eMarketer Webinar: Retail Ecommerce Outlook—Tallying the True Impact of Digital

©2014 eMarketer Inc.

May 1, 2014

Retail Ecommerce

Outlook—Tallying The

True Impact of Digital

Sponsored by

Presented by:

Yory Wurmser

eMarketer, Inc.


Agenda

eMarketer’s 2014 ecommerce forecast

– Overall pace of growth

– Sector-by-sector details

Convergence of online and offline shopping

– How digital influences brick-and-mortar

– Lessons from offline for digital retail

Role of mobile devices in ecommerce

– Smartphones

– Tablets

Twitter Hashtag – #eMwebinar


eMarketer’s Ecommerce

Forecast for 2014


Ecommerce: Rapid growth in sales and in

share of total retail revenue in 2014


Ecommerce sales growth will more than

triple growth in retail overall …


15.5%

4.4%

Ecommerce Retail Overall


… but sales in traditional retail still will

dwarf ecommerce sales in 2014


Sales

Traditional Retail Ecommerce

$4.43 Trillion

$0.30 Trillion


Recap: Ecommerce will grow quickly in

2014

• Sales reach $304 billion• 15.5% increase from 2013 • 6.4% of overall retail sales


Retail sales are still trying to pick up speed

following great recession


Retail still hasn’t recovered to

prerecession levels as a percent of GDP

• Reached 27.6%

in 2007

• Fell to 25.2% in

2009 at trough

• Back to 27.0% in

2013



Consumer spending is influenced by

conflicting forces

Upward

• Improving

consumer

confidence

• Lower debt

• Low interest

rates

• Pent-up

demand

Downward

• Flat real

income

• High

unemployment

• Harsh winter



One other ‘upward’ pressure: ecommerce

itself


One other ‘upward’ pressure: ecommerce

itself

1. The growth of ‘long-tail’ sales

2. The impact of international

sales from US ecommerce sites

3. The power of information to

overcome consumer reluctance



1. The long tail enabled by ecommerce

marketplaces

Source: Chris Anderson, www.thelongtail.com


2. International sales

7%OC&C Strategy Consultants


3. The power of information online

“[Consumers] don’t want to be

wrong. … So, a productive

thought process for the

retailer can be, ‘How can I

help them to feel more

assured in their choice?’”

— Karen Leitze, Executive Vice

President, Director of Research and

Strategy

MARC USA

http://sharepoint.emarketer.com/sites/interviews/Photos Originals/Leitze_Karen.jpg

http://sharepoint.emarketer.com/sites/interviews/Photos Originals/Leitze_Karen.jpg


Unpacking ecommerce: Retail sectors

deploy ecommerce differently


Clipart from www.clipartbest.com


Ecommerce by sector: Size tells only part

of the story

2014 Sales Ecommerce

(eMarketer) penetration*

Consumer electronics $66.4B 28%−44%

Apparel & accessories $50.2B 11%

*comScore & NPD Group


Biggest impact of ecommerce in

sectors characterized by:

Commodities

Easy storage

Easy delivery



Sectors with biggest ecommerce

growth in 2014

Books/Video/Music: 17.0%

Apparel & Accessories: 16.2%

Auto & Parts: 15.9%

Consumer Electronics: 15.8%


Focus on apparel: Why the lag and now

the growth?

• Low penetration

• Comfort in

returns

• Better online

experience



Focus on groceries: Big players join fray …


… while consumers gain comfort with

mobile shopping in supermarkets


Convergence of Online

and Offline Shopping


Impact of digital much bigger than

ecommerce sales

“The total impact of digital on

the retail enterprise today

[extends to] the majority of

retail sales.”

— Michael Burgess, President of

HBC Digital


Most US shoppers are digital shoppers

and buyers

• Nearly 90% of

219.4 million

internet users

shop online

• Nearly three-

quarters buy

online


Webrooming and showrooming: a two-way

street


Consumers shop on desktops, mobile and

stores as part of a single shopping

experience



Shift in focus from channel-specific

sales to overall sales

“Among multichannel retailers

… their interest in digital is

increasingly focused on

driving customers and

shoppers into their store

locations.”

— Scott Falzone, Industry Director

of Retail Specialty


CASE:

• Map to guide in-store

shopping

• Purchase history

• Clienteling app

• Click to collect



Multichannel retailers need to gauge

the total effect of ecommerce

“I truly don’t care if shoppers

end up buying online or in-

store.”

