On-Demand Webinar with Euromonitor: UK Perspective on Black Friday, Cyber Monday, & Singles’ Day

 Highlights & Insights to Help Build Your Strategy

Presenters:

Philip Benton
Senior Research Analyst
Euromonitor International

Katherine Wilson
Director, Marketing Insights
Clavis Insight

Description:
The online shopping trinity – Singles’ Day, Black Friday and Cyber Monday are three of the biggest global shopping days of the year.

For a profitable shopping season, brands must learn how to leverage these events as well as understand the overall eCommerce landscape of these three important shopping days. Listen to the on-demand webinar where Euromonitor’s Senior Research Analyst Analyst Philip Benton and Clavis Insight’s eCommerce expert Katherine Wilson will:

  • Provide key takeaways brands can use now to prepare for global online shopping events
  • Compare Singles’ Day and Black Friday/Cyber Monday trends
  • Show which retailers delivered the most competitive offers and greatest depth of discount on key gifting categories in the UK and US
  • Highlight promotional activities surrounding the events in each market

Prepare for the online shopping trinity now by finding out who are the winning retailers and what are the best practices to increase visibility, optimize availability and drive ‘add-to-basket’ in online stores around the world.

About the Presenters:

 

Image_Philip Benton_Euromonitor_100x100Philip Benton is a Senior Research Analyst for the Services & Payments team at Euromonitor International, with particular expertise on the UK and Ireland. Philip joined Euromonitor International in 2013; his professional interests include financial technology, retailing strategy and the sharing economy

 

KatherineKatherine Wilson is Director, Marketing Insights at Clavis Insight. Prior to joining Clavis Insight, Katherine was part of the Innovation Analytics group at Nielsen. There Katherine specialized in new product evaluation and forecasting to minimize innovation risk and maximize volume potential and chances of success.

 

Webinar Transcript

Paul: Euromonitor is the leading provider of global market research and analysis. Headquartered in London, Euromonitor has over 800 analysts on the ground in over 80 countries providing both syndicated and custom research solutions on a range of consumer packaged goods markets for some of the world’s largest companies. Learn more about Euromonitor by visiting their website, euromonitor.com.  

I’m excited to introduce today’s presenters, Philip Benton and Katherine Wilson. Philip Benton is based in the U.K. and is a senior research analyst for the services and payments team at Euromonitor International. His particular expertise is on the U.K. and Ireland. Philip joined Euromonitor in 2013. His professional interests include financial technology, retailing strategy, and the sharing economy. Katherine Wilson is director of marketing insights at Clavis Insight. Prior to joining Clavis, Katherine was part of the innovation analytics group at Nielsen. There she specialized in new product evaluation and forecasting to minimize innovation risks and maximize volume potential and chances of success. 

Katherine: Great, thank you Paul. Good afternoon, everyone. So, I just want to start by giving a little bit of a brief history of Black Friday and Cyber Monday born in the U.S. as the first mega-sales events. Black Friday is the Friday just after the Thanksgiving holiday in November in the U.S. It’s considered the unofficial start of the holiday shopping season here, and one of the season’s busiest days in the U.S. The popular myth is that this is an accounting term. It’s when retailers begin to turn a profit in the year. They were in the red before Black Friday, and then they were in the black. That’s actually not the case.  

The real story is that in the late 1950s police in Philadelphia would deal with hordes of shopper coming to the city of Philadelphia for those post-Thanksgiving sales that started on that Friday, and the police were also dealing with crowds gathering for a big Army-Navy American football game on the Saturday. So traffic police were working 12-hour shifts, no one could take time off, and it was a really just generally terrible day for them. So they coined the term of Black Friday, but as the post-Thanksgiving sales gained in popularity, the term stuck, and we’ve been using it ever since.  

The term Cyber Monday was coined by the National Retail Federation back in 2005, so 10 years ago, to describe the day consumers in the U.S. (where Cyber Monday was born) returned to work after Thanksgiving, typically sitting down to faster Internet speeds than they had at home, and they did some of their online shopping. Black Friday did manage to leap across the Atlantic a few years ago, landing in 2010 in the U.K. through WalMart’s Asda, and also France, Germany, India, and well beyond.  

Last year, we saw in 2014, Souq, a pure player online-only retailer with operations in Dubai, the U.A.E., Saudi Arabia and Kuwait. They launched their own version of Black Friday but instead called it White Friday since Friday is the traditional day of prayer there. It did manage to attract 10 million users to its site that day, so we are seeing the mega-sales events, Black Friday in one form or another, as well as Cyber Monday, jump over and certainly bleed outside of the borders of the U.S. pretty prolifically.

 
We also have seen in the last few years these mega-sales events proliferate. Prime Day, Amazon’s Prime Day launched just this past summer in July, and Double 11, also called Singles’ Day in China, are mega-sales events that aren’t really anchored to a traditional shopping holiday or even a key shopping period. Instead, you see ambitious retailers like Amazon and like Tmall in China creating events to capitalize on either a shopping peak or to create their own peaks during the slow shopping periods.  

