State of the U.S. Online Retail Economy in Q3 2014

For info about the proprietary technology used in comScore products, refer to http://comscore.com/About_comScore/Patents

State of the U.S. Online Retail

Economy in Q3 2014

November 2014

Gian Fulgoni, Co-Founder & Chairman Emeritus, comScore, Inc.

Andrew Lipsman, VP Marketing & Insights, comScore, Inc.

Ian Essling, Sr. Research Manager, comScore, Inc.

© comScore, Inc. Proprietary. 2

Topics for Today

Online Surveys Misleading for Behavioral Measurement

Review of Key Macroeconomic Trends

Consumer Perceptions of the Economy

Buyer Metrics & Product Category Overview

Mobile Commerce and the Multi-Platform Shopper

2013 Holiday Review and 2014 Forecast

Key Takeaways

Q+A


Data sourced from comScore’s global panel of 2 million Internet users

2 Million Person Panel

360°View of Person Behavior

CENSUS

Unified Digital Measurement™ (UDM)

Patent-Pending Methodology

1 Million Domains Participating Adopted by 90% of Top 100 U.S. Media Properties

PANEL

PERSON-Centric Panel with

WEBSITE-Census Measurement

Web Visiting & Search

Behavior Online Advertising Exposure

Advertising Effectiveness

Demographics, Lifestyles & Attitudes

Media & Video Consumption

Transactions

Online & Offline

Buying

Mobile Internet Usage & Behavior

PANEL

V0411 Plus 5 Million TV Set Top Boxes for 3-Screen Measurement


E-Commerce data includes all worldwide buying on U.S. sites using a desktop

M-Commerce data includes all worldwide buying on U.S. sites using a mobile device

Total Digital Commerce is the sum of e-Commerce (desktop) and m-Commerce (mobile)

Unless otherwise noted, the terms “mobile” and “m-Commerce”

refer to “smartphone” plus “tablet”

Unless explicitly stated otherwise, the term e-Commerce

refers to online retail spending, as measured by comScore, which

excludes travel, autos and auction sites

Behavioral activity shown includes data through September 2014

Custom comScore Surveys

week of October 20, 2014 (n=2,097)

week of October 27, 2014 (n=897)

Analysis Parameters & Definitions – Q3 2014 Data


-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Q1'05

Q2'05

Q3'05

Q4'05

Q1'06

Q2'06

Q3'06

Q4'06

Q1'07

Q2'07

Q3'07

Q4'07

Q1'08

Q2'08

Q3'08

Q4'08

Q1'09

Q2'09

Q3'09

Q4'09

Q1'10

Q2'10

Q3'10

Q4'10

Q1'11

Q2'11

Q3'11

Q4'11

Q1'12

Q2'12

Q3'12

Q4'12

Q1'13

Q2'13

Q3'13

Q4'13

Q1'14

Q2'14

Validation of comScore e-Commerce sales data:

Comparison of comScore data to U.S. Department of Commerce

Quarterly U.S. e-Commerce Growth* vs. YA

Source: comScore & U.S. Department of Commerce (DOC)

% G

row

th v

s. Y

A

Dept. of Commerce (DOC) comScore Estimate of DOC

*Note: To be consistent with DOC, comScore estimate excludes travel and event tickets but

includes auction fees.

Correlation: 0.92

© comScore, Inc. Proprietary. © comScore, Inc. Proprietary. 6

Online Surveys Misleading for Behavioral Measurement


“Self-reported online survey data

that requires consumer recall are

misleading for cross-platform

measurement”


Online surveys dramatically overstate e-commerce spend …

*Accenture Online Survey, Sept 2014

Online Survey*

7%

14%

46%

E-commerce % of allspend

E-commerce % of allspend excluding Autos,

Gas, Food / Bev

E-commerce % of allspend excluding Autos,

Gas, Food / Bev

U.S. Department of Commerce

Q4 2013


… and also overstate time spent online

SOURCE TV: Nielsen Cross Platform Report, US, Q2 2014 SOURCE Internet: comScore Media Metrix Multi-Platform, US, Q2 2014 *eMarketer 2014

Survey Behavioral Panels

TV (Behavioral Panel) Desktop & Mobile(Behavioral Panels)

Desktop & Mobile(Online Surveys)

