Apparel sales are expected to increase their lead over computer equipment and consumer electronics in coming years.
Excerpts from US Online Retail Forecast, 2009 To 2014 (Premium)
- Online retail managed a noteworthy 11% year-over-year growth in 2009. Topping out at $155.2 billion in sales in 2009, 154 million individuals bought online, representing 67% of the online population and a 4% increase in the number of Web buyers over the previous year.
- This year will be a mixed bag for retailers, as consumer spending will lag growth in gross domestic product (GDP)and advances in market indexes, with an expected increase in retail container traffic. The National Retail Federation (NRF) forecasts a conservative 2.5% growth in total retail sales this year.
Online retail will stabilize at a healthy 10% CAGR over the next five years.
Excerpts from Western European Online Retail Forecast, 2009 To 2014 (Premium)
- Online retail sales in Western Europe reached €68 billion in 2009 and are projected to grow to €114 billion by 2014.
- The European online retail market, which includes the EU-17 — Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the UK — will increase at a growth rate of 11% over the five-year forecast period.
- These business-to-consumer (B2C) online sales are continuing to rise at this double-digit growth rate because most Western European countries’ online retail sales are still relatively
immature. Meanwhile, those that are more mature like the UK are seeing continued growth due to the strong online value proposition.
- Europeans spent an annual average of €483 per person in 2009, and this amount will grow to €601 in 2014.
Technorati Tags: apparel, computers, consumer electronics, eCommerce, online-retail, retail sales, retailers
More than half of affluent online buyers say they are worse off than a year ago.
Excerpts from Affluent Online Buyers Are Negatively Affected By The Down Economy
In spite of their assets and optimism about their financial future and that of the US economy, more affluent online buyers believe that they have been negatively affected by the latest economic developments versus average online buyers. Thus, they intend to be cash-conservative shoppers by spending less, trading down, and researching purchases for good deals and prices.
Forrester defines the US affluent online buyer as the consumer whose combined financial assets have a total value of $1 million or more and who has purchased products or services online in the past three months. Members of this group represent 4.5% of the total online buying population but account for 9.2% of total online sales.
Affluent online buyers spend 65% more on the Web and 67% more in brick-and-mortar stores than average online buyers. They also spend 87% more when purchasing products or services over the phone, compared with average online buyers.
Fifty-eight percent of affluent online buyers say that their financial situation has become substantially worse/worse in the past year. This incidence is actually seven percentage points higher than among average online buyers, which
shows that the affluent are not immune to the damaging effects of the financial crisis.
But affluent online buyers are optimistic about the future. Fifty-one percent of affluent online buyers versus 30% of average online buyers think that their personal financial situation will become slightly or substantially better in the coming year.
Thirty-eight percent of affluent online buyers plan to shop less overall, and 22% intend to avoid major purchases in the next 12 months.
Technorati Tags: eCommerce, luxury retailers, online-retail
Marketing, eCommerce, CRM, and advertising will be transformed by social networks over the next five years as new technology provides consumers with portable online identities, according to Forrrester Research. In The Future of the Social Web, Forrester analyst Jeremiah Owyang writes that social experience is disjointed because consumers have separate identities in each social network they visit.
“The Social Web is about to evolve into something much broader than a few social network sites: a consistent backdrop for every online activity. Portable social IDs and the changes they enable will transform how consumers, brands, and social networks interact. This online social experience will evolve through five eras.”
A simple set of technologies that enable a portable identity will soon empower consumers to bring their identities with them — transforming marketing, eCommerce, CRM, and advertising.
- The era of social relationships. This was the first stage of the Social Web, starting in the mid- 1990s with communities like AOL and maturing a few years ago. In this era, people connected to each other using simple profiles and friending features to share information, discussions, and media.
- The era of social functionality. Today’s social networks have evolved beyond “friending” into
platforms that support social interactive applications and provide new meaning and utility to
communities. Even so, social relationships are still locked up within sites.
- The era of social colonization. In the next stage of social evolution, starting later in 2009,
technologies like OpenID and Facebook Connect will let individuals traverse the Internet with
their social connections along for the ride. The boundaries of social networks and traditional
sites will blur, making every Web site into a social experience.4
- The era of social context. Next year, as sites begin to recognize people’s personal identities and their social relationships, they will customize visitors’ experiences based on their preferences, their behaviors, and who their friends are. In addition to enabling more intense social applications, in this stage social networks will absorb features of email and become a base of operations for everyone’s online experiences.
- The era of social commerce. Starting about two years from now, as social networks become the repository for identities and relationships, they will become more powerful than corporate Websites and CRM systems. Communities will become the driving force for innovation. As a result, brands will cater to communities, resulting in a power shift toward the connected customer.
destinationCRM.com provides more detail on the report, including an interview with the author. The full report is available here.
Technorati Tags: advertising, brands, CRM, eCommerce, social-networks
Forrester Research predicts that more than 54% of Western European adults will shop online by 2014. “We expect that growing demand and greater promotion by merchants will drive the number of online shoppers in the Europe from 137 million in 2009 to 187 million in 2014.”
