E-Commerce

It’s Official: Cyber Monday 2014 was the Biggest e-Commerce Day in U.S. History

Phillip Nones Advertising, Business, Direct Marketing, Economics, Marketing Communications, Social Media , , , , , , , , , , , ,

Cyber Monday ShoppingIn the days following Black Friday this year, we heard reports that consumer purchase volumes at stores were down more than 10% compared to 2013.

A number of explanations for the decline were given, among them the notion that Black Friday sales are less of a draw this year, since merchandise sales now begin before Thanksgiving and tend to run the entire month of December.

But some observers speculated as to whether soft Black Friday revenue figures presage an equally soft holiday shopping season overall.

Well … now that we have sales figures from Cyber Monday (the Monday following Black Friday weekend), I think it’s safe to say that any concerns about a tepid holiday buying season are unfounded.

Custora E-Commerce Pulse, a customer relationship management firm which tracked more than 100 million online shoppers and over $40 billion in e-commerce revenue over the full Thanksgiving Holiday weekend, has just reported that Cyber Monday e-commerce revenues were up over 15% compared with Cyber Monday 2013.

That makes Cyber Monday 2014 the single biggest day in U.S. online shopping ever in history.

Other days of the Thanksgiving weekend also showed robust gains in online shopping:  Black Friday online sales were up ~21% over 2013, and online shopping on Thanksgiving Day itself were up nearly 18% over Thanksgiving Day in 2013.

The strong growth was fueled by mobile shopping, e-mail marketing, plus online product searches on Google and other search engines.

In particular, mobile shopping accounted for ~22% of orders on Cyber Monday, significantly higher than the ~16% of orders recorded last year.

On Black Friday itself, mobile shopping accounted for around 30% of all orders — yet another dramatic increase over 2013 when mobile shopping account for just shy of 23% of orders.

This year’s Cyber Monday stats put the lie to the notion that e-mail marketing is losing its luster.  In fact, e-mail marketing drove nearly one in four online shopping orders, outstripping natural search (at ~19% of all orders) and paid search (~16% of orders).

Much ado about (practically) nothing: Social media and Cyber Monday.
Much ado about (practically) nothing: Social media and Cyber Monday.

And guess which channels weren’t a meaningful part of the holiday shopping experience this year?

If you guessed social media … you’re absolutely correct.

Taken together, Facebook, Twitter, Pinterest and Instagram accounted for only about 1.5% of online e-commerce orders on Cyber Monday.  (For the weekend as a whole, it was only slightly better at ~1.7%.)

This year’s statistics just add more confirmation of several truisms about online consumer marketing:

  • Targeted e-mail still works the best.
  • Online search is important.
  • Social media is like Lucy and the football.

Amazon’s (Somewhat) Surprising Shopping Stats

Phillip Nones Advertising, Business, Sales, Social Commentary , , , , , , , , ,

Shoppin on AmazonOver the years, Amazon has branched out greatly from its original focus on books and other media to offer all sorts of other merchandise.

In fact, these days people can buy pretty much anything on Amazon — assuming it’s legal.

Even so, I was somewhat surprised to read the tea leaves on some new findings released by Chicago-based Consumer Intelligence Research Partners.  This research firm surveyed ~1,100 Amazon customers, asking them about their most recent purchases on Amazon.

Categorizing the responses by type of merchandise, CIRP found that books are no longer the most popular products sold on Amazon.

Instead, pride of place now goes to top-ranked electronics products, with ~33% of the survey respondents reporting that those types of products were their most recent purchase on the site.

Books still maintain their high ranking; the category comes in second at ~20% of respondents.  (Incidentally, approximately one-third of those book purchases are e-books.)

Amazon’s Fresh service, which delivers groceries within 24 hours of ordering, has been operating in select West Coast cities for some time now — and it appears that the company has latched onto a winning formula.

In fact, the grocery category ranked third in the survey.

This surprised me:  Call me old school, but I still prefer to select my fresh meats and produce on my own, instead of relying on some anonymous “picker” to do it for me.

What were the bottom three merchandise categories found in the CIRP survey?  Sports-related purchases were low  … and music purchases were lower still (about half of them being music downloads, by the way).

Dead last is the automotive category.  No real surprise here, I don’t think.