We are seeing this proliferation of the digital mega-shopping holidays as retailers are really competing to capture a greater share of the mega-shopping spends, and as e- and m-commerce adoption among consumers continues to grow. So, we’ve got just some images…these certainly give us a lot of really great images across all markets. For our slide deck, here in the middle we have an image from Tmall to highlight Singles’ Day, Double 11 in China. We also have Prime Day in the U.S./U.K., Black Friday advertisements U.S./U.K., as well as Souq advertising their White Friday event. We’re seeing record highs across all of these events each year. Again, as adoption grows, consumers get more excited about these events.  

In terms of the numbers that we’ve seen this year, Amazon didn’t release its Prime Day sales, but they did release that almost 35 million items across the 9 Prime eligible countries were sold, and that does include the U.K. Singles’ Day, again also called Double 11 in China, hit $9.5 billion for Alibaba alone. It’s worth noting that there are other major Chinese retailers that take part in this event, Jingdong, Yihaodian, and those aren’t even included. Tmall, Alibaba’s Tmall really is the pioneer of the event, so I’m sure they have the lion’s share, but this number is likely bigger in terms of a market-level take for the day. Black Friday and Cyber Monday were also seeing hit record highs. Between the two events we’ve got about £4 billion counts sold in the U.S. and over £2 billion in the U.K., so bigger than ever every year.  

What we are going to cover during this time? We are going to talk about these November mega-sales events. Singles’ Day in China, Black Friday and Cyber Monday, primarily in the U.K., we will touch on the U.S. And then we’re going to really look at a deep dive into the trends that were seen across these global mega-sales events, what they’re telling us about mega-sales events in general and the future of e-commerce. And then how to leverage those leanings to really win.

First I’m going to launch into Singles’ Day, again, also called Double 11 in China. Some of you are probably familiar because of the high levels of sales, more and more people are standing up and taking notice because Singles’ Day is really becoming the new king of the online sales event. It’s really the event to watch. So, this event was created back in the 1990’s by a few students. It’s supposed to be an anti-Valentine’s Day, when you don’t buy a gift for somebody else, you buy it for yourself. November 11. November is 1-1. Eleven also has 2 more 1s, so you’ve got 4 11s, so it’s more commonly called Double 11 in China. Kind of a fun, silly holiday until, in 2009, Alibaba decided to pick it up to create a mega-sales consumerists holiday for its Tmall platform in that anti-Valentine’s Day spirit.  

It’s an interesting contrast to Black Friday where we are supposedly shopping for others but, at least, I’ll admit I also do a fair amount of shopping for myself. Might have bought a new rug on Black Friday. So, buying for myself, my home, as well as for others. So we do see this very much a consumerist focus, admitted consumerist focus, for the Singles’ Day event. And it’s enormous. It’s almost five times the take of Cyber Monday in the U.S., which is the world’s second biggest online sales event. And worth noting is that this year it was more than a typical day’s retail sales in China, which is really incredible. You have more people shopping online that day than shopping offline in the enormous Chinese market on a typical day. Really incredible.  

Alibaba is really the dominant player in China. It’s the 800-pound gorilla. I don’t know the conversions. But, it’s really the behemoth, and it capitalized on Alibaba’s Tmall’s 46% of the online B2C, business to consumer market worth £92 million to them. They really are the ones that are driving this to become a mega-sales event.  

So, background on what Singles’ Day is. Now, what were people really buying on Singles’ Day? We’re really seeing apparel dominate the Double 11 featured promotions, particularly on Tmall, which reflects the overall e-commerce trends in China. In China, the category of clothing, apparel and footwear already accounts for 21% of all internet sales up from just 12$ in 2010, so people do need time to feel comfortable buying new categories online. I think we all agree now that the Internet is a good channel for electronic purchases. Really, apparel has now tipped in terms of the e-commerce channel as well. Alibaba itself controls over three-quarters of Internet apparel sales as of 2015, and they really have done that by, again, making it a safe, convenient, fun place to shop for clothes, and that’s again reflected in their Singles’ Day promotions where 43% of Tmall’s featured promotions were apparel products.  

And, again, that’s driven by how they manage their apparel and their apparel strategy through Tmall. So, on average, Tmall has over 9,000 reviews. That’s an incredible number of ratings and reviews, so you can really get a sense of is this a good product? What is the quality? Have people been happy with this purchase? Very cool at these Chinese retailers, there’s a lot of images that are uploaded in the ratings, in the reviews, so you can get to see how people wear it, the condition it arrived in, so again, you can really get a good understanding of what your experience is going to be, which gives consumers a lot of trust. Alibaba also offers a really great selection, great pricing, and return polices to help consumers, again, feel more comfortable, and really deep discounts on Double 11 for the clothing and apparel category. Between 25 and 55% off of Jack and Jones. You’ve got Camel at an almost 80% discount, and we see a nice mix of international retailers as well as Chinese retailers in terms of apparel on T-Mall.  

So, we know kind of what they’re buying. Now, who are they buying from on Double 11? International brands and retailers were a major push this year on Tmall, and we are really seeing these brands and retailers jumping in. Tmall gives international brands and retailers access to millions of Chinese consumers, and it gives particularly brands, as well as retailers, control over their products. Control they really lack in the brick-and-mortar retailers. So, you can control your images, the product information that consumers are seeing, in a way that you really can’t as easily in brick-and-mortar stores in China.  

