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Unwrapping Holiday 2015: E-Commerce Trends and Outlook

June 22, 2015

Today’s Speakers

Scot WingoExecutive Chairman

ChannelAdvisor

Sarah O’DeaSr. Manager, Corporate Communications

ChannelAdvisor

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Tips For Attendees

• Today’s presentation will last about 50 minutes, plus time at the end for questions.

• Have a question? Type it into the Chat With the Presenters box located on the left side of your ReadyTalk panel and hit SEND.

• Join the conversation about this webinar or submit your questions on Twitter.

– #ECOMholiday

• The recording and slides will be available after the webinar.

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Stay Informed With E-Commerce News

www.channeladvisor.com/blog

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ABOUT CHANNELADVISOR

ChannelAdvisor Overview

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Trusted By Top Sellers Globally

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The ChannelAdvisor Platform

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ChannelAdvisor Same Store Sales

• Measures, through a monthly report, the relative performance of various online channels such as Amazon, eBay, search, CSEs and more

• Uses real transactional data captured by ChannelAdvisor’s software; measures ChannelAdvisor customers’ GMV by channel

• Defines “store” as one customer that is selling through a particular channel

– “Store” is not active until that customer has been with ChannelAdvisor for a year

• Glossary of terms:

– Other 3PM: Third-party marketplaces excluding Amazon and eBay, such as Best Buy, Newegg, Sears

– GS: Google Shopping/Product Listing Ads (PLAs).

• We lump Google Shopping in with CSEs in monthly reports, but break out Google Shopping during the holidays

– Search: This refers to AdWords

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Agenda

• Trends:

– Looking back at 2014

– Changes in consumer behavior

• Priorities and Strategies for Holiday 2015

– Marketplaces

– Digital Marketing

– Checklists

• Q&A

Copyright ChannelAdvisor 2015 #ECOMholiday | 10

E-Commerce Trends

LOOKING BACK: 2014

2014 Holiday News Headlines

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Looking Back: 2014 Trends

• Earlier shopping than in previous years

Source: ChannelAdvisor SSS

E-Commercegrowth rate

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Haunted By 2013

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Looking Back: 2014 Trends

• Amazon and other third-party marketplaces were dominant

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Source: ChannelAdvisor SSS

Looking Back: 2014 Trends

• Consumers were much more mobile during Cyber Five Weekend

Mobile traffic accounted for 52.1% of online traffic on Thanksgiving Day, 49.6% on Black Friday, 41.2% on Cyber Monday.

#ECOMholiday | 16Copyright ChannelAdvisor 2015

Source: IBM

Looking Back: 2014 Trends

iOS vs. Android

• Average Order Value– iOS: $121.86 per order

– Android: $98.07 per order

• Online traffic– iOS: 32.4% of total online traffic

– Android: 15% of all online traffic

• Online sales– iOS: 21.9% of total online sales

– Android: 5.8% of all online sales

#ECOMholiday | 17Copyright ChannelAdvisor 2015

Source: IBM

Looking Back: 2014 Month of Black Friday

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2014 Black Friday Deals Start Early

Looking Back: 2014—Industry

• Online holiday growth Y/Y:

• Online holiday spend:

• Black Friday growth:

• Cyber Monday spend:

• Cyber Monday growth:

15%

$53b

26%

$2b

17%

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Source: comScore and IBM

Looking Back: 2014—ChannelAdvisor

Total growth rate during Cyber Five: 20.6%

Thanksgiving SSS:

Black Friday SSS:

Cyber Saturday SSS:

Cyber Sunday SSS:

Cyber Monday SSS:

22%

20%

27%

18%

17%

#ECOMholiday | 20Copyright ChannelAdvisor 2015

Source: ChannelAdvisor SSS

Looking Back: 2014 Cyber Five SSS (Total)

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Source: ChannelAdvisor SSS

What We Learned In 2014

• Earlier shopping than previous years

• Month of Black Friday/ “Christmas Creep”

• Amazon and other third-party marketplaces (3PM) dominant

• Consumers much more mobile during Cyber Five weekend

#ECOMholiday | 22Copyright ChannelAdvisor 2015

E-Commerce Trends

LOOKING FORWARD: 2015

E-Commerce Trends

LOOKING FORWARD: RETAILER EXPECTATIONS

2015 Online Retail Survey: Holiday Results

Retailers’ insight: Holiday 2014 performance, expectations for Holiday 2015 and strategies to increase sales

8%5%

20%15%

2%

15%

35%

What are your average online sales per year? US

8% 10%17% 17%

11%

38%

What are your average online sales per year?

