emarketer us retail ecommerce outlook

©2013 eMarketer Inc.

A P R I L 1 8, 2 0 1 3

US Retail Ecommerce Outlook—What’s Driving Growth?

Jeffrey GrauPrincipal Analyst

Sponsored by:


Roadmap of our journey

Online sales

forecast

Product category forecast

Leading retailers

Shoppers & buyers forecast


The outlook is bright for US retail ecommerce sales

14% CAGR

Online sales will grow more than 4 times the rate of 3.4% the NRF forecasts for total retail sales in 2013

Retail Ecommerce Sales Defined

Products/services ordered online or price and terms of sale negotiated online, even if payment or fulfillment occurs in-store

Included: o digital downloads (e.g., music from

iTunes and movies from Netflix)o Gross merchandise value (GMV) of

items sold on online marketplaces like Amazon and eBay

o Sales from US retail websites to foreign customers

Excluded:o Travel and event tickets sold online


What forces are influencing ecommerce growth?

Twitter – #eMwebinar

Waves of innovation

Mobile, globalization, omnichannel capabilities, online marketplaces, personalization, expedited fulfillment, new business models

Convenience, price and selection

Consumers find information, compare prices and access virtually limitless product selection at anytime, from anywhere

The Economy

After a burst of economic gains in January and February, job growth slowed to a trickle in March, raising concerns about the strength of the economic recovery in 2013


Mobile spending has begun to have an impact on ecommerce

Tablet Share of Mcommerce Sales

2013 2017

62.5% 71.5%


US ecommerce is also starting to get a boost from international sales

2013 Asia Ecommerce Facts

Asia-Pacific will surpass North America as the world’s biggest B2C ecommerce market

B2C ecommerce sales in Asia-Pacific will grow more than 30% vs. 12.2% in North America

China, India and Indonesia are driving the fast ecommerce growth in Asia-Pacific

China, the primary driver of Asia-Pacific growth, will surpass Japan as the region’s largest B2C ecommerce market

Note: B2C includes travel, digital downloads and event tickets salesSource: eMarketer, February 2013


Comparative estimates of ecommerce sales growth range from 10% to 14%


Historically, research firms have been bearish in forecasting online sales


Ecommerce is gradually accounting for more of total retail sales

…and the result is rising online sales penetration rates

Ecommerce is growing 2-3 times faster than total retail sales



But thinking about channels as distinct entities ignores how consumers shop

Eric BestCEOMercent

Sean CookCEOShopVisible

“This notion of channel is almost melting away. What’s important is how different channels influence each other and how to attribute customer engagement across them.”

Source: eMarketer interview, March 2013

“At some point that breakdown becomes immeasurable and irrelevant.”




Online sales

forecast


Leading retailers



The two largest product categories will account for 42.9% of total online sales in 2013


A mix of larger and smaller online product categories will post the highest CAGRs from 2012-2017


Several categories exceed the online penetration rate of 6% for total retail ecommerce sales


Categories to watch: Apparel and accessories

Growth Enablers

Body scanning technology

Runway videos

360 degree product views

Home try-on programs

Market Position

Low Medium High

Size (billion) $54.2

Growth 17.2%

Penetration 14%

Source: eMarketer, Booz & Company


Categories to watch: CPG (groceries and personal care)

Market Position

Low Medium High


Growth 15.2%

Penetration 1-4%

Source: eMarketer, Booz & Company

Growth Enablers

Automatic replenishment programs

Broader product selection

Faster and lower-cost delivery



Categories to watch: Autos and parts

Market Position

Low Medium High


Growth 9.2%

Penetration <5%

Source: eMarketer

Growth Enablers

In 2011, 35% of new vehicle buyers said they would buy a car online, up from 21% in 2009*

Powerful car dealership lobby has blocked the sale of cars online

Source: *Capgemini, Oct 2011



Online sales

forecast


Leading retailers



Amazon is a powerful engine of ecommerce growthAmazon accounts for a large share of US online sales and is growing faster than ecommerce overall

If 2012 sales included the gross merchandise value from third-party merchants, Amazon’s contribution to US ecommerce sales would be around 25%.

