IBM Online Retail Holiday Shopping Recap and 2014 Outlook
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© 2014 IBM Corporation 1
Holiday Recap and
2014 Outlook
© 2014 IBM Corporation 2
Today’s presenters
Sucharita Mulpuru Principal Analyst
Forrester
@smulpuru
Jay Henderson Strategy Director,
Enterprise Marketing Management
@jay_henderson
#SmarterCommerce @smulpuru @jay_henderson
© 2014 IBM Corporation 3
Agenda
› 2013 Recap
› Key US dates and trend
› Views from around the globe
› Shopper behavior
› Insights for 2014
#SmarterCommerce @smulpuru @jay_henderson
© 2014 IBM Corporation 4
Compare performance against industry peers with
IBM Digital Analytics Benchmark
Over 3,000 sites participated
Aggregate index
Compare against industry
Compare against peers
Geographic coverage
US, UK, AU, Europe, World Wide
Industry specific
Retail
Content
Financial Services
Travel
Segment specific
Apparel
Department Stores
Health and Beauty
And 12 others. . .
#SmarterCommerce @smulpuru @jay_henderson
© 2014 IBM Corporation 5
Wide range of free holiday benchmark resources available
Benchmark Reporting
Reports pulled on key dates and within key
date ranges for intra-day, DtD, WtW and YtY
comparisons
Key Messages, Graphs and Tables included
in outputs including Press Alerts, Releases
and Reports
US Retail & Retail sub-verticals
Black Friday, Cyber Monday Reports
UK Retail
Nov 25 Mega Monday
Dec 2 Cyber Monday
AU Retail
Nov 19-20 Click Frenzy
For all three countries
Post-Christmas
Holiday Recap Reports
www.ibm.com/benchmark
#SmarterCommerce @smulpuru @jay_henderson
© 2014 IBM Corporation 6
Thanksgiving Day had a dramatic spike starting at 5 PM PST as
stores began early Black Friday promotions
19.7% increase in online retail sales Thanksgiving Day 2013 over last year
Source: IBM Digital Analytics Benchmark
#SmarterCommerce @smulpuru @jay_henderson
© 2014 IBM Corporation 7
While Thanksgiving continues its growth year over year, Black
Friday still delivers considerably higher sales.
18.9% increase in online retail sales Black Friday 2013 over last year
Source: IBM Digital Analytics Benchmark
#SmarterCommerce @smulpuru @jay_henderson
© 2014 IBM Corporation 8
Cyber Monday continues to be the biggest online shopping day of
the year
Source: IBM Digital Analytics Benchmark
20.6% increase in online retail sales Cyber Monday 2013 over last year
#SmarterCommerce @smulpuru @jay_henderson
© 2014 IBM Corporation 9
Mobile shopping soars
As a percentage of all online traffic and sales, Thanksgiving was the highest at 42.6% and
25.8%, respectively
However, Cyber Monday saw the most growth year over year with increases of 44.9% and
55.4% for percentage traffic and sales, respectively
Source: IBM Digital Analytics Benchmark
#SmarterCommerce @smulpuru @jay_henderson
© 2014 IBM Corporation 10
Smartphones to Browse, Tablets to Buy
Source: IBM Digital Analytics Benchmark
#SmarterCommerce @smulpuru @jay_henderson
© 2014 IBM Corporation 11
Retailers “Push” Promotions to Mobile Shoppers
Source: IBM Digital Analytics Benchmark
Thanksgiving Day and Black Friday
On average, retailers sent 37 percent more push notifications during the two
day period of Thanksgiving Day and Black Friday – when compared to daily
averages over the past two months.
Average daily retail app installations also grew by 23 percent using the same
comparison.
Retailers sent more notifications on Thanksgiving Day than Black Friday.
Cyber Monday
On average, retailers sent 77 percent more push notifications –– when
compared to daily averages over the past two months.
Average daily retail app installations grew by 29 percent using the same
comparison.
#SmarterCommerce @smulpuru @jay_henderson
© 2014 IBM Corporation 12
Agenda
› 2013 Recap
› Key US dates and trend
› Views from around the globe
› Shopper behavior
› Insights for 2014
#SmarterCommerce @smulpuru @jay_henderson
© 2014 IBM Corporation 13
Around the globe….
