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Preparing for the 2015 Holiday
Shopping SeasonKey online shopping trends and best practices
2
Today’s presenters
Sucharita MulpuruPrincipal Analyst
Forrester
@smulpuru
Leah PaschallIBM Digital Analytics Benchmark
IBM Commerce
@leahpaschall
#IBMBenchmark @smulpuru @leahpaschall
Customer Analytics
3
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
#IBMBenchmark @smulpuru @leahpaschall
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
Wide
• 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
#IBMBenchmark @smulpuru @leahpaschall
Customer Analytics 4
© 2015 Forrester Research, Inc. Reproduction Prohibited 5
Source: Forrester Research Web-Influenced Retail Sales Forecast, 2013 To 2018 (US)
US eCommerce will top $300MM in 2015
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 6
Categories are shifting a lot
Share of top 3 online categories as a % of eCommerce
2000 2015 2018
46%
35% 36%
PCs, consumer electronics, apparel &
accessories
PCs, books, peripherals
Consumer electronics, apparel & accessories, home and housewares
Source: Forrester estimates
#IBMBenchmark @smulpuru @leahpaschall
Steady growth for online sales
Q1 2015Sales up over 15%
YoY
Source: IBM Digital Analytics Benchmark
Q2 2014 Q3 2014 Q4 2014 Q1 20150%
5%
10%
15%
20%
12% 11% 11%
16%
US QUARTERLY SALES CHART YoY Difference
#IBMBenchmark @smulpuru @leahpaschall
Customer Analytics 7www.ibm.com/benchmark
Consumer attention continues to decline
#IBMBenchmark @smulpuru @leahpaschall
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)
9
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar10%
20%
30%
40%
50%
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
#IBMBenchmark @smulpuru @leahpaschall
Customer Analytics www.ibm.com/benchmark
Source: IBM Digital Analytics Benchmark
Key holiday shopping days in 2014
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Shopping season is elongating• 12.6% YoY sales Thanksgiving through Cyber Monday
Customer Analytics
#IBMBenchmark @smulpuru @leahpaschall
www.ibm.com/benchmark
Source: IBM Digital Analytics Benchmark
© 2015 Forrester Research, Inc. Reproduction Prohibited 12
Though it’s still no Singles Day
Cyber Monday China's Singles Day (11/11)
$2
$11
Estimated total gross merchandise value generated online 2014 ($B)
Source: Forrester estimates
#IBMBenchmark @smulpuru @leahpaschall
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
13
#IBMBenchmark @smulpuru @leahpaschall
Customer Analytics 13www.ibm.com/benchmark
Source: IBM Digital Analytics Benchmark
14Customer Analytics
• Direct Load, Marketing, Paid Search yield highest rates
#IBMBenchmark @smulpuru @leahpaschall
www.ibm.com/benchmark
Source: IBM Digital Analytics Benchmark
Cyber Monday had the highest conversion across all channels
15Customer Analytics
Cyber Monday had the best engagement• Highest average session length, page views, new visitor
conversion rate and lowest bounce rate
#IBMBenchmark @smulpuru @leahpaschall
www.ibm.com/benchmark
Source: IBM Digital Analytics Benchmark
© 2015 Forrester Research, Inc. Reproduction Prohibited 16
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
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 17
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
54%
48%
45%
37%
32%
30%
24%
22%
19%
17%
14%
Base: 5,879 online holiday shoppers
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 18
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.
18%
25%
41%
47%
47%
50%
60%
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
#IBMBenchmark @smulpuru @leahpaschall
Screen size and the mobile rise
20
Larger screens have better buying and engagement metrics…..
