R E S T O R A T I O N H A R D W A R E D I G I TA L A N A LY S T A S S I G N M E N T

D I G I TA L R E TA I L 4 0 7 0

C H R I S T O P H E R G A R C I A , M A D I S O N T H A I N , M A D I S O N W O L F E , W E S L I E C E N T E N O , I R I S L E

O V E R V I E W

The Problem • Reduce marketing spending • Cut Inventory

Negative Sales Growth

End Goal • Increases sales back to positive growth rate • Reach $662 million in item sales for 2016.

2 0 1 2 - 2 0 1 5 A T A G L A N C E

U N I Q U E V I S I TO R S

0

37,500,000

75,000,000

112,500,000

150,000,000

2012

2013

2014

2015

Unique VistorsTrending

U N I Q U E B U Y E R S

0

1,500,000

3,000,000

4,500,000

6,000,000

2012

2013

2014

2015

Unique BuyersTrending

S A L E S

$200,000,000

$400,000,000

$600,000,000

$800,000,000

2012 2013 2014 2015 2016

Fiscal Year

Trending

S E S S I O N S V S . D I R E C T S E S S I O N S

0

60,000,000

120,000,000

180,000,000

240,000,000

2012

2013

2014

2015

SessionsDirect Load Sessions

B O U N C E R AT E

0%

6%

12%

18%

24%

2012

2013

2014

2015

Fiscal Year

18.9%20.9%

23.8%21.7%

Product Page View Increased • Review Product Page • Up Sell / Cross Sell • Perform Usability Testing

Unique Visitors To Site Increased • Identify traffic sources using tracking URL

Abandonment Rate • Lengthy checkout process (Evaluate time spent on site) • Cumbersome • Lack of Promotions - Nothing to excite customers to complete purchases.

Are customers coming back to complete purchases after a 24 hour period? How are customers behaving during seasons? Do we have seasonal promotions?

Are Newsletters Effected By Reduced Marketing Budget • Customers who receive email newsletters spend 82% more when they buy from the

company. (iContact)

N E W M E T R I C S C A L C U L A T E D

AV E R A G E U N I T R E TA I L

$26.00

$27.50

$29.00

$30.50

$32.00

2012

2013

2014

2015

Fiscal Year

$31.88

$28.75

$27.53

$26.60

AV E R A G E O R D E R VA L U E

$80.00

$87.50

$95.00

$102.50

$110.00

2012

2013

2014

2015

Fiscal Year

$103.10

$95.29

$91.60

$88.18

C O N V E R S I O N R AT E %

0%

1%

3%

4%

5%

2012

2013

2014

2015

Fiscal Year

4.22% 4.20%

3.02%

2.21%

$ / V I S I T

$0.00

$1.25

$2.50

$3.75

$5.00

2012

2013

2014

2015

Fiscal Year

$4.35$4.00

$2.77

$1.95

Year Sessions Direct Load Sessions Bounce Rate Unique Visitors Unique Buyers Sales Items Ordered Orders AUR AOV Conversion Rate $/Visit Product Page Views Abandonment Rate

2012 155,959,661 78,620,284 18.9% 97,067,073 4,792,221 $ 678,649,665 21,288,222 6,582,402 $31.88 $103.10 4.22% 4.35 410,011,875 69.6%

2013 179,274,970 89,034,041 20.9% 112,219,244 5,420,176 $ 717,109,805 24,940,782 7,525,855 $28.75 $95.29 4.20% 4.00 419,178,780 70.2%

2014 239,445,842 117,204,128 23.8% 143,995,412 5,999,375 $ 662,606,666 24,071,754 7,233,364 $27.53 $91.60 3.02% 2.77 585,012,226 74.6%

2015 236,032,975 112,887,345 21.7% 140,004,898 4,332,728 $ 460,044,428 17,296,216 5,216,403 $26.60 $88.19 2.21% 1.95 706,678,073 77.8%

2016 339,651,451 162,444,889 20.5% 201,467,048 6,234,796 $ 662,000,000 24,889,255 7,506,520 $26.60 $88.19 2.21% 1.95 600,000 73.5%

1.439 or 143% increase

1.2 orders per unique vistor on average

*Product page views has increased by 121,665,847 YOY

$201,955,572Needed to make goal of $662 million

With average order at $88.19 we need approximately 2,290,005 more orders. Bounce rate has decreased YOY, meaning other metrics will have to be focused on to increase orders.