Source: JMP Securities, March 2013


Two Amazon growth engines: Prime and its third-party sellers marketplace

Key Stats

Membership (millions)

2011 4

2012 10

2017 25

Annual Spend

Prime members $1,224

Non-members $505

Source: Consumer Intelligence Research Partners

Amazon said unit sales from its third-party sellers in the US increased more than 40% over the 2011 holiday season

Online marketplaces (e.g., Amazon, eBay, Rakuten and Sears) account for 27% online retail sales*

Marketplaces introduce consumers to unfamiliar retailersand greater product selection

Source: *ChannelAdvisor, 2012


A number of major retail chains reported strong online sales growth



Factors attributed to strong growth

Source: Corporate earnings announcements as reported in Internet Retailer

Reduced conflict between its stores and website by restructuring company by major brands—Gap, Old Navy and Banana Republic—as opposed to by stores, online, outlets and international

Better website search and navigation Richer product information Richer visualization tools Speedier order fulfillment and delivery

Increased coordination across digital and store channels

Upgraded mobile and online sites Enhanced customer engagement features


Retailers attribute omnichannel initiatives with boosting sales growth

Stores-only

Stores + Web

Stores + Web + Mobile

1 2 3 4 5 6

Source: Miguel, Almeida, VP of ecommerce at Walgreens at a session at Retails’ Big Show 2013, sponsored by the National Retail Federation

3-1/2321

1

Walgreens found that its omnichannel shoppers spend more than its single-channel shoppers



Online sales

forecast


Leading retailers



Current (not new) online buyers are driving the bulk of ecommerce sales growth

Key Shopper/Buyer Stats

CAGR (2012-2017)

Shoppers 2.7%

Buyers 3.8%

2013

Buyers as a % 82.2%of shoppers


Smartphones and tablets have become commonplace devices for buying online



By all estimates a strong majority of internet users make online purchases


Online buying is prevalent across all age cohortsBuyers 65+ will grow faster than any other group at a 7.3% CAGR from 2012-2017


Online spending is well distributed across household income segments


Impetus for spending more online: Personalization

Survey Findings

41% of online shoppers buy more from retailers who send them personalized emails based on past browsing and buying behavior

39% purchase more on retail sites with product recommendations

Source: The e-tailing group, sponsored by MyBuys, December 2012

Personalization Drives Online Sales at Sears

Shop Your Way membership program, which offers personalized product offers based on customer shopping behavior and other characteristics, strongly contributed to:

25% boost in online sales for Q4 2012

17% increase for all of 2012

Source: Internet Retailer, March 2013


Impetus for spending more online: Trust and security

Jason GoldbergVP strategyRazorfish

Vineet BuchGroup product managerGoogle

“Free returns engender online trust by reducing the likelihood a consumer will have buyers’ remorse.” Source: eMarketer interview, March 2013

“Every year we see more consumers who were latecomers to online shopping trusting ecommerce.”



What were the highlights of our journey?

Online sales

forecast


Leading retailers



Takeaways

US retail ecommerce sales will increase at a 14% CAGR from 2012 to 2017

Mobile users’ share of US retail ecommerce sales will rise from 15% in 2013 to 25% by 2017

Ecommerce growth comes from current (not new) online buyers, who account for 73% of internet users

Apparel & accessories and CPG are large categories with strong online growth potential

All age groups partake in online buying, but those ages 65+ are the fastest growing cohort


Trend: Greater Need for Guidance when Shopping Online

This is Where Needle Comes in

Power of a Needler

How Needle Does It

Guided Shopping Online Using Your Best Fans


Q&A Session

US Retail Ecommerce Outlook—What’s Driving Growth

Sponsored by:

Needle

You will receive an email tomorrow with a link to

view the deck and webinar recording.

Jeffrey Grau

Learn more about mobile marketing with an eMarketer corporate subscription

About 200 eMarketer reports are published each year. The following are a few recent ones you may be interested in:

US Retail Ecommerce: 2013 Forecast and Comparative Estimates

Online User Reviews: Building Trust and Boosting Sales

Shopping Cart Abandonment: New Ways of Looking at the Purchase Path

Retail Mobile Commerce Forecast: Shoppers Turn to Smartphones First

Multichannel Customer Service: Best Practices for Building Retail Loyalty

To learn more: www.emarketer.com/products

800-405-0844 or [email protected]

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