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Forrester Research 5 eCommerce Trends to Watch 2012
 

Forrester Research 5 eCommerce Trends to Watch 2012

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    Forrester Research 5 eCommerce Trends to Watch 2012 Forrester Research 5 eCommerce Trends to Watch 2012 Presentation Transcript

    • © 2011 Forrester Research, Inc. Reproduction Prohibited2 © 2009 Forrester Research, Inc. Reproduction Prohibited Five eCommerce Trends To Watch Sucharita Mulpuru, VP and Principal Analyst May 2, 2012
    • © 2011 Forrester Research, Inc. Reproduction Prohibited3
    • © 2011 Forrester Research, Inc. Reproduction Prohibited4
    • © 2011 Forrester Research, Inc. Reproduction Prohibited5 Things turn out to be different than they initially appear
    • © 2011 Forrester Research, Inc. Reproduction Prohibited6 Current conventional wisdom Takeaways Agenda
    • © 2011 Forrester Research, Inc. Reproduction Prohibited7 CW 1: Mobile commerce will be enormous Source: The State of Retailing Online 2011, a Shop.org study conducted by Forrester Research
    • © 2011 Forrester Research, Inc. Reproduction Prohibited8 Retailers are investing with mobile sales in mind 82% 63% 63% 62% 58% 54% 49% 49% 43% 37% 31% 28% 23% 14% 6% Drive revenue/sales to Web site Improve customer satisfaction Develop brand loyalty Be a ready source of product and price information for customers Improve customer acquisition Improve customer retention Drive traffic/sales in other channels (e.g., stores) Keep up with competitors Learn from and/or pilot mobile programs Drive sign ups/registrations Location-based targeting Real-time marketing Drive 1:1 dialogue with customers Provide store associates with tools to improve selling Reduce operations or marketing costs “What are your company’s objectives for mobile?” Source: Forrester/Shop.org State of Retailing Online Study, 2011
    • © 2011 Forrester Research, Inc. Reproduction Prohibited9 US mobile commerce is expected to grow to $31 billion by 2016 2010 2011 2012 2013 2014 2015 2016 US$ (billions) 1% 2% 3% 4% 5% 6% 7% Source: Forrester Research Mobile Commerce Forecast, 2011 To 2016 (US) Note: eCommerce includes mobile media and content, retail, travel, coupons/deals, and services. Does not include mobile ring tones, mobile gaming, or mobile video % of eCommerce $31 $25 $19 $14 $10 $6 $3 Source: June 17, 2011, “Mobile Commerce Forecast: 2011 To 2016” Forrester report
    • © 2011 Forrester Research, Inc. Reproduction Prohibited10 Please note which of the following you do with your mobile device(s) with respect to any online retailer. “Small screen” owners* Tablet owners Base 1,725 recent online buyers with web- enabled mobile phone 456 recent online buyers with tablets Read emails from retailers 64% 63% Receive texts with special offers from retailers 49% 38% Locate retail store/hours/directions 49% 54% Browse or research products 47% 70% Compare prices while shopping in stores 30% 29% Place orders for physical goods 17% 47% *”Small screen” includes iPhones, Android-based phones, Blackberries or other phones with web-browsing capabilties Source: Bizrate Insights/Forrester Mobile Commerce Online Flash Survey, Q4 2011 Mobile conversion rates are lower because the phone supports store shopping more
    • © 2011 Forrester Research, Inc. Reproduction Prohibited11 This is particularly true for store associates and salespeople
    • © 2011 Forrester Research, Inc. Reproduction Prohibited12 “Couch commerce” may in fact be bigger 0 20 40 60 80 100 120 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 PC Internet Laptop Desktop Broadband HDTV DVR Tablet Netbook eReader US householdsUS individuals
    • © 2011 Forrester Research, Inc. Reproduction Prohibited13 Retailers report that 21% of what is “mobile” traffic comes through tablets. Most tablet usage happens during prime-time hours.
    • © 2011 Forrester Research, Inc. Reproduction Prohibited14 Couch commerce… …or kiosk killer?
    • © 2011 Forrester Research, Inc. Reproduction Prohibited15 We’re no longer tethered to the desktop but the ROI around mobile will be much more nuanced than direct sales.
    • © 2011 Forrester Research, Inc. Reproduction Prohibited16 CW 2: Amazon is the force to reckon with online
    • © 2011 Forrester Research, Inc. Reproduction Prohibited17 Amazon is much more than the Walmart of the web
    • © 2011 Forrester Research, Inc. Reproduction Prohibited18 This is a relatively recent notion $1,152 $902 $645 $476 $190 $359 $588 $35 $(149) $(567) $(1,411) 20102009200820072006200520042003200220012000 Reported annual net income ($MM) Source: Amazon annual reports 2000-2010 Profitable Profit as a % of sales NA NA NA 1% 8% 4% 2% 3% 3% 4% 3% Small and erratic!