We do see Tmall offers the ability for retailers and brands to set up store fronts on Tmall, so we see a lot of global-renowned brands, Nike, Febre, L’Oreal jumping in and creating a store on Tmall. And we also have retailers doing that as well, interestingly. Amazon does have its own. There is Amazon China, but Amazon also has a storefront on Tmall. We also see Sainsbury’s, Dia, Macy’s from the U.S. with their own stores on Tmall. Very interestingly, the Sainsbury one is really focusing on its regional identity. It’s offering things like milk, tea, biscuits, quintessentially English items Chinese consumers might find interesting.  

Top featured brand’s really becoming a mix. In the past, it’s really been heavily dominated by Chinese brands. We’re starting to see some international brands crack in in terms of the featured promotions. We do see Apple get up there on Tmall to be one of the top five featured brands on Tmall. Jingdong, JD, had a little bit more of an electronic focus. We do see some international brands, Phillips and Samsung, cracking into those top five brands this year. Heavier focus in previous years on Chinese retailers.  

We have international brands and retailers flocking to the Double events in China. The question now is, “Will this go international?” So, to some extent it already is. Probably many people on the phone listening to this might have just heard of Singles’ Day for the first time this year. Some of you may be more savvy and have known about it before, but this year it seems like it’s kind of tipping in terms of awareness globally. We do have the New York Stock Exchange having Alibaba ring in the opening bell remotely. Jack Ma, the very charismatic chairman of Alibaba rang in the bell from China. Wal-Mart, major U.S. retailer, also advertised Double 11 specials in the U.S. Very interesting, because awareness is still pretty low here. And we also have global consumers able to access those Double 11 deals through Chinese platforms, so through Tmall and Jingdong often ship to the U.S., or international Chinese marketplaces such as Alibaba’s AliExpress where we did see AliExpress has websites in Russian consumers, U.K., U.S., Mexican, Brazilian, and so, really, all across the globe, and they did see that they had tripled the number of orders this year versus last year.  

In terms of Singles’ Day on Ali Express, Russia, Spain, and the U.S. are the top countries ordering from AliExpress, but we do have the U.K. landing in ninth place. One formidable barrier worth noting for Double 11 making it global is that this is Remembrance Day on November 11 in all of the Commonwealth Nations, and it is celebrated as Veteran’s Day in the U.S., so more solemn, reflective days, and I don’t think any of us really want to see these become consumerist extravaganza. That is Double 11, it is a fun event, but maybe those things don’t really marry well. Adoption for Double 11 could grow despite that, or marketers could explore some clever options. You could really exploit the difference in time zones to say Double 11 starts at midnight in China but really that’s still November 10 thin a lot of other markets, so there are some clever ways that we could still find it kind of creeping across the borders.  

So, a little bit of an overview on a very big mega-sales event. Now we are going to switch gears to look at what happened on Black Friday and Cyber Monday in the U.K. this year. 

Philip: I’m going to be talking about the Black Friday and Cyber Monday events in the U.K. And as Katherine mentioned in the introduction, Black Friday was imported as a big shopping event in 2010, but actually last year was probably the first kind of breakout year where it really gained a lot of momentum across all retailers. And what was interesting this year was, despite some key retailers bowing out, for example, Asda, who were obviously one of the initiators of the trend back in 2010, despite that, Black Friday and Cyber Monday still together topped 2 billion with retailers recognizing that a lot of consumers are now going online for the Black Friday deals rather in-store.  

What was interesting for this particular year was that we saw huge kind of interest in-store and online last year, whereas this year it seemed to be that the stores themselves relatively empty whereas online was seeing a lot more activity and a lot of the major retailers, Argos and John Lewis store, actually their websites crashed because of the amount of traffic that was being diverted to their retailer’s website. So it’s something that kind of really caught the retailers off guard again in terms of how much interest there was online. And we saw on the Black Friday itself more online activity than Cyber Monday, which is interesting because obviously Cyber Monday was seen as the main online day of that particular weekend, but we saw together £2 billion with Black Friday coming up slightly more than Cyber Monday at £1.1 million. And, if you look at that compared to last year, in 2015, online spend total was up 35% higher than the previous year so that’s really, really significant, and I guess really lends to the wider trend of how more and more people, particularly in the U.K., are spending online. And a lot of that being driven by people using their tablets and mobile phones to shop as well.  

I’m going to mention the actual in-store footfall fell by 4% compared to 2014, and I think a lot of retailers were prepared for similar numbers to last year and had increased security and opened the store slightly earlier, but I think last year was probably kind of an off-year in that it was still a new shopping event in the U.K. And it seems from this year a couple of main lessons to learn are the fact that it is online, and you can see actually with Amazon U.K. and John Lewis, Friday was their biggest ever Singles’ Day trade on their website. Amazon U.K. said their sales were over six million items, and John Lewis said their total sales were up just under 12% on last year’s event, so it kind of proves that the actual event got bigger, but the shift was definitely online.

And, although Asda, one of the retailers to pull out, there was still a lot of interest kind of across the board, and what I think the key of the trend that we saw was how promotions were spread out over days to kind of smooth demand, which is, previously, we were looking at Cyber Monday as a pure online day and Black Friday as the in-store day, whereas there was a bit more of a spread across the weekend and actually in the weeks leading up to Black Friday, so retailers could kind of drive that demand to continue to purchase up until the event and after just to kind of stagger it slightly. And I think what was quite interesting is particular areas, like furniture and appliances, did well, which Katherine I think will now be talking about in a little more detail. Here you go.  