Personally, I don’t know anyone who would feel comfortable purchasing a car online.  And since the vast majority of consumers don’t work on their cars either, it seems natural that most of them will continue to rely on their repair shops to procure the replacement parts and consumables they need for servicing their vehicles.

If you have particular merchandise you like to buy through Amazon — or if there is something really unusual that you’ve purchased from the site, please share your experiences with other readers here.

Online Marketplaces: The Brightest Stars in the e-Commerce Galaxy?

Phillip Nones Advertising, Business, Marketing Communications, Uncategorized , , , , , , , ,

online commerceGiven a choice between buying a branded product from Amazon and a similarly priced one from an e-commerce store on the brand’s own website, which purchase option do most people choose?

In most cases, people opt for Amazon.

And why wouldn’t they? Online marketplaces like Amazon devote the vast bulk of their energies to removing the obstacles to purchasing products and improving the overall buyer experience.

The e-commerce stores on most company or brand websites don’t get nearly the same degree of laser-focused attention.

So it comes as little surprise that as online e-commerce continues to evolve, marketplaces like Amazon, eBay and Grainger are outpacing general e-commerce websites in terms of their growth and popularity.

Let’s face it, compared to most standard e-commerce sites, e-marketplace sites do a superior job dealing with the four major customer drivers:  selection, value, convenience and user confidence.

It shows in the growth statistics. Looking back over the past decade, Amazon’s yearly growth has averaged around 32%.  Compare those stats to standard sites … and there isn’t much of a comparison.

If anything, the future looks even brighter for marketplaces. With the increased adoption of mobile devices for online shopping, dedicated mobile apps from marketplaces like eBay and Amazon are making buying by phone easier and more convenient than ever.

Their mobile apps iron out the “payment kinks and concerns” that have bothered some mobile purchasers. These apps solve the potential security problem of having to input payment or address/shipping information into the phone when the purchase is made.

The rise of online marketplaces isn’t limited to just Amazon and eBay, either. Numerous other robust e-commerce marketplaces in both the B-to-C and B-to-B realm are thriving, too – not just in the United States but in the developing world also.

The global aspect is quite important, actually. Marketplace e-commerce may represent only about one-third of total online sales in the U.S. … but in China, such marketplaces are capturing closer to 80% of the online business.

It helps that these marketplaces offer many PayPal-like payment options. This solves the problems of payment when fewer people overseas use credit cards for purchases. (In China, less than 5% of online customers pay via credit card.)

These developments don’t presage the end of “conventional” e-commerce sites, of course. But they do suggest that companies should seriously consider online marketplaces as a prime channel for getting their products into the hands of end-users.

After all, it’s only natural that customers are going to take the “path of least resistance” – making the buying process as effortless as possible.

Online marketplaces have that game down to a science. No one does it better.

What Will Retail Look Like in Five Years?

Phillip Nones Advertising, Business, Economics, Social Commentary, Uncategorized , , , , , , , ,

retailIt’s a question many people are asking:  To what extent is the digital revolution fundamentally changing shopping habits? 

A new report from Forrester Research titled “U.S. Cross-Channel Retail Forecast, 2012 to 2017” attempts to answer this question.

Its prediction:  just over 10% of total U.S. retail sales will be online purchase in five years’ time.

By comparison, in 2012, e-commerce accounted for about 5% of total U.S. retail spending, so Forrester is projecting a doubling of e-commerce volume.

Forrester also projects that by 2017, ~60% of retail sales in the United States will involve the Internet – either as a direct commercial transaction or as part of buyers’ pre-purchase research on laptops, tablets or smartphones.

The sectors most likely to be influenced by online research are grocery, apparel, home improvement and consumer electronics – no doubt abetted by the ability to access customer reviews and comparison prices during shopping excursions, Forrester reports.

These findings and more are included in Forrester’s report which can be found here (it’s a for-purchase study).

What’s the value of a consumer’s time spent online?

Phillip Nones Uncategorized , , , , , , , , , , , ,

The value of a consumer's time onlineIf you’ve ever wondered what the “value” is of a consumer spending time online, we have some answers courtesy of SumAll, a data visualization company.

SumAll has tapped into Google Analytics data to study patterns across ~10,000 customers and nearly $1 billion worth of transactions. What it finds is that a minute of time spent by a consumer “e-window shopping” is worth an average of 43 cents.

SumAll also calculates that one full visit to an e-commerce site is worth ~$1.30.