S I G N A L I N G T H E R O O T F O R D E C L I N E

P R O D U C T PA G E V I E W S

0

200,000,000

400,000,000

600,000,000

800,000,000

2012

2013

2014

2015

Fiscal Year

410,011,857 419,178,780

585,012,226

706,678,073

A B A N D O N M E N T R AT E

68%

71%

74%

76%

79%

2012

2013

2014

2015

Fiscal Year

69.6%70.2%

74.6%

77.8%

• Increased Product Page Views by approx. 121 million.

• Possibly looking for other items to purchase on site due to items being out of stock.

• Abandonment rate is increasing YOY.

• However, Bounce Rate is falling meaning consumer has (intent to purchase.)

Possible Causation: Low Inventory Turnover Rate / Buying Levels Are Too Low

Declining Customer Service Score

B O U N C E R AT E

2014

2015

23.8%

21.7%

Assuming there is increased traffic, our customer is still coming back meaning customer loyalty is strong. This is our 2nd chance to increase retention amongst new consumers.

We should: ‣ Leverage this traffic to convert unique visitors into unique buyers. There is promise here seeing as unique buyers from 2012-14’ has seen an increase by ~1.2 million or 125%

We do this by: • Increasing inventory levels by using 2013 as our POR.

* 2013 accounted for the highest orders placed and sales revenue.

This will result in: • Consumer confidence • Ability to purchase desired items / Less Browse Time • Opportunity to capitalize on consumer buying intent.

S T R A T E G Y 1

“Decrease in inventory level for a retailer may result in lower service level in some cases. In such cases, the impact on

future profitability would depend on the trade-off between the benefit of having lower inventory levels and the cost of

decline in service levels.” (ChicagoBooth)

Year Sessions Direct Load Bounce Rate

Unique Visitors Unique Buyers Sales Items Ordered Orders AUR AOV Conversion Rate

$/Visit Product Page Views Abandonment Rate

2 0 1 3 1 7 9 , 2 7 4 , 9 7 0 8 9 , 0 3 4 , 0 4 1 2 0 . 9 % 1 1 2 , 2 1 9 , 2 4 4 5 , 4 2 0 , 1 7 6 $ 7 1 7 , 1 0 9 , 8 0 5 2 4 , 9 4 0 , 7 8 2 7 , 5 2 5 , 8 5 5 2 8 . 7 5 9 5 . 2 9 4 . 2 0 % 4 . 0 0 4 1 9 , 1 7 8 , 7 8 0 7 0 . 2 %

2 0 1 4 2 3 9 , 4 4 5 , 8 4 2 1 1 7 , 2 0 4 , 1 2 8 2 3 . 8 % 1 4 3 , 9 9 5 , 4 1 2 5 , 9 9 9 , 3 7 5 $ 6 6 2 , 6 0 6 , 6 6 6 2 4 , 0 7 1 , 7 5 4 7 , 2 3 3 , 3 6 4 2 7 . 5 3 9 1 . 6 0 3 . 0 2 % 2 . 7 7 5 8 5 , 0 1 2 , 2 2 6 7 4 . 6 %

2 0 1 5 2 3 6 , 0 3 2 , 9 7 5 1 1 2 , 8 8 7 , 3 4 5 2 1 . 7 % 1 4 0 , 0 0 4 , 8 9 8 4 , 3 3 2 , 7 2 8 $ 4 6 0 , 0 4 4 , 4 2 8 1 7 , 2 9 6 , 2 1 6 5 , 2 1 6 , 4 0 3 2 6 . 6 0 8 8 . 1 9 2 . 2 1 % 1 . 9 5 7 0 6 , 6 7 8 , 0 7 3 7 7 . 8 %

