How, Where And Why Consumers Buy Online

How, where and why consumers buy online

The UK generation game on social media as reported by more than 2,000 consumers

The PayPal e-Commerce Index 2024, based on surveys of 2,047 UK consumers and 623 UK businesses about how they shop or sell online, taps into the key areas of e-commerce trends, payment experiences, online security and fraud, as well as the impact of artificial intelligence (AI) on digital commerce.

"We discovered reality contradicts expectations," says PayPal UK MD Vincent Belloc.

Discovery number one is fairly obvious. Cash is no longer king. Almost one-in-five Gen Zs (17%) have completely stopped using cash and overall it now makes up less than 20% of consumers' monthly spend.

Buy now, pay later (BNPL) options are growing in popularity, with 23% using it in the past six months with a further 35% considering using it in future. Naturally, PayPal's 'Pay in 3' makes its mark among these consumers, with 48% of BNPL users using the service.

It's a myth that boomers don't shop online

The prevailing myth that the older generation is averse to online shopping doesn't ring true in the UK. One-in-three (34%) boomers spend more than £400 a month, up 6% YOY to make them equal with Gen Y and just ahead of Gen X (33%). It's the younger consumers spending less, with just one-in-five (20%) spending more than £400 a month, possibly reflective of lower incomes earlier in their careers.

Ethics and sustainability

With 69% of consumers believing that eco-friendly products almost always have a higher price tag, do corporate ethics really matter to them?

Yes – almost one-in-three consumers (30%) are less likely to make an online payment or purchase if the brand doesn't align with social causes that reflect their values. And for Gen Z consumers, that number rises to almost half at 48%.

Consumers are also less likely to buy from brands that don't take responsibility for their environmental impact (12%); don't support diversity and inclusion (11%); are known for underpaying workers or having unsafe working conditions anywhere in their supply chain (19%).

Shipping

Shipping can make or break a sale. Consumers don't just expect free shipping to be part of the deal, they do see it as a real differentiator when buying online. So get it right with free and express shipping, and clear returns policies, and 74% of consumers are more likely to make a purchase. Charge too much, and they're more likely to leave.

The rise of AI

Undeniably the biggest trend of 2023, generative artificial intelligence (GenAI) has captured the world's attention and, according to PayPal, 83% of UK businesses are already leveraging generative AI tools.

Generative AI is a machine learning capability that enables tools to create new content, such as text, code, images and videos. Businesses are using it for everything from drafting content and personalising campaigns to providing customer service chatbots and giving product recommendations.

More than 90% of businesses believe AI will have a positive impact on their business, and 37% expect cost savings as a result. So it's no surprise that many intend to expand AI into more process-driven parts of their businesses, such as detecting fake or auto-generated comments or reviews, managing returns and exchanges, developing personalised campaigns, and so on.

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