On-Demand Webinar with Euromonitor: US Perspective on Black Friday, Cyber Monday, & Singles’ Day
Highlights & Insights to Help Build Your Strategy
Global Retail Analyst
Director, Marketing Insights
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 of these three important mega-shopping days at online retailers. Join Euromonitor‘s Global Retail Analyst Tim Barrett and Clavis Insight’s eCommerce expert Katherine Wilson as they:
• Provide key takeaways brands can use now to prepare for the 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 used in 2015 to increase visibility, optimize availability and drive “add-to-basket” in online stores around the world.
About the Presenters:
Tim Barrett is a Global Retail Analyst at Euromonitor International who previously covered a number of markets for the US. Tim’s professional interests include the evolving grocery landscape and online marketplace growth.
Katherine 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.
We are very excited to be partnering with Euromonitor International on this webinar. 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 syndicated and custom research solutions on a range of consumer packaged goods markets, some of the world’s largest companies.
Today’s presenters are Tim Barrett from Euromonitor and Katherine Wilson from Clavis Insight. Tim Barrett is a Global Retail Analyst at Euromonitor International who previously covered a number of markets in the US. Tim’s professional interests include the evolving grocery landscape and online marketplace growth. 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 risk and maximize volume potential and chances of success. And now I am glad to send it over to my colleague, Katherine Wilson.
Katherine: To kick things off today, I just want to give a little bit of background on Black Friday and then Cyber Monday and how they started. So Black Friday, the Friday right after Thanksgiving, is considered the unofficial start of the holiday shopping season, as well as one of the season’s busiest days. In popular mythology, it’s an accounting term, it’s the day that retailers begin to turn a profit for the year, due to these big post-Thanskgiving sales. The real story is that back in the 1950s, police in Philadelphia had to deal with hordes of shoppers flocking to the city for post-Thanksgiving sales on Friday, and then the crowds gathering for a big Army/Navy football game the next day. They had to work 12-hour shifts, nobody could take the day off, and the city was really mobbed. So, this was a term coined by Philadelphia police in dread of the post-Thanksgiving shopping holiday called Black Friday. But, as post-Thanksgiving sales gained in popularity, the term really stuck, and we’ve been using it ever since. Cyber Monday was coined just 10 years ago by the National Retail Federation, it’s the day that consumers return to work after Thanksgiving and, especially 10 years ago, it’s the day that they were sitting down to faster internet speeds than they had at home, and could do more of their online shopping quickly and easily; that’s less true now with faster broadband speed and mobile shopping really take that out of the equation, but retailers are still driving a lot of sales on the day with heavy promotions.
Black Friday has really leapt across the Atlantic in the last few years, Walmart’s Asda, a UK retailer, brought it to the UK back in 2013. It didn’t make a big splash the first year, but last year, 2014, retailers were really swamped, websites were slowed down, it was called a tsunami of demands, 30% in excess of expectations, so this year retailers were really working to prepare for Black Friday in the UK. In 2014, Souq, a retailer operating in Dubai, the UAE, Saudi Arabia and Kuwait, launched White Friday in those markets. Friday is the traditional day of prayer, so Black Friday really wasn’t going to fly, so they introduced White Friday, which drove about 10 million users to their site on that day. And then from there we see the new mega-sales events really proliferating, really not anchored to any traditional major shopping day. Prime Day and 11.11 are examples. These are mega-sale days, again not anchored to historical traditional shopping days, 11.11 was kind of a joke event created in the ’90s that has just blown up now into a major retail day. But what’s happening in these cases is that ambitious retailers, like Amazon and TMall, are creating these events to capitalize on shopping peaks, or really in these cases, to create peaks in what would normally be slow shopping periods.
Okay, so, we’ve seen this real proliferation of digital mega-shopping days as retailers compete to capture a greater share of mega-shopping spends, we’ve got a lot of really great screenshots of these, you know, these retailers give us such great imagery to use that we’ve got Tmail in the center, Prime Day, Black Friday, White Friday, really across the globe. And as eCommerce and mCommerce adoption among consumers grows, every year is seeing record highs across all of these events. So, 2015, just to give a quick overview of the total online sales that we’re seeing from these mega-shopping days, Amazon did not release sales dates for it’s Prime Day holiday this summer back in July, but it does claim that it sold almost 35 million items across the 9 Prime-eligible countries. Singles’ Day as, by now most of you probably know, earned $14 billion for Alibaba alone, it’s worth noting that there are other retailers, like, JD, that probably bring that total number higher, but we do have the Alibaba number at $14 billion so really this is a major, major online shopping day, by far the biggest in the world.