The company has been tracking this sort of information for a number of years, so we have some comparative statistics we can observe. In 2012, SumAll finds that the average amount of time spent per site declined by approximately 14% — from 3 minutes, 16 seconds in 2011 to 2 minutes, 49 seconds today.

Despite that decrease in time spent per online visit, the revenue generated per visit actually grew by ~24%.

What’s the reason? “Buyers are more accustomed to buying online, so the hesitation is dropping,” Dane Atkinson, SumAll’s CEO claims.

The SumAll data also suggest that an average consumer spending 1 minute, 54 seconds on a site is the amount of time needed in order for the e-retailer to make a dollar in sales.

The SumAll report concludes that a balance needs to be struck on e-commerce sites between having enough depth to be interesting … but not so much as to be overwhelming, with too many products offered and/or undue difficulty in illuminating the payment path for buyers.

According to Atkinson, aiming for an average e-commerce visit of three to four minutes is a good goal for engaging customers without confusing them with too many options.

Finally, we see from the trend data that there has been a dramatic decrease in the amount of minutes spent on a site to result in a dollar sale: it was charted at over 5 minutes back in 2009, more than three times 2012’s findings.

I guess we’ve become more nimble than ever buying online.

More Interest in Pinterest …

Phillip Nones Uncategorized , , , , , , , , ,

While it pales in comparison to the $1 billion+ Facebook public offering today, social bulletin board Pinterest, the topic of a recent blog post of mine, has snagged its own financial windfall this week.  It comes in the form of a $100 million investment led by Rakuten, Inc., a Japanese conglomerate of Internet-oriented businesses.

With this filing, Pinterest is now valued at approximately $1.5 billion.

Why is Rakuten making the investment?  Very likely because one of the key components of the conglomerat is e-Commerce Marketplace, which is Japan’s leading electronic commerce player. 

Michael Jaconi, an executive officer at Rakuten, is quoted as saying that “Pinterest recognizes Rakuten as a global Internet player and they want to leverage some of the skill set in the growing business world.”

With 77 million members in Japan already, Rakuten has ambitious plans to become “the top global internet service company,” according to Mr. Jaconi.

But why choose Pinterest instead of Facebook or Twitter for such a major financial investment? 

The answer to that question isn’t necessarily “either/or,” actually.  “We want to continue investing in technology that is as innovative as Pinterest,” Jaconi notes.  “If we need to buy and invest to bring us closer to that source of innovation, we will.”

Stay tuned, obviously.

Social Couponing and “Daily Deal” Sites: Storm Clouds on a Blue Horizon?

Phillip Nones Uncategorized , , , , , , , ,

Daily deals and other online couponsI’ve blogged in the past about the risks and rewards of social couponing. Recently, we’ve been getting some conflicting reports about the online couponing phenomenon.

On the positive side, according to a new market forecast by local media expert and advertising firm BIA/Kelsey, American consumer spending on coupon “deals” – including daily deals, instant deals and flash sales – is expected to grow at a healthy compound annual growth rate of ~37% between 2010 to 2015.

That would mean that Americans will be spending ~$4.2 billion in this segment by 2015. And that’s an increase of ~$300 million over BIA/Kelsey’s earlier 2015 forecast, released by them just this past March.

The BIA report also makes the following observations and prognostications about the segment:

Groupon and LivingSocial – the leading players in this market – have expanded rapidly. With low barriers to entry, more participants have entered as well, including vertical sites and local media companies.

 There’s been substantial growth in the number of registered users who are active in buying coupons.

 More specialization in deal sites – by market segment and by geography – is leading to more activity by registered users.

 An increase in both the number of transactions and the average price per transaction will occur.

Counterbalancing this rosy report is the experience of market leader Groupon in its attempts to take itself public. That endeavor has been accompanied by the release of financial figures that show company performance well below expectations.

And the challenges go well beyond Groupon: The Wall Street Journal’s Shayndi Raice is reporting that a shakeout has already begun among the ~530 daily deal sites that have been formed in recent times. So far in 2011, nearly one-third have shut down or been sold (~170 of them), according to daily deal site aggregator Yipit. Even sites like Yelp and Facebook have pulled back from their daily deal coupon activities.

According to reporter Raice, at the root of the challenge is the cost of acquiring registered users for the couponing services. At the outset, the novelty of the segment and the resulting PR buzz made it relatively easy to attract “early adopter” consumers and participating merchants, so only a relatively modest sales promotion budget was needed.

