at the 95% confidence level. M355. We are trying to better understand how smaller, independent businesses are able to be more competitive when selling their products online. What impact, if any, would each of the following have on your likelihood to buy a product online from a smaller, independent business?

Which ones do think would be most and least effective for a smaller, independent business that is trying to be more competitive when selling their products online? All generations cite money back guarantee as a leading way to be competitive; Retirees support this more so than younger generations Most and Least Effective Ideas Gen Z (a) Millennials (b) Gen X (c) Boomers (d) Retirees (e) Total, n= 100 101 99 Seeing the rating/stars the business receives online from other buyers Business offers a money back guarantee Business has a social media page, that is updated regularly When you see that the business owner responds directly to customer reviews online Business accepts forms of payment other than my credit or debit card Seeing the number of times the business has been rated online by other buyers Business has a professional looking website Business donates part of their profits to charity Business offers a loyalty program Purchasing with that business gets you entry into a monthly prize drawing When you see that others in your social media network ‘like’ the business Business sends an email newsletter with specials, news, featured items, etc. Most effective Least effective d de a abc de cde bc bc e c bc c de Letters denote significant differences at the 95% confidence level. M356. Regarding the same ideas that you just read about, which ones do think would be most and least effective for a smaller, independent business that is trying to be more competitive when selling their products online?

Recommendations for Selling Online What advice or words of wisdom would you share with the owner of a smaller, independent business who is trying to be more competitive when selling their products online? Following best practices offered by Amazon and other reputable sites like free shipping, reviews, and good customer service are among the recommendations Offering unique products and partnering with Amazon are suggested strategies Recommendations for Selling Online Common Theme In their own words… Free/Reduced shipping “Free shipping.” (Retiree) “Don't charge a lot for shipping. Let me use PayPal so I don't have to enter my card info.” (Boomer) “Create a good website, offer shipping included as part of an optional membership, post reviews and product ratings.” (Gen X) Reviews “I think the most important action the small business can take to get online sales is to get a lot of good ratings and reviews from buyers or customers. It also helps to be approved or backed by Amazon.” (Boomer) “Be sure to have reviews of your business up.” (Gen X) Unique products “Be different from big box stores. Carry unique products that big boxes can’t get.” (Boomers) “Be unique yet price competitive.” (Gen Z) Transparency “Be honest. No gimmicks. Have a return policy that is fair to all consumers.” (Boomers) “Be transparent. Don't be afraid of saying you don't know or that you made a mistake. You have to have a lenient return policy but don't let people take advantage of you.” (Boomers) Customer service “Be responsive to complaints, encourage reviews from verified purchasers if using Amazon or a similar platform, try to have a fast (48 hour or less) response rates to emails asking for more information, post your prices clearly.” (Millennials) “Have good customer service and respond quickly to problems.” (Boomers) Professional website “Do everything possible to come across as professional, trustworthy and knows what they are doing. The website should be professional and reflect who you are as a business (i.e. small, service oriented, quality). Also collecting success stories and or comments to have a customer satisfaction page on the website.” (Retiree) Low prices “Try to keep your prices reasonable - I find that small businesses have really high prices.” (Gen X) Tie up with Amazon “Try to become an Amazon third party seller. If you get well reviewed people will buy more from you.” (Millennials) “Amazon is really hot right now, so try and partner with Amazon. That'll get you best visibility to a wide market.” (Gen Z) M357. What other advice or words of wisdom would you share with the owner of a smaller, independent business who is trying to be more competitive when selling their products online?

Gender Comparison

Which statement best describes your overall opinion about shopping for products online? Men and women do not have clear preferences on whether they prefer to shop online or in-stores, and there are no differences between men and women on their preferences Overall Opinion About Online Product Shopping Total Male (a) Female (b) Total, n= 500 245 255 It is a normal and preferred way that I shop I prefer to shop in-stores but will sometimes shop online for a specific reason (e.g., save time, specialty item, get best price, etc.) I avoid shopping online and will only do so if I have no other choice I never shop online Letters denote significant differences at the 95% confidence level. M350. Which statement best describes your overall opinion about shopping for products online?