Black Friday in the US landed at almost $3 billion, and just over $1 billion in the UK. Cyber Monday figures were pretty much the same, what I thought was interesting was that in the UK, Black Friday is a little bit bigger than Cyber Monday, whereas the reverse is true in the US, and this is in terms again of online sales, so still almost equally important the two days in both markets but we just see a little bit of a variation in terms of which day is preferred for online shopping. So what we’re going to cover today is the November mega-sales recap: we’ll talk about Singles’ Day, which is more often called 11.11 in China. We’ll talk about Black Friday and Cyber Monday in the US this year, then we’ll move on to the five trends we’re really seeing across global mega-sales events, and then we’ll take those trends and all of the learning and talk about how to leverage 2015 online holiday shopping trends to plan and win in 2016. So with that I am going to hand it over to Tim, to talk about Singles’ Day in China this year.
Tim: I’m going to talk to you guys about Singles’ Day right now, and like Katherine said, Black Friday may have the more storied history, but Singles’ Day is really sort of the new event to watch, due to its sheer size. It was started a while back in the ’90s by a few Chinese students who were trying to create sort of an anti-Valentines Day, however the real story starts in 2009, when Alibaba’s TMall decided to pick it up and turn it into a more consumerist position shopping holiday for yourself, in that sort of anti-Valentine’s day spirit, getting things for yourself instead of for others, which is an interesting juxtaposition against Black Friday, which is more of a shopping for your friends and family, although let’s be honest, there’s a fair amount of shopping for yourself that goes on on Black Friday and the whole shopping season, holiday shopping season as well. But part of the reason that TMall’s 11.11/Singles’ Day extravaganza is becoming so big, is the sheer size of it. This year it did $14.3 billion in GMV, which is 5 times that of Cyber Monday, which is the most comparable holiday out there in the US, and the second biggest online sales event, and it’s larger than a typical day’s retail sales in China, which indicates that it is clearly better than your average day in China.
Alibaba has sort of grown quite large and has been able to use this size to help push Singles’ Day as a cultural phenomenon. Alibaba’s TMall actually maintains 46% of of the online B2C market, which is worth about $138 million to them each year. Singles’ Day is important, but a little bit more of what’s important about it is what people are buying, you know, and how they’re shopping. One of the more important things that we see revolving around Singles’ Day revolving around, which is indicative of just the changing nature of online shopping in general, is the fact that apparel dominated Singles’ Day TMall future promotions. Just speaking generally, in China, the category of apparel and footwear already accounts for 21% of all internet sales, and this is up from 12% 5 years ago, and so you see this emphasis on apparel really coming through in Singles’ Day, as you can see in the pictures of sales and the discounts on brands indicated in the slide here.
Alibaba actually controls over three quarters of the internet apparel sales category, and it has done this by helping to build the category over the course of years. Much like, you know, buying things online takes a little bit of time for people to get used to, much like with consumer electronics back in the day, and apparel is no different, and we’re sort of reaching the point where people are beginning to accept that the internet is a good channel to buy apparel items. It’s a lot easier shopping experience, returns are easier, there’s a lot more products, it’s easier to view the products, it’s easier to imagine how the products would look on you, and so, overall, it’s just become a much better shopping experience, and this, along with the increasing familiarity of it, has sort of convinced people that it is okay to buy apparel en masse online now and you can see this because of the fact that 43% of TMall’s featured promotions were on apparel products, and that the average apparel item featured on TMall actually has over 9,000 reviews.