UK

17%

48%

32%

3%

36%41%

23%

Under 100 staff 100 to 999 staff 1000+ staff Unknown

Company Size

US

UK

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Source: ChannelAdvisor 2015 Online Retail Survey

Importance Of Holiday

7%

19%

43%

23%

7%

1%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

1-10% 11-19% 20-29% 30-39% 40-49% 50% or more

What percentage of your annual sales come during the holiday/Christmas season?

70% said Cyber

Monday and Black Friday are the two most profitable days

throughout the calendar year

#ECOMholiday | 26Copyright ChannelAdvisor 2015

Source: ChannelAdvisor 2015 Online Retail Survey

2015 Holiday Expectations

0%

5%

12%

19%

42%

21%

I expect my online sales to decrease

The holiday season does not influence my online sales

I expect my online sales to remain flat

Increase 1-10%

Increase 10-15%

Increase over 15%

How do you expect your 2015 holiday/Christmas season to compare to your 2014 holiday/Christmas season?

#ECOMholiday | 27Copyright ChannelAdvisor 2015

Source: ChannelAdvisor 2015 Online Retail Survey

Timing For Holiday Promotions

6%4%

11%

33%31%

10%

5%8%

3%

12%

36%

27%

9%

5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

June or earlier July August September October November December

When did you start/will you begin your holiday/Christmas season promotions in 2014/ in 2015?

2014 2015

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Source: ChannelAdvisor 2015 Online Retail Survey

Top Strategy For Increasing Holiday Sales

1%

6%

14%

15%

17%

22%

24%

Other

Stock more product quantities

Start holiday promotions earlier than last year

Offer free shipping/returns

Add products to your catalog

Increase digital marketing/advertising budget

Offer more holiday promotions than last year

What is your top strategy for increasing holiday/Christmas season this year?

#ECOMholiday | 29Copyright ChannelAdvisor 2015

Source: ChannelAdvisor 2015 Online Retail Survey

Holiday Challenges

1%

18%

19%

27%

34%

Other

Inventory management/overselling

Converting mobile traffic

Adjusting to competitor activity (such as promotions)

Fulfilling orders on time

What is your biggest e-commerce challenge during the holiday/Christmas season?

#ECOMholiday | 30Copyright ChannelAdvisor 2015

Source: ChannelAdvisor 2015 Online Retail Survey

Cut-Off Date For Christmas Deliveries

11% 11%

15%

31%

13%

7%9%

3%

7%

11%9%

34%

13%

10%11%

5%

16%

11%

21%

28%

13%

4%

7%

1%

December 17 orearlier

Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 Dec-23 Dec-24

What date will be your cut-off day for guaranteed on-time Christmas deliveries?

Total USA UK

#ECOMholiday | 31Copyright ChannelAdvisor 2015

Source: ChannelAdvisor 2015 Online Retail Survey

E-Commerce Trends

LOOKING FORWARD: CONSUMER BEHAVIOR

Changing Consumer Behavior

• Mobile

• Social

• Zero Friction

• Value Consumer

• Cross-Border Trade (CBT)

We see five changing consumer behaviors driving enormous change in the e-commerce landscape.

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Consumer Behavior: Mobile

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Consumer Behavior: Mobile

M - C O M M E R C E

1 %

D E S K T O P

8 %

T R A D I T I O N A L R E T A I L

9 1 %

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Source: http://www.slideshare.net/FlurryMobile/source14-the-age-of

Consumer Behavior: Mobile

85%

5%9%

79%

7%

14%

Last 12 Months: Next 12 Months:

#ECOMholiday | 36Copyright ChannelAdvisor 2015

Source: http://www.paymentscardsandmobile.com/mobile-commerce-growing-three-times-faster-than-e-commerce/

Consumer Behavior: Mobile

#ECOMholiday | 37Copyright ChannelAdvisor 2015

Source: comScore

Engaged Minutes Spent Per Device

0K5K

10K15K20K25K30K35K40K45K50K55K60K65K

DESKTOP SMARTPHONE TABLET

Tota

l Min

ute

s (M

M)