157 Hours / Month

77 Hours / Month

(~50% of TV)

Online is

130% of TV*


Source of the problem: Measured by passive electronic observation, online

survey panelists are heavier than average Internet users (index)

Source: comScore Research

255 281

170 193

286 274

0

50

100

150

200

250

300

350

Time spentonline

Pagesdownloaded

Searchesconducted

Dollars spentonline

Made onlinecredit cardapplication

Paid bills online

Average User Survey Panelist

AV

ER

AG

E U

SE

R

Ind

ex


“Unlike online survey panels, passively-collected

electronic data from user panels offer a broad and

accurate foundation for Multi-Platform measurement”


State of the Economy

A Review of Key Macroeconomic Trends


Year to date, desktop e-Commerce (retail + travel) was up +11% Y/Y overall, totaling $260 billion

through the first three quarters of the year. Retail e-commerce reached $165 billion, up 12% vs YA

$42 $53 $67 $82 $102

$123 $130 $130 $142 $162

$186 $211

$165

$30 $40

$51 $61

$69

$77 $84 $80

$85

$94

$103

$111

$95

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q1-Q32014

Retail Travel

Desktop e-Commerce Dollar Sales ($ Billions) Source: comScore e-Commerce Measurement

$72 $93

$117 $143

$171

$200 $214 $209

$228

$289

$256 $260

Billio

ns

($

)

+29%

+26% +22%

+19%

+17% +7%

-2%

+9%

+12%

+13%

+26%

+33%

+26%

+28% +20%

+24% +24%

+13%

+20%

+12%

+6%

+9%

0%

-5%

+10%

+6%

+15%

+9%

+14%

+11%

+11%

+13%

+8%

+12%

+11% $322

+9%


When including mobile, digital commerce growth outpaced offline retail

growth by more than 4x on an apples-to-apples basis

1%

-5% -5%

-6% -6%

0% 4% 5% 6%

7% 6% 4% 4% 3%

6% 2% 2% 2% 1%

4% 5% 4% 1%

3% 3%

Q32008

Q42008

Q12009

Q22009

Q32009

Q42009

Q12010

Q22010

Q32010

Q42010

Q12011

Q22011

Q32011

Q42011

Q12012

Q22012

Q32012

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Quarterly Retail & Food Services Sales Growth vs. YA

Source: DOC (excluding autos, gas and food/beverage)

6% -3% 0% -1% -2%

3%

10% 9% 9%

11% 12% 14% 13%

14%

21% 17% 17% 17% 15% 16% 14% 12% 13% 13%

14%

Q32008

Q42008

Q12009

Q22009

Q32009

Q42009

Q12010

Q22010

Q32010

Q42010

Q12011

Q22011

Q32011

Q42011

Q12012

Q22012

Q32012

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Quarterly Retail Digital Commerce Sales Growth vs. YA Source: comScore e-Commerce/m-Commerce Measurement

comScore digital commerce growth

rates include mobile commerce

beginning with Q1 2012 data


Digital commerce (desktop + mobile) reached $60.6 billion

in Q3 2014, up 14% vs YA.

$44.3 $43.2 $41.9

$56.8

$50.2 $49.8 $47.5

$63.1

$56.1 $54.8 $53.9 $4.5

$3.8 $4.6

$7.2

$5.9 $4.7 $5.8

$8.3

$7.3 $6.8 $6.7

Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014

Desktop Mobile

Desktop+Mobile Retail Commerce Dollar Sales ($ Billions) Source: comScore e-Commerce& m-Commerce Measurement

Billio

ns

($

)

$71.4

$56.1

$64.0

$45.4 $47.0 $48.8

+21% +17% +17% +17% +15% +16% +14%

$54.5 $54.3

+12% +13%

$63.4 $61.6

+13% +14%

$60.6


When including both mobile and desktop spending, Digital Commerce

accounted for 11.6% of consumers’ discretionary spending in Q3 2014

*Note: e-Commerce share is shown as a percent of DOC’s Total Retail Sales excluding Food

Service & Drinking, Food & Bev. Stores, Motor Vehicles & Parts, Gasoline Stations and

Health & Personal Care Stores.