Katherine: We are going to be looking at three different dates, the Tuesday before Black Friday, Black Friday and Cyber Monday, and see what the top five categories were in terms of featured promotions. And first we are going to talk Argos and Tesco. So, one of the interesting things is that both Argos and Tesco, their selection looks a little bit different on that Tuesday before. Argos focusing more heavily on furniture and appliances and health and personal care. Tesco on baby and gardens, but both are really shifting their focus starting on Black Friday and continuing through Cyber Monday on the same two categories, furniture, videos games, electronics, toys and games. These are really key gifting categories. Also, gifts for yourself and gifts for your home. Purchases you may be kind of waiting to buy, you have some pent-up demand again for that furniture category, appliances, so shifting to these items that are going to be really popular on Black Friday and Cyber Monday.  

John Lewis and Amazon tactics were a little bit different. They were more consistent throughout, so that Tuesday before they were featuring very similar categories as they did on Black Friday and Cyber Monday. John Lewis is very focused squarely on electronics’ and appliance’s promotions while Amazon is really consistently featuring clothes, shoes, and jewelry, and electronics, and they are promoting those throughout the week. So, again, some more consistency here. Amazon, really, in the U.S. and the U.K., stayed pretty focused. We saw the same trend in the U.S.  

One interesting contrast to the U.S., which may be something retailers in the U.K. want to consider, is we did see similar consistency between featured promotional categories between Black Friday and Cyber Monday across all of these four U.K. retailers. The categories on promotion aren’t that different between Black Friday and Cyber Monday, similar to the U.S. But in the U.S. we saw a lot of variation in which brands were featured. So, for example, on Black Friday in the toy and game category, Amazon did feature, Ravensburger puzzles, Melissa & Doug items, and Target was really focused on razor scooters on promotions. But then these brands were mostly absent from the featured deals midday on Cyber Monday. So, changing your focus of brands really incentivizes shoppers to come back for multiple shopping trips. So, I picked up the Melissa & Doug puzzle for my daughter, but now I’m going to have to look for something…there is something else I want on Cyber Monday, so I’m going to come back again.  

We didn’t see this very much in the U.K. You know, in terms of toys and games, Tesco was featuring Disney and Teenage Mutant Ninja Turtles. Argos, Fischer-Price, and Disney. Amazon, Ravensburger, Melissa & Doug, and Leap Frog throughout. So we saw those same brands across all of these days. Similar to electronics, the top three brands really aren’t changing between Black Friday and Cyber Monday. So, Amazon is featuring Sony, Amazon Basics, and Adobe. John Lewis, Samsung and Sony as well, and we are not seeing that shift day after day. So, if I’m a consumer, I may just look for my deals one time, and then say, ‘I’m all done with all of my shopping after Black Friday.’ Whereas, if you are changing up the brands, they’ll come back again and again.  

So, now we know what the top categories are. What we are looking at now in this chart is the top five categories on promotion at each retailer. Looking at the average depth of discount on, again, that Tuesday before Black Friday, Black Friday, and Cyber Monday.  

So, some key callouts here. Amazon, the category depth of discount is really consistent across the 3 days, averaging in total the featured promotions about 35% off each day. We do see the steepest discounts on toys and games and electronics, really key gifting categories. But we’re not seeing major shifts throughout the days. So, if I’m a shopper at Amazon, I kind of know I can go and shop any day for these in the promotional period, and again, Amazon advertising this as a week of deals instead of just two days of deals.  

Argos had some of the deepest discounts we saw, averaging between 40 to 50% off across the 3 days. We did see some variation here. Some featured discounts were actually lower on the Tuesday before Black Friday on electronics and appliances than they were on Black Friday and Cyber Monday, but then we, in other categories, were seeing the deeper discounts on Black Friday and Cyber Monday. So, Argos has been staggering promotions throughout the shopping holiday. You know, November they were already offering promotions on toys right at the beginning of November, and even right now they are calling this Friday Blue Friday, so there’s a Blue Friday event right now. So, Argos has been trying to really stagger all throughout November and now December its promotions to keep consumers coming back. So, we are seeing a range in when you should look for the deepest discounts at Argos.  

For John Lewis and Tesco, pretty much across the board it’s worth waiting for Black Friday and Cyber Monday. We did see much deeper discounts on those days. Tesco particularly, the desk discounts are on average about 10 percentage points deeper on Black Friday than the Tuesday before. Furniture and toys and games items are about 20% deeper, the discounts on Black Friday and Cyber Monday, so absolutely a retailer worth waiting for the actual Black Friday event for Tesco.  


Just a couple of the doorbusters that we saw some of the deepest discounts on Black Friday, we’re seeing almost 90% off a pair of premium sunglasses on Amazon. Argos again furniture. Probably not the normal stocking stuffer or gift, but certainly something I might be buying for my home, 67% off at Argos. And some toys at Tesco, selling for almost 75% off. And then at John Lewis, we’ve got a convection oven going for about 25% off. We do see a great variety of brands on all of these different days at different retailers. But a couple of brands, and they were all electronic brands, were able to cut through the clutter and win featured promotion positions across retailers. So, Phillips, Sony, and Samsung were available across Amazon, Argos, and John Lewis, and Tesco, available across all of them across days. We didn’t really see any other brand match that in terms of the availability of those key promotional spots.