— Gihad Jawhar, Vice President, Customer

Interface



Ecommerce Teaching Brick-and-Mortar

Some Lessons


Stores finding equivalents to web

analytics

Web

• Cookie

• Heat map

• Traffic source

• Shopping carts


Store

• Loyalty number

• Foot traffic

• MAC address

• Location-tracking


In-store messaging personalized at-scale

• Apps with scanners

• Mobile CRM

• Beacons



Ecommerce can also learn from brick-

and-mortar


Clipart from 4vector.com


Digital is a less free-flowing shopping

experience than is in-store

“You’re trying to catch lightning

in a bottle by relying on digital to

drive your market product.”

— Marshal Cohen, Chief Industry Analyst,

NPD Group



The Role of Mobile

Devices


US retail mcommerce in 2014

• $57.8 billion in sales

• Up 37.2% from 2013

• 19.0% of ecommerce sales

• 1.2% of total retail sales



Tablets generate far higher on-device

sales

2/3of mcommerce

sales in 2014

will come

via tablets


Growth in tablet sales will outpace

growth in smartphone sales through 2018


266%

134%


Corollary: Smartphone share of

mcommerce is decreasing



Mobile Is Becoming a Ubiquitous Part of

Shopping

“Retailers increasingly see consumers as not only

being always on, but also on the go.”

Scott Falzone, Industry Director of Retail Specialty

Google


Mobile shoppers in 2014 make up 73.7%

of digital shoppers


110.9 million124.8

million• 144.8 million total

• Up 16% from 2013


Smartphone shoppers outnumber tablet

shoppers


110.9 million124.8

million110.9 million


Knowing the Role of Devices

Tablets

• At home

• Extended

research

• General buying

Smartphones

• Everywhere

• Quick research

• Last-minute

buying


Mcommerce is biting into desktop’s share

of traffic and revenue


Percent change in US apparel and accessories retail ecommerce,

Q3 2012 & Q3 2013

Traffic RevenueDesktop 19.8% 7.9%Smartphone 58.5% 66.4%Tablet 49.0% 60.8%

Source: MarketLive, “Q3 2013 Performance Index”


Three implications for retailers trying to

maximize impact of mobile shopping

1. Understanding use cases is

crucial for strategy

2. Small screen size demands

simplicity of design

3. Curation is vital for

merchandising


Implication No. 1: Understanding

Use cases is crucial for strategy


Implication No. 2: Small screen size

demands simplicity of design

“The smartphone is just not going to work

the same way as your stores. You can

show me thousands of products in your

store. You can only show me five on the

phone. So there is a mechanical,

mathematical kind of compression effect

between the two that is going to disrupt

the way business is done.”

--Nicolas Franchet, Head of Retail and Ecommerce,

Global Vertical Strategy


Implication No. 3: Simpler smartphone

interfaces raise importance of curation via…

– Algorithms

– Friends

– Shopper

recommendations

– Tastemakers



Takeaways

2014 will be another year of rapid growth in

ecommerce sales

Sales are only a partial measure of

ecommerce, which may influence the majority

of sales

The brick-and-mortar and ecommerce shopping

experiences are converging, making a singular

strategy important

Mobile is taking on a bigger role, with tablets

becoming digital catalogs and phones

becoming omnipresent research tools.


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› RMN SHOWCASE:

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American Eagle’s

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Home Depot’s Spring

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You will receive an email tomorrow with a link to

view the deck and webinar recording.

Q&A Session

Retail Ecommerce

Outlook—Tallying the

True Impact of Digital

Around 200 eMarketer reports are published

each year. Here are some recent ones you

may be interested in:

Proximity Marketing in Retail: Can Ecommerce Tactics

Revive Brick-and-Mortar?

Shopping Cart Abandonment: How Retailers Are Using

the Metric to Drive Better Results

Supermarkets and Mobile: Satisfying Grocery

Shoppers’ Appetites

The State of Omnichannel Retail: Retailers Playing

Catch-Up with Consumers

Tablets and Apparel: Fashioning a Role in Mobile

Commerce

Key Digital Trends for 2014

Learn more about digital

marketing with an eMarketer

corporate subscription

To learn more: www.emarketer.com/corporate

800-405-0844 or [email protected]

Sponsored by

Yory Wurmser

eMarketer Webinar: Retail Ecommerce Outlook—Tallying the True Impact of Digital

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Transcript of eMarketer Webinar: Retail Ecommerce Outlook—Tallying the True Impact of Digital