Each year, the release of the Mary Meeker report provides us with a detailed review of online trends. Although some of the data is from the US, the trends discussed can certainly be seen in the Australian and international market. The report is 213 pages, with a strong focus on mobile and retail, and I have selected key slides to provide an overview of where the industry is heading. 2016 INTERNET TRENDS Analysis of the Mary Meeker Report
Transcript
Each year, the release of the Mary Meeker report provides us with a detailed review of online trends. Although some of the data is from the US, the trends discussed can certainly be seen in the Australian and international market. The report is 213 pages, with a strong focus on mobile and retail, and I have selected key slides to provide an overview of where the industry is heading.
2016 INTERNET TRENDS Analysis of the
Mary Meeker Report
One of the emerging retailers identified is Casper, Casper sells mattresses online; obsessively engineered mattresses at a very fair price. You can sleep on a Casper for 100 days, and they provide free delivery and painless returns. They are servicing a quality-driven, price-conscious Gen Z customer segment; which according to Fitch, “expect retailers to be awake at 3am”. Their success can be validated by 320,000 Facebook likes and very positive consumer sentiment.
E-commerce continues to grow; some stores such as John Lewis see 40% of sales coming from online but the biggest growth opportunity lies with m-commerce. According to Simon Nankervis Chief Commercial Officer at DSW Inc, when online sales are over 20% there is a linear correction with Sales and general administration expense (SGNA) if you do not correct it will impact you. Most physical retailers predict that online sales will hit a ceiling, expected to be at 40% of total sales and are currently facing this adjustment.
There is a new norm emerging in the retail industry; brands are becoming retailers. For example; Warby Parker (valued at 1.2 billion in its last round of funding) has moved from brand to retail. In addition to this, retailers are becoming products themselves, for example thrive an online natural and organic retailer.
Digital to physical is a trend we have seen grow rapidly across the last year, and there is no stopping this one. The digital retailers pose much more of a threat in the physical world due to their customer-centric digital platforms, and their data driven approach to retailing.
Stitch Fix is an example of a retailer taking a data-driven approach; the $250 million start-up is redefining personalisation. They are applying a Netflix and Spotify content discovery process, where 100% of sales onsite come from recommendations in collaboration with their stylist.
It took Nike 14 years, Lululemon 9 years and Under Armour 8 years to reach $100 million dollars. This data just goes to prove that the Internet is not only contributing to the growth of physical retailers, but actually accelerating it.
Although these are US statistics, the platforms of choice are fairly similar to that of the Australian and UK markets.
When I first read this slide, the first thought as a Mum of Gen Z, is that I will need to develop a specific ‘Mum’ screen to communicate with him. Even then, I am guessing I will be Screen #6 in the pecking order!
What we do know, and what is being seen on all of the channels I am working with clients on, is that video is evolving and continues to grow rapidly, and that imagery is absolutely key for millenials. According to Social Science Research, 65% of us are visual learners, so if we want consumers to learn about our brands/products visuals is key. Couple that with an 8-second attention span, and a multiple of screens (x 5 for Gen Z), those visuals have to have a strong “wow” factor.
It’s the image-based platforms that are driving real sales.
I believe that conversational apps are the perfect example of how mobile is to be used. Mobile was originally developed for this purpose, then we shoved the Internet into it and in the process we lost the art of communication. We are now seeing a growing trend back into conversational apps and integration with existing messaging applications. (Messaging applications by the way, is there we spend more of our time). This evolution is feeding a “let me shop when and where I want,” which isn’t just physical and digital but also on a micro-level - within messaging applications, on my TV screen, on the dashboard in my car and all the places that technology touches my life!
The way we converse has evolved, and we now rely on text as much as voice. The new generations do not want to talk directly with brands. In saying that, they want to connect more than any other generation has, just through different format and therefore are purposeful in the their communication with brands and retailers.
When you look at the average number of apps that account for 80% of our time (only 3), and then you look at the investment from brands in apps over the past few years the cost per user becomes astronomical. Apps range in cost anywhere from $150,000 to $1,000,000. Until we reach a point where apps provide real value to the consumer, over and above a retailers’ website or mobile site, we will continue to see a high cost per acquisition, a low user retention rate and high negative sentiment – coupled with lots of uncomfortable questions at a board level!
Messaging apps are becoming our second screen, and retailers need to look at how to integrate and add value within this platform, whilst ensuring not to interrupt the flow of communication. The “secret source” according to Mary Meeker is remembering context, time, identity and preferences.
When we look at regionally specific platforms, we can see that WeChat is increasingly become more of an e-commerce platform.
Voice is the next big trend, and as we become more advanced in speech technology we will see a significant shift to voice activated technologies such as Amazon Echos Alexa. Although, I do have a strong belief that social etiquette (for some) will prevail, rendering these technologies to be used predominantly in personal spaces such as the home or the car. Voice accuracy is now equivalent to the human level in low noise environments
The current generation of Internet leaders is growing faster than the former generation of leaders. As you can see here, Uber is growing faster than eBay, JD.com is growing faster than Amazon.
Here is an overview of the top 20 leaders and the incredible market value they hold.
