State of the U.S. Online Retail Economy in Q2 2010




Gian Fulgoni, Chairman, comScore, Inc.
Note: A copy of this present...
Data sourced from comScore’s global panel of 2 million Internet
users


   °
360°View of Consumer Behavior                ...
Validation of comScore Sales Data:
          Comparison of comScore data to U.S. Department of Commerce



               ...
Following a soft 2009, total e-commerce sales through Q2 2010 were up
  7% versus year ago. Travel and non-travel up 5% an...
Positive growth returned in 2010, with notably strong growth rates in
   March & April, a possible result of heavier promo...
After two quarters of accelerating sales, e-commerce growth
plateaued in Q2

                                     Quarterl...
e-Commerce continues to gain share of retail spending on an apples-
to-apples basis

                                     ...
Lower-and-upper income segments are drivers of online growth in Q2 2010,
but the large mid-income segment shows no growth ...
Worries of double-dip recession are mounting, stoking fear among
consumers


   “The recovery just isn’t looking
 that gre...
The ‘Scariest Jobs Chart Ever’ is beginning to look even scarier

        % Job Losses Relative to Peak Employment Month i...
An increase in pessimism regarding the unemployment rate
coincides with findings from the Pew Research Center showing the
...
Unemployment remains the top concern among consumers; financial-
 market concerns have risen, especially among the upper-i...
76% of consumers have changed how they spend money based on
the recession and 43% of them say these changes are permanent
...
76% hold a pessimistic view of current economic conditions;
3 in 10 predict conditions will worsen in the future

        ...
Who is Today’s Online Consumer?




            © comScore, Inc. Proprietary and Confidential.   15
The average heavy online buyer spent $615 in Q2 2010, nearly 5X
more than medium buyers and 20X more than light buyers

  ...
The leading ten retailers within the heavy e-commerce buyer segment
are split between multi-channel and pure-play retailer...
Six in ten consumers say the Internet has become important when
making buying decisions and 59% of them say it has increas...
Consumer loyalty to specific retailers and brands has steadily
 decreased over the past two years, while likelihood to sho...
Amazon has the largest audience with 76 million UVs in Q2 2010; it’s
one of the fastest growing sites in the category, sec...
Pure-play retailers have gained market share over the past two years.
Multi-channel retailers have lost share

           ...
Larger retailers continue to benefit from leveraging deeper discounts,
free shipping incentives and inventory, garnering a...
Women are more avid online buyers than men, making up 58% of
total dollars spent and 61% of online transactions




      ...
60% of buying on multi-channel sites is attributable to women,
whereas the distribution on pure-play sites is more evenly ...
Most product categories showed sales growth versus year ago.
Consumer electronics and computers have shown strength
throug...
The Impact of Promotions & Price Incentives on
Internet Behavior




             © comScore, Inc. Proprietary and Confide...
Comparison Shopping sites, such as Nextag and Shopping.com,
have gained visitors and increased time spent on their sites
 ...
Coupon sites continue to grow in importance; category visitors tend
 to skew slightly older and female

                  ...
Coupons.com, which leads the Coupon category in terms of UVs,
reports $1 billion in redemption value in first half of 2010...
Flash Sale sites continue to gain traction with high growth rates
 versus year ago, although we’re seeing a slight slowdow...
Group buying is surging. Groupon.com and LivingSocial continue to
  execute against strategies that enhance the user exper...
Half of consumers say they’ll abandon their shopping cart if free
shipping isn’t offered, a quarter will only buy when fre...
Special pricing, future discounts and rewards/incentives are
appealing alternatives to free shipping for consumers

      ...
Other Digital Trends Retailers Can’t Afford to Ignore




              © comScore, Inc. Proprietary and Confidential.   34
Facebook monthly UVs now over 145 million in the U.S. while
  MySpace still reaches 60 million – more people than any sing...
On fixed Internet, Retail sites and Search have a comparable reach,
however, with Smartphones and Mobile, Search’s reach i...
Among Smartphone users, only 10% have purchased physical items via
their phones. On average, these users spent $121 in the...
Twitter experienced explosive growth in early 2009, which has since
        leveled off at about 20+ million monthly UVs. ...
22% of Twitter users follow businesses to find special deals,
promotions or sales

                                       ...
The Use of Video in Retail




             © comScore, Inc. Proprietary and Confidential.   40
Retail video – a quick overview


                                                                                      Ju...
Adding video to retail sites is extremely powerful

                      Buying Power Index
        Source: comScore Vide...
Nearly 100% of online spenders are video viewers


   Non-Video
    Viewers
      4%




               Video Viewers
    ...
Video advertising is significant in terms of online audience reach


 63% of the online audience is
 currently reached by
...
Video advertising is increasingly important in terms of impact


  83% of all online spending comes from these
  video vie...
Not all video audiences are created equal when it comes to video
advertising and retail spending at a category level


   ...
Tips for Retailers Considering Video

 For key products with important and detailed benefits, adding video to your
 site c...
comScore Holiday Season Retailer Report

Track the performance of your site versus your competitors’ during the
  holiday ...
QUESTIONS?