But, Raice notes, “It now takes more spending to get to remaining consumers and to cut through the noise created by so many competitors.”

Groupon’s own statistics from regulatory filings in connection with its bid to go public illustrate this dramatically. Here’s how the average cost to acquire a new custom jumped over the span of just one year:

 March 2010: $7.99 average acquisition cost-per-customer
 June 2010: $20.93
 March 2011: $30.74

Groupon was forced to spend nearly $380 million in marketing initiatives during the first half of 2011, compared to only around $35 million a year earlier. In the heightened competitive environment, not only must companies vie for new consumers, they need to sell new merchants on the program as well.

Those marketing and selling requirements translate into nearly 1,000 Groupon sales employees in North America alone, while second-ranked LivingSocial has ~700 … each of whom earns an average $100,000 in salary plus commission.

Considering these daunting dollar figures, it’s hardly a surprise that there’s a shakeout happening, with the less-heeled participants having to exit the market or sell themselves off.

In hindsight, it appears that many entrepreneurs and investors may have been tempted by the deceptively low barriers to entry into the “online deals” coupon game – basically a website … a few merchants offering coupon discounts … and some e-mail offers to consumers. But the real costs come with trying to scale operations so that the individual coupon offers result in sufficient income and fees that will offset the relatively labor-intensive operating model.

Obviously, many have yet to find the sweet spot in this business.

Shopping in the Internet Age: Let’s Make a Deal

Phillip Nones Uncategorized , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Consumers love their online dealsI hear the complaint often that e-mail has become the preserve of “deal a day” promotions and communications from brands that have devolved into little more than breathless announcements about discounts that are “too good to pass up,” coupled with the obligatory “free shipping” pot-sweetener.

And then the next day, another deal shows up that’s practically the same as the last one …

But how surprising is this, really? Let’s not forget that daily newspaper advertising – the equivalent antecedent to e-mail marketing, has always had a similar focus on price, sales and deals.

It’s just that with e-mail, it seems more ubiquitous because they’re being pitched to us hourly on any number of digital platforms and mobile devices, rather than just once a day with the newspaper delivery.

And there’s no doubt that the sheer volume of deal activity is growing – the low cost of e-mail marketing makes sure of that. Not only is seemingly every consumer brand out there working the e-mail channel like they did catalogues and newspaper advertising in the past, there’s also the bevy of coupon marketers like LivingSocial, Groupon, Yipit and Gilt City, to name just the top few.

Some have discerned a decline in the “quality” of the information that is being provided; whereas there may have once been some educational, informative or “cool” content included along with the special deals, now it’s often devolved into nothing but “price, price, price” and “savings, savings, savings.”

The extent of consumer interaction with “deal-a-day” websites and e-mail offerings was quantified recently in consumer research conducted by Yahoo and Ipsos OTX MediaCT. The survey, fielded in February 2011, discovered that U.S. adults who are on the Internet subscribe to an average of three daily or weekly shopping e-mails or e-newsletters. (And more than half subscribe to two or more.)

How often are people reading these e-communiqués? With daily regularly, it turns out.

Nearly two-thirds of the respondents who subscribe to at least two of these “daily deal” e-mails or e-newsletters report that they read all of the messages that are sent. Here’s how reading frequency breaks out:

 Read several times per day: ~22% of respondents
 … Once per day: ~38%
 … A few times per week: ~23%

 Read once per week: ~7%
 … A few times per month: ~5%
 … Once per month or less: ~5%
The same Yahoo/Ipsos survey measured the degree of pass-along activity, which is one of the most potent aspects of e-mail marketing. Most recipients reported doing this – about 45% doing so on a weekly basis or more frequently:

 Forwarding deals to friends or family several times per week: ~17%
 … Several times per day: ~12%
 … Once per day: ~10%
 … Once per week: ~6%

 Forwarding once per month or less frequently: ~19%
 … Never doing so: ~22%

Despite the complaint commonly heard about groaning e-mail inboxes, the Yahoo/Ipsos survey gives little indication that consumers are in reality becoming all that tired of the onslaught of daily deal promos. In fact, over six in ten respondents in the survey reported that they subscribe to more of them today compared to last year.

Moreover, nearly half of the survey respondents reported that they’re excited to receive them … and that they “can’t wait” to see the latest deals being offered each time.

