Holiday sales are known to make or break retailers, and 2014 is shaping up to be even stronger than last year. Topics in this webinar include: How much will holiday ecommerce and overall sales grow? Is mobile eclipsing desktop in ecommerce? Are beacons and visual search ready for primetime? Will supply chain troubles plague retailers again this year?

1. © 2014 eMarketer Inc.
Made possible by
Holiday Shopping 2014Online Trends and Forecast
Yory Wurmser
Retail Analyst
September 18, 2014

2. © 2014 eMarketer Inc.
Agenda
US ecommerce forecast for 2014 holiday season
Mobile’s expanding role in US ecommerce
Emerging technology trends this season
Fulfillment: Are last year’s shipping issues resolved?
Key takeaways
Twitter –#eMwebinar

3. © 2014 eMarketer Inc.
eMarketer’s US Holiday Ecommerce Forecast for 2014

4. © 2014 eMarketer Inc.
US retail ecommerce will grow 16.6%this holiday season, up from last year’s 15.3% rise
Twitter –#eMwebinar

5. © 2014 eMarketer Inc.
Ecommerce accounts for a growing share of US retail sales during the holiday season

6. © 2014 eMarketer Inc.
What’s driving this year’s strong ecommerce growth?
1.Greater comfort with mobile buying
2.Improved retail sales overall
Twitter –#eMwebinar

7. © 2014 eMarketer Inc.
1.More consumers are getting comfortable with buying on their mobile devices …

8. © 2014 eMarketer Inc.
… leading to more mobile sales
US retail mcommerce sales will grow 37.3% in 2014
Mcommerce’sshare of US retail ecommerce will reach 19.0% in 2014

9. © 2014 eMarketer Inc.
Mobile shopping plays an even bigger role during the holiday season
In 2013, Black Friday was the season’s biggest mobile sales day
People bought with their phones and tablets while waiting in line
Twitter –#eMwebinar

10. © 2014 eMarketer Inc.
2.A strong year for ecommerce will mirror an improved season for US retail sales overall
Source: eMarketer, Sep 2014

11. © 2014 eMarketer Inc.
Despite solid sales growth, three factors will keep retail from excelling this holiday season
Image source: Shutterstock

12. © 2014 eMarketer Inc.
1.Slow real-income growth
Real income in the US is up 2.3% since Jan. 2014
But it’s down 2.0% overall since Dec. 2012
Per capita real income is down 8% since 2007
Source: BEA, Aug. 2014
Twitter –#eMwebinar

13. © 2014 eMarketer Inc.
Slow real-income growth leaves consumers cautious
“The big issue is the economy. You’re not going to see big sales growth until you see real-income growth.”
—Craig Johnson, president of Consumer Growth Partners

14. © 2014 eMarketer Inc.
2.Retailers overestimated consumer demand in 2013
Image source: Shutterstock

15. © 2014 eMarketer Inc.
Retailers are making conservative inventory choices in 2014
“ [Last year], the conversion rates were starting to fall below plans, the pricing pressure started to get significant, and the promotional levels started to elevate.… [This year], we’re seeing very, very lean levels of inventory going into the back half [of the year]. Retailers would rather compromise sales for better profitability.”
—Stephanie Wissink, co-director of research and senior research analyst at Piper Jaffray

16. © 2014 eMarketer Inc.
3.2014 has a short holiday season

17. © 2014 eMarketer Inc.
A short season will only marginally affect total sales but shift retailer and shopper behavior
“We are going to start seeing much more aggressive ads a lot sooner in the year. People tend to procrastinate and there will just be fewer days to buy items.”
—Clay Olivier, CEO of Volusion

18. © 2014 eMarketer Inc.
Recap: Despite challenges, US retail ecommerce will have a stellar holiday season
Sales will grow 16.6%, boosted by:
1.More mobile commerce
2.5.0% year-over-year growth in overall US retail sales
Three factors will hold spending back:
1.Slow real-income growth
2.Cautious retailers
3.Short season

19. © 2014 eMarketer Inc.
Mobile’s Ever-Expanding Role in Holiday Sales

20. © 2014 eMarketer Inc.
Mobile sales are still relatively small …
1.2%
of US retail sales occur on mobile devices
Twitter –#eMwebinar

21. © 2014 eMarketer Inc.
… but mobile’s impact on shopping is much larger
In 2014:
145.9 million USmobile shoppers
74%of US digital shoppers shop with their phones
23 million more US mobile shoppers
Twitter –#eMwebinar

