Preparing for the 2015 holiday shopping season

Preparing for the 2015 Holiday

Shopping Season Key online shopping trends and best practices

2

Today’s presenters

Sucharita Mulpuru

Principal Analyst

Forrester

@smulpuru

Leah Paschall IBM Digital Analytics Benchmark

IBM Commerce

@leahpaschall

#IBMBenchmark @smulpuru @leahpaschall

Customer Analytics

Contents

• Online shopping trends

• Key holiday shopping days in 2014

• Screen size and the mobile rise

• 5 themes for 2015

• Make the holiday season profitable

3 Customer Analytics


IBM Digital Analytics Benchmark

• Over 3,000 sites participated

• Aggregate index

– Compare against industry

– Compare against peers

• Geographic coverage

– US, UK, FR, Gmy, AU, Europe, World

Wide

• Industry specific

– Retail, Content, Financial Services,

Travel

• Segment specific

– Apparel, Department Stores, Health

and Beauty, and 12 others. . .

• Free Resources

– US holiday retail & sub-verticals

– UK Black Friday & Cyber Monday

– Holiday Mobile Report

www.ibm.com/benchmark


Customer Analytics 4

© 2015 Forrester Research, Inc. Reproduction Prohibited 5

Source: Forrester Research Web-Influenced Retail Sales Forecast, 2013 To 2018 (US)

US eCommerce will top $300MM in 2015



Categories are shifting a lot

Share of top 3 online categories as a % of eCommerce

46%

35% 36%

2000 2015 2018

PCs, consumer

electronics, apparel &

accessories

PCs, books,

peripherals

Consumer electronics,

apparel & accessories,

home and housewares

Source: Forrester estimates


Steady growth for online sales

Q1 2015 Sales up over 15%

YoY

Source: IBM Digital Analytics Benchmark

12% 11% 11%

16%

0%

5%

10%

15%

20%

Q2 2014 Q3 2014 Q4 2014 Q1 2015

US QUARTERLY SALES CHART YoY Difference


Customer Analytics 7 www.ibm.com/benchmark

Consumer attention continues to decline


Session length keeps decreasing

Down to 6:42 compared to 7:25 2 years ago

Cart abandonment remains high and continues to rise

Up to 74%

Bounce rate continues to rise

Up to 35.6%, a 10% increase from 2 years ago

Pages per view declined to 7.2, down 8% from 2 years ago

Customer Analytics www.ibm.com/benchmark

Source: IBM Digital Analytics

Benchmark (March 2015)

9

10%

20%

30%

40%

50%

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

MARKETING PERCENT OF SITE TRAFFIC Current Period (2014-2015)

Prior Period (2013-2014)

Prior Period (2012-2013)

Consistently

driving

~25-30% of

traffic

Marketing promotions, offers, &

messages are working...

Especially

around the

holiday

shopping

period




Key holiday shopping

days in 2014

Shopping season is elongating

• 12.6% YoY sales Thanksgiving through Cyber Monday






Though it’s still no Singles Day

$2

$11

Cyber Monday China's Singles Day (11/11)

Estimated total gross merchandise value

generated online 2014 ($B)

Source: Forrester estimates


UK Cyber Monday & AU’s Click Frenzy

Online sales increased by 22.6% over 2013 with mobile percent of sales growing by 29.3%, reaching 42.9% of all online sales,

Australia’s Click Frenzy – November 18 – 19, 2014

Online sales increased by 27.7% over 2013 with mobile percent of sales growing by 15.3%, reaching 20.4% of all online sales

UK Cyber Monday- December 1, 2014

13





• Direct Load, Marketing, Paid Search yield highest rates




Cyber Monday had the highest

conversion across all channels


Cyber Monday had the best engagement

• Highest average session length, page views, new visitor

conversion rate and lowest bounce rate





Cyber Monday best practices

› Conversion is higher because shoppers expect sales; threshold based shipping offers can shift demand

› “Doorbusters” are often impactful (specific items) vs sitewide promotions

› Over time, email is essential to maintaining energy on this date

› Ensure mobile optimization and easy mobile payments



Convenience is the main reason people shop online

Source: Bizrate Insights Holiday Retrospective Study, Jan 7-14, 2015

54%

48%

45%

37%

32%

30%

24%

22%

19%

17%

14%

No crowds, no traffic, no hunting for parking

Buying online takes up less time than going to stores

Free shipping

It was so easy!€“ Why expend more energy?