Online sales increased by 31.6% compared to the same Monday in 2012 with mobile percent of sales growing by 94%, exceeding 33% of all online sales
Australia’s Click Frenzy – November 19 – 20, 2013
Online sales increased by 16.3% compared to the same Monday in 2012 with mobile percent of sales growing by 43%, exceeding 17.7% of all online sales
UK Cyber Monday- December 2, 2013
Source: IBM Digital Analytics Benchmark
#SmarterCommerce @smulpuru @jay_henderson
© 2014 IBM Corporation 14
Mobile traffic and sales have reached a tipping point…across the
globe
Source: IBM Digital Analytics Benchmark
#SmarterCommerce @smulpuru @jay_henderson
© 2014 IBM Corporation 15
Smartphone to brows, tablets to buy….
Source: IBM Digital
Analytics Benchmark
#SmarterCommerce @smulpuru @jay_henderson
© 2014 IBM Corporation 16
Agenda
› 2013 Recap
› Key US dates and trend
› Views from around the globe
› Shopper behavior
› Insights for 2014
#SmarterCommerce @smulpuru @jay_henderson
© 2013 Forrester Research, Inc. Reproduction Prohibited 17
Early November was strong
#SmarterCommerce @smulpuru @jay_henderson
Source: IBM Digital Analytics Benchmark
© 2013 Forrester Research, Inc. Reproduction Prohibited 18
The myth of holiday shopping is that it’s about gifts
Who were you shopping for today?
Pre-Thanksgiving Thanksgiving CyberMonday CyberWeek
Base: online consumers who purchased online during the given timeframe
Source: Bizrate Insights/Forrester Holiday Flash Survey, 2013
56%
42%
8%
4%
Myself
Gifts for others
Non-gifts forothers
Business
53%
52%
7%
3%
49%
57%
6%
4%
44%
56%
7%
4%
#SmarterCommerce @smulpuru @jay_henderson
© 2013 Forrester Research, Inc. Reproduction Prohibited 19
This could explain the soft early December
Pre-Thanksgiving Thanksgiving CyberMonday CyberWeek
Base: online consumers who purchased online during the given timeframe
Source: Bizrate Insights/Forrester Holiday Flash Survey, 2013
17%
13%
I love deals! Themore, the merrier
I will only buy if Ihave a sale, deal or
promotion
24%
20%
23%
22%
22%
17%
Which of the following best characterizes your feelings about online deals, promotions, and specials around the holidays?
#SmarterCommerce @smulpuru @jay_henderson
© 2013 Forrester Research, Inc. Reproduction Prohibited 20
Deals were often the same on key dates…
CyberMonday 2012 CyberMonday 2013
#SmarterCommerce @smulpuru @jay_henderson
© 2013 Forrester Research, Inc. Reproduction Prohibited 21
…in some cases there were higher hurdles
#SmarterCommerce @smulpuru @jay_henderson
© 2013 Forrester Research, Inc. Reproduction Prohibited 22
Disproportionate volume occurs toward the end of the holiday season
Timeframe Total days
Percent of
online sales
during peak
2012-2013
growth
Pre-11/25 24 26% 25%
11/25-12/7
(Thanksgiving, Cyber
Week)
13 25% 15%
12/8-12/24 17 40% 15%
Post 12/24 7 9% 10%
Average daily eCommerce package volume (non-peak): 7MM
Average daily eCommerce package volume (peak): 46MM
© 2013 Forrester Research, Inc. Reproduction Prohibited 23
Web shoppers continue to abandon stores during key time periods
Pre-Thanksgiving Thanksgiving CyberMonday CyberWeek
Base: online consumers who purchased online during the given timeframe
Source: Bizrate Insights/Forrester Holiday Flash Survey, 2013
69%
83%
I shopped in storesless because Ishopped online
instead
I prefer to shop onlinerather than go tocrowded stores
during Thanksgivingweekend
79%
87%
75%
82%
65%
81%
% agreeing with statement
#SmarterCommerce @smulpuru @jay_henderson
© 2014 IBM Corporation 24
Agenda
› 2013 Recap
› Key US dates and trend
› Views from around the globe
› Shopper behavior
› Insights for 2014
#SmarterCommerce @smulpuru @jay_henderson
© 2013 Forrester Research, Inc. Reproduction Prohibited 25
1. The last mile wars are just beginning
Timeframe Offer 2011 2012 2013
Pre-Thanksgiving
Free shipping no threshold 20% 20% 32%
Free shipping with threshold 25% 23% 18%
Thanksgiving
Weekend
Free shipping no threshold 26% 24% 40%
Free shipping with threshold 29% 27% 21%
Cyber Monday
Free shipping no threshold 33% 29% 32%
Free shipping with threshold 26% 27% 28%
Cyber Week
Free shipping no threshold 23% 23% 25%
Free shipping with threshold 25% 25% 25%
Source: Bizrate Insights/Forrester Holiday Flash studies
Which types of deals did you take advantage of for today’s purchase?
