eMarketer Webinar: Online Holiday Shopping Forecast and Trends 2016

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Online Holiday Shopping Forecast and Trends 2016

Yory WurmserRetail Analyst

September 8, 2016


Story of online Holiday 2016 has two big themesRetail ecommerce sales will continue to skyrocket

Brick-and-mortar retailers will build stronger bridges to online shoppers

Source: commons.Wikimedia.org Source: commons.Wikimedia.org


US Retail Ecommerce Growth Will Skyrocket


Overall retail sales growth will be moderate, but ecommerce will rise rapidly this holiday season

Retail ecommerce sales will jump 17.2% for the season, the highest rate since 2011

Retail sales will rebound slightly, up 3.3% from a weak 2015

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2015 was a strong year for retail ecommerce, but 2016 will be even better

Retail ecommerce sales will grow 16.1% in 2016

Ecommerce’s share of US retail sales will increase to 8.2% in 2016

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US retail ecommerce will increase in each quarter of 2016, with the largest gain in Q4

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The two-month holiday season will have an even higher ecommerce growth rate (17.2%), pushing ecommerce to 10.7% of retail sales

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So What’s Behind Ecommerce’s Torrid Growth?


Two factors are driving up ecommerce in 2016

Source: Yory Wurmser


One big factor powering US retail ecommerce is the rapid growth of retail mcommerce

US retail mcommerce will grow 43.2% in 2016

Mcommerce’s share of retail ecommerce sales will hit 29.1% in 2016

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The largest part of mcommerce growth will come from purchases via smartphones

US smartphone retail mcommerce will surge 78.3% in 2016, an improvement over a spectacular 2015

2016 will be the first year that smartphones account for more than half of US mcommerce sales

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Mobile accounted for the majority of retail ecommerce site traffic* during Holiday 2015

* On IBM’s platform

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The Amazon Effect

Amazon captured 36% of US ecommerce sales on Cyber Monday in 2015 (Source: Slice Intelligence)

Amazon’s share of holiday ecommerce will rise from 26% in 2015 to 28% to 30% in 2016 (Source: NetElixir)

Amazon’s ecommerce sales grew 18.4% in trailing 12 months (through Q2 2016) vs. roughly 15% for ecommerce overall in the US (Source: eMarketer and Amazon)

63 million US consumers using Prime as of June 2016 (Source: Consumer Intelligence Research Group)

Nearly 70% of Amazon shoppers in Holiday 2015 made a purchase on a mobile device (Source: Amazon)

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Amazon is increasingly used as a de facto search engine during the holiday season

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Offline Sales Lag


In fact, foot traffic continues to fall

RetailNext found that same store sales and foot traffic shrunk each month between February and July 2016

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Total retail sales will improve in 2016 vs. a weak 2015, but won’t herald an era of fast growth

eMarketer expects that overall US retail sales will grow 2.9% this year, up from a 1.4% increase in 2015

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Gas station sales have suppressed retail sales over the past two years, but the effect is lessening in 2016

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Car sales boosted retail sales from 2012 to 2015, but haven’t done so this year

H1 retail sales without gas stations or auto dealers hovered around a 3% gain between H1 2013 and H1 2015, but growth was stronger in H1 2016


Brick-and-Mortar Retailers Are Building Better Bridges to

Digital Shoppers


The 2016 holiday season should see advances in four areas that bind online and offline commerce

1. Better fulfillment

2. Better local advertising products

3. Local digital merchandising

4. Better offline attribution

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1. Better fulfillment

Fast, free shipping is the leading factor for influencing holiday purchases

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Demand for variable fulfillment options is growing

More than half of back-to-school shoppers in 2016 planned to use buy online, pick up in-store fulfillment options

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In-store pickup is spreading, but retailers are still working out the kinks

42%Of retailers reported offering in-store pickup, but nearly half of those reported that it was not working well yet

Source: Boston Retail Partners, June 2016

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Retailers in 2015 pushed the cutoff date for holiday deliveries right up to Christmas

In 2014, 39% of retailers had a cutoff date of December 21 or later

In 2015, 54% had a cutoff date of December 21 or later

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Last year, only 39% of US internet users were finished with holiday shopping by December 21

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2. Better local advertising

US mobile local ad spending will rise by almost a third in 2016

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Local search drives brick-and-mortar traffic

50%of mobile local searches lead to an in-store visit

Source: Google, 2014

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Mobile’s share of paid search is increasing

40% of paid search ad spending in North America in Q2 2016 was for mobile searches

58% of clicks were on mobile

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Mobile Product Listing Ad (PLA) clicks more than doubled during the 2015 holiday season

Growth of mobile PLAs exceeded the growth of mobile search more broadly

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Local Inventory Ads (LIAs) have become more prominent

Require real-time inventory visibility and integration with point-of-sale and marketing systems

5% to 7% of total Google Shopping clicks now come from LIAs (Source: Merkle)

Clickthrough rates 50% higher for LIAs than for standard mobile PLAs (Source: Merkle)

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LIAs could play a pivotal role in the final days before Christmas

“One week in particular that’s always a little slow for us is the week right before Christmas. Even after the shipping cutoff, in those few days right before Christmas, [LIAs are] a great opportunity to get out there and drive people into your stores.”