There’s another way we know that these deals are retaining their relevance: Three-fourths of the respondents reported that these types of e-mails come to their main inbox rather than to a separate account they’ve set up to receive such offers. So there’s little doubt that when people say that these deals are desirable, they actually mean it.

We consumers do like our deals, don’t we? And if you think that the popularity of deals and discounts is due to the recession, that’s belied by the fact that even America’s super-affluent are on the deal bandwagon. Unity Marketing’s recent survey of the wealthiest 2% of Americans — those earning $250,000+ per year — finds that value-priced Amazon is the top shopping destination for ~45% of them. Not only that, ~10% use Groupon for coupons and ~8% use Craigslist.

No, it seems bargain-hunting is the thing for practically everyone.

The European Union Versus Marketers

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EU e-Privacy Initiative attacks ad tracking via cookiesI wonder how many marketers are focused on what’s happening in Europe on the digital marketing front? While companies here are busily engaged in making sure ad tracking is being done to the nth degree, in the UK and Continental Europe, new legal restrictions on advertising tracking threaten to upend a lot of these efforts, particularly for multinational brands.

In short, the EU’s e-Privacy Directive restricts the use of “cookies” and virtually all other digital ad tracking methods. And the legal frameworks set up around this directive would require any marketer with users in any EU country to be subject to EU-wide and country-specific privacy legislation.

The new privacy initiatives are far more restrictive than the present US-EU “safe harbor” agreement, which merely requires American companies to notify users when cookies are used on a website. The new regs covering web pages, web apps and mobile apps would require giving notice each time a cookie is used, thereby setting up a flurry of endless notifications that promises to seriously degrade the online browsing experience.

The seemingly reasonable compromise of adding information to a “terms of use” agreement isn’t acceptable to the EU either, unless all users are issued the new agreement and they certify their acceptance.

And just to make sure everyone knows how serious all of this is, the new regs call for the imposition of financial and/or criminal penalties for the non-compliant use of cookies. But for the moment at least, only two relatively small countries besides the UK – Estonia and Denmark – have implemented controls to enforce the EU directives.

Here in the United States, privacy legislation slowly wends its way around Congress, with many legislators understanding that the key to successful commerce online is the ability for marketers to match marketing messages to interested consumers. It’s in Europe where governments appear more than willing to cripple the ability of marketers to do the job they’ve sought to do for decades: Target their audiences with as much precision as possible.

As a result, some European businesses are making noises about abandoning Europe for the United States. The problem is, in the digital age with so much of the branding and commerce blurred between countries, it’s impossible for restrictive moves in one region not to cause negative repercussions somewhere else.

E-mail early birds? The worm may be turning differently.

Phillip Nones Uncategorized , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Best time to deploy marketing e-mail messages.One of the great benefits of the “online everything” world in which we now live is the ability to evaluate nearly anything about marketing not with hunches or speculation, but with hard data.

A perennial question is what time of day is best to deploy marketing e-mails to customers and prospects. The higher the propensity to open and read these messages, you’re closer to the goal of converting eyeballs to clickthroughs … and to sales.

ReachMail, a Chicago-based e-mail service provider, recently studied a large sampling (~650,000) of the millions of consumer and business marketing e-mail messages it sends out for clients daily in order to determine open rate differences based on the time of day. It normalized the data to account for different time zones.

What ReachMail found was that there are differing peak open rate times on weekends versus on weekdays:

 Weekdays: Peak e-mail open rates are between ~11:30 am and ~2:00 pm.

 Weekends: E-mail open rates begin trending upward at ~11:30 am, but don’t peak until ~4:00 pm.

John Murphy, ReachMail’s president, had this to say about people’s weekday e-mail open rate behaviors: “You would think it would spike in the morning, but they’re looking at work e-mails in the morning. Once they’ve cleared out their inbox, they’re looking at marketing e-mails in the afternoon.”

ReachMail’s conclusion: It’s best to deploy weekday e-mails between 10:00 am and Noon. For weekend e-mails, deploy them between Noon and 3:00 pm.

And this additional tidbit also: Don’t assume e-mails sent during the week will perform better than those deployed over the weekend. “People’s engagement rates are up there on the weekend,” Murphy maintains. “It’s our habit of checking e-mail all the time.”

He’s sure right about that.