Desktop & Mobile Digital Commerce Share of Corresponding Consumer Spending* Source: comScore e-Commerce/m-Commerce & U.S. Department of Commerce (DOC) for Retail

4%

5%

6%

7%

8%

9%

10%

11%

12%

13%

14%

Digital Commerce Share (desktop+mobile)

e-Commerce Share (desktop)

13.2% (Q1 ‘14)

10.3% Q3 ‘14

11.6% Q3 ‘14

The share of consumer spending via digital tends

to peak in Q1 and Q4 –

Q1 ‘14 saw a 13.2% share, the highest ever

11.7% (Q3 ‘13)




Negative sentiment continued to decline in Q3 2014, with less than one in three

selecting ‘poor’, the lowest level since comScore tracking began in April 2009

68% 66% 61% 61% 59% 63% 62% 52%

60% 60% 61% 54% 50%

56% 49%

42% 41% 41% 41% 40% 35% 31%

27% 30% 31% 33% 34% 32% 32%

40% 31% 31% 29%

36% 40% 36%

40% 44% 47% 48% 43% 48%

48% 49%

5% 4% 8% 6% 7% 5% 6% 8% 9% 9% 11% 10% 10% 8% 11% 13% 12% 12% 16% 13% 17% 20%

Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Oct-14

Poor Fair Excellent/Good


*Note: respondents selecting “I don’t know / not sure” accounted for an average of 1.1% of responses in

each quarter, and results shown above are rebased to exclude these data

Q.How would you rate economic conditions today? Source: comScore Custom Surveys


Consumer concern shifted even more toward ‘rising prices’ this quarter, as

concern for unemployment / job security dropped to 27%

Percent of Respondents Citing Their One Most Important Issue

32% 29%

33%

30% 29%

42%

54%

37% 37%

43%

48%

44%

45%

47% 45%

46%

42% 43%

52%

45% 42%

50%

42% 44%

45%

36%

27%

37%

38%

31%

26%

33% 34% 31%

33% 31%

33%

32%

27% 27%

13%

9% 10% 13%

9%

7%

7%

12% 12% 10%

11%

10% 10%

10% 10% 10% 12%

14% 11% 14%

8% 7% 9%

8% 10%

11% 7% 8%

9%

10% 11%

8% 8%

7% 7% 6% 8% 6% 5%

5%

Oct 09 Jan 10 Apr 10 Jul 10 Oct 10 Jan 11 Apr 11 Jul 11 Oct 11 Jan 12 Apr 12 Jul 12 Oct 12 Jan 13 Apr 13 Jul 13 Oct 13 Jan 14 Apr 14 Oct 14

RisingPrices

Unemployment / JobSecurity

FinancialMarkets

Real Estate /Home Values

Q. Based on your current situation, which one of the following economic conditions most concerns you? Source: comScore Custom Surveys


Retailer and Product Category Overview


Overall e-commerce buying via desktop in Q3 2014 increased by 13% versus Q3 2013, driven by an

11% increase in dollars per buyers. Growth in the number of buyers appears to have plateaued

Key Desktop e-Commerce Buyer and Transaction Measures

Q3 2014 vs. YA Source: comScore e-Commerce Measurement

Metric Q3 2013 Q3 2014 % change

Dollar Sales ($ Billions) $47.5 $53.9 13%

Buyers (Millions) 193 197 2%

Dollars per Buyer $245 $273 11%

Average Order Value $69 $72 4%

Transactions (Millions) 689 751 9%

Transactions per Buyer 3.56 3.80 7%


Desktop computers

+8%

Nearly all e-Commerce categories showed double-digit growth versus Q3 2013,

including the largest overall category in dollars, computers/portable devices

Q3 2014 Desktop e-Commerce Sales Growth vs. YA by Retail Category Source: comScore e-Commerce Measurement

Absolute Dollar

Rank Product Category

Q3 2014

Growth

vs. YA

#8 Digital Content & Subscriptions Very Strong

#13 Jewelry & Watches Very Strong

#3 Apparel & Accessories Very Strong

#4 Consumer Packaged Goods Very Strong

#6 Event Tickets Strong

#5 Consumer Electronics Strong

#11 Home and Garden Strong

#1 Computers / Peripherals / Tablets Strong

#12 Sports & Fitness Strong

#9 Furniture & Appliances Strong

#19 Flowers, Greetings & Misc. Gifts Strong

#7 Office Supplies Strong

#15 Video Games, Consoles & Accessories Moderate

#10 Books & Magazines Moderate

Growth rate definitions Very Strong: +15% or higher

Strong: +10-14%

Moderate: +5%-9%

Low: +1%-4%

Portable devices

(e.g. tablets)