—Jared DeSisto, Senior Manager, SEM and Feeds, Merkle

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3. Local digital merchandising

Site merchandising was a leading priority for US digital retailers following last year’s holiday season

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Retailers can import offline information to create more personalized digital merchandising

“Retailers already have my offline data—they know what I like; they know the prices I like; they know that I’m a female; they know how old I am, all of that. They can import the information and utilize both the offline and the online behavioral data to show to me the kinds of products [like those] I’m searching.”

—Madeline Ng, Product Marketing Lead, BloomReach

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Digital merchandising is starting to reflect the shopper’s current location

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(Images source: Jetlore)


4. Better local attribution: Many new ways to track offline purchases back to online ads

Facebook – Offline conversions API – Store visits

Google – Offline conversion and store visits tracking in AdWords– Attribution 360

Others

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Holiday Outlook for Two Trends Generating Buzz


1. Conversational Commerce

Commerce embedded within AI-enhanced conversations

(Images source: Kik)

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Conversational platforms have huge scale

US Facebook Messenger users will top 100 million in 2016

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3% of US internet users reported having a smart speaker (mostly Amazon Echo) in June 2016

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Conversational platforms are releasing commerce-related bots and extensions

Facebook Messenger introduced:– Conversations with brands, mostly around clienteling or customer

service (2015)– Chatbots and send/receive API (April 2016)

Kik introduced a bot store in April 2016

Apple will release iOS 10 next week with: – Siri extensions that connect queries to apps via an API– iMessage apps

Alexa had 1,400 skills (as of July 2016)#eMwebinar


Conversational commerce is generating buzz, but the big impact won’t happen until 2017

“There are a lot of retailers who are very interested in this, but they’re waiting on the sidelines to see it develop a little more before they plunge in. So, I’m not 100% convinced that this holiday season is going to be a really massive time for conversational commerce, but I would put it on the next holiday.”

—Kent Deverell, CEO, Fluid

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2. Augmented Reality: Pokémon Go is just one aspect of a burgeoning field

Pokémon Go: 500 million downloads

(Source: Niantic, 9/7/2016)

$440 million in revenue (Source: Sensor Tower)

On 12% of US smartphones (Source: Sensor Tower)

(Images source: www.pokemon.com)


Pokémon Go has the potential to become an advertising platform

(Images source: Toru Hanai/Reuters via Techinsider.io)

McDonald’s Japan has bought sponsored gyms for 400 restaurants and Pokéstops for its 2,500 other restaurants

Softbank in Japan will have 3,700 stores as a sponsored location

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Most Pokémon players would be interested in some form of sponsored content in the game

The most acceptable sponsored content:– free coins– redeemable items following a

purchase– unique game items available

at physical stores

59% would be open to sponsored stops or gyms


Interest in sponsored location in the US seems muted

“Right now I am not sure that we would have anybody in the holiday season advertising within Pokémon.”

—Scott Shamberg, US President, Performics

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At the launch of Pokémon Go, less than a third of US internet users had heard of augmented reality

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Augmented reality as a whole has benefitted from the awareness generated by Pokémon Go

“The understanding and interest in augmented reality has spiked since the launch of Pokémon Go. Now people understand what it is, what it does and why it’s so cool and fun.”

—Jennifer Tidy, CMO, Modiface

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But various augmented reality retail applications have been successful

Keys to their success: – Ease of use– Accessibility

(Images source: Modiface

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Recap Overall US retail sales will grow by a tepid 3.1% during

the 2016 holiday season

US retail ecommerce sales will expand by 17.2%

US retailers will rely on four advances that will help them bridge the online/offline gap:– Better fulfillment; better local advertising products; local digital

merchandising; better offline attribution

Conversational commerce and augmented reality have generated recent buzz, but their holiday impact will be minimal

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Yory Wurmser

Online Holiday Shopping Forecast and Trends 2016

Back-to-School Shopping Preview: The Shift to Ecommerce Accelerates

Facebook Messenger: Strategies for Customer Service, Ecommerce, Content and Advertising

US Mcommerce Update 2016: Behind the Rapid Growth

US Holiday Shopping Preview 2016: Absorbing the Lessons of 2016

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