I could shop when stores weren't open

Lowest total cost

I was sure to get the items I wanted to buy

I couldn't find what I wanted to buy in local stores

Items were only available online

Guaranteed on-time delivery

Shipping directly to a gift recipient

Base: 5,879 online holiday shoppers



Use coupons to drive store traffic as you get closer to 12/25

“Which of the following statements describes you?” (Select all that apply)

18%

25%

41%

47%

47%

50%

60%

I use my phone more than my computer or tablet to access the internet.

I'm more likely to make a purchase in store if I receive a coupon on my smartphone while in store

I prefer to shop online for most of my purchases.

I love shopping in brick and mortar stores.

I enjoy looking for coupons and promotion codes online.

I'm more likely to visit a store if I receive a coupon for that store

I love receiving digital coupons, offers or online promotion codes.

Source: A commissioned study conducted by Forrester Consulting on behalf of RetailMeNot, May 2014

Base: 500 US consumers who used a digital coupon, offer, or online promotion code in the past three months


Screen size and the

mobile rise

Larger screens have better buying and

engagement metrics…..


$91.23

6.1

38.8%

1.1%

10.7%

34.2%

$102.72

7.7

34.7%

3.2%

13.6%

12.8%

$121.60

7.9

33.4%

3.6%

75.5%

52.4%

Average Order Value

Average Page Views

Bounce Rate

Conversion Rate

% of Sales

% of Traffic

Performance by Device Type - March 2015

Smartphone Tablet Desktop

IBM Digital Analytics Benchmark IBM Digital Analytics Benchmark



Source: IBM Digital Analytics Benchmark – U.S. Retail




Source: IBM Digital Analytics Benchmark – U.S. Retail (March 2013 vs. March 2015)

…..however, mobile continues to soar

Mobile Use By Country: Australia, UK, US

22

• Mobile traffic and sales grew in double digits on major shopping days in US, UK

and Australia.

• As a percentage of all online traffic and sales, the UK was highest at 56.2% and

42.9%, respectively.

0%

10%

20%

30%

40%

50%

60%

AU Click Frenzy UK Cyber Monday US Cyber Monday

Mobile Performance 2014

Mobile % of Sales Mobile % of Site Traffic

Mobile % of Traffic and Sales

IBM Digital Analytics Benchmark




Mobile Use By Country: Australia, US, UK

23

0%

10%

20%

30%


Mobile Percentage of Sales 2014

Tablets Smartphones

AU, UK, US IBM Digital Analytics Benchmark

0%

10%

20%

30%

40%


Mobile Percentage of Traffic 2014

Tablets Smartphones

AU, UK, US IBM Digital Analytics Benchmark

Tablets

to buy

Smartphones

to browse




However, smartphone traffic is

increasing while tablet traffic remains

steady…





…And smartphones are gaining ground

on tablets in making the purchase





5 Themes for 2015


Themes

1. The Omnichannel Octopus

2. Middle-of-the-Road Mobile

3. Short-lived Security Splurges

4. Payments Paralysis

5. Dumping “Big Data”



Key merchant priorities in 2015



Everyone has appropriated “omnichannel”

Marketing

OMNICHANNEL

Endless aisle

In-store pickup

Ship from/to store

Alternative pickup points

Same day delivery

Cross-site customer acquisition

Cross-device measurement

Cross-channel measurement

Loyalty data and CRM

Cross-channel infrastructure

POS sync across channels

CS data shared across channels

Remote customer service

Digital service capabilities

Integration across channels



Shipping issues are a little more challenging

27%

25%

62%

55%

11%

22%

Returns as a % of total orders

Fulfillment costs per order

Increased

Remained flat

Decreased

Source: The State of Retailing Online (Shop.org/Forrester) 2015: Key Metrics



Themes








Mobile is growing

Base: 41 online retailers

Source: “The State Of Retailing Online,” a Shop.org study conducted by Forrester Research

Mobile as a percentage of

online sales (average)

Year-over-year growth in

mobile sales (average)

Mobile as a percentage of

online traffic (average)



Responsive design trumps apps



“Which of the following best describe your company’s smartphone and tablet

device presence? (Select all that apply)”