Please contact us at learnmore@comscore.com if you have any
additional questions or comments.




         ...
Thank You!
Note: A copy of this presentation will be sent to all attendees within 24
hours of today’s webinar.




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State of the U.S. Online Retail Economy in Q2 2010

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comScore Chairman Gian Fulgoni presents his quarterly review of the state of the U.S. online retail economy during this webinar from Thursday, August 19. This installment includes an overview of e-commerce trends in the second quarter of 2010 and survey findings that highlight consumer sentiment about the current state of the economy.

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State of the U.S. Online Retail Economy in Q2 2010

  1. 1. State of the U.S. Online Retail Economy in Q2 2010 Gian Fulgoni, Chairman, comScore, Inc. Note: A copy of this presentation will be sent to all attendees within 24 hours of today’s webinar
  2. 2. Data sourced from comScore’s global panel of 2 million Internet users ° 360°View of Consumer Behavior Analysis Parameters E-commerce data includes all worldwide buying on U.S. sites Unless explicitly stated otherwise, the term e-commerce refers to online retail spending, which excludes travel, autos and auctions Behavioral activity through July 2010 Survey issued in July 2010, n=1086 Consumer Measurements: – Site Visitation – Online Buying – Video Viewing – Attitudes and Intentions – Behavioral Segments Retailer Views: – Large vs. Small Retailers – Multi-Channel vs. Pure-Play Retailers © comScore, Inc. Proprietary and Confidential. 2
  3. 3. Validation of comScore Sales Data: Comparison of comScore data to U.S. Department of Commerce Quarterly U.S. e-Commerce Sales* ($ Billions) Quarterly U.S. e-Commerce Growth* vs. YA Source: comScore & U.S. Department of Commerce (DOC) Source: comScore & U.S. Department of Commerce (DOC) 50 Dept. of Commerce (DOC) comScore Estimate of DOC Dept. of Commerce (DOC) comScore Estimate of DOC 45 35.0% 40 30.0% Correlation: 0.96 35 25.0% % Growth vs. YA 30 20.0% Billions ($) 25 15.0% 20 10.0% 15 5.0% 10 0.0% 5 -5.0% 0 -10.0% 2005 - Q1 2005 - Q2 2005 - Q3 2005 - Q4 2006 - Q1 2006 - Q2 2006 - Q3 2006 - Q4 2007 - Q1 2007 - Q2 2007 - Q3 2007 - Q4 2008 - Q1 2008 - Q2 2008 - Q3 2008 - Q4 2009 - Q1 2009 - Q2 2009 - Q3 2009 - Q4 2010 - Q1 2010 - Q2 2005 - Q1 2005 - Q2 2005 - Q3 2005 - Q4 2006 - Q1 2006 - Q2 2006 - Q3 2006 - Q4 2007 - Q1 2007 - Q2 2007 - Q3 2007 - Q4 2008 - Q1 2008 - Q2 2008 - Q3 2008 - Q4 2009 - Q1 2009 - Q2 2009 - Q3 2009 - Q4 2010 - Q1 2010 - Q2 *Note: To be consistent with DOC, comScore estimate excludes © comScore, Inc. Proprietary and Confidential. 3 travel and event tickets but includes auction fees and autos.
  4. 4. Following a soft 2009, total e-commerce sales through Q2 2010 were up 7% versus year ago. Travel and non-travel up 5% and 9%, respectively. e-Commerce Dollar Sales Growth ($ Billions) Source: comScore e-Commerce Measurement +7% +7% +17% -2% +19% $214 $209 +22% $200 +26% $171 +9% $84 $80 -5% +29% $143 $77 +12% $117 $69 +13% $111 $93 $61 +20% $72 $51 +28% $44 +5% +6% Travel $40 +33% 0% $30 +24% $123 +20% $130 $130 +24% $102 Non- +26% $67 +26% $82 $67 +9% Travel $42 $53 2002 2003 2004 2005 2006 2007 2008 2009 YTD 2010 2010 YTD © comScore, Inc. Proprietary and Confidential. 4
  5. 5. Positive growth returned in 2010, with notably strong growth rates in March & April, a possible result of heavier promotion activity in Spring of 2010 Monthly e-Commerce Sales Growth vs. YA ShopLocal Index of Weekly Offers Per Store Source: comScore e-Commerce Measurement Source: ShopLocal Month Growth Rate vs. YA 400 2009 2010 January 2010 +7% 350 February 2010 +4% 300 March 2010* +17% April 2010 +12% 250 May 2010 +8% 200 June 2010 +7% July 2010 +9% 150 *March saw an additional bump in activity due to timing of Easter in 2010 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 Week For January through July 2010, non-US residents accounted for 6.6% of ecommerce sales at U.S. sites Note: International contribution is defined as the percent of e- commerce sales made on U.S. sites by consumers residing outside © comScore, Inc. Proprietary and Confidential. 5 of the U.S. It excludes U.S. sites with non-U.S. addresses (e.g. amazon.co.uk).