We do want to do a little bit of a deep dive on John Lewis because it was really interesting some of what they did. They positioned themselves as premium even while they’re discounting. So, John Lewis, a more premium brand, still really wading knee-deep into the Black Friday events but still trying to take the focus off price once they have shoppers at their website and moving along the path to purchase. So, they offer price matching to assure shoppers they are getting the lowest prices, so, “Basically, come to our store. I know we are premium, but we are still offering the lowest prices,” but then once you get to their store, interestingly, they display the promoted price without showing the original price. At all the other retailers we looked at, and I have an example, I believe it’s from Argos, but I could be wrong. But everyone else is showing the original price was £599, now save £220 for this final price. We don’t see that on John Lewis. It just notes how much you saved, but again, not showing the original price. And the featured discounts are not as deep as other retailers. We are looking at 20% discounts as opposed to at Argos where the discount might be 40 to 50% on average.  

But all of this to say John Lewis was pretty successful. Sales at their website were up over 15% from the same week in 2014, so it’s a strategy that’s working. John Lewis isn’t hiding the fact that they don’t love Black Friday. Andy Street, the head of John Lewis, said “Do I wish it had stayed in the U.S.? Yes, I do.” So, they don’t love it, but they are still wading in while trying to maintain the perception of being premium.  

Just briefly, key takeaways from this year’s U.S. Black Friday and Cyber Monday. So, between Thanksgiving Day and the Cyber Monday, shoppers spent £7.5 billion online, up 17% from last year, and Black Friday and Cyber Monday online sales again hitting new record highs, up 12% versus last year. Very notable this year, we are in the U.S., the adoption of mobile has been a little bit slower than other markets, particularly the U.K., but really shocking was the adoption of mobile this year. It’s been very a jaw-dropping breakthrough. By midday Cyber Monday, mobile accounted for over half of online shopping with 41% coming from phone, 12% from tablets, and WalMart’s, the behemoth retailer in the U.S., reported that 70% of its online traffic coming from smartphones and tablets. So, a sea change happening in the U.S., finally, kind of moving to the adoption of mobile and m-commerce here.  

So, now, we want to take what we’ve talked about and really look at five key trends across these mega-sales events that we’re seeing in China, in the U.S., in the U.K., and really beyond that. 

Philip: The first major trend that we want to talk about was looking at how the sales days are really more of a sales week, if not a season. So, we’re seeing across the globe really, and the Singles’ Day in China that the promotions are kind of well beyond just a day. So, Tmall, for example, were offering the Singles’ Day actually a month in advance. And, similarly, Amazon for both U.S. and the U.K. were offering flash deals throughout November, so it wasn’t just waiting for Black Friday, it was actually in the run up to that. And, similarly, Argos were offering deals since Halloween on various products because they’ve got a wide range, they want to promote to consumers. They’ve kind of been staggering as Katherine was saying earlier about encouraging the consumer to come back to the website throughout November and leading up to Black Friday weekend.  

And I think that the main reason really for this is just for the retailers to protect their margins. Asda, who famously pulled out of Black Friday, the Chief Executive actually came out this week and said actually dropping out was the best decision they’ve ever made because what they’ve got now is a number of products, like TVs, DVDs, Xboxes, and PlayStations, which now they can sell at a reasonably discounted price but throughout the December leading up to Christmas, rather than just be relying on that Black Friday weekend. So I think that’s kind of the main challenge for retailers going forward, is to kind of protect that. And even ones that haven’t participated in Black Friday have kind of noticed that at least the whole advertisement of the whole holiday has actually benefited them.  

So, REI in the U.S., which is an outdoors retailer I guess most similar to something like GO Outdoors or Mountain Warehouse here in the U.K., actually closed their stores on Black Friday, and they still experienced 26% higher web traffic on the day versus the year prior. And also Aldi have come out and said they don’t do Black Friday because they claim that every day is a Black Friday at Aldi. So there is still a lot of retailers that aren’t kind of participating but still recognizing the kind of value of it and using I guess the Black Friday holiday as a way of staggering their deals to kind of keep bringing consumers back throughout the holiday season.  

Which kind of brings me nicely onto the second trend, which is looking in more detail on omnichannel. And this is, again, another key takeaway from Black Friday in the U.K. this year, is the fact that consumers were expecting a seamless experience no matter what kind of device they used to access the retailer’s website. We saw desktop, mobile, and tablet is still a popular way for consumers to find out the offers, to find out what’s going on, but they expect to see the same kind of brands listed on these, on the devices, no matter where they see them. So, the key thing really for retailers is to ensure that however they’re kind of making their products available, that it is as easy as possible for the consumer. And one way that is I guess a good example in the U.K. of a retailer who’s done this is Tescos using a hugely successful click and collect concept, and what they’ve been doing is actually using several kind of convenient pick-up locations. So, you go can go to the store to get your groceries, but they also have a temperature-controlled vans where you can get fresh foods, and even London underground stations have been used as a way of consumers picking up the goods they ordered in advance.  

