eMarketer Webinar: Online Holiday Shopping Forecast and Trends 2015

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Online Holiday Shopping Forecast

and Trends

Yory Wurmser

Retail Analyst

September 17, 2015


Agenda

Forecast for US retail and retail ecommerce sales during

the 2015 holiday season

Drivers of ecommerce growth

Evolution of the holiday online buying season

Emerging trends to watch this season


Forecast for Holiday 2015


US retail and retail ecommerce sales will grow

strongly in the 2015 holiday season

5.6%

13.9%

EcommerceTotal Retail


Retail

ecommerce

sales growth

in 2015 will be

on par with

recent years,

but retail

overall will

have the

strongest year

since 2011


The strong holiday season will follow a weak

first half of 2015

Retail sales grew only

1.5% in Q1 and 0.8% in

Q2, with slow gas sales

pushing down overall

retail sales totals

Q4 will have the

strongest growth in retail

sales of the year at 5.8%


Falling gas prices in H1 2015 hurt overall retail

sales

Weak sales by

gas stations

lowered retail

sales growth by

roughly

3 percentage

points in both

Q1 and Q2


Reasons for optimism:

Strong labor market

– Unemployment down to 5.1% in August (Source: BLS, Sept. 4)

– Wages rose 2.5% YoY in August (Source: BLS, Sept. 4)

High consumer confidence

– Present situation index: 115.1 in August 2015, compared with 93.0

in September 2014 (Source: The Conference Board)

Low interest rates

Cheap gas

– $3.43/gallon on 9/4/2014 vs. $2.30/gallon on 9/16/2015 (Source: GasBuddy.com)


Ecommerce

will be

responsible

for 9.0% of

holiday

season retail

sales for the

first time in

2015


Q4 accounts for an outsized portion of total

retail ecommerce sales for the year

Q4 sales will be

more than 30%

higher than Q3

sales this year


Why Ecommerce Won’t

Slow Down This Season


Two major drivers for ecommerce these days:

1. Mobile commerce

2. Better fulfillment and exchange options


1. Mobile commerce is growing rapidly

32% YoY

jump in retail

mcommerce

sales in 2015

22% of retail

ecommerce in

2015 will come

from mcommerce


Mcommerce’s share of ecommerce generally

peaks in Q4, and this year should be no different

comScore estimated that

mcommerce was

responsible for 13.0% of

retail ecommerce sales

in Q4 2014

The big jump in Q1 2015

was unprecedented and

presages a big growth in

mcommerce this holiday

season


The majority of US digital buyers are now mobile

buyers

70.8% of digital

buyers will be mobile

buyers in 2015

11.0 million more

people will buy with

their smartphones in

2015 than did in

2014


Mobile is

especially

important for

heavy

shoppers


Mcommerce peaks on major shopping days


2. Better fulfillment options will also boost

ecommerce


In-store pickup leads to additional sales

45%

of shoppers who use in-store pickup buy additional items

Source: UPS, “Pulse of Online Shoppers”


In-store pickup will be especially important this

holiday season for two reasons:

1. Foot traffic in stores continues to slide

2. Shipping network could face some bottlenecks this

year


As ecommerce grows and people do more

research online, foot traffic has gone down

According to Euclid

Analytics, foot traffic

continues to fall,

down 0.7% YoY in H1

2015

Shoppers are

spending more time

in stores once they

enter


At the same time, sales per shopper are

increasing

RetailNext

reported a

steeper fall in

foot traffic than

did Euclid

Average

transaction

value has been

increasing


Shipping network could have more bottlenecks

this year

“UPS and FedEx haven’t added any

substantial capacity over last holiday

season, but we’re all forecasting meaningful

holiday growth. … The major retailers are

wisely signing up for their capacity, and

that’s likely going to leave less

capacity for the smaller, more

independent retailers.”

—Jason Goldberg, global vice president of

commerce strategy at Razorfish


Retailers are having problems staffing

warehouses for the holidays

Retail had 136,000

additional job openings in

July 2015 compared with a

year earlier (Source: BLS)

Distribution centers require

two to five times the

number of workers during

the holiday season

(Source: Frank Layo, via CNBC, Sept. 4, 2015)

“If people are struggling right now

to bring stuff into the warehouse,

then they’re definitely going to

have a problem when it comes to

getting it out.”

— Frank Layo, partner and retail

strategist at Kurt Salmon, via NPR,

Sept. 7, 2015


Flexible fulfillment can help alleviate shipping

and warehouse problems

Create redundant

fulfillment options

Drive people into

stores to fulfill

orders themselves

In-store pickup

spikes on peak

shopping days (Source:

Adobe, 2014 Holiday Shopping Recap)

Image source: UPS


Has the holiday shopping

season shifted earlier?