+17%

Mobile phones and plans

+19%


43% 50% 48% 51%

44%

67% 58% 59%

68%

57% 50% 52% 49%

56%

33% 42% 41%

32%

Q32012

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

% Transactions with Paid Shipping

% Transactions with Free Shipping

Percentage of e-Commerce Transactions

with Free Shipping Source: comScore e-Commerce Measurement

Q. Among the services/factors listed below which can be provided by online retailers, please rate them on a scale of 1-5,

where 1 is the most important factor to you, and 5 is the least important.

Percent of Respondents Selecting Each Factor as

‘Most Important’ for Online Shopping Source: comScore Custom Surveys

49% 53% 52% 45%

31% 26% 25% 28%

13% 14% 13% 14%

4% 4% 6% 8%

3% 3% 4% 4%

Q4 2013 Q1 2014 Q2 2014 Q3 2014

Free shipping Exclusive online dealsNo sales tax Fast shippingIn store pickup

Considered the most important factor for online shopping by many consumers,

it’s unsurprising most online transactions now include free shipping


Mobile Commerce and the Multi-Platform Shopper


Continued strength in adoption of smartphones and tablets has led to a

dramatic shift in media engagement on these platforms

0

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

140,000,000

160,000,000

180,000,000

200,000,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Sep-14

Nu

mb

er

of

De

vic

e O

wn

ers

174 MILLION 72% PENETRATION

93 MILLION 38% PENETRATION

Number of U.S. Smartphone and Tablet Owners Source: comScore MobiLens and TabLens, U.S., 2000-2014

+17%

vs. YA

+30%

vs. YA


Mobile commerce, $6.7 billion in Q3, accounted for 11% of total digital commerce

dollars in Q3 -- a slightly higher share than Q3 2013

1.8% 2.4%

3.6%

5.8% 6.6%

8.8% 9.0% 9.3%

8.1%

9.8%

11.3% 10.5%

8.6%

10.8% 11.7% 11.5% 11.1% 11.1%

Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014

m-Commerce Share of Total Digital Commerce Dollars Source: comScore m-Commerce Measurement


In terms of discretionary spending, m-Commerce growth is still outpacing e-

Commerce & bricks-and-mortar but dampened in relation to Q2’s strong growth

+3%

+14%

+17%

+0%

+2%

+4%

+6%

+8%

+10%

+12%

+14%

+16%

+18%

+20%

Total Discretionary Retail E-Commerce M-Commerce

Q3 2014 Y/Y Retail Spending Growth by Channel Source: Dept. of Commerce, comScore e-Commerce & m-Commerce Measurement


Mobile has become the primary medium for consumers to engage with retail

brands online with 2/3rds of online shopping activity now happening on mobile.

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

55,000

60,000

65,000

To

tal M

inu

tes (

MM

)

Desktop Smartphone Tablet

Total Minutes (MM) Spent in Retail Category by Platform Source: comScore Media Metrix and Mobile Metrix, U.S., Mar-2013 – Sep-2014

41% 34%

44% 50%

15% 15%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Sep-2013 Sep-2014

Desktop Smartphone Tablet


Mobile commerce dollars lag retail engagement by a wide margin, but the gap

will ultimately have to narrow

66%

11%

34%

89%

Share of Time Share of Dollars

Mobile Desktop

Retail: Share of Digital Time Spent & Dollars by Platform Source: comScore Media Metrix & E-Commerce Measurement, U.S., Sep 2014

Source: comScore M-Commerce Measurement and Media Metrix MP


Several leading retailers are seeing rapid growth in their number of mobile-only

visitors, highlighting the importance of mobile storefronts

Selected Top Retailers: Y/Y % Change in Mobile-Only Unique Visitors (000) Source: comScore Media Metrix Multi-Platform, U.S., Sep-2013 – Sep-2014

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Amazon eBay Walmart Target Best Buy