And different end of the scale retailer is Ikea, which is obviously a retailer of a kind of large store generally, and they can’t find the sites that they want in order to engage with more consumers, so what they’ve been trialing this year was the launch of a store in Norwich, which is a, they called it a northern collection point, which is a smaller format. And what it allows consumers to do is to order things in advance and actually go to the smaller concept store in Norwich and actually find out more about what they’re buying before they do so. And one thing I think Ikea’s mentioned that a lot of consumers were going into their stores in Milton Keynes or in Bluewater and Lakeside to actually go to Ikea to find that’s actually purchased there and collect their goods. But they wanted just kind of a new concept where they could still engage those consumers in a different way. And that is something I think especially for the bigger size retailers is going to be more of a common trend going forward.  

And because click and collect has been so successful, pure players like Alibaba in China and eBay and Asus in the U.K. have been teaming up with the bricks and mortar retailers to make sure that they can still offer the service, because it’s something that is kind of becoming standard in the U.K. now. And what eBay and Asus did is eBay teamed up with Argos and allows consumers to pick up orders they’ve purchased from the eBay website actually in the Argos stores. And Asus, did some similar [inaudible 00:35:09] retailers’ perspective it’s a good way of driving more traffic. So, I think the kind of key message here is that when done well, the omnichannel is giving the consumers the best of both worlds and they kind of need to make sure that they can give that service to consumers to ensure they keep coming back to their stores. And now I’ll hand on to Katherine who’s going to talk a bit more about the mobile commerce market in more detail.  

Katherine: Mobile is really a part of that omnichannel, but we’re flowing out to be its on trend since it is very critical. Retailers are really enticing consumers to shop via mobile to drive sales but also to drive loyalty, really turn them into long-term customers. It’s critical to have a loyalty strategy and a mobile strategy. On consumers’ mobile phones and on their tablets, there are very few apps that are downloaded and used, so retailers are really working hard to win real estate on the shopper’s mobile devices through the apps because they are going to be your most loyal shoppers. Offer a lot of functionality through those apps to keep consumers coming back. We saw Alibaba this year for Double 11, incredibly, almost 70% of their sales were mobile, and that wasn’t just by coincidence. They had a mobile strategy that offered some deals every 10 minutes only on mobile. Separate deals that were offered every hour on desktop.  

Jingdong in China also offered different discounts on desktop and mobile, so to try to encourage people to download the app and use the mobile app, they were advertising that a Burt’s Bees lip balm was available both on desktop and mobile, but it was 40% less if you did purchase via mobile. So, again, driving people to download and use the app. We also saw that in the U.S. with Wal-Mart really working hard to encourage consumers to download their app, which a lot of consumers did and were using it to search Wal-Mart on Cyber Monday and Black Friday. In the U.K., we have retailers offering really great functionality for their apps, you’ve got the House of Fraser using the Scan to Explore app with really incredible functionality to again get that app on shoppers’ mobile devices and turn them into loyal long-time consumers.  

There’s a certain amount of m- and e-commerce growth that’s organic. We have younger generations who are very quick to embrace mobile. You have everyone becoming a little bit more comfortable, but I think we should make sure we are not kidding ourselves because a lot of this is really driven by retailer’s pole strategies. So retailers that are being really smart and using these mega-sales events as inflection points to impact changes in consumer behavior. Amazon has done this globally this year in a lot of different ways. Amazon used Prime across the nine different Prime eligible markets to use that as an event to drive membership. Prime Day, you had a trial period for Prime membership. You came in for these really great deals. This year in the U.K. Prime was offered at a discount of £20 in advance of Black Friday to give shoppers access to the free delivery. Prime Now in London and Birmingham that comes with the prime Membership.

Souq also did this with their White Friday event. They are really trying to drive a lot of changes in consumer behavior, encourage memberships, they’re encouraging app downloads, and they’re also trying to encourage credit card adoption. Credit card penetration is pretty low across the Middle Eastern countries where they operate, so they offered a 10% discount on top of all of the other promotions for consumers who paid with a credit card. And again, JD and Tmall really using differentiated discounts to help drive mobile traffic. So these plays for adoption and loyalty are really pushing e- and m-commerce penetration forward. It’s getting more people onboard for e- and m-commerce, which gets us to our next point.  

As more and more people do come onboard, often pulled in on these mega-sales events, we are also using these mega-sales events to stress test and improve the system. So these are really, the huge spikes in shopping on Double 11, on Black Friday, and Cyber Monday, are stress tests on websites and our fulfillment models to really drive us to improve those online shopping experiences and fulfillment for when e-commerce and m-commerce do become more and more mainstream and you have more and more shoppers using these channels.

 So, website slowdowns and outages, we did have that happen due to unexpectedly high surges in demand, and we saw that in the U.S. at retailers like Target and Neiman Marcus. We certainly saw that in the U.K. at Argos, and we even tech companies facing issues that are delaying payments. PayPal is a technology company in the U.S. that processes payments that had a lot of issues over the Black holiday and Cyber Monday weekend. It’s going to push them to increase their bandwidth to, again, accommodate more and more shoppers as they do move all of their shopping online, not just during these mega-sales events.  

We also have new fulfillment models proliferating to accommodate these spikes in demand. Again, as more of our spend goes online, these fulfillment models will be built to accommodate that. You have the Royal Mail experimenting with new models to increase capacity and to compete with retailer delivery services. Amazon U.K. is certainly going to be a big threat for them, so they’re doing things like hiring thousands and thousands of temporary staff over the holidays. They are opening 225 delivery offices on Sundays during the holidays so consumers can pick up their online orders across all 7 days. It’s really trying to double-down on parcels, hoping any decline in letter delivery is going to be made up, and they want to be the go-to provider for parcel delivery.  

