IBM Benchmark's 2015 Holiday Readiness Webinar

transcript

Preparing for the 2015 Holiday

Shopping SeasonKey online shopping trends and best practices

Today’s presenters

Sucharita MulpuruPrincipal Analyst

Forrester

@smulpuru

Leah PaschallIBM 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

Customer Analytics

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

• 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

Customer Analytics 4

Source: Forrester Research Web-Influenced Retail Sales Forecast, 2013 To 2018 (US)

US eCommerce will top $300MM in 2015

Categories are shifting a lot

Share of top 3 online categories as a % of eCommerce

2000 2015 2018

35% 36%

PCs, consumer electronics, apparel &

accessories

PCs, books, peripherals

Consumer electronics, apparel & accessories, home and housewares

Source: Forrester estimates

Steady growth for online sales

Q1 2015Sales up over 15%

Source: IBM Digital Analytics Benchmark

Q2 2014 Q3 2014 Q4 2014 Q1 20150%

12% 11% 11%

US QUARTERLY SALES CHART YoY Difference

Customer Analytics 7www.ibm.com/benchmark

Consumer attention continues to decline

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)

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar10%

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

Key holiday shopping days in 2014

Shopping season is elongating• 12.6% YoY sales Thanksgiving through Cyber Monday

Customer Analytics

Though it’s still no Singles Day

Cyber Monday China's Singles Day (11/11)

Estimated total gross merchandise value generated online 2014 ($B)

Source: Forrester estimates

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

14Customer Analytics

• Direct Load, Marketing, Paid Search yield highest rates

Cyber Monday had the highest conversion across all channels

Cyber Monday had the best engagement• Highest average session length, page views, new visitor

conversion rate and lowest bounce rate

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

Convenience is the main reason people shop online

Source: Bizrate Insights Holiday Retrospective Study, Jan 7-14, 2015

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

Use coupons to drive store traffic as you get closer to 12/25

“Which of the following statements describes you?” (Select all that apply)

I use my phone more than my computer or tablet to access the in-ternet.

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

Screen size and the mobile rise

Larger screens have better buying and engagement metrics…..

Customer Analytics

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 BenchmarkIBM Digital Analytics Benchmark

Source: IBM Digital Analytics Benchmark – U.S. Retail

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

• 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.

AU Click Frenzy UK Cyber Monday US Cyber Monday0%

Mobile Performance 2014

Mobile % of Sales Mobile % of Site Traffic

Mobile % of Traffic and SalesIBM Digital Analytics Benchmark

Mobile Use By Country: Australia, US, UK

Mobile Percentage of Sales 2014

Tablets Smartphones

AU, UK, USIBM Digital Analytics Bench-mark

Mobile Percentage of Traffic 2014

Tablets Smartphones

AU, UK, USIBM Digital Analytics Benchmark

Tablets to buy

Smartphones to browse

However, smartphone traffic is increasing while tablet traffic remains steady…

Customer Analytics

…And smartphones are gaining ground on tablets in making the purchase

Customer Analytics

5 Themes for 2015

Themes

1. The Omnichannel Octopus

2. Middle-of-the-Road Mobile

3. Short-lived Security Splurges

4. Payments Paralysis

5. Dumping “Big Data”

Key merchant priorities in 2015

Everyone has appropriated “omnichannel”

Fullfillment

Marketing

OMNICHANNEL

Customer Service

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

Shipping issues are a little more challenging

Returns as a % of total orders

Fulfillment costs per order

IncreasedRemained flatDecreased

Source: The State of Retailing Online (Shop.org/Forrester) 2015: Key Metrics

Themes

Mobile is growing

Base: 41 online retailersSource: “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)

Responsive design trumps apps

“Which of the following best describe your company’s smartphone and tablet device presence? (Select all that apply)”

So spend is still modest

Smartphone investment in 2014 Tablet investment in 2014

Average number of full-time employees dedicated to mobile: 3.1Average number of part-time employees dedicated to mobile: 7.1

Shoppers often find coupons on their mobile phones

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

Themes

Data security is a top concern

Security breaches are bad…but not insurmountable…

…and they’re not nearly as bad as bad business execution

CIOs focusing on data security is more like this…

DATA BREACH

That said, EMV migrations will be the thing to watch in the fall

Themes

Mobile growth is creating hype around the payments space

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

Lots of players are fighting for a relatively small pie

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

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

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

Themes

Big Data - The practices and technology that close the gap between the data available and the ability to turn that data into business insight.

The Key Is Incremental Impact

Photo source: http://iphone.sys-con.com/node/2411901

TechRadar™: Retail Analytics, 2014

Make the holiday season profitable

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

Become a C2Bbusiness 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.

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

One stop shop for analysis, product information and best practice guides

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

Questions?www.ibm.com/benchmark

Sucharita MulpuruPrincipal AnalystForrester @smulpuru

Leah PaschallIBM Digital Analytics Benchmark LeadIBM ExperienceOne @leahpaschall