Sep-2013 Sep-2014

+84%

+35%

+34%

+82%

+24%


Mobile usage in the retail category skews heavily towards younger consumers,

with one in three of those age 18-24 falling into the ‘mobile only’ sector

33%

19% 12% 11% 13%

5%

50% 70%

73% 66%

69%

27%

17% 11% 15%

23% 18%

68%

0%

20%

40%

60%

80%

100%

Age 18-24 Age 25-34 Age 35-44 Age 45-54 Age 55-64 Age 65+

Mobile Only Multi-Platform Desktop Only

Percent Platform Composition by Age Segment in Retail Category Source: comScore Media Metrix Multi-Platform, U.S., Age 18+, Sep-2014


0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000

Amazon Sites

eBay

Apple.com Sites

Wal-Mart

Target Corp.

Best Buy Sites

Kohls Corporation

The Home Depot

Etsy.com

Sears.com

Desktop Only Desktop + Mobile Mobile Only

A significant percentage of top retailers’ audiences are multi-platform & mobile-

only; but wide variation among mobile app vs. browser splits

Selected Leading Retailers: Total U.S. Digital Population

Unique Visitors (000) by Platform Source: comScore Media Metrix Multi-Platform, U.S., September 2014

168M

111M

95M

73M

51M

27M

23M

23M

22M

20M

31%

32%

<1%

39%

32%

95%

70%

88%

44%

78%

69%

68%

99%

61%

68%

5%

30%

12%

56%

22%

Browser App

% of Time Spent –

Browser vs. App Source: comScore Mobile Metrix,

U.S., September 2014

Mobile = Smartphone + TabletMobile app usage for Apple.com Sites includes all Apple property apps (e.g. iTunes, Apple

Maps, etc.)

Apple Sites


Apps done right: Target hit a home run with Cartwheel rollout as evidenced by

huge gains in mobile app usage

% of Time Spent on Target Mobile –

Browser vs. App Source: comScore Mobile Metrix, U.S., Sep-2013 / Sep-2014

79%

32%

21%

68%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

September 2013 September 2014

App

Browser


Target’s mobile usage is up 78% y/y, with Cartwheel accounting for the entire

increase in time spent via mobile

Total Minutes (000) Spent via Target Mobile Source: comScore Mobile Metrix, U.S., Mar-2013 – Sep-2014

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

Target.com Website Cartwheel (Mobile App) Target (Mobile App)

+78%


2013 Holiday Review and 2014 Forecast


Holiday Season includes November and December

2013 U.S. desktop e-commerce holiday sales grew 10% to $46.5 billion, falling

short of comScore’s original forecast of 14% growth

$19.6

$24.6

$29.2 $28.0 $29.1

$32.6

$37.6

$42.3

$46.5

+26%

+19%

-4%

+4%

+12%

+15%

+14%

+10%

$0.0

$5.0

$10.0

$15.0

$20.0

$25.0

$30.0

$35.0

$40.0

$45.0

$50.0

-10%

-5%

0%

5%

10%

15%

20%

25%

30%Holiday Season $ in Billions Y/Y Growth Rates

Holiday Season Retail Desktop e-Commerce Sales ($ Billions) Growth vs. YA Source: comScore e-Commerce Measurement

2013 2012 2011 2010 2009 2008 2007 2006 2005


The 2013 holiday e-commerce season had ten $1 billion spending days, led by

Cyber Monday

Holiday 2013 U.S. Desktop e-Commerce Spending by Day Source: comScore e-Commerce Measurement