You also have the pure play retailers like Tmall, Amazon, Argos, and Souq developing their own delivery services. Everything from trucks to motorbikes to horses, in the case of Tmall, to get that last mile for some of those deliveries in some more challenging regions. And, eventually, we may see drones. Amazon has certainly…the secret’s out that they’ve been experimenting with drone delivery so they can accommodate and fulfill on their delivery promises themselves. Argos is really struggling this year. I they have all these great deals throughout November and December, and they offered fast track, which a lot of consumers are taking them up on, and they are finding it hard to meet that demand. But they’ll learn from any mistakes they made this year, and they’re just going to make that system better and better to accommodate more e-commerce and m-commerce deliveries in the future.  

We also have some concierge services in the U.S. We have Instacart for retailers that don’t really have a great delivery fulfillment model created themselves, we have these concierge services in the U.S. and the U.K. that will deliver for you. So all of this is going to prepare our system for the growing online penetration and the volume that’s coming.  

So, how do we take all of these lessons from 2015, from these online holiday events, these mega-sales events, to win in 2016? So, for retailers, how do you plan for 2016? Really, it’s about giving consumers what they want, when they want it, and how they want it. What they want, that right selection of gifts for themselves, for others, for the home. So they want to see the right furniture selection right alongside the toy selection that they are going to be buying for nieces and nephews and children. They want access to well-known local brands as well as prestigious international ones. So, again, making sure you have a really great selection. They also want to see that the promotions are spread out. This is great for retailers. It protects their margins, it draws consumers back for multiple visits, it eases the strain on fulfillment, but it’s also what consumers want. They don’t really actually want to be tied to a particular day or a particular time. Just like when they want to stream their TV now instead of sitting down for an appointment, they want to do the same with their shopping. Again, when they want it, just like I said, over the range of days as opposed to just one.  


Delivery. They want the options. They don’t necessarily want everything delivered fast. They may want delivery within hours, which they may be willing to pay for, or they may be perfectly happy with items being held at click and collect locations over a course of days. They want it how they want it. They want to order it from their desktop. They want to order it from their mobile device while they’re sitting on the bus, while they’re in front of the TV, and in-store. As Philip was saying, they want to do it across devices, and they want that omnichannel experience.  

Really critical for retailers, you need to have those SaaS load times and sites optimized for across your devices. Mobile web can’t be little desktop anymore. You have to have your site optimized for mobile and give consumers a really rich experience. And they want it shipped, delivered, or picked up, and they really want all of those options. It’s really critical to look beyond your home market for what retailers are doing globally for best practices. Really amazing things are happening globally. Just a couple of pictures. Tmall really created an event out of its Double 11. There was a live streaming event in the middle of the night on Double 11, James Bond’s there as well, really exciting and fun. It made an interactive and entertaining event for consumers who could shop as they watched and felt like they were participating in this event. So, just some fun things to consider. And again, look beyond your own borders and your local competition for what to do and some great ideas.  

How can brands plan for 2016? So, just, what you want to do is focus on the consumer past purchase and how your brand looks at optimizing across everything you can control. So, your portfolio. Make sure your key gifting products and popular items are listed across online stores. So, if you’re Melissa & Doug, you need to be everywhere. You need to be anywhere where consumers are going to be looking for you. You need to make sure your content, all of your product information and your images are complete, up-to-date, accurate and engaging for consumers researching purchases. I think this is especially important around this gifting holiday. I’m trying to look for a cutting board for my husband, and I don’t know how to cook. I’m terrible, and I have no idea, and he’s very good, I don’t know what the best material is for a cutting board, so I’m really leveraging ratings and reviews. I’m leveraging content to shop for somebody else in a category I know nothing about, so content is key always and especially right now.  

Brands are really going to need to work closely with retailers to build the pipeline and monitor inventory to address availability outages quickly. You can consider special offers for key online retailers. The extending of promotions is going to be a great thing for inventory management for brands, but still there is probably going to be some unexpected spikes in demand as we kind of iron out what this promotional cycle should look like. You want to win on key category search terms. If I’m, again, shopping for a cutting board, you want to be one of the first ones up there and available in the right menu locations. And, again, have a really high quantity and quality of ratings and reviews for all of your products, and listen and respond to any negative reviews.  

We don’t necessarily have to go through every one of these. I do have an example, a really fun example, from Tmall. One of the top discounts on Double 11 was a popular pair of women’s  snow boots. Originally almost 700 yuan but going for just 98 yuan, so a discount of about 86%. Looking at the product page for this item, it has almost 200,000 reviews. I mean, that’s just an incredible number, just on Tmall, just at one retailer. Almost all of them are positive. It has incredible content. I only took a little, one or two, screenshots here, but it has really a number of pictures of models wearing the shoes, what the material is made of, how to care for it. It just scrolls down and down and down. It’s really educational, and it’s fun content. And all of this plus 200,000 reviews surely helped drive sales even higher on Double 11.  