  6. 6. After two quarters of accelerating sales, e-commerce growth plateaued in Q2 Quarterly e-Commerce Sales Growth vs. YA Source: comScore e-Commerce Measurement 23% 23% 25% 17% 19% 20% 15% 11% 13% 10% 9% 10% 6% 3% 5% -3% 0% -1% -2% 0% Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 -5% Quarterly Retail & Food Services Sales Growth* vs. YA Source: U.S. Department of Commerce (DOC) When excluding autos, 7% 10% gas and food/beverage, Q2 6% 4% 4% 5% 4% retail sales growth was 5% 3% 2% 1% marginally softer at +6% 2% 0% Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 -5% -10% -8% -7% -9% -15% -10% *Note: The U.S. Department of Commerce calculation includes total © comScore, Inc. Proprietary and Confidential. 6 retail and food service sales, which also includes motor vehicles and parts dealers.
  7. 7. e-Commerce continues to gain share of retail spending on an apples- to-apples basis e-Commerce Share of Corresponding Retail Spending* Source: comScore for e-Commerce & U.S. Department of Commerce (DOC) for Retail 9.0% 8.1% 8.0% 7.4% 7.3% 7.6% 7.7% 7.7% 7.1% 7.0% 6.7% e-Commerce Share 6.9% 5.9% 6.8% 6.0% 6.4% 6.3% 6.5% 6.6% 5.1% Commerce 5.9% 5.0% 5.3% 5.3% 4.3% 5.0% 4.6% 4.5% 4.0% 4.3% 4.0% 3.0% 3.7% e-Commerce share peaks in colder seasons (Q4 & Q1) 2.0% 1.0% 0.0% *Note: e-Commerce share is shown as a percent of DOC’s Total Retail Sales excluding Food Service & Drinking, Food & Bev. Stores, Motor Vehicles & Parts, Gasoline Stations and Health & Personal © comScore, Inc. Proprietary and Confidential. 7 Care Stores.
  8. 8. Lower-and-upper income segments are drivers of online growth in Q2 2010, but the large mid-income segment shows no growth and is down versus pre- recession periods two years ago e-Commerce Sales vs. YA by Income Segment Source: comScore e-Commerce Measurement Bracket Contribution of Total Income Segment Online Retail Spending Online Retail Spending Share of e-Commerce Growth Growth in Q2 ‘10 vs. Q2 ‘08 Growth in Q2 ‘10 vs. YA Spending in Q2 ‘10 for Q2 ‘10 Online Retail Income Segment Under $50,000 +14% +22% Online Retail 22% +5% Spending $50,000 - $99,999 -8% -2% 41% -1% $100,000 or more +28% +17% 37% +6% Total +8% +9% 100% +9% © comScore, Inc. Proprietary and Confidential. 8
  9. 9. Worries of double-dip recession are mounting, stoking fear among consumers “The recovery just isn’t looking that great. The job market has lost some positive momentum. This suggests another weak reading on consumer spending in the third quarter.” – Julia Coronado, Sr. Economist at BNP Paribas, August 13, 2010 “With unemployment at 9.5%, people in the U.S. are worried about the recovery. And a record string of 22 straight federal government budget deficits has raised fears of higher taxes. Caution by Americans over their finances means higher saving, which restrains spending.” – Wall Street Journal, August 12, 2010 © comScore, Inc. Proprietary and Confidential. 9
  10. 10. The ‘Scariest Jobs Chart Ever’ is beginning to look even scarier % Job Losses Relative to Peak Employment Month in Post WWII Recessions Source: CalculatedRiskBlog.com Number of Months After Peak Employment © comScore, Inc. Proprietary and Confidential. 10
  11. 11. An increase in pessimism regarding the unemployment rate coincides with findings from the Pew Research Center showing the surge in long-term unemployment Q. When do you think the unemployment rate will begin to improve? Source: comScore Surveys - April & July 2010 63% +10% vs. April 2010 22% 10% 4% 1% The typical unemployed worker today has been out More Than Next 7-12 Next 4-6 Next 2-3 Next of work for nearly six months or 23.2 weeks. This is 12 Months Months Months Months Month almost double the previous post-World War II peak From Now for this measure –12.3 weeks – in 1982/83. – Pew Research Center © comScore, Inc. Proprietary and Confidential. 11
  12. 12. Unemployment remains the top concern among consumers; financial- market concerns have risen, especially among the upper-income segment Percent of Respondents Citing Their One Most Important Issue Q. Based on your current situation, which one of the following economic conditions most concerns you? Source: comScore Surveys - October 2009 & January, April & July 2010 Rising Unemployment/ Financial Real Estate/ Prices Job Security Markets Home Values Oct Jan April July Oct Jan April July Oct Jan April July Oct Jan April July 09 10 10 10 09 10 10 10 09 10 10 10 09 10 10 10 Total 32% 29% 33% 30% 42% 50% 42% 44% 13% 9% 10% 13% 8% 7% 9% 8% Household Income $100K or more 19% 22% 23% 13% 34% 44% 34% 45% 27% 13% 17% 26% 15% 17% 18% 13% $50K-$99,999 28% 23% 26% 22% 43% 50% 49% 46% 13% 12% 11% 16% 12% 10% 11% 11% Under $50K 39% 36% 41% 40% 42% 50% 39% 42% 9% 6% 7% 9% 4% 4% 5% 6% © comScore, Inc. Proprietary and Confidential. 12