22. © 2014 eMarketer Inc.
The majority of US smartphone owners in all age cohorts shop in-store with their phones

23. © 2014 eMarketer Inc.
The influence of mobile shopping on total retail sales is huge
In the 2014 holiday season, mobile shopping (i.e., research) before or during in-store trips will influence between a quarter and a half of all US retail sales, eMarketer estimates

24. © 2014 eMarketer Inc.
Recap:
Mcommerce sales are still only a small part of total US retail sales
The majority of US shoppers are mobile shoppers
Mobile will influence between a quarter and half of all US in-store retail sales this holiday season
Twitter –#eMwebinar

25. © 2014 eMarketer Inc.
Emerging Technologies

26. © 2014 eMarketer Inc.
Ubiquitous mobile shopping is spurring retailers to test two emerging technologies this season
1.Beacons
2.Visual search

27. © 2014 eMarketer Inc.
1.Beacons
Image source: Estimote.com

28. © 2014 eMarketer Inc.
Beacons will be more common this year
“ More than half of the top 100 retailers are actively working with beacon technology now. They’re in different stages, but all of them are evaluating, testing, piloting, trying it out. We’re going to see at least several retailers announce very large- scale, public rollouts to support holiday campaigns.”
—Rob Murphy, VP of marketing at Swirl

29. © 2014 eMarketer Inc.
HBC is one of the first major retailers to deploy beacons system-wide
HBC will cover 130 of its Hudson’s Bay Co. and Lord & Taylor stores with beacons
Each store will have multiple beacons
Offers will come via HBC apps and third-party coupon app SnipSnap
Image source: HBC.com

30. © 2014 eMarketer Inc.
Third-party apps overcome the limits of branded retailer apps
Beacon provider Swirl announced a partnership with Epicurious
Epicurious app holders will receive messages when entering stores of partnering retailers
Image source: iTunes

31. © 2014 eMarketer Inc.
eMarketer’s view on beacons this holiday season:
Retailers will expand experiments with beacons
Direct effect on sales this season will be limited
Beacon’s biggest impact will come via third-party apps
Twitter –#eMwebinar

32. © 2014 eMarketer Inc.
2)Visual search
Image courtesy of Slyce

33. © 2014 eMarketer Inc.
Amazon.com’s Firefly jumpstarted visual search
Image source: Yory Wurmser

34. © 2014 eMarketer Inc.
Retailers see opportunity in visual search
“We’re hearing a lot of brands say that they want to be able to capitalize on impulse purchasing at the moment of inspiration when they see something.”
—Mark Elfenbein, CEO of Slyce

35. © 2014 eMarketer Inc.
Target’s In a Snap, an early branded visual search tool:
Works with Target advertising
Does not need QR or bar codes
More examples should follow this season
Image source: In a Snap

36. © 2014 eMarketer Inc.
eMarketer’s view on visual search:
Firefly has ushered in an era of visual search experimentation
Firefly and other early versions have limited functionality, but newer search tools show promise
Until visual search can readily identify objects in the wild, and from various angles, consumers will not use it widely
Twitter –#eMwebinar

37. © 2014 eMarketer Inc.
Fulfillment: Will Retailers Avoid Last Year’s Problems?

38. © 2014 eMarketer Inc.
2013: Missed deliveries made headlines
Midwest snowstorms hit FedEx and UPS hubs
Roughly 33% of major etailers tracked by Stella Service missed deliveries
Amazon, Kohl’s and Nordstrom were among the retailers affected
Image source: Shutterstock

39. © 2014 eMarketer Inc.
Consumers depend on reliability of cutoff dates
96%
deem guaranteed delivery dates important
46%
will look elsewhere after a late delivery
Source: CFI Group

40. © 2014 eMarketer Inc.
2014: Shippers are building networks to avoid last year’s issues
UPS will hire 90K to 95K seasonal employees, up 10K from last year
UPS has invested an extra 21% in new technology and manpower (Source: WSJ)
FedEx also expects to hire more seasonal workers
Image source: UPS

41. © 2014 eMarketer Inc.
It won’t be enough
“Consumers are increasingly taking advantage of two-day shipping and waiting until the last minute to do their holiday shopping. … The trend is growing faster than the logistics that are there to keep up with it.”
—Chris Mason, co-founder of Branding Brand

42. © 2014 eMarketer Inc.
Retailers are overcoming the limits of the shipping network in 3 ways:
1.Distributive shipping
2.In-store pickup
3.A commitment to removing shipping bottlenecks
Image source: UPS