    • © 2011 Forrester Research, Inc. Reproduction Prohibited19 And oddly enough, this profit came in a counterintuitive way $274 $1,188 $1,557 $6,731 2005 2010 US Marketplace GMV (gross merch value) US Marketplace revenue US Marketplace revenue and GMV ($B) $359 $1,152 $274 $1,188 2005 2010 Global profit US marketplace revenue US Marketplace Revenue as a profit driver Source: Amazon SEC filings; Forrester analysis
    • © 2011 Forrester Research, Inc. Reproduction Prohibited20 It’s this…
    • © 2011 Forrester Research, Inc. Reproduction Prohibited21 …or this
    • © 2011 Forrester Research, Inc. Reproduction Prohibited22 The balance of power is shifting to Amazon’s favor “Are you a member of a shipping club or program (i.e. Amazon Prime, Shoprunner or Williams-Sonoma Reserve)?” 9% 91% Source: Bizrate/Forrester Online Retail Holiday Study, Q4 2010 and Q4 2011 N= 10,017 recent online buyers 12% 88% Yes No 5% 40% 55% I shop less with the retailer after joining the shipping club The shipping club has not changed my shopping behavior with that retailer I shop more (or plan to shop more) with the retailer(s) whose shipping club I have joined N: 714 recent online buyers “How does your membership in a shipping club or program affect your shopping frequency?” 20102011 N= 15,520 recent online buyers
    • © 2011 Forrester Research, Inc. Reproduction Prohibited23 And “private label” is no foreign concept to them
    • © 2011 Forrester Research, Inc. Reproduction Prohibited24 And while the sales tax fight makes it seem like Amazon has something to lose… Paid sales tax, 44% Didn't pay sales tax, 38% Don't recall, 18% “Did you pay sales tax on the purchase you just made?” Source: Forrester/Bizrate Insights Online Sales Tax Flash Survey, Q2 2011 Base: 24,136 recent online shoppers “Did you consider not buying today due to the sales tax?” “If sales tax had been charged, would you have purchased from a different retailer?” 75% 22% 3% No Yes Don't recall 36% 25% 39% No Yes Depe nds
    • © 2011 Forrester Research, Inc. Reproduction Prohibited25 Amazon’s influence is far greater than the web; Amazon is the new Walmart.
    • © 2011 Forrester Research, Inc. Reproduction Prohibited26 CW 3: Shipping offers are important
    • © 2011 Forrester Research, Inc. Reproduction Prohibited27 Many retailers offered free shipping with no threshold
    • © 2011 Forrester Research, Inc. Reproduction Prohibited28 Free shipping is now table stakes “Which of the following do you expect from a retailer or brand?” Base: 4,731 US online adults Source: Q1 2011 US Retail Online Survey 28% 32% 44% 52% 55% Physical retailers to price match if I find a price cheaper on my mobile device Physical stores to be able to place orders online for me To see the same assortment of products no matter where I shop Free returns on all my purchases Free shipping on all my orders
    • © 2011 Forrester Research, Inc. Reproduction Prohibited29 But here’s the good news… Thinking about your most recent online purchase, approximately how many online retailers did you visit during the purchase process? Base: 2,827 online buyers Source: Q3 2011 Retail Recontact Survey, Forrester Technographics 41% 21% 14% 3% 4% 18% I visited 1 retailer I visited 2 retailers I visited 3 retailers I visited 4 retailers I visited 5 or more retailers I don't remember/other
    • © 2011 Forrester Research, Inc. Reproduction Prohibited30 CW 4: Social networks will be the mother of all interactive marketing tactics #FBDebate
    • © 2011 Forrester Research, Inc. Reproduction Prohibited31 Stepping back, “social” means many things
    • © 2011 Forrester Research, Inc. Reproduction Prohibited32
    • © 2011 Forrester Research, Inc. Reproduction Prohibited33 Facebook in particular struggles with being useful in commerce Source: North American Technographics® Retail Online Benchmark Recontact Survey, Q2 2010 (US) #FBDebate
    • © 2011 Forrester Research, Inc. Reproduction Prohibited34 Yet retailers are not heeding the obvious Current usage and effectiveness of social media tactics Source: The State of Retailing Online 2011, a Shop.org study conducted by Forrester Research Percent Ranking as very effective Base: 68 online retailers
    • © 2011 Forrester Research, Inc. Reproduction Prohibited35 Even Facebook tacitly acknowledges this “When new technologies arrive, it takes awhile [for them] to be embraced…when television was a new medium, advertisers had a hard time figuring out how to use it…the first ads looked like radio ads in front of a video camera…” Dan Rose, VP Partnerships and Platform Marketing