  13. 13. 76% of consumers have changed how they spend money based on the recession and 43% of them say these changes are permanent Lifestyle Changes Based on Recession Q. Have you changed how you spend money based on the recession? Q. In what ways have you changed how you spend money, based on the recession? Source: comScore Survey July 2010 76% Eating at home instead of eating out 80% Only making planned purchases 69% Reducing entertainment expenses 67% Using cash/debit card/checks instead of credit cards 54% 24% Sticking to a personal budget 48% Changing travel plans 42% Yes No Changing driving habits 33% Reducing or canceling cable/Internet plans 23% Reducing or canceling cell phone plans 21% 43% of these consumers say Changing living arrangements 14% these changes are permanent and will be continued even Other 2% when the economy recovers None of these 0% % of those who changed how they spend money based on the recession © comScore, Inc. Proprietary and Confidential. 13
  14. 14. 76% hold a pessimistic view of current economic conditions; 3 in 10 predict conditions will worsen in the future Consumer Agreement with Economic Statements Q. Which statement best describes how you feel about the current economic conditions? Source: comScore Survey July 2010 “We haven’t hit bottom yet; the worst is still to come.” 29% “We’ve turned the corner, but I would not be surprised if the economy dropped again before it 21% Pessimistic 76% fully recovers.” Chg from Q1 (+3%) “We might be headed in the right direction but the signs of improvement are hard to see.” 26% “The economy is stagnant, not going up or down.” 16% Neutral/Positive 24% Chg from Q1 (-3%) “We’ve turned the corner and are beginning to see signs of improvement.” 8% % of All Respondents © comScore, Inc. Proprietary and Confidential. 14
  15. 15. Who is Today’s Online Consumer? © comScore, Inc. Proprietary and Confidential. 15
  16. 16. The average heavy online buyer spent $615 in Q2 2010, nearly 5X more than medium buyers and 20X more than light buyers Key Shopping Metrics for Heavy/Medium/Light Buyer in Q2 2010 Source: comScore e-Commerce Measurement Heavy Medium Light % of Buyers 20% 30% 50% % of e-Commerce Dollars 69% 22% 8% % of Transactions 40% 30% 30% Dollars per Buyer $615 $133 $30 Transactions per Buyer 4.7 2.4 1.4 Amazon Attracts a Higher Proportion of Heavy Online Buyers Amazon % % CHG in Buyer Reach Composition Segment Within Reach vs. Amazon Amazon reaches a Q1 2010 third of heavy Segment Buyers online buyers, up 3 Heavy 34% +3 points 28% percentage points Medium 25% 0 points 31% from Q1 2010 Light 20% 0 points 41% H/M/L Definition: Heavy = Top 20% of buyers based on dollars spent in Q2 2010 Medium = Next 30% of buyers based on dollars spent in Q2 2010 © comScore, Inc. Proprietary and Confidential. 16 Light = Bottom 50% of buyers based on dollars spent in Q2 2010
  17. 17. The leading ten retailers within the heavy e-commerce buyer segment are split between multi-channel and pure-play retailers, but Amazon leads the pack with 10% share Top 20 Selected Retailers by Share of Heavy Buyers’ Dollar Spending in Q2 2010 Source: comScore e-Commerce Measurement Share of Heavy Buyers Top Retailers Dollar Spending Amazon 10% Dell 8% Staples 4% Costco 4% Walmart 3% Ticketmaster 3% QVC 3% Apple 3% Office Depot 2% HSN 2% JCPenney 2% Quill 2% Best Buy 2% Sears 2% Tiger Direct 2% Victoria’s Secret 2% Stub Hub 1% Home Depot 1% Target 1% Gap 1% © comScore, Inc. Proprietary and Confidential. 17
  18. 18. Six in ten consumers say the Internet has become important when making buying decisions and 59% of them say it has increased in the past year Importance of the Internet in Making Purchasing Decisions Q. In the past 3 months, how important has the Internet become in providing you with information to help you make buying decisions? Q. How has this changed versus a year ago? Source: comScore Survey – July 2010 31% 59% 59% 16% Significantly Increased 10% Somewhat Increased 43% % of those who found the Internet important Slightly/very important Slightly/very unimportant Neither important nor unimportant © comScore, Inc. Proprietary and Confidential. 18
