IBM Online Retail Holiday Shopping Recap and 2014 Outlook

© 2014 IBM Corporation 1

Holiday Recap and

2014 Outlook


Today’s presenters

Sucharita Mulpuru Principal Analyst

Forrester

@smulpuru

Jay Henderson Strategy Director,

Enterprise Marketing Management

@jay_henderson

#SmarterCommerce @smulpuru @jay_henderson


Agenda

› 2013 Recap

› Key US dates and trend

› Views from around the globe

› Shopper behavior

› Insights for 2014



Compare performance against industry peers with

IBM Digital Analytics Benchmark

Over 3,000 sites participated

Aggregate index

Compare against industry

Compare against peers

Geographic coverage

US, UK, AU, Europe, World Wide

Industry specific

Retail

Content

Financial Services

Travel

Segment specific

Apparel

Department Stores

Health and Beauty

And 12 others. . .



Wide range of free holiday benchmark resources available

Benchmark Reporting

Reports pulled on key dates and within key

date ranges for intra-day, DtD, WtW and YtY

comparisons

Key Messages, Graphs and Tables included

in outputs including Press Alerts, Releases

and Reports

US Retail & Retail sub-verticals

Black Friday, Cyber Monday Reports

UK Retail

Nov 25 Mega Monday

Dec 2 Cyber Monday

AU Retail

Nov 19-20 Click Frenzy

For all three countries

Post-Christmas

Holiday Recap Reports

www.ibm.com/benchmark



Thanksgiving Day had a dramatic spike starting at 5 PM PST as

stores began early Black Friday promotions

19.7% increase in online retail sales Thanksgiving Day 2013 over last year

Source: IBM Digital Analytics Benchmark



While Thanksgiving continues its growth year over year, Black

Friday still delivers considerably higher sales.

18.9% increase in online retail sales Black Friday 2013 over last year




Cyber Monday continues to be the biggest online shopping day of

the year


20.6% increase in online retail sales Cyber Monday 2013 over last year



Mobile shopping soars

As a percentage of all online traffic and sales, Thanksgiving was the highest at 42.6% and

25.8%, respectively

However, Cyber Monday saw the most growth year over year with increases of 44.9% and

55.4% for percentage traffic and sales, respectively




Smartphones to Browse, Tablets to Buy




Retailers “Push” Promotions to Mobile Shoppers


Thanksgiving Day and Black Friday

On average, retailers sent 37 percent more push notifications during the two

day period of Thanksgiving Day and Black Friday – when compared to daily

averages over the past two months.

Average daily retail app installations also grew by 23 percent using the same

comparison.

Retailers sent more notifications on Thanksgiving Day than Black Friday.

Cyber Monday

On average, retailers sent 77 percent more push notifications –– when

compared to daily averages over the past two months.

Average daily retail app installations grew by 29 percent using the same

comparison.



Agenda

› 2013 Recap







Around the globe….

Online sales increased by 31.6% compared to the same Monday in 2012 with mobile percent of sales growing by 94%, exceeding 33% of all online sales

Australia’s Click Frenzy – November 19 – 20, 2013

Online sales increased by 16.3% compared to the same Monday in 2012 with mobile percent of sales growing by 43%, exceeding 17.7% of all online sales

UK Cyber Monday- December 2, 2013




Mobile traffic and sales have reached a tipping point…across the

globe




Smartphone to brows, tablets to buy….

Source: IBM Digital

Analytics Benchmark



Agenda

› 2013 Recap






© 2013 Forrester Research, Inc. Reproduction Prohibited 17

Early November was strong




The myth of holiday shopping is that it’s about gifts

Who were you shopping for today?

Pre-Thanksgiving Thanksgiving CyberMonday CyberWeek

Base: online consumers who purchased online during the given timeframe

Source: Bizrate Insights/Forrester Holiday Flash Survey, 2013

56%

42%

8%

4%

Myself

Gifts for others

Non-gifts forothers

Business

53%

52%

7%

3%

49%

57%

6%

4%

44%

56%

7%

4%



This could explain the soft early December




17%

13%

I love deals! Themore, the merrier

I will only buy if Ihave a sale, deal or

promotion

24%

20%

23%

22%

22%

17%

Which of the following best characterizes your feelings about online deals, promotions, and specials around the holidays?



Deals were often the same on key dates…

CyberMonday 2012 CyberMonday 2013



…in some cases there were higher hurdles



Disproportionate volume occurs toward the end of the holiday season

Timeframe Total days

Percent of

online sales

during peak

2012-2013

growth

Pre-11/25 24 26% 25%

11/25-12/7

(Thanksgiving, Cyber

Week)

13 25% 15%

12/8-12/24 17 40% 15%

Post 12/24 7 9% 10%

Average daily eCommerce package volume (non-peak): 7MM

Average daily eCommerce package volume (peak): 46MM


Web shoppers continue to abandon stores during key time periods




69%

83%

I shopped in storesless because Ishopped online

instead

I prefer to shop onlinerather than go tocrowded stores

during Thanksgivingweekend

79%

87%

75%

82%

65%

81%

% agreeing with statement



Agenda

› 2013 Recap







1. The last mile wars are just beginning

Timeframe Offer 2011 2012 2013

Pre-Thanksgiving

Free shipping no threshold 20% 20% 32%

Free shipping with threshold 25% 23% 18%

Thanksgiving

Weekend



Cyber Monday



Cyber Week



Source: Bizrate Insights/Forrester Holiday Flash studies

Which types of deals did you take advantage of for today’s purchase?