“Online retail and travel in Western Europe will reach €129 billion in 2009 and is projected to grow to €203 billion by 2014. The European eCommerce market, which includes the EU-17 — Austria, Belgium, Switzerland, Germany, Denmark, Spain, Finland, France, Greece, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Sweden, and the UK — will grow at a CAGR of 8% over the six-year forecast period.”
Business-to-consumer (B2C) and consumer-to-consumer eCommerce continue their double-digit year-over-year growth rate, in part because sales are shifting away from stores, the number of new online shoppers is rising, and online shoppers are less sensitive to adverse economic conditions than the average European consumer.
For details see Western European Online Retail And Travel Forecast, 2008 To 2014
Technorati Tags: eCommerce, Europe, Forrester, online-retail, travel
Forrester Research says that while eBusiness isn’t impervious to the downturn, it is faring better than offline channels. eBusines professionals surveyed by Forrester say their budgets will stay steady for 2009 and that the online channel continues to grow in importance within their organizations.
Even in these tough times, most eBusiness leaders plan to follow through with planned investments in new technologies or site enhancements.
Forrester says Web analytics and search lead the pack for investment this year and that customer ratings and reviews are top of mind for site enhancements.
Details are available in The Recession’s Impact On 2009 eBusiness Plans.
Technorati Tags: eBusiness, eCommerce, online-marketing, search, web-analytics
In an ominous harbinger of holiday spending, comSCore reported today that US online spending last month grew by only 1 percent over October 2007, down from the 5 percent annual growth rate recorded in September. October saw the lowest monthly growth rate since comScore began tracking e-commerce in 2001.
Retail e-commerce growth rates have fallen from a high of 28 percent in August 2007 to a growth rate of just 1 percent in October 2008. October represents the sixth consecutive month this year of slowing growth rates.
The overall softness in online retail spending was precipitated by curtailed spending across mid to lower income segments, with households earning less than $50,000 reducing their spending compared to a year ago.
Technorati Tags: eCommerce, economic-data, online-retail, online-shopping, retail
Online information is increasingly used for research, but only a small percentage of searches lead to online purchases, according to a survey from the Pew Center for Internet and American Life Project. The survey, focussing on shopping for music, cellphones and housing showed that, more often than not, purchases are consummated offline and post-purchase online commentary is only a small part of a typical shopper’s activities.
The online mall helps people sort through product choice, but it is not the only method they use to assess products and not a place where people often close the deal.
Other key findings:
Search: Online information can make product research more efficient, and it can be particularly useful for a feature-rich product. But it is not the only tool buyers use to gather information.
- Influence: Online information is generally modest in its impact on decisions, but looms larger when a purchase requires a big commitment.
- Participation: Rating products after purchase is surprisingly rare, but music buyers make direct
connections with artists after they have bought their tunes.
- Disintermediation: When it comes time to make the transaction, it is still an offline world. But fewer barriers between buyers and sellers can help consumers get better deals. Online resources augment the shopping experience in tactical ways for users.
- The music-purchasing experience: Digital resources play an important role that allows consumersto engage with music after it is bought, but online resources do not play a large role in the musicpeople choose or how they consume it.
- The cell phone-purchasing experience: Online information is influential for cell phone buyers as they do comparison shopping. In addition to consulting websites of vendors, they also go to stores and consult salespeople as they sort through options.
- Hunting for housing: Online information reduces search costs for people looking for a new place tolive, but online resources supplement buyers’ toolkits. They don’t substitute for offline resources.
Technorati Tags: eCommerce, online-shopping
More than 85% of the world’s online population has used the internet to make a purchase, increasing the market for online shopping by 40% in the past two years, cccording to the latest Nielsen Global Online Survey on internet shopping habits.
Globally, more than half of internet users have made at least one purchase online in the past month, according to Nielsen.
Among internet users, the highest percentage shopping online is in South Korea, where 99% of those with internet access have used it to shop, and 79% of these internet users have shopped in the past month. Other prolific shoppers are in the last month are: the UK (76%), Switzerland (67%) and the US (57%.)
The most popular purchased items over the internet are books,clothing/accessories/shoes, videos/DVDs/games, airline tickets, and electronic equipment.
Online shoppers tend to stick to the shopping sites they are familiar with, with 60% saying they buy mostly from the same site
Meanwhile, Forrester Research expects growth in eCommerce to slow this year as the industry will be hit exceptionally hard by expected declines in consumer spending.. However, the industry will still grow at a rate of roughly 17%, Forrester says in its Top US eCommerce And Online Retail Predictions For 2008.
Much of that growth will result from overseas expansion, as ecommerce firms take advantage of the weak dollar. European and Asian markets are seen as particularly attractive options for US ecommerce firms.
Much of the growth in 2007 was, in fact, led by the adoption of revenue-driving initiatives such as alternative payment adoption and improved Web site operations.
Another developing feature of eCommerce this year: increased seasonality in the sales numbers. That is to say, holiday sales will be more important than ever.
Other trends for 2008 identified in the report:
- More made-to-order merchandise initiatives.
- A more mature interpretation of multichannel integration.
- Diminished expectations for Social Computing.