  19. 19. Consumer loyalty to specific retailers and brands has steadily decreased over the past two years, while likelihood to shop online for deals has risen How Consumers Are Cutting Shopping Expenses Q. Please indicate how you are cutting your shopping expenses Source: comScore Surveys – July & October 2008, April 2009, April & July 2010 July Oct April April July % Chg (07/08 to 07/10) 2008 2008 2009 2010 2010 Reducing gift spending 41% 51% 59% 57% 56% +15% Shopping at different retailers 20% 25% 30% 33% 32% +12% Buying different brands (including generic brands) 52% 51% 58% 57% 62% +10% Shopping online for deals 24% 25% 33% 32% 32% +8% Signing up for retail point programs or customer loyalty 22% 22% 27% 29% 29% +7% programs Using coupons more often when making purchases 59% 62% 68% 64% 66% +7% Shopping only when there are sales (i.e. one day 40% 43% 41% 43% 44% +4% sales) Shopping at secondhand stores, garage sales, etc. 30% 33% 30% 31% 33% +3% Shopping less frequently 68% 71% 70% 72% 69% +1% Buying in bulk at warehouse/discount retailers like 27% 28% 31% 28% 28% +1% Costco, Sam`s Club, BJ`s etc. Shopping at auction sites such as ebay.com 13% 14% 14% 13% 13% 0% Only shopping for basic necessities 66% 67% 60% 62% 65% -1% © comScore, Inc. Proprietary and Confidential. 19
  20. 20. Amazon has the largest audience with 76 million UVs in Q2 2010; it’s one of the fastest growing sites in the category, second only to Netflix Average Monthly Unique Visitors (MM) and % Growth vs. YA on Selected Retail Sites in Q2 2010 Source: comScore Media Metrix Retail Sites 168.7 +13% Amazon Sites 76.2 +21% Apple.com Sites 40.2 +15% Walmart 34.9 +5% Target Corporation 26.1 -3% Netflix.com 19.0 +34% Best Buy Sites 16.7 +8% Hewlett Packard 14.8 +6% The Home Depot, Inc. 13.1 +8% JC Penny Sites 12.0 -3% Sears.com 11.0 +1% © comScore, Inc. Proprietary and Confidential. 20
  21. 21. Pure-play retailers have gained market share over the past two years. Multi-channel retailers have lost share Multi-channel vs. Pure-play: Share of Quarterly U.S. e-Commerce Sales Source: comScore 100% 90% 36.0% 80% 42.5% 40.1% 41.3% 47.2% 44.3% 44.8% 44.6% 51.1% 48.6% 70% 60% 50% Multi-Channel Pure-Play 40% 64.0% 58.7% 30% 57.5% 59.9% 52.8% 55.7% 55.2% 55.4% 48.9% 51.4% 20% 10% 0% Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 © comScore, Inc. Proprietary and Confidential. 21
  22. 22. Larger retailers continue to benefit from leveraging deeper discounts, free shipping incentives and inventory, garnering an additional 5.6 share points from Q2 2009 Share of Sales for Top 25 Retailers in Q2 2010 vs. YA Source: comScore e-Commerce Measurement Point Change Sales Share Q2 2009 Q2 2010 vs. YA Q2 2010 Total E-Commerce 100.0% 100.0% N/A Largest 25 Retailers 59.8% 65.4% +5.6 pts All Other Retailers 40.2% 34.6% -5.6 pts Share Shifts Q2 2010 vs. YA Q1 2010 vs. YA Q4 2009 vs. YA Largest 25 Retailers +5.6 pts +3.6 pts 4.2 pts All Other Retailers -5.6 pts -3.6 pts -4.2 pts © comScore, Inc. Proprietary and Confidential. 22
  23. 23. Women are more avid online buyers than men, making up 58% of total dollars spent and 61% of online transactions In the U.S., 12.5% of female 58.2% Internet users made 61.1% an online purchase in February 2010, Women compared to 9.3% Men of men. 41.8% 38.9% Dollars Transactions U.S. Consumers, Non-Travel Internet Purchases, February 2010 © comScore, Inc. Proprietary and Confidential. 23 Source: comScore e-Commerce Report
  24. 24. 60% of buying on multi-channel sites is attributable to women, whereas the distribution on pure-play sites is more evenly split Propensity to Buy on Multi-Channel vs. Pure-Play Retailer Sites by Age and Gender % of Total Dollars Spent by Segment in June 2010 Source: comScore e-Commerce Measurement Multi-Channel Retailers Pure-Play Retailers Women Men Women Men Age <34 19% 14% Age <34 12% 14% Age 35-54 28% 19% Age 35-54 24% 22% Age 55+ 13% 7% Age 55+ 17% 11% Total 60% 40% Total 53% 47% Multi-Channel: Utilizes more than one channel to conduct business (e.g. Best Buy) Pure-Play: Utilizes a single channel to conduct business (e.g. Amazon) © comScore, Inc. Proprietary and Confidential. 24
  25. 25. Most product categories showed sales growth versus year ago. Consumer electronics and computers have shown strength throughout 2010 Q2 2010 e-Commerce Sales Growth vs. YA by Retail Category Source: comScore e-Commerce Measurement Category Change vs. YA Strong CONSUMER ELECTRONICS (x PC PERIPHERALS) Strong COMPUTERS / PERIPHERALS / PDAs Out-Performing Total Internet Strong (Growth rates of 9% or higher) BOOKS & MAGAZINES Strong VIDEO GAMES, CONSOLES & ACCESSORIES Moderate JEWELRY & WATCHES Moderate HOME & GARDEN Moderate FURNITURE, APPLIANCES & EQUIPMENT Moderate Under-Performing Total Internet CONSUMER PACKAGED GOODS (Growth rates of 1%-8%) Moderate FLOWERS, GREETINGS & MISC GIFTS Moderate OFFICE SUPPLIES Moderate EVENT TICKETS Flat Flat/Negative APPAREL & ACCESSORIES Weak Growth SPORT & FITNESS © comScore, Inc. Proprietary and Confidential. 25