43. © 2014 eMarketer Inc.
1.Distributive fulfillment
Image source: Shopatron
Online Order
Order management system

44. © 2014 eMarketer Inc.
Shipping from stores gives multichannel retailers a way to fight back against pure plays
“Distributed technology is fundamentally the most resilient and most diverse system that can exist. You have two hands. If you lose one, you’ve got another one.”
—Ed Stevens, CEO of Shopatron
‘Zone-skipping’
Increased productivity of store staff
Reduced shipping times

45. © 2014 eMarketer Inc.
Distributive fulfillment: Modell’s
Harmonized online and in-store inventory
Began drop-shipping to increase available styles and sizes
Added ship-from-store, and continues to add stores to the system
Twitter –#eMwebinar
Image source: Modell’s.com

46. © 2014 eMarketer Inc.
2.In-store pickup: Customers can fulfill online orders themselves
40%of in-store pickups lead to additional in-store purchases (Source: Shopatron)
10% of Target’s online orders are for in-store pickup
In-store pickup can serve last-minute orders
Image source: Target.com

47. © 2014 eMarketer Inc.
Consumers who default to in-store pickup remain the exception

48. © 2014 eMarketer Inc.
3.Successful etailers make it easy for the shipping companies
Image from Zappos.com

49. © 2014 eMarketer Inc.
Zappos.com: Few problems last year despite late cutoff date
“Inventorying all product is one variable of [our success]. We also have a great relationship with UPS and are committed within our company and all of our fulfillment centers to meet those deadlines and get those packages out as soon as possible to our customers.”
—Maura Dailey, senior manager of customer loyalty at Zappos.com

50. © 2014 eMarketer Inc.
Zappos minimizes potential breakdowns
All products in-stock
No drop-shipping
Priority relationships with shippers
Phone reps focus on service
Image source: Zappos.com
Twitter –#eMwebinar

51. © 2014 eMarketer Inc.
eMarketer’s viewpoint on fulfillment:
Shippers are better prepared this year
Problems will persist nonetheless, because shoppers expect quick delivery
Multichannel retailers have an opening to capture last-minute shoppers via in-store pickup
Forward-looking etailers are simplifying fulfillment processes and building relationships with shippers

52. © 2014 eMarketer Inc.
Takeaways
US retail ecommerce sales will grow 16.6%year-over-yearin the 2014 holiday season
US retail sales overall will have a good season, with sales up 5.0%. But slow income growth and retailer caution will keep that figure from being even higher
The ubiquity of mobile shopping will convince retailers to test new technologiesthat bring the physical and virtual shopping worlds together (e.g., beacons and visual search)
Fulfillment will remain a challenge, but retailers will turn to distributive fulfillment, in-store pickup and better coordination with shippers to mitigate problems
Twitter –#eMwebinar

53. #1 Ranked eMail Marketing Platform
•Ranked No. 1 among email marketing providers to the Internet Retailer Top 1000
•Built for commerce: conversions, transactions and revenue
•Highly personal, relevant email and cross- channel marketing
•Sophisticated made simple
Susan Wall|VP, Marketing | Bronto Software

54. Bronto’s Holiday Resource Center
Visit Bronto’s Holiday Resource Center to find everything a retail marketer needs for the holidays.
•2014 Holiday Planning Guide
•Top 12 Marketing Tips for the Holidays
•Interactive plans, checklists and guides
•On-demand holiday webinars, plus much more!
resources.bronto.com/holidays

55. Tips & Tricks Newsletter
•Expertise from the field
•White papers
•Customer success stories
•Blog posts
bronto.com/resources

56. © 2014 eMarketer Inc.
Learn more about digital marketing with an eMarketercorporate subscription
Around 200 eMarketer reports are published each year. Here are some recent reports you may be interested in:
Q&A Session
Made possible by
You will receive an email tomorrow with a link to view the deck and webinar recording.
To learn more: www.emarketer.com/products
800-405-0844 or webinars@emarketer.com
Yory Wurmser
Holiday Shopping 2014Online Trends and Forecast
Holiday Shopping Preview: Ecommerce Grows as Brick-and- Mortar Stores Embrace Digital
2014 Back-to-School Preview: Ecommerce Sales to Log Above-Average Gains
Proximity Marketing in Retail: Can Ecommerce Tactics Revive Brick-and-Mortar?
Bronto