If you’re interested in what people are buying, you’re probably also interested in who they’re buying it from, and the brands that are available on TMall, and Singles’ Day, are also very important. What I want to focus on right now, however, is the international appeal of TMall and Singles’ Day. TMall has been pushing Singles’ Day to greater and greater numbers every year, and as such, international brands have looked to it to help sort of push their brands onto the vast amount of Chinese consumers that go Alibaba’s website every Singles’ Day. Not only does this give them access to a large number of consumers at a single time, but it gives brands a lot more control over how they can present their brand, which can be an issue when it comes to in-store retailing in China. So Singles’ Day is a perfect way to get their brand in front of people in the way that they want to. You see a number of international brands, like Sainsbury’s, Nike, Burberry, L’Oreal, retailers and brands alike, pushing out their products, with some of them opening their own stores, like we have a picture of Sainsbury’s right there.
In addition, brands can use Singles’ Day to help push status and prestige of their products, if they can help sort of convey that message through their tailored offering. Apple has done this really well, not on Singles’ Day alone, but just generally with their product and the reputation that it has, and as such, is actually able to crack the top five promotion companies with promotions in TMall this year, as you can see, which is a really hard feat to do for an international brand, because you can see that most of these are Chinese, or even Asian in general, so Apple has been able to use their status and prestige to be able to really convince people to buy, and Chinese to buy their products, and Singles’ Day has been a really good platform for them to do that. Next slide please.
So if international brands are going to Singles’ Day, the next question of course is, okay, well is Singles’ Day going to come internationally? And, you know, it’s very likely that it will, to some extent, and I mean, it already even is. You can see that Walmart actually had their own Singles’ Day sales online in the US, and even Alibaba had their own pull in the US, you know, opening the bell for the NYSE on November 11th, and sort of having a little brouhaha with that, but also, Alibababa used AliExpress to export their own Singles’ Day items to people from a number of different countries, primarily Russia, Spain, and the US, where the top three countries that used AliExpress to take advantage of Singles’ Day, but as people become more aware of Singles’ Day internationally, and retailers continue to push it, it’ll be interesting to see if it really catches on.
An interesting juxtaposition with this year has been Prime Day, which is new as of 2015, but is positioned as a completely consumerist holiday, which is not something in the US has ever had or pushed before, even though most of our holidays are consumerist in nature, they’re not explicitly so, so there appears to be more of a taste for trying to push purely consumerist holidays at people, and if they do catch on, Singles’ Day of course is going to be a really good target as the world continues to get flatter and more international. And that’s about it from me for Singles’ Day. So I’ll take it back to Katherine to talk about Black Friday.
Katherine: I’ll move on to cover Black Friday and Cyber Monday and what we saw this year. So what we saw this year is that consumers are continuing to move a lot of their pre-holiday spend online, especially notable was the move onto smartphones, and some mobile devices. US shoppers spent over $11 billion online between Thanksgiving Day and Cyber Monday, that’s up 17% over 2014. Black Friday and Cyber Monday online sales topped $6 billion, roughly $3 billion each this year, those are both up 12%. It’s worth noting that more people shopped online over the Thanksgiving weekend than visited retail stores, according to the National Retail Federation, so again, we’re just witnessing this tipping point to eCommerce, we’re kind of over the tipping point and really rolling downhill pretty quickly to a place where it will just be very mainstream. Also worth noting, those five days, the online spend accounted for roughly a third of total spend, for Thanksgiving through Cyber Monday.
The very rapid adoption of mobile has been the jaw dropping breakthrough of 2015. The US has been slower to adopt mCommerce than other developed markets, but retailers and brands are working hard to drive mobile adoption, and we saw this really paid dividends over this last week’s major shopping days. By mid-day on Cyber Monday, mobile accounted for over half of online shopping, roughly 41% coming from smartphones and 12% coming from tablets, and Walmart, who really made a concerted effort to push people to download its app in advance of Black Friday, offering their circular only available via the app, again, that really also paid dividends, they had 70% of online traffic coming from smartphones and tablets.
What you’re looking at here is a chart that captures the top five categories on promotion at Amazon, Macys.com, Target.com and Walmart.com, and what we’re doing in this chart is comparing the average depth of discount on Black Friday and Cyber Monday, for again those top categories available across these retailers. What we saw that that Amazon and Walmart promised in advance of Black Friday, deep discounts, and they did deliver on that. I highlighted the areas where we’re showing the depth of discount across those two retailers, and we were seeing that those discounts averaged at about 40% off at Amazon and 30% off at Walmart.com, between the Tuesday before Thanksgiving, through Cyber Monday. So, what this really tells us is that consumers can shop anytime during the week at those two retailers and find some really great deals. However, it’s worth waiting for Black Friday and Cyber Monday at Macy’s, as you see down at the bottom, those little red boxes that just appeared, where average discounts were roughly 10% deeper on Black Friday and Cyber Monday overall. On clothing specifically, the average discount went from 28% on the Tuesday in advance to over 40% on Black Friday and Cyber Monday. So, again, Macy’s worth waiting for the big sales event.