Consumer online shopping activity

#ECOMholiday | 38Copyright ChannelAdvisor 2015

Source: comScore Media Metrix and Mobile Metrix, US, March 2013-Sept. 2014

Consumer Behavior: Mobile

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Consumer Behavior: Mobile

2 0 1 3

A L L T R A N S A C T I O N S

100%

2 0 1 4 ( X 2 )

42%

M O B I L E T R A N S A C T I O N S

51%20%

Q 1 2 0 1 5

Sources: http://www.wsj.com/articles/alibabas-revenue-rises-on-mobile-growth-1422533361?mod=djemalertTECH http://www.onlinemarketing-trends.com/2014/09/mobile-shopping-at-alibaba-contibutes.html

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Marketplaces: Mobile

• Action: Add Amazon and eBay to your mobile strategy– Amazon

• Include product identifiers (UPC, EAN, etc.) so you match with the correct listing

• Use Amazon Sponsored Products to highlight products and get visibility on mobile devices (and desktop)

#ECOMholiday | 41Copyright ChannelAdvisor 2015

– eBay

• Use Item Specifics (both those recommended by eBay and Custom Item Specifics, which you define)

• Use responsive design templates

Marketplaces: Mobile

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Item Specifics

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Responsive Design Templates

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• Action: Optimize your Product Listing Ads (PLAs)—this should be a priority

• Adjust your mobile bid modifier

• Diversify beyond Google with PLAs on Yahoo and Bing

Digital Marketing: Mobile

#ECOMholiday | 45Copyright ChannelAdvisor 2015

• Action: Take advantage of Yahoo Gemini

• Clone your current campaigns and ad groups from Google AdWords into Yahoo Gemini

• Adjust your bids and daily budgets where needed

Digital Marketing: Mobile

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Digital Marketing: Mobile

• Action: Create an optimal user experience to help increase conversion rates• Optimize your product landing

pages and create an easy and trustworthy checkout experience

• Consider mobile-friendly payment options—Apple Pay, PayPal, etc.

#ECOMholiday | 46Copyright ChannelAdvisor 2015

Consumer Behavior: Social

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Mobile And Social In A Virtuous Cycle

$4.0B

$3.5B

$3.0B

$2.5B

$2.0B

$1.5B

$1.0B

$0.5B

$0.0B

PAYMENTS AND FEES

MOBILE ADVERTISING

ADVERTISING (NON-MOBILE)

REVENUE

Source: http://www.businessinsider.com/facebooks-mobile-ad-business-is-three-quarters-of-total-revenue-2015-4

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Marketplaces: Social—Buy Buttons

• Action: Keep your eye on new opportunities with social buy buttons; social platforms potentially become marketplaces

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Marketplaces: Social—Buy Buttons

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Digital Marketing: Social

• Action: Take advantage of Facebook Dynamic Product Ads

• Create a Business Manager account

• Optimize product feed and set up pixels

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Facebook Dynamic Product Ads

#ECOMholiday | 53Copyright ChannelAdvisor 2015

Digital Marketing: Social

• Action: Enlist Rich Pins to make sure people are sharing your products

• Set up Pinterest Business Account

• Get pixels installed; optimize product feed and monitor analytics

#ECOMholiday | 54Copyright ChannelAdvisor 2015

Consumer Behavior: Zero Friction

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• Time is money

• Brand conscious and loyal

Convenience vs Value-Oriented Consumers

• Bargain Shoppers – not brand loyal

• eBay shoppers –more time than money

CONVENIENCE VALUE

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Delivery Is The New Battleground

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Marketplaces: Zero Friction

• Action: Establish quick and easy shipping

• Utilize FBA for those hot items to ensure they are Prime eligible (now not the case 100% of time)

• Hire additional employees to process items more quickly

#ECOMholiday | 61Copyright ChannelAdvisor 2015

Marketplaces: Zero Friction

• Action: Beef up your return policies • Have your return policy extend until the new year

to give customers time to make a return

• Consider offering free return shipping

• Action: Make sure orders are convenient for customers • eBay: Use Click & Collect programmes in the UK

(Argos) and AU (Woolworths)• Expect all marketplaces to request more

accommodating returns policies to get visibility and badging (i.e., Top Rated Sellers)

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Digital Marketing: Zero Friction

• Action: Be sure you are advertising with PLAs

• Optimize your PLAs for broad exposure and more…

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Consumer Behavior: Value Consumer

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Value Consumer

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Jet’s Dynamic Pricing Engine

• Boosts basket size and profitability by finding efficiencies, based on retailers’ preset rules.