Many shoppers start holiday shopping before the

official season begins

48%* of US shoppers had finished the majority of their

2014 holiday shopping by Cyber Monday

1/4* of US shoppers had already done some 2014 holiday

shopping by Halloween

32 million** US shoppers have already started Christmas

shopping

4.6 million** (2%) US shoppers have already finished

Christmas shopping

• Source: *IpsosMediaCT and Google, “Post-Holiday Survey, 2015”

• **CreditCards.com survey, September 3 to 6, 2015 via ABC News


Some holiday

sales shifting

to earlier in

the fall


Biggest ecommerce sales jump of 2014 holiday

season was during weekend of December 20–21

36%*

Enabled by:

Increased in-store pickup

Later shipping cutoffs

Extended free shipping

* Source: comScore


In order to capture early-bird shoppers, retailers

heavily discounted before Thanksgiving in 2014

Biggest

discounts were

on Thanksgiving

Day

Monday before

Thanksgiving

had higher

discounts than

Cyber Monday


But discounts had limited effect on buying

patterns

“Last year, there was a tiny bump on

the Monday before Thanksgiving.

Getting people to shop prior to

[Thanksgiving] will be very difficult,

and so far we haven’t seen evidence

that it’s been effective.”

—Tyler White, senior Manager of Adobe

Digital Index Data Science at Adobe


Two Key Trends to Watch in

the 2015 Holiday Season


1. Retailers will try to capitalize on mobile

influence in stores


Mobile will soon influence the majority of sales

“I see mobile becoming the

dominant sales driver over

time. That doesn’t mean

sales will happen on the

mobile platform, but

[mobile] will be the

largest driver of

sales.”

—Jeff Simpson, partner at

Deloitte Consulting


Consumers are interested in in-store

engagement

63%*

of shoppers would consider receiving offers based on

where they were in a store at a particular moment

*Source: Blackhawk Engagement Solutions


More than half

of shoppers

would give

permission to

be tracked

while in-store


Beacon deployments

for marketing are

still limited


A combination of factors have limited beacon

success:

Lack of tools and middleware: “It's very easy to throw two

beacons in a test store, but operationalizing a program requires tools

and middleware.” —Maya Mikhailov, chief marketing officer and co-founder at

GPShopper

Interference: “It’s unlicensed spectrum. There are all sorts of things

getting in the way of that beacon signal.” —Chris Mason, CEO and

co-founder of Branding Brand

Complicated use cases: “We’re kind of jumping into a very

complicated engagement use cases … as opposed to saying, ‘Hey, let’s

just solve the communicating with people based on whether or not

they’re in the store”. —Brent Franson, CEO of Euclid


Scale remains an issue for retailer apps

Only 12%

of US consumers use a retailer app

(Source: Epsilon, 2015)


eMarketer View: Proximity media will play a

bigger role this season, but winning media will

remain unclear

Beacon tests will continue but with more modest goals

Retailers will deploy a range of proximity media

– Wi-Fi

– Digital displays


2. Social commerce re-emerges

Instagram Pinterest Twitter Facebook

Image source: FacebookImage source: TwitterImage source: PinterestImage source: Instagram


Social media is still a relatively small driver of

direct digital purchases

Social media

directly generated

1.9% of digital

purchases in 2014


Facebook is testing buy buttons in ads, and new

shopping tabs in retailer pages

Limited tests of buy buttons in

mobile direct-response ads

Mobile Pages—new retailer pages

with shopping tabs and

calls-to-action, some with buy

buttons

Main focus is on small and mid-

sized retailers

Credit card info stored

2015 impact: Low


Pinterest is pursuing a broader release of its

‘Buy it’ button

Wide range of retailers participating

Retailers can load their whole

product catalog

Shoppers can search by price

Only one item can be purchased

at a time

Initially on iOS only

Credit card info stored

2015 impact: Medium


Instagram is rolling out ‘Shop Now’ buttons

Broad release scheduled for this autumn

Part of large expansion of advertisements

and advertising tools

Inventory, number of ads served, ad

frequency and pricing remains unclear

No credit card info stored

2015 impact: Unclear


Twitter is rapidly expanding direct commerce

Buy buttons

– Tests began in September 2014

– Big expansion to cover all Shopify clients

(175,000 retailers) in August 2015

‘Collections’

– Pages of buyable products curated by celebrities

or brands, introduced June 2015

Retailers have choice to have transactions

on Twitter or on their own website

2015 impact: Low


Biggest impact

of social media

on 2015 holiday

season will as

tool for discovery


The leading

shopping use of

social media

during the

holidays is for

gift ideas


eMarketer View: Over the long term, social

commerce will become important

Social media is:

– Very influential in discovery

– At mass scale

Mobile commerce is ripe for expansion

– Mobile traffic accounts for half of digital shopping traffic

– Current mobile buying experience is poor

– App-based buying is more seamless than web-based


Key takeaways for the holiday season:

Retail sales will grow 5.6%

Retail ecommerce sales will rise 13.9%, continuing a

streak of double-digit growth

Mcommerce and better fulfillment will boost ecommerce

Mobile influence continues to deepen

Consumers are ready for proximity marketing and

retailers will continue to test different media

Social commerce will have a minor impact on sales

during the holidays but may become important long-term

Holiday Readiness with Akamai

Caley Iandiorio, Global Industry Marketing Manager, Commerce

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Akamai can help!

To learn how you can better prepare for the upcoming holiday season, visit

www.akamai.com/holiday

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Reach out to learn more about how we can move your business faster

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Yory Wurmser

Online Holiday Shopping

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Holiday Shopping Preview

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Trends for Retail’s ‘Second Season’

Omnichannel Trends 2015: Mobile is the New Retail Hub

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