So, really, to sum it up, these mega-sales events are showing us what the future of e-commerce looks like. Each year these events are hitting record highs because more consumers are shopping online and retailers and brands are pulling them there. They want to drive that online penetration particularly to retailers own sites. We are also seeing the increasingly reach of these events. Black Friday, again, going to the Middle East, going all over Europe, really globally, and in India it’s also an important shopping holiday. And they really show us what the future of e-commerce is going to look like. These promotional calendars that satisfy consumers while still allowing retailers to maintain or stay in business, there will be longer promotional periods with selected discounts. Again, I think retailers in the U.K. could really consider shifting the brands discounted on different days to encourage consumers to come back. We are going to see increased mobile and omnichannel shopping, and we are going to see this whole ecosystem of sites and fulfillment models that are going to be able to accommodate the increasing volume that we know is moving online. So, brands and retailers can really use these mega-sales events to prep for online growth and to strengthen their position. With that, I am going to hand it back to Paul.  

Paul: Thank you Katherine, and thank you Philip, for your wonderful insights. So, we’ve now reached the question and answer portion of the program. As I mentioned at the beginning of the call, our participants are on mute, so you could enter your questions in the Q&A box. Just before we get to the questions and answers, Katherine’s just going to give a very brief overview of Clavis Insight.  
 
Katherine: Sure, thanks Paul. So, what we do at Clavis with our clients is we visit online stores, we can really do this globally. We look at their products, so we might go to a shampoo item, and we go and we look, what is the portfolio of the shampoo selection at all of the given retailers, what does the content look like, the availability, ratings and reviews, etc. We take back everything the consumer would see. We also simulate search for shampoo. We might be looking for shampoo, volumising shampoo, key search terms to get the search rank, and we take all of that information at the product level and we organize it. We put it into a fully automated SaaS platform, software as a service, so you don’t need to download any technology, and we organize it so that our clients can really deliver actionable insights and improve their presence and performance in the online channel.  

This is just a sampling of the retailers that we’re monitoring across the globe, but we really can set up any retailer. But you know, everything from Wal-Mart in Brazil to Tmall in China, absolutely, through Sainsbury’s, Tesco, Asda and Alkota in the U.K. But, again, this is just a sampling, but we’re absolutely global. We can harvest in any language for our clients.  

Paul: Great, thank you Katherine. So, we have just a few minutes left for some questions and answers. Might as well give them answers. So, just a quick popular question here is the slide and the recording, so all attendees will receive a copy of the webinar deck as well as a recording within the next one to two business days. All right, here’s our first question, someone looking into the future. So, how much of an event will Black Friday be in the U.K. next year?

Philip: Thanks Paul. I’m happy to take this one on. So, I think as I said earlier, the Black Friday itself has really manifested itself in the last kind of two years, so it’s still kind of at experimental stage in terms of what will work and what wont. But I think that what’s apparent is that it will exist, maybe not in its current form. I think it’s clear that the in-store sales are never really going to be the driver of this sales event. I think that’s still going to be limited to the major sales of Boxing Day and January after the Christmas period. The direction is very much online, so maybe rather than seeing a Black Friday, we might see a Black weekend with prolonged sales on certain items to kind of drive web traffic, as we’ve been saying, to encourage consumers to do their Christmas shopping earlier. And I guess also it kind of lends this kind of testing ground for retailers to actually bring some of the purchases forward if we’re moving online so there’s not a huge rush towards the end of the Christmas period.  

Katherine: Yeah, and Philip and I were actually talking about this earlier. It seems like this adoption of Black Friday in the U.K. is coming at the same time as e-commerce adoption, and, in the past, people might have done their shopping in physical stores in the weekends before Christmas, and now they are doing it online. Fulfillment models really can’t deliver on that, so even without Black Friday, if Black Friday didn’t exist, U.K. retailers would probably be looking for a way to encourage that earlier shopping so that it wasn’t all happening on the weekend before Christmas online, and the fulfillment models would completely break down trying to deliver all of these packages in time for Christmas.  

Paul: Great, and one last question. Mobile was certainly a huge theme this year, both in the U.S. and the U.K. Are you any seeing differences in the page layout and overall user experiences between mobile apps, mobile web, and desktop websites for the retailers?

Katherine: I’m happy to jump in first on this one. But, absolutely, we are seeing these three formats: desktop, mobile web, mobile app really diverging because they are different use occasions. These devices offer different capabilities. Mobile offers a camera, so smart apps allow, really take advantage of that functionality. And for the clients that we work with, we really do pay attention to what their content and what things like their product title look like across these different devices, what the images look like. So, absolutely, we are seeing these three formats change. Smart retailers are really making the most of mobile web and mobile apps, and brands are optimizing to make sure they are looking great no matter what sort of device the consumer is using.  

Philip: I think just to add to Katherine’s point, another trend that we are seeing in the U.K. is the growth of what we call the phablets. These are kind of the mobile phones with bigger screen that are almost a mini tablet in itself. What this means is really that the consumer is just using the mobile to actually shop on-the-go a lot more frequently than they were maybe two or three years ago. So, it’s crucial I think for the retailers and the brands to have their layout and experience for the consumer kind of seamless across whatever platform they choose to view it on because not only are they buying from mobile or tablet, but they’re using it as a way of researching and ultimately buying maybe in-store. They need to make sure that the products you’re listing on your mobile and tablet website, that they’re available in store and vice-versa.