Base: recent online buyers
#SmarterCommerce @smulpuru @jay_henderson
© 2013 Forrester Research, Inc. Reproduction Prohibited 26
But the postal service is in dire straits
$0.90
$(15.10)
$(21.30)
2006 2014 (F)* 2016 (F)
* Includes retirement benefits pre-funding requirement
Source: USPS
Net Income/Loss for USPS in US$B
#SmarterCommerce @smulpuru @jay_henderson
© 2013 Forrester Research, Inc. Reproduction Prohibited 27
It is hard to match the postal service
Major carriers Regional upstarts
#SmarterCommerce @smulpuru @jay_henderson
© 2013 Forrester Research, Inc. Reproduction Prohibited 28
What happens next is well-documented
#SmarterCommerce @smulpuru @jay_henderson
© 2013 Forrester Research, Inc. Reproduction Prohibited 29
Cost reduction is already in motion
Early retirement packages
Retail shared with other stores
Clustered delivery boxes
Fewer delivery days
√
√
?
?
#SmarterCommerce @smulpuru @jay_henderson
© 2013 Forrester Research, Inc. Reproduction Prohibited 30
Cost increases for parcels are one of the only levers
Revenue
source
This
means… Elastic? Profitable?
First class Envelopes Not so much Very
Business
delivery
Catalogs,
magazines Very Not so much
Parcels eCommerce
shipments Not so much Very
#SmarterCommerce @smulpuru @jay_henderson
© 2013 Forrester Research, Inc. Reproduction Prohibited 31
Add to that, holiday crunches
#SmarterCommerce @smulpuru @jay_henderson
© 2013 Forrester Research, Inc. Reproduction Prohibited 32
Omnichannel is now an imperative
#SmarterCommerce @smulpuru @jay_henderson
© 2013 Forrester Research, Inc. Reproduction Prohibited 33
2. Mobile madness maddens
8% 5% 9% 8% 9% 10% 8% 3% 13% 7% 8%
13% 14% 12% 13% 14% 13% 15%
8%
15% 12% 13%
79% 81% 79% 79% 77% 77% 77% 89%
72% 81% 79%
Average <$25MM $25-100MM $100MM Store-basedretailer
Pureplay Manufacturer Catalog andother
multichannel
<4 years old 4-10 yearsold
>10 years
Smartphone Tablet Other Web (e.g. PC)
% of web revenue transacted on each device
Source: The State of Retailing Online 2014: Key Metrics
#SmarterCommerce @smulpuru @jay_henderson
© 2013 Forrester Research, Inc. Reproduction Prohibited 34
Top eCommerce priority in 2014: mobile
3%
3%
4%
14%
14%
19%
19%
26%
36%
46%
53%
Customer service
Social
Fulfillment
Merchandising improvements
International expansion
Checkout overhaul
Replatform
Omnichannel efforts
Marketing
Site overhaul
Mobile
Examples/Definitions
Responsive design, mobile site optimization, tablet redesign
Redesign (not specific to responsive design), personalization, site
usability, content management system integration, taxonomy
improvements
Brand marketing, search optimization, customer acquisition,
loyalty and CRM
In-store pickup, order management system overhaul
New platform integration, site performance
Alternative payments, checkout optimization
Growth to key markets like BRIC
Videos, on-site selection improvement, enhancing marketplace
and drop ship capabilities
Speed to ship packages, order visibility
Integration with Instagram and Pinterest
Integration of live chat
Source: The State of Retailing Online 2014: Key Metrics
#SmarterCommerce @smulpuru @jay_henderson
© 2013 Forrester Research, Inc. Reproduction Prohibited 35
Mobile investments are often still modest
#SmarterCommerce @smulpuru @jay_henderson
© 2013 Forrester Research, Inc. Reproduction Prohibited 36
This is a classic first mover dilemma
Source: The Half-Truth of First Mover Advantage, HBR 2005
Pace of market
evolution
Pace of technology
evolution
Faster
Faster
Rough
waters
1st mover
wins Calm waters
Loser box
Mobile today
#SmarterCommerce @smulpuru @jay_henderson
© 2013 Forrester Research, Inc. Reproduction Prohibited 37
#SmarterCommerce @smulpuru @jay_henderson
© 2013 Forrester Research, Inc. Reproduction Prohibited 38
Here are some of the early winners
#SmarterCommerce @smulpuru @jay_henderson
© 2013 Forrester Research, Inc. Reproduction Prohibited 39
3. EDLP dies…because the web always has a lower price
35% use phones to research
prices IN STORES
35% of showroomers use
search to compare prices
32% of showroomers find it
easy vs 11% who find it difficult
37% of showroomers plan to
reesarch prices more on their
mobile devices in the future
Source: Forrester Life Cycle Survey, Q1 2013: Forrester-Aprimo Research
#SmarterCommerce @smulpuru @jay_henderson
© 2013 Forrester Research, Inc. Reproduction Prohibited 40
The store “premium” isn’t large
How much more would you consider paying to purchase a product in a physical store rather than buying
it online so that you could have the product immediately rather than wait for it to be shipped to you?