Electronics were really dominating at Walmart and Target.com’s featured Black Friday and Cyber Monday deals, accounting for over 20% of the featured deals, and more than a third off of original prices. We saw a little bit of a different pattern at Amazon and Macy’s, where clothing, shoes, and jewelry were among the most featured and deepest discounted items at Macys.com and Amazon on Black Friday and Cyber Monday, typically seeing discounts between 40 and 50%. This heavy shift toward clothing, shoes, and jewelry give shoppers a chance to pick something up for themselves as they shop for others. As Tim was saying, you know, these US holidays are not positioned as consumerist holidays where you’re shopping for yourself, but at least speaking for myself, I absolutely picked up things for myself as I was filling my shopping basket for other people. Those categories give consumers a great chance to pick up something nice for themselves. Walmart.com and Target.com, on the other hand, maintained discounts at roughly one third across their top five featured categories, so not more heavily discounting some categories versus others to the same degree as Amazon and Macy’s.
So, the doorbusters drove about 40% of Cyber Monday sales, so we really saw hot and prominently featured deals become a huge draw for consumers. So just a sampling of some of the top deals that we saw for Black Friday, 95% off a JBW Men’s watch that’s normally almost $8,000, really a pretty significant deal, a Razor Pocket Electric Scooter, available at Target for 64% off, and then on Cyber Monday, Walmart was offering one of it’s best deals, a Straight Talk Moto Prepaid Smartphone for just about $20, a discount of about 80% off, and then again, treat yourself or somebody else to some nice 1.3 carat diamond earrings for almost 60% off at Macy’s. We also saw Jet, who doesn’t really feature what the original prices were, but they did have one of their big deals on Monday was a 40″ Roku Smart TV, available for $339.99, so, some really great deep discounts, and, you know, while there’s a great variety of brands available and featured across these retailers, a few managed to kind of cut through the clutter and win the high share of featured promotions at Amazon, Target, and Walmart, and those are primarily electronics brands. We saw Apple, Microsoft, Samsung, and Sony among the brands capturing a pretty big share of the featured promotions across those three major retailers.
So what we’re looking at now is kind of blowing out that chart that we saw a couple of slides ago and looking at the top five categories on promotion across these three days, across the four retailers that we’re looking at. Pretty interesting patterns, here. We put Amazon and Walmart first because they really followed a very similar pattern. We see similar promotional strategy at both Amazon and Walmart, in terms of the categories. On the Tuesday before Thanksgiving, there’s a wider variety of categories on promotion that are the featured promotions, but they both really narrowed their focus to key shopping categories on Black Friday through Cyber Monday. So, the two of them really started to focus on those two days on the Clothing, Shoes, Jewelry category, Home & Kitchen, Electronics, Sports, Fitness, & Outdoors, and then Toys & Games. So, following a very similar strategy, the percentages may vary slightly, but the same categories really highlighted across Black Friday and Cyber Monday at both Amazon and Walmart. Target, interestingly, heavily featured Toy & Game discounts a few days before Black Friday, but on Black Friday and Cyber Monday it really moved its focus very similar to Amazon and Walmart, so again, percentages aren’t exactly the same but they’re really focusing on the same five or so key shopping categories.