Customer Analytics
Average Order Value
Average Page Views
Bounce Rate
Conversion Rate
% of Sales
% of Traffic
91.2
6.1
0.4
0.0
0.1
0.3
102.7
7.7
0.3
0.0
0.1
0.1
121.6
7.9
0.3
0.0
0.8
0.5
Performance by Device Type - March 2015
Smartphone Tablet Desktop
IBM Digital Analytics BenchmarkIBM Digital Analytics Benchmark
#IBMBenchmark @smulpuru @leahpaschall
www.ibm.com/benchmark
Source: IBM Digital Analytics Benchmark – U.S. Retail
21Customer Analytics
#IBMBenchmark @smulpuru @leahpaschall
www.ibm.com/benchmark
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
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• 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%
10%
20%
30%
40%
50%
60%
Mobile Performance 2014
Mobile % of Sales Mobile % of Site Traffic
Mobile % of Traffic and SalesIBM Digital Analytics Benchmark
#IBMBenchmark @smulpuru @leahpaschall
Customer Analytics www.ibm.com/benchmark
Source: IBM Digital Analytics Benchmark
Mobile Use By Country: Australia, US, UK
23
AU Click Frenzy UK Cyber Monday US Cyber Monday0%
10%
20%
30%
Mobile Percentage of Sales 2014
Tablets Smartphones
AU, UK, USIBM Digital Analytics Bench-mark
AU Click Frenzy UK Cyber Monday US Cyber Monday0%
10%
20%
30%
40%
Mobile Percentage of Traffic 2014
Tablets Smartphones
AU, UK, USIBM Digital Analytics Benchmark
Tablets to buy
Smartphones to browse
#IBMBenchmark @smulpuru @leahpaschall
Customer Analytics www.ibm.com/benchmark
Source: IBM Digital Analytics Benchmark
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However, smartphone traffic is increasing while tablet traffic remains steady…
Customer Analytics
#IBMBenchmark @smulpuru @leahpaschall
www.ibm.com/benchmark
Source: IBM Digital Analytics Benchmark – U.S. Retail
25
…And smartphones are gaining ground on tablets in making the purchase
Customer Analytics
#IBMBenchmark @smulpuru @leahpaschall
www.ibm.com/benchmark
Source: IBM Digital Analytics Benchmark – U.S. Retail
5 Themes for 2015
© 2015 Forrester Research, Inc. Reproduction Prohibited 27
Themes
1. The Omnichannel Octopus
2. Middle-of-the-Road Mobile
3. Short-lived Security Splurges
4. Payments Paralysis
5. Dumping “Big Data”
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 28
Key merchant priorities in 2015
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 29
Everyone has appropriated “omnichannel”
Fullfillment
Marketing
OMNICHANNEL
Tech
nolo
gy
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
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 30
Shipping issues are a little more challenging
Returns as a % of total orders
Fulfillment costs per order
27%
25%
62%
55%
11%
22%
IncreasedRemained flatDecreased
Source: The State of Retailing Online (Shop.org/Forrester) 2015: Key Metrics
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 31
Themes
1. The Omnichannel Octopus
2. Middle-of-the-Road Mobile
3. Short-lived Security Splurges
4. Payments Paralysis
5. Dumping “Big Data”
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 32
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)
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 33
Responsive design trumps apps
Base: 52 online retailersSource: “The State Of Retailing Online,” a Shop.org study conducted by Forrester Research
“Which of the following best describe your company’s smartphone and tablet device presence? (Select all that apply)”
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 34
So spend is still modest
Base: 51 online retailersSource: “The State Of Retailing Online,” a Shop.org study conducted by Forrester Research
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
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 35
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
8%
16%
20%
23%
24%
25%
27%
27%
28%
28%
30%
32%
33%
39%
55%
57%
“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
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 36
Themes
1. The Omnichannel Octopus
2. Middle-of-the-Road Mobile
3. Short-lived Security Splurges
4. Payments Paralysis
5. Dumping “Big Data”
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 37
Data security is a top concern
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 38
Security breaches are bad…but not insurmountable…
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 39
…and they’re not nearly as bad as bad business execution
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 40
CIOs focusing on data security is more like this…
DATA BREACH
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 41
That said, EMV migrations will be the thing to watch in the fall
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 42
Themes
1. The Omnichannel Octopus
2. Middle-of-the-Road Mobile
3. Short-lived Security Splurges
4. Payments Paralysis
5. Dumping “Big Data”
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 43
Mobile growth is creating hype around the payments space
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 44
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
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 45
Lots of players are fighting for a relatively small pie
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 46
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
Low
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
Low
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
#IBMBenchmark @smulpuru @leahpaschall
© 2015 Forrester Research, Inc. Reproduction Prohibited 47
Themes
1. The Omnichannel Octopus
2. Middle-of-the-Road Mobile
3. Short-lived Security Splurges
4. Payments Paralysis
5. Dumping “Big Data”
#IBMBenchmark @smulpuru @leahpaschall
© 2014 Forrester Research, Inc. Reproduction Prohibited 48
Big Data - The practices and technology that close the gap between the data available and the ability to turn that data into business insight.
#IBMBenchmark @smulpuru @leahpaschall
The Key Is Incremental Impact
Photo source: http://iphone.sys-con.com/node/2411901
© 2015 Forrester Research, Inc. Reproduction Prohibited 50
TechRadar™: Retail Analytics, 2014
#IBMBenchmark @smulpuru @leahpaschall
Make the holiday season profitable
© 2015 Forrester Research, Inc. Reproduction Prohibited 52
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
#IBMBenchmark @smulpuru @leahpaschall
53
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.
Customer Analytics www.ibm.com/benchmark
#IBMBenchmark @smulpuru @leahpaschall
54
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
55
One stop shop for analysis, product information and best practice guides
#IBMBenchmark @smulpuru @leahpaschall
Customer Analytics 55www.ibm.com/benchmark
56
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
Customer Analytics www.ibm.com/benchmark
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Questions?www.ibm.com/benchmark
Sucharita MulpuruPrincipal AnalystForrester @smulpuru
Leah PaschallIBM Digital Analytics Benchmark LeadIBM ExperienceOne @leahpaschall
#IBMBenchmark @smulpuru @leahpaschall
Customer Analytics ©2015 IBM Corporation 57