Efficiencies come when Jet shoppers:

Purchase multiple items

Approve a slower delivery method

Live close to a distribution center

Turn off the option of returning items

Reach an order threshold

#ECOMholiday | 66Copyright ChannelAdvisor 2015

Marketplaces: Value

• Action: Expand your reach on emerging marketplaces such as Jet

• Apply for a Jet Partner account to get started

• Explore additional opportunities on other 3MPs

• Action: Run promotions

• Check out offers and pursue ones that are most meaningful

• Emerging marketplaces are often open to including your products in their deals programs

#ECOMholiday | 67Copyright ChannelAdvisor 2015

Digital Marketing: Value

• Action: Use Google Merchant Promotions to advertise the best value to consumers

• Create a Promotions feed in Google Merchant Center (you must fill out interest form first)

#ECOMholiday | 68Copyright ChannelAdvisor 2015

Digital Marketing: Value

• Action: Send a feed to all comparison shopping engines (CSEs)

• Optimize your feed; fill in any missing attributes; make sure your titles are complete; send your feed to each CSE at least once a day

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Consumer Behavior: CBT

#ECOMholiday | 70Copyright ChannelAdvisor 2015

CBT: Massive Growth Expected

Source: Extrapolated from http://blog.ebay.com/paypal-unveils-the-new-modern-spice-routes/

29%

2014 2018

C R O S S - B O R D E R O N L I N E S H O P P I N G P O P U L A T I O N

101M

52M

130M

72.6M

111%

2014 2018

C R O S S - B O R D E R O N L I N E S H O P P I N G S P E N D

US $145.4B

US $50.32B

US $307B

US $106B

TOTAL

VIA MOBILE DEVICES

#ECOMholiday | 71Copyright ChannelAdvisor 2015

eBay

53% 57% 125%

SELLERS LISTINGS ORDERS

M A R K E T P L A C E

S H I P P I N G

Source: http://www.ebayinc.com/in_the_news/story/ebays-global-shipping-program-numbers

#ECOMholiday | 72Copyright ChannelAdvisor 2015

Amazon

M A R K E T P L A C E

2 BI T E M S

Source: http://phx.corporate-ir.net/phoenix.zhtml?c=176060&p=irol-newsArticle&ID=2002794

#ECOMholiday | 73Copyright ChannelAdvisor 2015

AliExpress

#131 %

2 0 0 8 2 0 1 5

3 9 %

S A L E S

$ 1 T

Source: http://www.channeladvisor.com/blog/?pn=scot/ebay-q4-2014-results-from-a-sellers-perspective

#ECOMholiday | 74Copyright ChannelAdvisor 2015

Marketplaces: CBT

• Action: Sell your hot items on international marketplaces

• Research international markets and test items that are relevant

• eBay - Global Shipping Program

• Amazon - FBA

• Amazon - Utilize Unified Accounts to make sharing inventory across Europe or North America easier

Other CBT Marketplaces: MELI CBT, AliExpress, TMall Global, Cdiscount

#ECOMholiday | 75Copyright ChannelAdvisor 2015

AliExpress

AliExpress is a cross-border e-commerce solution enabling Chinese merchants to sell overseas.

#ECOMholiday | 77Copyright ChannelAdvisor 2015

Tmall Global is

developing into

the largest

importing

goods

shopping

destination for

Chinese

consumers.

TMall Global

Tmall Global is a cross-border e-commerce solution enabling overseas merchants to enter and participate in China’s online retail market throughTmall.com.

#ECOMholiday | 78Copyright ChannelAdvisor 2015

Singles Day

• $9.3B sales through Alibaba

• Alibaba sales surpassed $2B in first hour

• Alibaba processed 278M orders within 24 hours

#ECOMholiday | 79Copyright ChannelAdvisor 2015

Digital Marketing: CBT

• Action: Utilize PLAs and text ads to reach global consumers

• Action: Take advantage of global CSEs

#ECOMholiday | 80Copyright ChannelAdvisor 2015

We believe these five consumer trends have broad

implications for brands, manufacturers and retailers.

Those who understand and take action will seize the

advantage while others will be left behind.