Macy’s, on the other hand, had a pretty dramatic shift toward Clothing, Shoes, & Jewelry on Cyber Monday, so they went from about 30% Clothing, Shoes, & Jewelry share of featured promotions, to 60%, so doubling that share of featured promotions in that category. What we found though, was that, though in the case of most of the retailers, the featured promotional categories was consistent between Black Friday and Cyber Monday so again those same five categories promoted across Black Friday and Cyber Monday, at Amazon, Walmart, and Target, we found that the variety really changed, so again, featured promotions at each retailer, they’re really changing significantly between shopping days, which has the advantage of drawing shoppers back multiple times. To give an example, on Black Friday in the Toys & Games category, Amazon was featuring a lot of Ravensburger puzzles, Melissa & Doug toys, you know, often for smaller children, and Target.com had over a dozen razor scooters on promotion, but then when we looked at Cyber Monday, we didn’t really see those brands at those retailers mid-day, so again, keeping the toy category share featured promotions relatively consistent but really switching up the brands and items on promotion. We also saw Target.com and Walmart.com offer more Star Wars themed and Lego toys on Cyber Monday than they did on Black Friday, so from a shopper perspective, if you’re looking for specific items, it’s really worth monitoring the deals across shopping days at these retailers.
Just wanted to hit a few highlights from our friends across the pond over in the UK where they also had a pretty big record-setting Black Friday and Cyber Monday. The UK online Black Friday was the first UK online event to top £1 billion, 1.1 billion, so hooray over there. That’s about $1.7 billion, which is interesting because it is a little more than half of what we in the US spent on Black Friday online, which is really actually quite high, considering that Black Friday is still new in the UK and their population is roughly a fifth of the US population. I think that this is likely a reflection of higher eCommerce adoption in the UK, doesn’t have anything to do with the amount that they spend on the holiday, I think again, that they’re ahead of us in terms of their eCommerce penetration and adoption. And I think these numbers are really interesting because there has been a lot of talk about the decline of these mega-sales events in the UK, particularly Black Friday and Cyber Monday, because they’re anchored to a US holiday that really isn’t as relevant over there, but instead we’re really seeing online sales on both days grow 35% this year, versus 2014, even if foot traffic fell on Black Friday by about 4%.
Online retailer Amazon UK and then John Lewis, which is Britain’s biggest department store chain, said Friday was their biggest-ever single day’s trade, and as in the US, we saw that promotions were spread out over a few days to smooth demand. Last year, again, they were really caught off guard, so they changed their promotional strategy to be able to cope with the enormous spike in demand that they saw this past shopping weekend.
Tim: Trend #1, which you’ve probably have been noticing, is that these sales days are actually becoming sales weeks, and more reflective of the sale seasons, and starting to see some pushback from the really hyperconcentrated type of stuff that you see, although there’s still very much concentrated, particularly with Singles’ Day and Black Friday, but we’re moving a little bit back, as the pendulum swings the other direction. You’ll see that even with Singles’ Day, TMall started offering 11.11 promotions a month in advance. Amazon had flash deals throughout November. In early November, across the pond, in the UK, retailers had already begun offering steep discounts. Basically retailers are just trying to protect margins, as is usually the case, and having too many doorbuters on a single day can hurt volume and stress your overall supply chain, particularly as delivery becomes more important, so spreading out stuff like this, so long as the discounts aren’t too deep, will help them maintain those margins over time.
Additionally, some retailers are making a noted point of bowing out of some of the madness, REI had a big campaign to note that it was going to be closed in the US on Black Friday, because it wanted people to instead just to go outside. It saw a lot higher web traffic because of that, and seemed to resonate with people as some of the insanity of Black Friday can be seen in many videos of in-store fights and clamoring over different doorbusters, has kind of reached a head, and is really a strain on consumers and retailers alike. So, it seemed in everybody’s best interests to sort of take it a little easier and spread things out and offer people more options on when to come in. I know Walmart had the same deals online that it had in stores this year, giving people more options and making the overall shopping experience easier on everybody involved, and sort of everybody backing down from the Black Friday arms race. You’ll probably see this continue on in the future.