Black

Friday

Cyber

Monday Green

Monday

$-

$200,000,000

$400,000,000

$600,000,000

$800,000,000

$1,000,000,000

$1,200,000,000

$1,400,000,000

$1,600,000,000

$1,800,000,000

$2,000,000,000

01

-Nov-1

3

02

-Nov-1

3

03

-Nov-1

3

04

-Nov-1

3

05

-Nov-1

3

06

-Nov-1

3

07

-Nov-1

3

08

-Nov-1

3

09

-Nov-1

3

10

-Nov-1

3

11

-Nov-1

3

12

-Nov-1

3

13

-Nov-1

3

14

-Nov-1

3

15

-Nov-1

3

16

-Nov-1

3

17

-Nov-1

3

18

-Nov-1

3

19

-Nov-1

3

20

-Nov-1

3

21

-Nov-1

3

22

-Nov-1

3

23

-Nov-1

3

24

-Nov-1

3

25

-Nov-1

3

26

-Nov-1

3

27

-Nov-1

3

28

-Nov-1

3

29

-Nov-1

3

30

-Nov-1

3

01

-Dec-1

3

02

-Dec-1

3

03

-Dec-1

3

04

-Dec-1

3

05

-Dec-1

3

06

-Dec-1

3

07

-Dec-1

3

08

-Dec-1

3

09

-Dec-1

3

10

-Dec-1

3

11

-Dec-1

3

12

-Dec-1

3

13

-Dec-1

3

14

-Dec-1

3

15

-Dec-1

3

16

-Dec-1

3

17

-Dec-1

3

18

-Dec-1

3

19

-Dec-1

3

20

-Dec-1

3

21

-Dec-1

3

22

-Dec-1

3

23

-Dec-1

3

24

-Dec-1

3

25

-Dec-1

3

26

-Dec-1

3

27

-Dec-1

3

28

-Dec-1

3

29

-Dec-1

3

30

-Dec-1

3

31

-Dec-1

3

Free

Shipping

Day


Cyber Monday surpassed Green Monday as the heaviest online spending day of

the year in 2010 and hasn’t looked back since

8

12

9

3

2

1 1 1 1

1

2

1

2

5

2

3 3 3

0

1

2

3

4

5

6

7

8

9

10

11

12

13

2005 2006 2007 2008 2009 2010 2011 2012 2013

Sp

en

din

g D

ay R

an

k

Cyber Monday & Green Monday - Spending Day Rank Source: comScore, 2005-2013

Cyber Monday - Spending Day Rank

Green Monday - Spending Day Rank

$484

$608

$733

$846 $887

$1,028

$1,251

$1,465

$1,735

2005 2006 2007 2008 2009 2010 2011 2012 2013

Cyber Monday U.S. Online Spending in Millions Source: comScore, 2005-2013

Cyber Monday


$0

$500

$1,000

$1,500

$2,000

Black Friday (Nov. 29) Cyber Monday (Dec. 2)

Mobile

Desktop

M-Commerce contributed an incremental 20% of dollars spent on Cyber

Monday, making it the first single day to break $2 Billion

$1,512

$2,085

21%

Mobile

17%

Mobile

Multi-Platform Retail e-Commerce Dollars Spent in Millions Source: comScore E-commerce & M-commerce Measurement


Thanksgiving and Black Friday have grown at faster rates over the past few

years as online buying continues to get pulled forward in the season

$776

$1,198

$1,735

$1,401

$-

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

Thanksgiving Black Friday Cyber Monday Green Monday

2010 2011 2012 2013

+91%

+85%

+69%

+47%

Daily Retail Desktop E-Commerce Sales (Millions) Source: comScore e-Commerce Measurement


With the compressed holiday season last year, people relied more on online

shopping and buying during the weekend than ever before

12%

34%

16%

71%

10%

41%

0%

10%

20%

30%

40%

50%

60%

70%

Thanksgiving Week M - F Thanksgiving Weekend Cyber Week M - F Cyber Weekend Green Week M - F* Green Weekend**

Y/Y Growth of Desktop e-Commerce Transactions – Weekdays vs. Weekends Source: comScore e-Commerce Measurement

* 12/9/13 – 12/13/13 vs. 12/3/12 – 12/7/12

** 12/14/13 – 12/15/13 vs. 12/8/12 – 12/9/12


The importance of free shipping can be clearly seen in 2013, with more than

60% of transactions involving free shipping each week

52%

51%

56%

64%

59%

53%

59% 56% 56%

36%

42%

55% 57%

51%

53% 59%

54%

48%

61% 62% 62%

64% 60%

60%

63%

30%

35%

40%

45%

50%

55%

60%

65%

70%

2011 2012 2013

Percentage of Desktop e-Commerce Transactions w/ Free Shipping Source: comScore e-Commerce Measurement