    • © 2011 Forrester Research, Inc. Reproduction Prohibited36 Why the disconnect? Developers are leading the vision for commerce… …and Facebook just doesn’t have time to sell a better vision “We think one of the best ways to stay small is just to stay smaller.” COO Sheryl Sandberg on Facebook’s ~3,000 employees
    • © 2011 Forrester Research, Inc. Reproduction Prohibited37 But there’s actually a really interesting vision “We have this concept of serendipity.—humans do. A lucky coincidence. It’s like you go to a restaurant and you bump into a friend that you haven’t seen for a while. That’s awesome. That’s serendipitous. And a lot of the reason why that seems so magical is because it doesn’t happen often. But I think the reality is that those circumstances aren’t actually rare. It’s just that we probably miss like 99% of it. How much of the time do you think you’re actually at the same restaurant as that person but you’re at opposite sides so you don’t see them, or you missed each other by 10 minutes, or they’re in the next restaurant over? When you have this kind of context of what’s going on, it’s just going to make people’s lives richer, because instead of missing 99% of them, maybe now you’ll start seeing a lot more of them.” Mark Zuckerberg, to Time magazine
    • © 2011 Forrester Research, Inc. Reproduction Prohibited38 Here’s the execution
    • © 2011 Forrester Research, Inc. Reproduction Prohibited39 Personalization itself isn’t all that lucrative Source: November 2010 “What You Need To Know About Third-Party Recommendation Engines”
    • © 2011 Forrester Research, Inc. Reproduction Prohibited40 But this fuels Facebook’s display advertising model (and why “likes” could be so important) BILLIONS in spite of currently abominable CTRs!
    • © 2011 Forrester Research, Inc. Reproduction Prohibited41 And for retailers this could solve the multichannel measurement conundrum +
    • © 2011 Forrester Research, Inc. Reproduction Prohibited42 Social is many things, but not a silver bullet.
    • © 2011 Forrester Research, Inc. Reproduction Prohibited43 Some say “the silence is deafening”
    • © 2011 Forrester Research, Inc. Reproduction Prohibited44 Unfortunately, social has yet to make a mark on the web marketing funnel Touchpoint (s) General holiday season Thanksgiving weekend Cyber Monday Paid search alone 17% 17% 17% Paid search + other 15% 16% 15% Natural search alone 14% 13% 13% Email + other 12% 12% 13% Natural search + other 11% 12% 10% Email alone 7% 8% 12% Social alone <1% <1% 1% Social + other <1% <1% <1% Others (CSEs, affiliates, display) alone 8% 9% 8% Others (CSEs, affiliates, display) + others 15% 12% 11% 100% 100% 100% Percent of total transactions (hard goods) Source: Forrester eBusiness Research in collaboration with GSI Commerce Holidays Attribution Research (Q1 2012)
    • © 2011 Forrester Research, Inc. Reproduction Prohibited45 Social has a bigger impact on soft goods Touchpoint (s) General holiday season Thanksgiving weekend Cyber Monday Paid search alone 11% 13% 11% Paid search + other 8% 8% 8% Natural search alone 9% 7% 7% Email + other 26% 24% 27% Natural search + other 5% 5% 5% Email alone 15% 15% 18% Social alone 1% 1% 1% Social + other <1% <1% <1% Others (CSEs, affiliates, display) alone 4% 5% 4% Others (CSEs, affiliates, display) + others 20% 22% 19% 100% 100% 100% Percent of total transactions (soft goods) Source: Forrester eBusiness Research in collaboration with GSI Commerce Holidays Attribution Research (Q1 2012)
    • © 2011 Forrester Research, Inc. Reproduction Prohibited46 Consumers reinforce this data 3% 4% 3% 7% 9% 10% 12% 33% 47% Other social site Through traditional media (eg TV) Retailer's social presence Deals or shopping website Other email Someone told me about it Through search engines Via email from the retailer I visited the retail site directly 2% 3% 5% 6% 8% 9% 8% 46% 39% Other social site Through traditional media (eg TV) Retailer's social presence Deals or shopping website Other email Someone told me about it Through search engines Via email from the retailer I visited the retail site directly 3% 6% 3% 7% 9% 10% 10% 39% 44% Other social site Through traditional media (eg TV) Retailer's social presence Deals or shopping website Other email Someone told me about it Through search engines Via email from the retailer I visited the retail site directly 3% 4% 4% 6% 8% 9% 11% 37% 44% Other social site Through traditional media (eg TV) Retailer's social presence Deals or shopping website Other email Someone told me about it Through search engines Via email from the retailer I visited the retail site directly How did you learn about these special deals [from today’s purchase]? Pre-Thanksgiving (11/18-23) Thanksgiving Weekend (11/14-27) Cyber Monday (11/28) Cyber Week (11/29-12/4) Source: Bizrate Insights/Forrester Holiday Shopping Flash Surveys, Q4 2011