Trend #2 is that mobile is becoming so much more important, and is really important at driving retailer loyalty. Very interestingly, for 11.11 or Singles’ Day, almost 70% of all of the sales were via mobile this year. This is probably because of the fact that they had a lot of different sales on mobile as opposed to desktop to help incentivize people to go to mobile, but with that high share it’s clear that people really like shopping on mobile particularly in China. JD.com did a very similar thing, where they had different discounts as well, and they’re probably the biggest competitor to TMall in China. You’ll see that even in the US, mobile accounted for over 30% of US online shopping on Black Friday and Cyber Monday, at least as far as IBM commerce is concerned. Walmart made a big push for mobile this year, and that did really well as 70% of its online traffic over the Thanksgiving shopping days came from smartphones and tablets. So, the push to mobile is real, and is actually very important, particularly because in regards to mobile shopping, and mobile apps in particular, there’s only very few apps that people use regularly on their phones and so for a retailer to be able to get in to that valuable real estate on the phone’s most used apps page gives them really key access to what is going to become one of the largest eCommerce shopping channels in the world. You can see this happening particularly in Asia, where apps for different retailers actually revolve around messaging, too, like the somewhat new Line app. That’s it for me, and we’ll have Katherine introduce trend #3.
Katherine: For trend #3, we’re talking about omnichannel. Omnichannel models are really flourishing to meet the consumer’s demand for convenience. So retailers we’re seeing make big omnichannel plays to drive that multi-channel loyalty. Omnichannel offers convenience to consumers, who can move their basket across desktop, mobile and stores, and then receive items however they want it. Target offers the option to ship to your door, to click and collect in stores, they offer that on their product page and at checkout, and more recently they’ve added the option to have their items delivered via Instacart. Instacart is a concierge shopping service where somebody goes in, does your shopping for you, and delivers it to you. The advantage is that you typically have it within hours. So a lot of different options that Target can offer, both through it’s brick and mortar and it’s online storefronts.
Tesco, this is a major retailer in the UK, offers hundreds of convenient pickup locations across the country, from their stores to temperature controlled vans, as you can see in the image over on the right, you see a couple picking up their temperature-controlled groceries from the vans, and travel hubs, making it all convenient for consumers. Consumers shouldn’t be punished to shop from your store, you want to make it as seamless and easy as possible. Walmart and Kroger are also testing click and collect in the US, which we’re already seeing become very popular at retailers like Best Buy. We’re seeing pure plays make a move into omnichannel as well, what I mean by pure play is retailers that are 100% online, so, your Amazon, your TMall, that really don’t have a physical store present, but, omnichannel, they’re finding ways to have a brick and mortar arm, despite that. Alibaba, we’ve seen, this 11.11, they’ve teamed up with brick and mortar stores to offer Singles’ Days deals for the same prices that were seen online. Jet.com, the big upstart in the US this past summer, what they did this year that was really interesting, they told consumers if they signed up for Jet.com, if they signed up for membership, now free, by midnight on Thursday, if they went and spent $50 at key brick and mortar retailers like Toys “R” Us, Babies “R” Us, Sports Authority, major retailer partners, consumers could upload those receipts to Facebook in exchange for JetCash. Really interesting because they don’t have a storefront, it seems like it’s encouraging the consumers to go in and go to a different retailer, but in the end Jet’s big drive right now is membership, so it does give them that access to brick and mortar through retail partnerships and they still are going to benefit. So, when done well, omnichannel really is giving consumers the best of both worlds, both online, on their mobile phones, on their mobile devices, and in store.
Trend #4, these events can really be used by retailers to drive adoption, so I think there’s certain amount of eCommerce and mCommerce growth that’s organic, people just becoming more comfortable with it, the younger generation is always on their mobile devices, but I think we shouldn’t kid ourselves, a a lot of this is pull strategy. These are retailers being very smart and using these mega-sales events as inflection points to really impact major changes, major shifts in consumer behavior. Some examples of this in terms of driving membership, as we discussed on the last slide, Jet used what it called “Purple Friday” to drive its membership numbers up, Amazon again offered in the middle kind of a retail dessert when not a lot of money is spent in July, they used it as an opportunity to offer great deals and to encourage Prime membership. Souq really uses it’s White Friday event to encourage a lot of different changes in consumer behavior, from membership to app downloads and also to credit card adoption, you can see on the right side, in their White Friday ad, they have a 10% discount for those who use credit cards, which adoption is very low in the countries it’s operating in.
We’ve discussed Walmart.com using Black Friday to push consumers to download apps, and JD and TMall again trying to drive loyalty and app use to get some real estate on consumer mobile devices. So these mega-sales can make some great plays for adoption and loyalty that are going to push eCommerce and mCommerce penetration further, so these consumer push strategies, these carrot strategies, are just going to get more people on board for e and mCommerce.
