preparing for the 2015 holiday shopping season
TRANSCRIPT
Preparing for the 2015 Holiday
Shopping Season Key online shopping trends and best practices
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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
#IBMBenchmark @smulpuru @leahpaschall
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
#IBMBenchmark @smulpuru @leahpaschall
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
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 6
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
#IBMBenchmark @smulpuru @leahpaschall
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
#IBMBenchmark @smulpuru @leahpaschall
Customer Analytics 7 www.ibm.com/benchmark
Consumer attention continues to decline
#IBMBenchmark @smulpuru @leahpaschall
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
#IBMBenchmark @smulpuru @leahpaschall
Customer Analytics www.ibm.com/benchmark
Source: IBM Digital Analytics Benchmark
Key holiday shopping
days in 2014
Shopping season is elongating
• 12.6% YoY sales Thanksgiving through Cyber Monday
11 Customer Analytics
#IBMBenchmark @smulpuru @leahpaschall
www.ibm.com/benchmark
Source: IBM Digital Analytics Benchmark
© 2015 Forrester Research, Inc. Reproduction Prohibited 12
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
#IBMBenchmark @smulpuru @leahpaschall
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
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#IBMBenchmark @smulpuru @leahpaschall
Customer Analytics 13 www.ibm.com/benchmark
Source: IBM Digital Analytics Benchmark
14 Customer Analytics
• Direct Load, Marketing, Paid Search yield highest rates
#IBMBenchmark @smulpuru @leahpaschall
www.ibm.com/benchmark
Source: IBM Digital Analytics Benchmark
Cyber Monday had the highest
conversion across all channels
15 Customer Analytics
Cyber Monday had the best engagement
• Highest average session length, page views, new visitor
conversion rate and lowest bounce rate
#IBMBenchmark @smulpuru @leahpaschall
www.ibm.com/benchmark
Source: IBM Digital Analytics Benchmark
© 2015 Forrester Research, Inc. Reproduction Prohibited 16
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
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 17
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
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 18
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
#IBMBenchmark @smulpuru @leahpaschall
Screen size and the
mobile rise
Larger screens have better buying and
engagement metrics…..
20 Customer Analytics
$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
#IBMBenchmark @smulpuru @leahpaschall
www.ibm.com/benchmark
Source: IBM Digital Analytics Benchmark – U.S. Retail
21 Customer Analytics
#IBMBenchmark @smulpuru @leahpaschall
www.ibm.com/benchmark
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
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• 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
#IBMBenchmark @smulpuru @leahpaschall
Customer Analytics www.ibm.com/benchmark
Source: IBM Digital Analytics Benchmark
Mobile Use By Country: Australia, US, UK
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0%
10%
20%
30%
AU Click Frenzy UK Cyber Monday US Cyber Monday
Mobile Percentage of Sales 2014
Tablets Smartphones
AU, UK, US IBM Digital Analytics Benchmark
0%
10%
20%
30%
40%
AU Click Frenzy UK Cyber Monday US Cyber Monday
Mobile Percentage of Traffic 2014
Tablets Smartphones
AU, UK, US IBM Digital Analytics Benchmark
Tablets
to buy
Smartphones
to browse
#IBMBenchmark @smulpuru @leahpaschall
Customer Analytics www.ibm.com/benchmark
Source: IBM Digital Analytics Benchmark
However, smartphone traffic is
increasing while tablet traffic remains
steady…
24 Customer Analytics
#IBMBenchmark @smulpuru @leahpaschall
www.ibm.com/benchmark
Source: IBM Digital Analytics Benchmark – U.S. Retail
…And smartphones are gaining ground
on tablets in making the purchase
25 Customer Analytics
#IBMBenchmark @smulpuru @leahpaschall
www.ibm.com/benchmark
Source: IBM Digital Analytics Benchmark – U.S. Retail
5 Themes for 2015
© 2015 Forrester Research, Inc. Reproduction Prohibited 27
Themes
1. The Omnichannel Octopus
2. Middle-of-the-Road Mobile
3. Short-lived Security Splurges
4. Payments Paralysis
5. Dumping “Big Data”
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 28
Key merchant priorities in 2015
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 29
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
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 30
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
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 31
Themes
1. The Omnichannel Octopus
2. Middle-of-the-Road Mobile
3. Short-lived Security Splurges
4. Payments Paralysis
5. Dumping “Big Data”
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 32
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)
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 33
Responsive design trumps apps
Base: 52 online retailers
Source: “The State Of Retailing Online,” a Shop.org study conducted by Forrester Research
“Which of the following best describe your company’s smartphone and tablet
device presence? (Select all that apply)”
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 34
So spend is still modest
Base: 51 online retailers
Source: “The State Of Retailing Online,” a Shop.org study conducted by Forrester Research
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
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 35
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
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 36
Themes
1. The Omnichannel Octopus
2. Middle-of-the-Road Mobile
3. Short-lived Security Splurges
4. Payments Paralysis
5. Dumping “Big Data”
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 37
Data security is a top concern
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 38
Security breaches are bad…but not insurmountable…
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 39
…and they’re not nearly as bad as bad business execution
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 40
CIOs focusing on data security is more like this…
DATA BREACH
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 41
That said, EMV migrations will be the thing to watch in the fall
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 42
Themes
1. The Omnichannel Octopus
2. Middle-of-the-Road Mobile
3. Short-lived Security Splurges
4. Payments Paralysis
5. Dumping “Big Data”
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 43
Mobile growth is creating hype around the payments space
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 44
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
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 45
Lots of players are fighting for a relatively small pie
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 46
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
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 47
Themes
1. The Omnichannel Octopus
2. Middle-of-the-Road Mobile
3. Short-lived Security Splurges
4. Payments Paralysis
5. Dumping “Big Data”
#IBMBenchmark @smulpuru @leahpaschall
© 2014 Forrester Research, Inc. Reproduction Prohibited 48
Big Data - The practices and
technology that close the gap
between the data available and
the ability to turn that data into
business insight.
#IBMBenchmark @smulpuru @leahpaschall
The Key Is Incremental Impact
Photo source: http://iphone.sys-con.com/node/2411901
© 2015 Forrester Research, Inc. Reproduction Prohibited 50
TechRadar™: Retail Analytics, 2014
#IBMBenchmark @smulpuru @leahpaschall
Make the holiday
season profitable
© 2015 Forrester Research, Inc. Reproduction Prohibited 52
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
#IBMBenchmark @smulpuru @leahpaschall
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.
Customer Analytics www.ibm.com/benchmark
#IBMBenchmark @smulpuru @leahpaschall
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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
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One stop shop for analysis,
product information and best
practice guides
#IBMBenchmark @smulpuru @leahpaschall
Customer Analytics 55 www.ibm.com/benchmark
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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
Customer Analytics www.ibm.com/benchmark
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Questions? www.ibm.com/benchmark
Sucharita Mulpuru Principal Analyst Forrester @smulpuru
Leah Paschall IBM Digital Analytics Benchmark Lead IBM ExperienceOne @leahpaschall
#IBMBenchmark @smulpuru @leahpaschall
Customer Analytics ©2015 IBM Corporation 57