So spend is still modest



Smartphone investment in 2014 Tablet investment in 2014

Average number of full-time employees dedicated to mobile: 3.1

Average number of part-time employees dedicated to mobile: 7.1



Shoppers often find coupons on their mobile phones

8%

16%

20%

23%

24%

25%

27%

27%

28%

28%

30%

32%

33%

39%

55%

57%

By watching a TV show or commercial that says how I can get a coupon on my phone

By reading catalogs, mail or newspapers saying how I can get a coupon on my phone

By reading signage at stores or on shelves saying how I can get a coupon on my phone

Through push messages from a coupon company sent to me on my phone

By receiving a push notification from an app that I have downloaded specifically for coupons and offers

By receiving a push notification from an app from a retailer

By texting a short code to a coupon company

By visiting a coupon site directly from my phone

Through push messages from a retailer sent to me on my phone

By visiting a retailer's website directly from my phone

By browsing an app from a retailer

Via email from a coupon company

By browsing an app that I have downloaded specifically for coupons and offers

By texting a short code to a retailer and getting a link to a coupon on my phone

Through search engines on my smartphone

Via email from a retailer

“How do you typically find digital coupons, offers or online promotion codes on your smartphone?”

(Select all that apply)

Source: A commissioned study conducted by Forrester Consulting on behalf of RetailMeNot, May 2014

Base: 177 US consumers who used a smartphone to find a digital coupon, offer or online promotion code in the

last three months



Themes








Data security is a top concern



Security breaches are bad…but not insurmountable…



…and they’re not nearly as bad as bad business execution



CIOs focusing on data security is more like this…

DATA BREACH



That said, EMV migrations will be the thing to watch in the fall



Themes








Mobile growth is creating hype around the payments space



Note: Forecast does not include purchases made on a tablet or card payments made at mobile point of sale (mPOS)

or with a mobile card reader.

Source: Forrester Research Mobile Payments Forecast 2014 To 2019 (US)

But what people don’t seem to understand is this data



Lots of players are fighting for a relatively small pie



Including the major tech companies

Disruptive Threat Likelihood

Medium-low

Installed base too limited for now; less traction outside

of US; requires merchant adoption; consumer adoption

questionable; Apple Store Pay is interesting but has no

traction

Medium

Google has virtually no success in consumer payments

excluding Android store; Softcard was never a viable

product and arguably not the reason for Google

Wallet’s failure the first time

Low

No traction in the physical environment and significant

skepticism from non-Amazon properties for online

payments; Amazon will ultimately morph into a B2B

model to subsidize its B2C business

Low

Large mobile installed base; hasn’t yet invested heavily

in in-app transaction capabilities but WeChat shows it

could be possible and relatively successful; in-app

payments are its best bet

Medium

Loop Pay is very innovative and requires no merchant

integration; technology invested in security could deem

even EMV obsolete but that may also require merchant

integration which could be years away



Themes








Big Data - The practices and

technology that close the gap

between the data available and

the ability to turn that data into

business insight.


The Key Is Incremental Impact

Photo source: http://iphone.sys-con.com/node/2411901


TechRadar™: Retail Analytics, 2014


Make the holiday

season profitable


Thoughts…

› There’s still a lot of hype

› Focus on what matters: a strong customer experience, flexibility in fulfillment, transparency in shopper information, good store economics


Become a C2B business with IBM

Today, business is more than B2B or B2C. It’s also

C2B: customer-to-business. Put your customers at

the center of everything you do.



54

IBM Digital Analytics Benchmark Hub www.ibm.com/benchmark

• Holiday Reports

• Press alerts, press releases and bylines

• Blogs

• LIVE social feed

• Link to product information

• Best practice guides

• Access to IBM Benchmark Live

55

One stop shop for analysis,

product information and best

practice guides



56

IBM Benchmark Live gives you instant access to real-time online

shopping trends with customizable visuals that you can download and

share.

IBM Benchmark Live #IBMBenchmark @smulpuru @leahpaschall


57

Questions? www.ibm.com/benchmark

Sucharita Mulpuru Principal Analyst Forrester @smulpuru

Leah Paschall IBM Digital Analytics Benchmark Lead IBM ExperienceOne @leahpaschall


Customer Analytics ©2015 IBM Corporation 57

Preparing for the 2015 holiday shopping season

Software