    • © 2011 Forrester Research, Inc. Reproduction Prohibited47 Consumers do, however, report sharing through social networks I have shared online shopping deals with others through my social network (i.e. Facebook) within the last month. 30% 32% 31% 32% Cyber Week Cyber Monday Thanksgiving Weekend Pre-Thanksgiving Source: Bizrate Insights/Forrester Holiday Shopping Flash Surveys, Q4 2011
    • © 2011 Forrester Research, Inc. Reproduction Prohibited48 Consumers say they like to read about what their friends recommend 48% 40% 17% 15% 11% 8% It is a great way to discover new products, brands, trends, or retailers It is a great way to discover sales and promotions I have bought something based on a friend's post No reaction, I usually ignore these types of updates I notice the post, but generally do not take great interest in it I don't like these posts Base: 5,578 recent online shoppers who use social media Source: Forrester/Bizrate Insights Social Commerce Flash Survey, Q3 2011 Which of the following do you agree with in response to social media posts, "likes," or links to products or retailers made by friends?
    • © 2011 Forrester Research, Inc. Reproduction Prohibited49 CW5: Search and email are getting tired Total Pureplay Multichannel Manufacturer Average budget $5.5MM $4.3MM $7.3MM $2.7MM Paid search 37% 38% 41% 28% Email (house and prospecting) 17% 12% 15% 26% Affiliate programs 13% 16% 12% 12% SEO/natural search 9% 13% 8% 6% Comparison shopping engines 5% 5% 5% 3% Remarketing/ behavioral targeting 5% 1% 6% 11% Social network ads 3% 2% 4% 4% Traditional portal deals 2% 3% 1% 1% Other 9% 10% 8% 9% Source: The State of Retailing Online 2011, a Shop.org study conducted by Forrester Research
    • © 2011 Forrester Research, Inc. Reproduction Prohibited50 Search and email still win
    • © 2011 Forrester Research, Inc. Reproduction Prohibited51 Current conventional wisdom Takeaways Agenda
    • © 2011 Forrester Research, Inc. Reproduction Prohibited52 To summarize We are no longer tethered to the desktop Amazon is the new Walmart Free shipping is table stakes Social is currently about small wins Search and email still win
    • © 2011 Forrester Research, Inc. Reproduction Prohibited53 Recommendations Optimize your site for as many devices as you can; develop for multichannel impact; think about context. We are no longer tethered to the desktop Amazon is the new Walmart Free shipping is table stakes Social is currently about small wins Search and email still win
    • © 2011 Forrester Research, Inc. Reproduction Prohibited54
    • © 2011 Forrester Research, Inc. Reproduction Prohibited55 Implications Optimize your site for as many devices as you can; develop for multichannel impact; think about context. We are no longer tethered to the desktop Amazon is the new Walmart Free shipping is table stakes Social is currently about small wins Search and email still win New profitability models must emerge; unique products and exciting merchandising will be essential; cherry-picking is a new norm; sales tax issues are irrelevant.
    • © 2011 Forrester Research, Inc. Reproduction Prohibited56 Implications Optimize your site for as many devices as you can; develop for multichannel impact; think about context. We are no longer tethered to the desktop Amazon is the new Walmart Free shipping is table stakes Social is currently about small wins Search and email still win New profitability models must emerge; unique products and exciting merchandising will be essential; cherry-picking is a new norm; sales tax issues are irrelevant. Shipping cannot be a profit center any longer; retailers need incorporate freight costs into the “cost of business” and figure out other ways to subsidize those costs (using store delivery networks for instance). Product sharing is a small benefit; data about your brand from the social graph is potentially the big disruption; consider if marketing is the best owner of “social” in this paradigm; privacy concerns remain TBD. Traditional web marketing stands to be neglected; mobile search may be slower to gain share without more “best practices”; email needs the 1-2 punch of social synergies.
    • © 2009 Forrester Research, Inc. Reproduction Prohibited Thank you Sucharita Mulpuru smulpuru@forrester.com www.forrester.com