In the next 6 months, how likely are you to purchase from a small, independent business by each of the following? Men & women are equally likely to purchase from small businesses throughout Amazon.com Men are generally more likely than women to want to purchase from small businesses though a variety of channels Likelihood to Purchase from Small Business (Definitely / Probably will – on 5pt scale) Total Male (a) Female (b) Total, n= 500 245 255 Through Amazon.com Marketplace, provides goods from small businesses In-store at a smaller, independent business On a website owned by the smaller, independent business Through discount websites / apps, like Groupon Through auction sites, like eBay, QuiBids or DealDash Through online search engines, like Google’s shopping tab Through specialty online marketplaces, like Etsy Through online classified ad sites, like Craigslist or Letgo Through a social media site, like a Facebook store By clicking a banner ad / online advertising b b b b b b b Letters denote significant differences at the 95% confidence level. M351. This next question is about different ways to purchase from smaller, independent businesses. In the next 6 months, how likely are you to purchase from a small, independent business by each of the following?

Which type of retailer would you typically prefer to use? Women are more likely to say it does not matter to them whether they purchase from large, national chains or small businesses – rather, they are more interested in choosing by price Preference/ Indifference to Purchasing from Small Businesses Online Total Male (a) Female (b) Total, n= 500 245 255 ■ Would prefer to purchase from large, national chain Would prefer to purchase from smaller, independent business Does not matter to me; I simply choose by price b a Letters denote significant differences at the 95% confidence level. M352. For this question, assume that you have the choice to buy a product online from a smaller, independent business or from a large, national chain. In this situation, from which type of retailer would you typically prefer to purchase?

For each of these scenarios presented below, please indicate what you would most likely do? Men are more open than women to purchasing on a small business website, if item is competitively priced Men are also less sensitive to the number of ratings and the overall rating for a small business that is selling through an online marketplace I Would Complete the Purchase Online From the Smaller, Independent Business Total Male (a) Female (b) Total, n= 500 245 255 Product is only being sold on the small business’s website versus a popular website like Amazon Price is within 5% of what you believe you can pay on other sites if you spent the time to search Product and price are good, but the business has not been rated by other buyers as many times as other businesses who sell through the same The small business website forces you to create a profile or register to purchase the product You are not familiar with the name of the smaller, independent business selling the product Product and price are good, but the overall rating/number of stars the seller has received from other buyers is slightly lower than ratings for The small business website does not accept your preferred payment method You cannot tell if there is a “satisfaction guarantee” offered You have to pay extra for shipping b b b b Letters denote significant differences at the 95% confidence level. M354. For this question, assume you found a product online that you would like to purchase, and it is being sold by a smaller, independent business. For each of the scenarios presented below, please indicate what you would most likely do.

What impact, if any, would each of the following have on your likelihood to buy a product online from a smaller, independent business? Men and women are similarly influenced by the different methods small businesses can use to be more competitive when selling online Where differences occur, men are more influenced by social media “likes” and monthly drawings Impact on Likelihood to Buy a Product Online from Small Business (Much more / Somewhat more– on 5pt scale) Total Male (a) Female (b) Total, n= 500 245 255 Business offers a money back guarantee Seeing the rating/stars the business receives online from other buyers Seeing the number of times the business has been rated online by other buyers When you see that the business owner responds directly to customer reviews online Business has a professional looking website Business accepts forms of payment other than my credit or debit card Business offers a loyalty program Business donates part of their profits to charity Business sends an email newsletter with specials, news, featured items, etc. When you see that others in your social media network ‘like’ the business Business has a social media page, that is updated regularly Purchasing with that business gets you entry into a monthly prize drawing b b Letters denote significant differences at the 95% confidence level. M355. We are trying to better understand how smaller, independent businesses are able to be more competitive when selling their products online. What impact, if any, would each of the following have on your likelihood to buy a product online from a smaller, independent business?

Which ones do think would be most and least effective for a smaller, independent business that is trying to be more competitive when selling their products online? Women are most likely to consider money back guarantees as an effective way for small businesses to be more competitive when selling their products online Most and Least Effective Ideas Total Male (a) Female (b) Total, n= 500 245 255 Business offers a money back guarantee Business accepts forms of payment other than my credit or debit card Seeing the rating/stars the business receives online from other buyers Business offers a loyalty program Seeing the number of times the business has been rated online by other buyers When you see that the business owner responds directly to customer reviews online Business has a professional looking website Business has a social media page, that is updated regularly When you see that others in your social media network ‘like’ the business Business sends an email newsletter with specials, news, featured items, etc. Business donates part of their profits to charity Purchasing with that business gets you entry into a monthly prize drawing Most effective Least effective a b a Letters denote significant differences at the 95% confidence level. M356. Regarding the same ideas that you just read about, which ones do think would be most and least effective for a smaller, independent business that is trying to be more competitive when selling their products online?