  26. 26. The Impact of Promotions & Price Incentives on Internet Behavior © comScore, Inc. Proprietary and Confidential. 26
  27. 27. Comparison Shopping sites, such as Nextag and Shopping.com, have gained visitors and increased time spent on their sites Unique Visitors (000) to Comparison Shopping Sites Source: comScore Media Metrix 85.5 Million in Jul ‘10 90,000 +30% vs. Jul ‘08 85,000 80,000 75,000 70,000 65,000 60,000 55,000 50,000 Total Minutes (MM) Spent on Comparison Shopping Sites Source: comScore Media Metrix 600 550 440 Million in Jul ‘10 500 +51% vs. Jul ‘08 450 400 350 300 250 200 © comScore, Inc. Proprietary and Confidential. 27
  28. 28. Coupon sites continue to grow in importance; category visitors tend to skew slightly older and female Total Unique Visitors (000) and Total Visits (000) to Coupon Sites Source: comScore Media Metrix 101.1 million visits 120,000 +56% vs. Jul ‘08 100,000 80,000 60,000 34.5 million UVs +34% vs. Jul ‘08 40,000 20,000 0 Jul-2008 Sep-2008 Nov-2008 Jan-2009 Mar-2009 May-2009 Jul-2009 Sep-2009 Nov-2009 Jan-2010 Mar-2010 May-2010 Jul-2010 Total Unique Visitors (000) Total Visits (000) UV Composition Index by Income UV Composition Index by Gender Under 97 $60K Females 114 $60K - 101 $74,999 $75K - 104 $99,999 Males 86 $100K 104 or more © comScore, Inc. Proprietary and Confidential. 28
  29. 29. Coupons.com, which leads the Coupon category in terms of UVs, reports $1 billion in redemption value in first half of 2010 Top Coupon Sites by Unique Visitors (MM) “[Coupons.com] said savings from July 2010 coupons printed out or loaded to a loyalty Source: comScore Media Metrix card from its online properties doubled to more than $1 billion from $529 million a Coupons, Inc. 7.2 year ago. The value of savings in June alone hit $110 million, the highest total to LivingSocial* 6.8 date for any single month via Coupons.com.” (MediaPost, July 2010) Groupon.com 5.3 RetailMeNot.com 4.4 EverSave.com 4.0 eBayCoupon.US 2.4 RebateGiant.com 2.2 With only 2.2 million UVs, MyPoints Sites MyPoints Sites 2.2 generated 14.5 million visits or an average of 6.6 visits per visitor in July 2010. CouponMountain.com 1.6 CouponCabin.com 1.4 *Note: LivingSocial is currently included in the Social Networking category within comScore Media Metrix. For the purpose of this analysis, it has been © comScore, Inc. Proprietary and Confidential. 29 included in the above Coupon ranking.
  30. 30. Flash Sale sites continue to gain traction with high growth rates versus year ago, although we’re seeing a slight slowdown during the summer months U.S. Unique Visitors to Flash Sale Sites Source: comScore Media Metrix 2000 1800 1600 1400 1200 HauteLook 1000 +12% vs. July ‘09 Ideeli 800 +382% vs. July ‘09 600 Gilt +46% vs. July ‘09 400 RueLaLa 200 +15% vs. July ‘09 0 HAUTELOOK.COM IDEELI.COM GILT.COM RUELALA.COM © comScore, Inc. Proprietary and Confidential. 30
  31. 31. Group buying is surging. Groupon.com and LivingSocial continue to execute against strategies that enhance the user experience and entice consumers from across the Web U.S. Unique Visitors (000) Source: comScore Media Metrix 8,000 LivingSocial.com 7,000 +8300+% vs. YA 6,000 5,000 4,000 Groupon.com 3,000 +3300+% vs. YA 2,000 1,000 0 LIVINGSOCIAL.COM GROUPON.COM 19% of UVs to Living Social are sourced from Evite and 15% from Facebook. Source: comScore Media Metrix, July 2010 © comScore, Inc. Proprietary and Confidential. 31
  32. 32. Half of consumers say they’ll abandon their shopping cart if free shipping isn’t offered, a quarter will only buy when free shipping is an option and 90% won’t pay more than $10 51% of consumers are at least ‘somewhat likely’ to cancel their entire purchase if free shipping is not offered.* Q. In general, how much are you willing to pay for shipping on a purchase made online? Source: comScore Survey – July 2010 I only purchase items with free shipping 23% Between $0.01 and $4.99 47% Between $6 and $9.99 20% Between $10 and $14.99 4% Between $15 and $19.99 1% Between $20 and $49.99 0% More than $50 0% Shipping charges do not matter to me 4% % of All Respondents *Q. If you reached the end of your online checkout and found that free shipping was not offered, how likely would you be to cancel your © comScore, Inc. Proprietary and Confidential. 32 purchase? (comScore Survey, July 2010)