Key Holiday Theme: The 5 S’s

Short Calendar

Social Commerce

Smartphone Apps

Sit-Back Shopping

Showrooming


Short Calendar: 2014 has a similarly short holiday shopping calendar as 2013,

so it will be especially important to avoid last year’s pitfalls

32

22

10

26

18

8

27

19

8

0

5

10

15

20

25

30

35

Total Days Weekdays Weekend Days

2012

2013

2014

Number of Shopping Days Between Thanksgiving & Christmas


Social Commerce: Digital WOM may activate consumers at different phases of

the purchase cycle

The Digital Word-of-Mouth Funnel

Broadcast: Facebook, Twitter

Curation: Pinterest

Reviews: Amazon

Scale

Specificity

Digital WOM


Smartphone Apps: Building on success of Target Cartwheel, expect greater

emphasis on apps for large retailers – with Walmart ready to make a big ripple

Total Minutes (000) Spent via Walmart Mobile Source: comScore Mobile Metrix, U.S., Sep-2013 – Sep-2014

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

Walmart.com Website Walmart (Mobile App)

+166% Savings Catcher Launch


Sit-Back Shopping: Certain retail categories see spikes in shopping on tablets

in the evening hours. Apparel sees 34% of tablet shopping between 6pm-12am

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Retail Apparel: Platform Share of Time Spent by Hour of Day Source: comScore Media Metrix Multi-Platform (Custom), U.S., November 2013

Smartphone

Tablet

Desktop


Showrooming: Smartphone ownership is a key driver of ‘showrooming,’ with

nearly half of smartphone users having engaged in the behavior

40%

26%

44%

23%

% of Smartphone Owners % of Non-owners

Q3 2013 Q3 2014

52%

36%

31%

30%

13%

22%

Searching for better prices

Looking for online promotions/deals

Searching for item information

Checking reviews/ratings

Making a purchase via mobile device

Other

How Consumers Use Smartphones

While Showrooming

Q. For which of the following do you regularly use your mobile device

while showrooming? (Please select all that apply)

Source: comScore Survey – October 2014

Percent of Consumers Engaging in

Showrooming


5 Bold Predictions for the 2014 Online Holiday Shopping Season

#1 Official Holiday Forecast (Nov-Dec): Total Digital Commerce +16% to $61.0 Billion

>> Desktop +14% to $53.2 Billion, Mobile +25% to 7.9 Billion

#2 M-Commerce will reach its highest ever percentage of total digital commerce at 13% and

surpass $10 billion in spending for the first time in Q4 2014

#3 Cyber Monday will be the heaviest online spending day in history and surpass $2 Billion

in spending on desktop and add another ~$400 million via mobile

#4 Thanksgiving Day will emerge as an important online shopping day and surpass $1 Billion

in spending across desktop and mobile

#5 All 13 M-F online shopping days from Cyber Monday thru Free Shipping Day will see at

least $1 billion in spending, and we will also see our first ever $1 billion day on a weekend


Key Takeaways


Key Takeaways

• Q3 2014 Total Digital Commerce accelerated marginally to 14% y/y as it continued to gain share

from brick-and-mortar

• Desktop e-commerce grew 13%, while mobile commerce grew 17%

• Digital commerce grew by 1 percentage point vs. Q2, suggesting an acceleration in growth.

• Consumer sentiment continues to improve, providing some tailwind for an all-important Q4, but

economic concerns remain

• Negative economic sentiment hit 5-year low while -4 points vs. Q2 2014. But, 31% still rate economic conditions as poor.

• Lower gas prices driving declining concern about price inflation, while concern about jobs also declines. Nonetheless, under-

employment and lack of wage growth remain problematic. Concern about volatility in stock market increasing.

• Free shipping continues to grow in importance hitting an all-time non-Q4 high in Q3 at 68%, suggesting still a need for deals.

• 2014 Holiday Season outlook calls for cautious optimism but short calendar could be a drag

• Official comScore forecast of 16% Nov-Dec holiday growth to $61 Billion. Desktop +14% and Mobile +25%.

• Overall spending may still be held back from potential because of short calendar, but y/y comps are favorable for growth rates.

• Mobile expected to account for largest ever share of e-commerce spending at 13%, but mobile even more important to shopping

than it is to buying.

• Keep an eye on the 5 S’s: Retailers who adopt and execute the best strategies to deal with these issues will come out ahead.

State of the U.S. Online Retail Economy in Q3 2014

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