Base: recent online buyers



But the postal service is in dire straits

$0.90

$(15.10)

$(21.30)

2006 2014 (F)* 2016 (F)

* Includes retirement benefits pre-funding requirement

Source: USPS

Net Income/Loss for USPS in US$B



It is hard to match the postal service

Major carriers Regional upstarts



What happens next is well-documented



Cost reduction is already in motion

Early retirement packages

Retail shared with other stores

Clustered delivery boxes

Fewer delivery days

√

√

?

?



Cost increases for parcels are one of the only levers

Revenue

source

This

means… Elastic? Profitable?

First class Envelopes Not so much Very

Business

delivery

Catalogs,

magazines Very Not so much

Parcels eCommerce

shipments Not so much Very



Add to that, holiday crunches



Omnichannel is now an imperative



2. Mobile madness maddens

8% 5% 9% 8% 9% 10% 8% 3% 13% 7% 8%

13% 14% 12% 13% 14% 13% 15%

8%

15% 12% 13%

79% 81% 79% 79% 77% 77% 77% 89%

72% 81% 79%

Average <$25MM $25-100MM $100MM Store-basedretailer

Pureplay Manufacturer Catalog andother

multichannel

<4 years old 4-10 yearsold

>10 years

Smartphone Tablet Other Web (e.g. PC)

% of web revenue transacted on each device

Source: The State of Retailing Online 2014: Key Metrics



Top eCommerce priority in 2014: mobile

3%

3%

4%

14%

14%

19%

19%

26%

36%

46%

53%

Customer service

Social

Fulfillment

Merchandising improvements

International expansion

Checkout overhaul

Replatform

Omnichannel efforts

Marketing

Site overhaul

Mobile

Examples/Definitions

Responsive design, mobile site optimization, tablet redesign

Redesign (not specific to responsive design), personalization, site

usability, content management system integration, taxonomy

improvements

Brand marketing, search optimization, customer acquisition,

loyalty and CRM

In-store pickup, order management system overhaul

New platform integration, site performance

Alternative payments, checkout optimization

Growth to key markets like BRIC

Videos, on-site selection improvement, enhancing marketplace

and drop ship capabilities

Speed to ship packages, order visibility

Integration with Instagram and Pinterest

Integration of live chat

Source: The State of Retailing Online 2014: Key Metrics



Mobile investments are often still modest



This is a classic first mover dilemma

Source: The Half-Truth of First Mover Advantage, HBR 2005

Pace of market

evolution

Pace of technology

evolution

Faster

Faster

Rough

waters

1st mover

wins Calm waters

Loser box

Mobile today



Here are some of the early winners



3. EDLP dies…because the web always has a lower price

35% use phones to research

prices IN STORES

35% of showroomers use

search to compare prices

32% of showroomers find it

easy vs 11% who find it difficult

37% of showroomers plan to

reesarch prices more on their

mobile devices in the future

Source: Forrester Life Cycle Survey, Q1 2013: Forrester-Aprimo Research



The store “premium” isn’t large

How much more would you consider paying to purchase a product in a physical store rather than buying

it online so that you could have the product immediately rather than wait for it to be shipped to you?

52%

18%

6%

4%

4%

3%

1-5% higher in store





More than 25% higher in store

Source: Forrester Life Cycle Survey, Q1 2013



For commodities, this type of price difference gets tougher

Source: 360pi



Summary of Insights for 2014

› There probably won’t be a reprieve in shipping expenses, but omnichannel investments can insulate retailers from unwelcome suprises

› We are just beginning to see “mobile unique” solutions; if you can create one, you will amplify your mobile success

› Dynamic pricing is here to stay and will become standard for the most commoditized categories; ultimately, merchandising strategies change a lot



Customers know more

Customers demand more

Your business expects more

Marketing must re-imagine its role



It’s awfully hard to re-imagine customer engagement when the

technology infrastructure looks like this…

Customer Database

Files

Files

Files

Web Analytics Provider

Website Behavioral Targeting

Product & Content

Recos

Customer Insight Tool

Predictive Analytics

Email Service Provider

Data

warehouse

Files

Marketing Finance Mgmt

Digital Asset Mgmt

Call Center / Inbound Decisioning

Marketing Operations

Management

Lead Management

SMS Marketing

Files

Local Marketing

Mobile Push Notifications

Mobile Marketing

Files

Files

Files

Social Marketing

App/Widget Creation

Campaign Management

Files

Contact Optimization

Transactions

Search Bid Management

SEO

Files

Marketing Mix Modeling



A modular solution - so

you only have to buy and adopt what you need, that you can

expand over time

Choosing the right technology for marketing

Preferably an integrated

suite that has multiple

entry points

Open solution so you can

integrate it into your

existing infrastructure



Understand Engage

Optimize

IBM Marketing and Merchandising solutions empower clients to

understand and engage customers in context across channels



Digital Marketers

Merchandisers Marketers eCommerce Professionals

Customer Service

IBM Marketing and Merchandising solutions empower clients to

understand and engage customers across departments



IBM continues to build out an industry leading portfolio of technologies

Digital Marketers

Merchandisers Marketers eCommerce Professionals

Customer Service

Omni-Channel Marketing Omni-Channel

Commerce

Omni-Channel

Merchandise

Optimization

Customer

Experience for

Service

& Digital Marketing

Customer Analytics

Real-time Personalization



IBM continues to build out an industry leading portfolio of technologies

to enable retailers

50


http://www.initiate.com/


Additional holiday benchmark analysis & best practice guides



http://www.ibm.com/benchmark


Questions?

Sucharita Mulpuru Principal Analyst

Forrester

@smulpuru

Jay Henderson Strategy Director,

IBM, Enterprise Marketing

@jay_henderson



http://www.ibm.com/benchmark

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IBM Online Retail Holiday Shopping Recap and 2014 Outlook

Technology

Transcript of IBM Online Retail Holiday Shopping Recap and 2014 Outlook