- Broad adoption of rich Internet applications (RIAs).
In a related report, US eCommerce Forecast: 2008 To 2012, Forrester says US online retail reached $175 billion in 2007 and is projected to grow to $335 billion by 2012. Business-to-consumer (B2C) eCommerce continues its double-digit year-over-year growth rate, in part because sales are shifting away from stores and in part because online shoppers are less sensitive to adverse economic conditions than the average US consumer.
Despite the continued growth of the channel, online retailers face several challenges to growth.
Technorati Tags: eCommerce, internet-commerce, online-shopping
Since the early days of the web, automotive manufacturers have struggled to achieve balance between supporting the needs of the online customer and keeping their dealers happy. The open information, self-service model of the web often conflicted with dealer-controlled sales processes.
Thankfully, in recent years, most of the automotive OEMs have found a comfortable balance, while their dealers have learned to embrace the web as a lead generating engine. Even so, there are vast differences today in the ease in which a user can interact with various auto manufacturer websites.
Web analytics firm Compete has just completed a study which ranks automotive manufacturer websites based upon shopping engagement. Compete defines shopping engagement for auto sites as the percentage of overall visitors who visit one or more of the following functions:
- Configurator
- Request a Quote
- Locate a Dealer
- Payment Estimator
According to Compete’s data, users who engage with these shopping tools are twice as likely to buy as those who do not.
Using their web traffic data, Compete was able to rank brands based upon the level of engagement of users on their websites. Perhaps surprisingly, the top three brands, in terms of engagement, were Mini, Kia and Isuzu. Mercedes-Benz ranked fourth, followed by Pontiac and Hyundai. Meanwhile, some of the top-selling brands such as Toyota, Honda, Chevrolet and Ford, all fall below average in terms of online engagement.
Compete suggests that visits to the “request a quote” feature are the best indicator of interest, with between 7-10% of those who use that feature buying a vehicle. Kia leads all manufacturers in this area, with 14% of its website visitors requesting quotes, followed by Toyota, Acura and Honda. Interestingly, none of the other leaders in terms of engagement appear in the top 10 in use of “request a quote”.
While the automotive OEMs have made much better use of the Internet in recent years, it seems clear that there is great opportunity for them to improve the level of engagement with their customers, increasing their sales opportunities.
Complete results of the study may be found on the Compete blog.
Technorati Tags: automotive, eCommerce, internet, Kia, Mini-Cooper
The first half of 2008 portends a mixed bag of trends affecting Internet companies, according to Merrill Lynch analyst Justin Post.
A bump in ad spending, improved display ad targeting and the potential break-up of larger players should be positive developments for stock prices. But greater third-party seller competition and the emergence of the social networking revenue model are negative factors. Greater focus on the mobile market could provide both upside and downside potential, Post writes in Merrill’s Top Internet Themes for 1H’08 report.
Merrill’s top Internet stock picks for 2008 are Google (GOOG)and Priceline (PCLN). The top six themes for the first half of 2008:
1) Intensifying third-party seller competition
Post sees potential negatives resulting from eBay’s anticipated changes in listing fee structure, where initial listing fees will be lower, with final value fees set higher. He sees potential volatility in Amazon (AMZN) as investors try to assess the impact of eBay’s new fee structure.
2) Spending increases in online display advertising.
The election cycle, combined with reduced television viewership due to the writers’ strike, could generate a potential $150 million bump for sites such as Yahoo (YHOO) and Google.
3) Increasing focus on the mobile market
Google and Yahoo are both focused on the mobile market, with Yahoo focused on consumer electronic devices, while Google remains a candidate to win the spectrum auction. Post estimates Google to have less than a 50/50 chance of winning the auction and views a loss as a catalyst to Google stock as it removes the risks and uncertainty of Google entering that space.
(CreditSights believes that Google’s entry into the wireless industry could potentially introduce significant long-term instability into the wireless industry. In a new report A Look At the Upcoming 700MHz Spectrum Auction, CreditSights says the actual impact of the “open access” rule could be relatively minor at this point.)
4) Improving display ad targeting technology
Driven by Google’s acquisition of DoubleClick and Yahoo’s acquisitions of Right Media and Blue Lithium, improved ad targeting should increase the value of online display inventory. This will lead to higher CPMs and increase the average RPM (revenue per thousand page views).
5) Asset Value Unlock speculation
A successful split of IAC InteractiveCorp into five companies later this year could highlight value potential of other companies. Merrill Lynch identifies Yahoo, eBay (EBAY) and Expedia (EXPE) as potential candidates.
6) Emergence of Social Network Revenue Models
While social networking sites such as Facebook, MySpace and others seek to monetize their increasing traffic, they continue to pull traffic away from the traditional portals, search engines and eCommerce sites. This creates increased risk for the traditional large Internet sites most notably MSN, AOL and Yahoo, which are losing visitors.
The full report has been posted on the Guy Kawasaki blog.
Technorati Tags: (EXPE), (GOOG), (PCLN), (YHOO), Amazon, AMZN, eBay, eCommerce, expedia, Google, internet, Microsoft, predictions, priceline, wireless, Yahoo
