E-Retail Outlook for 2008 & Beyond

TeleconferenceThe Outlook For US eCommerce In 2008 And BeyondSucharita MulpuruPrincipal AnalystForrester Research

February 20, 2008. Call in at 12:55 p.m. Eastern time

2Entire contents © 2008 Forrester Research, Inc. All rights reserved.

B2C US eCommerce will continue to grow at a double-digit clip

© 2007, Forrester Research, Inc. Reproduction Prohibited

Forecast: US eCommerce, 2007 To 2012January 2008 “US eCommerce Forecast: 2008 To 2012”


Forecast: US eCommerce, 2007 To 2012 (Cont.)January 2008 “US eCommerce Forecast: 2008 To 2012”


Forecast: US eCommerce, 2007 To 2012 (Cont.)January 2008 “US eCommerce Forecast: 2008 To 2012”


Online holiday sales were strong

Base: US online consumers

“Given the total amount you spent during the holiday season, what percent was spent in each channel?”

6% 5%

71%61%

23%34%

0%10%20%30%40%50%60%70%80%90%

100%

2006 2007

OnlineStoresOther

Source: Consumer Technographics® Post-Holiday Retail Online Survey, Q1 2008


This growth has happened in spite of economic conditions . . .


0.4

0.9

1/1/

2006

3/1/

2006

5/1/

2006

7/1/

2006

9/1/

2006

11/1

/200

6

1/1/

2007

3/1/

2007

5/1/

2007

7/1/

2007

9/1/

2007

11/1

/200

7

1/1/

2008

US$ to Euro Interbank rate

. . . including a declining dollar

December 2007 “US Online Travelers’ Outlook On The Economy And Spending”

Consumers’ Views Of Their Financial Situations And The US Economy

Consumers’ Views Of Their Financial Situations And The US Economy (Cont.)

December 2007 “US Online Travelers’ Outlook On The Economy And Spending”


eCommerce may be insulated because:

• Online consumers tend to be more affluent in general.

• Online consumers use the channel because it is just more convenient.

• Only 15% of US online consumers agreed with the statement “I bought less online this holiday season due to uncertainty about the US economy.”

• While overall retail sales may be flat or declining in most stores, online retailers still experience upward trajectories from a channel shift.


The Web is growing faster than stores

US$B

CAGR2008-12: 2%

CAGR2008-12: 13%

$204 $235 $268 $301 $335

$2,605 $2,646 $2,689 $2,734 $2,783

$0

$1,000

$2,000

$3,000

2008 2009 2010 2011 2012

Online sales Non-online sales



43%

46%

49%

40% 42% 44% 46% 48% 50%

I found the best values/deals online

I found products online that I couldn’t

find anywhere else

I prefer to shop online to avoid

crowds/linesCONVENIENCE

SELECTION

VALUE

The reasons consumers shop online remain the same



Core shoppers drive most of eCommerce

Half of online shoppers drive two-thirds of

online shopping spend.



“Did you experience any complications while shopping online

during holiday 2007?”

42%Yes

58%No

Base: US online Web buyers

Consumer problems haven’t improved with time

8%

13%

17%

21%

0% 5% 10% 15% 20% 25%

Poor Web site performance (e.g., sluggishness)

Shipping ended up taking longer than I had expected

The item I purchased was backordered or not in stock

Shipping prices were higher than expected



This makes Web shopping very utilitarianJanuary 2008 “US eCommerce Forecast: 2008 To 2012”


We believe some trends will shape the coming yearsDecember 2007 “Which Personalization Tools Work For eCommerce — And Why”


This should mean more experiences like this:


“Please rank the following channels in order of your purchasing preference.”


Rank 1 Rank 2 Rank 3 Rank 4 Rank 5

Traditional offline stores 74% 19% 4% 2% 2%

Online 22% 52% 11% 7% 8%

Print catalog 1% 18% 50% 24% 7%

By telephone (e.g., flowers) 2% 9% 26% 45% 19%

Television (e.g., shopping channel, infomercial)

1% 2% 9% 22% 64%

Consumers still prefer to shop in stores

Source: Consumer Technographics® Retail Online Survey, Q3 2007


This should mean stronger multichannel integration

US leaders

Circuit City

Best Buy

Wal-Mart

International leaders

FNAC

Tesco

ASDA


On-demand production driven by the long tail


Better, richer user experiences


Prognosis

Despite economic conditions, eCommerce

should continue on a strong, upward trajectory.


One last plug

• For those of you interested in more online retail metrics who also have an eCommerce business, participate in our annual “The State of Retailing Online” survey!

• Rich report with the following data points:» Marketing spend» Merchandising priorities» Percent of business through the Web channel» Multichannel priorities

• Email me ([email protected]) or [email protected] for a link to the survey.

• Must be completed very, very soon.


Sucharita Mulpuru

[email protected]

www.forrester.com

Thank you

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