52%
18%
6%
4%
4%
3%
1-5% higher in store
6-10% higher in store
11-15% higher in store
16-20% higher in store
21-25% higher in store
More than 25% higher in store
Source: Forrester Life Cycle Survey, Q1 2013
#SmarterCommerce @smulpuru @jay_henderson
© 2013 Forrester Research, Inc. Reproduction Prohibited 41
For commodities, this type of price difference gets tougher
Source: 360pi
#SmarterCommerce @smulpuru @jay_henderson
© 2013 Forrester Research, Inc. Reproduction Prohibited 42
#SmarterCommerce @smulpuru @jay_henderson
© 2013 Forrester Research, Inc. Reproduction Prohibited 43
Summary of Insights for 2014
› There probably won’t be a reprieve in shipping expenses, but omnichannel investments can insulate retailers from unwelcome suprises
› We are just beginning to see “mobile unique” solutions; if you can create one, you will amplify your mobile success
› Dynamic pricing is here to stay and will become standard for the most commoditized categories; ultimately, merchandising strategies change a lot
#SmarterCommerce @smulpuru @jay_henderson
© 2013 IBM Corporation 44
Customers know more
Customers demand more
Your business expects more
Marketing must re-imagine its role
#SmarterCommerce @smulpuru @jay_henderson
© 2014 IBM Corporation 45
It’s awfully hard to re-imagine customer engagement when the
technology infrastructure looks like this…
Customer Database
Files
Files
Files
Web Analytics Provider
Website Behavioral Targeting
Product & Content
Recos
Customer Insight Tool
Predictive Analytics
Email Service Provider
Data
warehouse
Files
Marketing Finance Mgmt
Digital Asset Mgmt
Call Center / Inbound Decisioning
Marketing Operations
Management
Lead Management
SMS Marketing
Files
Local Marketing
Mobile Push Notifications
Mobile Marketing
Files
Files
Files
Social Marketing
App/Widget Creation
Campaign Management
Files
Contact Optimization
Transactions
Search Bid Management
SEO
Files
Marketing Mix Modeling
#SmarterCommerce @smulpuru @jay_henderson
© 2014 IBM Corporation 46
A modular solution - so
you only have to buy and adopt what you need, that you can
expand over time
Choosing the right technology for marketing
Preferably an integrated
suite that has multiple
entry points
Open solution so you can
integrate it into your
existing infrastructure
#SmarterCommerce @smulpuru @jay_henderson
© 2014 IBM Corporation 47
Understand Engage
Optimize
IBM Marketing and Merchandising solutions empower clients to
understand and engage customers in context across channels
#SmarterCommerce @smulpuru @jay_henderson
© 2014 IBM Corporation 48
Digital Marketers
Merchandisers Marketers eCommerce Professionals
Customer Service
IBM Marketing and Merchandising solutions empower clients to
understand and engage customers across departments
#SmarterCommerce @smulpuru @jay_henderson
© 2014 IBM Corporation 49
IBM continues to build out an industry leading portfolio of technologies
Digital Marketers
Merchandisers Marketers eCommerce Professionals
Customer Service
Omni-Channel Marketing Omni-Channel
Commerce
Omni-Channel
Merchandise
Optimization
Customer
Experience for
Service
& Digital Marketing
Customer Analytics
Real-time Personalization
#SmarterCommerce @smulpuru @jay_henderson
© 2014 IBM Corporation 50
IBM continues to build out an industry leading portfolio of technologies
to enable retailers
50
#SmarterCommerce @smulpuru @jay_henderson
© 2014 IBM Corporation 51
Additional holiday benchmark analysis & best practice guides
www.ibm.com/benchmark
#SmarterCommerce @smulpuru @jay_henderson
© 2014 IBM Corporation 52
Questions?
Sucharita Mulpuru Principal Analyst
Forrester
@smulpuru
Jay Henderson Strategy Director,
IBM, Enterprise Marketing
@jay_henderson
www.ibm.com/benchmark
#SmarterCommerce @smulpuru @jay_henderson
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