Restoring Marketing Practices

We aim to: ‣ Rebuild ROI ‣ Understand the consumer’s decision journey for purchasing product as well expected service quality ‣ Shed light on what marketing program are profitable (Tracking URLS)

This discussion should be had with every aspect of the organization during marketing planning meetings and not limited to the marketing team exclusively. This is especially true for CPG to ensure that the value of these established relationships with our customer is sustained as we continue to scale.

Review: • Customer Comments/FAQ • Data Review • Industry Buzz

Effects: Purchasing, Allocation,

S T R A T E G Y 2

“Marketing and sales leaders need to develop complete pictures of their customers so they can create messages and products that are relevant to them. Our research shows that personalization can deliver five to eight times the ROI on marketing spend and lift sales 10 percent or more” (Forbes)

SAVE UP TO 30% ON HUNDREDS OF HOLIDAY GIFTS

HOLIDAY DECOR

K E Y D R I V E R S / M E T R I C S T O C O N S I D E R

Bounce Rate • Rate decreases: Marketing strategy is successful which we can use to support our findings. • Rate increases: We will need to reevaluate which metrics to consider moving forward seeing as this is reason to believe there is oversight on our part.

Unique Buyers • If this metric increases it is indicative of our conversion rate increasing, this can be attributed to a successful promotional strategy or adequate buying levels that drives consumers to checkout.

Abandonment Rate • We hope to see a noticeable decrease in percentage (~5%) of cart abandonment once we roll out our A|B testing for offers at checkout as well as popups on homepage.

Conversion Rate • We hope that conversion rate will increase with the added traffic however we will have to monitor this portion with each quarter to see how our customers are behaving.

F O R C O N S I D E R A T I O N …

•Time On Site

•Visitor Recency

•Traffic/Traffic Sources

•Customer Demographics

•Value Per Visit (VPV)

•Cost Per Visit (CPV)

U N I Q U E V I S I TO R S

0

55,000,000

110,000,000

165,000,000

220,000,000

2012

2013

2014

2015

2016

Unique VistorsTrending

U N I Q U E B U Y E R S

0

1,750,000

3,500,000

5,250,000

7,000,000

2012

2013

2014

2015

2016

Unique BuyersTrending

S A L E S

$0

$200,000,000

$400,000,000

$600,000,000

$800,000,000

2012 2013 2014 2015 2016

Fiscal Year

Trending

S E S S I O N S V S . D I R E C T S E S S I O N S

0

100,000,000

200,000,000

300,000,000

400,000,000

2012

2013

2014

2015

2016

SessionsDirect Load Sessions

B O U N C E R AT E

0%

6%

12%

18%

24%

2012

2013

2014

2015

2016

Fiscal Year

18.9%20.9%

23.8%21.7%

23.8%

P R O J E C T E D I N C R E A S E F O R 2 0 1 6

Year Sessions Direct Load Bounce Rate

Unique Visitors Unique Buyers Sales Items Ordered Orders AUR AOV Conversion Rate

$/Visit Product Page Views Abandonment Rate

2 0 1 6 1 7 9 , 2 7 4 , 9 7 0 8 9 , 0 3 4 , 0 4 1 2 0 . 9 % 1 1 2 , 2 1 9 , 2 4 4 5 , 4 2 0 , 1 7 6 $ 7 1 7 , 1 0 9 , 8 0 5 2 4 , 9 4 0 , 7 8 2 7 , 5 2 5 , 8 5 5 2 8 . 7 5 9 5 . 2 9 4 . 2 0 % 4 . 0 0 4 1 9 , 1 7 8 , 7 8 0 7 0 . 2 %

Projected Data for 2016

QUESTIONS?