Take Action

#ECOMholiday | 81Copyright ChannelAdvisor 2015

Take Action

HOLIDAY 2015 CHECKLIST

Holiday 2015 Checklist—Trends

Add Amazon and eBay to your mobile strategy

Optimize your Product Listing Ads (PLAs); take advantage of Yahoo Gemini

Keep your eye on buy buttons

Take advantage of Facebook Dynamic Product Ads and Rich Pins

Establish quick and easy shipping; beef up your return policy

Create an optimal user experience, mobile-friendly payments

Expand your reach on emerging marketplaces

Send a feed to all CSEs

Sell your hot items on international marketplaces

Utilize PLAs and text ads to reach global consumers

#ECOMholiday | 83Copyright ChannelAdvisor 2015

Holiday 2015 Checklist—Misc.

Check that your shipping and handling policies are in line with the requirements for being a Top Rated Seller

Address customer issues head on; keep open lines of communication

Keep an eye on buyer feedback

Improve quantity management

Advertise on Amazon

Make sure your keywords are up to date

#ECOMholiday | 84Copyright ChannelAdvisor 2015

Questions?

Contact us:

Phone: 866-264-8594

Email: [email protected]

Newsletter: www.channeladvisor.com/newsletter

Blog: www.channeladvisor.com/blog

Web: www.channeladvisor.com

Twitter: @ChannelAdvisor

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APPENDIX

ChannelAdvisor SSS Methodology

• The way SSS is compiled is as follows:– Each ChannelAdvisor customer's GMV is recorded on a monthly basis

by channel.– We think of a “store” metaphorically as one customer selling through a

particular channel – in other words, one of our online retailer customers can have multiple “stores” if they use more than one channel to sell their merchandise.

– Once a “store” has been active with ChannelAdvisor for a year (that is, the customer has been with us for at least a year and has been utilizing the particular channel for at least a year), then we begin to include it in the SSS data.

– If a customer stops working with ChannelAdvisor or stops selling on a particular channel, then that combination of customer and channel —that “store” — is no longer included (assuming it made it past the year mark in the first place). When an online retailer stops selling on a channel or stops utilizing ChannelAdvisor, they are immediately taken out of the SSS data.

– GMV is measured in native currency and compared in native currency.

#ECOMholiday | 87Copyright ChannelAdvisor 2015

ChannelAdvisor SSS Disclaimers

There are many reasons this data is not a proxy for overall e-commerce activity as well as individual channel total performance including, but not limited to:• Customer variance - ChannelAdvisor's customers may not be representative of the overall

customer mix of any individual channel. For example, on eBay, our customers are skewed toward a larger eBay customer set, not the average.

• Category variance – ChannelAdvisor’s customers are over-represented in some categories (electronics, sporting goods and auto parts) and under-represented in others (collectibles, BMV/media, etc.). For example, on Amazon, ChannelAdvisor has very few media customers so we have no visibility into that large chunk of Amazon's business.

• Cross Border Trade variance - While ChannelAdvisor does have a fair amount of non-domestic GMV, our mix of domestic and international customers is not necessarily equivalent to that of other e-commerce players.

• Software Impact - At the end of the day, we are a software company. Some of our features cause a short-term bump in sales that may skew results high at the beginning and then lower at the end of a one-year SSS cycle.

• Channel impact - Certain changes at e-commerce channels may cause disproportionate good or harm to our customer base, category mix, international mix and software. While the data shows these changes, because we are not a material part of every channel, over 90% of that channel's business may not have the same impact (positive or negative).

• SSS is a metric unique to ChannelAdvisor- eBay, Amazon, Google and other e-commerce businesses do not measure SSS. They look at overall growth when they report their financial metrics. We believe SSS is important to our customers from a benchmarking standpoint, which is why we do it this way — it is not intended to be a proxy for the overall performance of any of these e-commerce channels.

#ECOMholiday | 88Copyright ChannelAdvisor 2015

SURVEY METHODOLOGY

• The survey was conducted among 100 US and 102 UK decision makers in e-commerce.

• The interviews were conducted online by Redshift Research in May and June 2015 using an email invitation and an online survey.

• Sample was selected from the Crowdology & Crowdology partner panels. Crowdology™ is an online panel owned and operated by Redshift Research. The Crowdology™ panel is balanced across regional, age and gender demographic factors, and is nationally representative of the UK population. Each respondent completes 120 profiling questions before being accepted to join our panel. Panel Quality Management is carried out frequently to ensure reliable surveys.

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