  33. 33. Special pricing, future discounts and rewards/incentives are appealing alternatives to free shipping for consumers Free Shipping Alternatives Q. If free shipping was not offered on an order, which of the following would make you more likely to continue with your purchase anyway? Source: comScore Survey July 2010 Special pricing on items 54% Discounts on future purchases and/or Reward Points/Incentives 31% Faster shipping 16% 66% would be more likely to continue their purchase if special pricing or Money back through branded credit card offers 11% discounts/rewards on future purchases were offered Not sure 13% % of All Respondents None of these 16% © comScore, Inc. Proprietary and Confidential. 33
  34. 34. Other Digital Trends Retailers Can’t Afford to Ignore © comScore, Inc. Proprietary and Confidential. 34
  35. 35. Facebook monthly UVs now over 145 million in the U.S. while MySpace still reaches 60 million – more people than any single multi- channel retailer site Number of Unique U.S. Visitors (000) to Facebook.com and MySpace.com Source: comScore Media Metrix +66% in July 2010 150,000 vs. YA Unique Visitors (000) 130,000 110,000 90,000 -11% in July 2010 vs. YA 70,000 50,000 In May 2009, Facebook surpassed MySpace for the first time in terms of total U.S. UVs, and the site is continuing to experience explosive growth, now35with more than 2X the monthly UVs of MySpace. © comScore, Inc. Proprietary and Confidential.
  36. 36. On fixed Internet, Retail sites and Search have a comparable reach, however, with Smartphones and Mobile, Search’s reach is about 3X and 5X greater than Retail sites, respectively % Reach for Search and Retail On Fixed Internet, Smartphone & Mobile Source: Media Metrix + MobiLens, June 2010 88.8% 78.3% 51.2% 15.8% 19.6% 5.6% Internet Smartphone Mobile Retail Search © comScore, Inc. Proprietary and Confidential. 36
  37. 37. Among Smartphone users, only 10% have purchased physical items via their phones. On average, these users spent $121 in the last 3 months In the past 3 months, approximately how much Average dollars % of money have you spent on each of the following spent (among Smartphone Q. Do you own or use a smart types of digital content via a mobile device, those who users who phone or digital media device, Smartphone or other wireless device? purchased) purchased such as an iPhone, iPad, Droid, Movies/videos/TV shows $28 13% Blackberry, Kindle or similar Games $24 17% device? Music $19 17% Source: comScore Survey July 2010 Kindle books $15 9% Applications $10 14% Other type of e-book $10 7% Ringtones $7 9% Wallpapers/graphics $7 6% 22% Other digital content $5 5% Average dollars % of In the past 3 months, approximately how much spent (among Smartphone money have you spent on each of the following via those who users who a mobile device or Smartphone? purchased) purchased 78% Physical items purchased from a retail site $121 10% Physical items purchased from an auction site $52 7% ‘Deal of the day’ sites $48 8% Renewing or recurring website expenses $23 9% Yes No Renewing subscriptions to online services $22 9% Other physical/subscription purchase $2 2% © comScore, Inc. Proprietary and Confidential. 37
  38. 38. Twitter experienced explosive growth in early 2009, which has since leveled off at about 20+ million monthly UVs. API usage likely means that actual monthly users are somewhat higher Total Unique Visitors (000) to Twitter.com Source: comScore Media Metrix Media 24.8 million UVs 30,000 +17% vs. July ‘09 & +3066% vs. July ‘08 25,000 Unique Visitors (000) 20,000 15,000 10,000 5,000 0 © comScore, Inc. Proprietary and Confidential. 38
  39. 39. 22% of Twitter users follow businesses to find special deals, promotions or sales Consumer Usage of Twitter Q. For which have you used Twitter? Source: comScore Survey July 2010 Reading tweets from users I follow 44% Posting my own tweets 33% Conversations with other users 24% Following businesses to find sales/deals/special prices/promotions 22% Finding breaking news 21% ‘Retweeting’ other users’ tweets 20% 29% of Twitter users in total use the Following celebrities 17% service for retail- Finding political news 15% related purposes Finding product reviews/opinions 14% Following my favorite sports teams 11% Asking for help/advice from other users 9% Other 4% None of the above 16% % of Twitter users © comScore, Inc. Proprietary and Confidential. 39
  40. 40. The Use of Video in Retail © comScore, Inc. Proprietary and Confidential. 40
  41. 41. Retail video – a quick overview July July % Chg 2009 2010 vs. YA Number of people who watch video on retail 41MM 58MM +40% YOY growth in retail sites each month video viewers (40%) significantly % of retail site visitors outpaced growth who also viewed video 28% 34% +18% in total video viewers (17%) onsite Source: comScore Video Metrix Total # of viewed 174MM 311MM +79% videos Viewing time per 11mins 20mins +82% person % reach total US 14% 20% +43% population © comScore, Inc. Proprietary and Confidential. 41
  42. 42. Adding video to retail sites is extremely powerful Buying Power Index Source: comScore Video Metrix 2.0, June 2010 250 Retail site visitors who also view video are 64% more 200 201 likely to purchase 150 137 Retail site visitors who also view video spend 2 minutes 115 100 longer onsite per visit 100 50 0 Total Total Internet Retail Site Retail Site Internet w/ Video Visitors Visitors w/ Video Viewing © comScore, Inc. Proprietary and Confidential. 42
  43. 43. Nearly 100% of online spenders are video viewers Non-Video Viewers 4% Video Viewers 96% © comScore, Inc. Proprietary and Confidential. 43 Source: comScore Video Metrix 2.0, June 2010
  44. 44. Video advertising is significant in terms of online audience reach 63% of the online audience is currently reached by video advertising each month 83% of all online spending comes from them © comScore, Inc. Proprietary and Confidential. 44 Source: comScore Video Metrix 2.0, June 2010
  45. 45. Video advertising is increasingly important in terms of impact 83% of all online spending comes from these video viewers who have seen a video ad © comScore, Inc. Proprietary and Confidential. 45 Source: comScore Video Metrix 2.0, June 2010
  46. 46. Not all video audiences are created equal when it comes to video advertising and retail spending at a category level Buying Power Index Source: comScore Video Metrix 2.0, June 2010 170 180 136 145 160 140 115 120 100 80 60 40 20 0 Total Video Sites Video Ad Network Earned Media & Long Format TV Category Social Video © comScore, Inc. Proprietary and Confidential. 46
  47. 47. Tips for Retailers Considering Video For key products with important and detailed benefits, adding video to your site can encourage people to spend more time on your site and ultimately to make a purchase – Remember, almost all online spenders are video viewers and retail site visitors who view video are 64% more likely to make a purchase When adding video to your site or on sites like YouTube, ensure your videos are easy to find and have detailed metadata tags for search visibility – this will help your video cut through the clutter to reach your target audience Video advertising on premium and social video sites like Hulu and YouTube can help you reach people who are much more likely than typical Web visitors – It’s definitely worth considering for high value products, branding or important launches © comScore, Inc. Proprietary and Confidential. 47
  48. 48. comScore Holiday Season Retailer Report Track the performance of your site versus your competitors’ during the holiday season and get answers to important questions such as: How does my audience size and that of my competitors’ vary day to day throughout the holiday season? What are my peak traffic days? What retailers are leading in terms of audience size? To what extent are retailers leveraging free shipping? How effective is my site compared to the competition at converting visits into transactions and how does that compare with site averages across the Internet? How qualified is the traffic at each of the competitive domains as well as my own? To what extent is my site and my competitors’ sites penetrating the online buyers and how does that compare to last holiday season? For more information: Jenn Vlahavas jvlahavas@comscore.com 1-312-775-6628 © comScore, Inc. Proprietary and Confidential. 48
  49. 49. QUESTIONS? Please contact us at learnmore@comscore.com if you have any additional questions or comments. © comScore, Inc. Proprietary and Confidential. 49
  50. 50. Thank You! Note: A copy of this presentation will be sent to all attendees within 24 hours of today’s webinar. Want more insights? Follow us on Twitter! http://twitter.com/gfulgoni http://twitter.com/comscore

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