And as we’re seeing these events drive further penetration of e and mCommerce, we’re also having the additional benefit of, these mega-sales are really stress tests, that are really going to drive our system, the online eCommerce system, further. These events often lead to website slowdowns and outages, due to major surges in demand. Over the last weekend of Cyber Monday, Target.com’s volume was twice as high as their busiest online day ever, which is great news for them as a retailer, but this dramatic spike in demand caused low spike time and loading problems, leading to lines online, which is what everyone was hoping to avoid, but this hits a lot of retailers around these key mega-shopping dates, Nieman Marcus had some outages this year, Argos, and even tech companies like PayPal, but what that’s going to do, they’re all going to learn their lesson, and they’re going to increase their bandwidth and be prepared to deal with the mega-events coming next year, but also for again, that anticipated increase in total penetration and total share of wallet as people are spending more and more online.
Similarly, we’re seeing new fulfillment models proliferate to accommodate these huge demand spikes. UPS in 2013, the delivery company, underestimated demand and didn’t meet it’s obligations, it was late and there was a lot of strain on the system. In 2014, it overspent and overstaffed to compensate, so they’re really working hard to find the right balance, how do you deal with such a surge in demand? But what we also see as a reaction is retailers like TMall, Amazon, Argos, and Souq, they’re really developing their own delivery systems, keep it in-house, keep it under their control, and being very creative. They can get items to their distribution center, but what everyone’s calling the last mile, trying to get it from those final distribution centers to the homes is really challenging. So these delivery services are trucks, motor bikes, in the case of TMall, there are stories of horses being used to get to the last mile to extremely rural space areas, and eventually drones, we’ve all heard about Amazon exploring that option.
Also seeing some concierge services pop up, like Instacart, that will deliver purchases from retailers like Costco, Petco, Whole Foods, and now Target, and all of this really moves the whole system forward, it prepares us for the growing online penetration and volume.
Okay, so, how do we take those lessons that we learned in 2015 to prepare to win in 2016? So, first to focus on retailers. So you want to give consumers what they want, when they want it, and how they want it. So what they want is really the right selection of gifts both for themselves and for others, and I think in this presentation we discussed, from China to the US, we are seeing that these events are really self-gifting events as much as we’re buying for other people. So consumers want access to well-known local brands as well as prestigious international ones. Consumers also want the promotions spread out, this has the benefit of protecting retailer merchants a little bit and it also encourages those consumers to come back for multiple visits, so it’s really a win-win. I want to focus on when they want it. Again, they want to see a range of days for these deep promotions as opposed to just one. In terms of delivery, they may want their items delivered within hours via a concierge service like Instacart, or held at a click and collect location for days, shipped fast, shipped slow, they want to have those different options.
How they want it, whether they want to shop on their desktop, their mobile device, and/or in-store, all of those really need to be optimized for a really smooth shopping experience. We need fast load times and sites that are optimized across mobile devices, and you need to give consumers the option to have items shipped, delivered, or picked up, really whatever they’re looking for, it’s up to us to meet their needs. And a key takeaway for retailers is look beyond your home market for retailer best practices, Target doesn’t necessarily just need to look at just Walmart and Amazon to see what it should be doing next, because there are really cool and amazing things happening globally. House of Fraser has their “Scan and Explore” app that has a lot of engaging content, you’re able to scan items, there’s some virtual reality components there, very, very cool, and then TMall, again, taking this mega-sales event and just blowing it up to really make this a social and entertaining event, along with being a shopping event.
How can brands prioritize, or plan for 2016? So, brands really need to focus on online store placement and what consumers are going to see on your product page. So, I’m not going to go through every one of these in detail but just to keep some key metrics to focus on. Portfolio, you have to make sure your key gifting products and most popular items are listed across online stores, and you have to make sure that they’re available, you really need to build that pipeline, and monitor inventory to address availability outages. It’s also worth considering, when you are thinking about your portfolio, creating special offers for key online retailers. Content, you need to have product information and images that are complete, accurate, and engaging for consumers researching purchases. Just to give an example from myself, my husband loves to cook, and loves cutting boards, and I know nothing about them, so in my gifting mission I’m really leveraging content, I’m reading all of this, I’m reading ratings and reviews, because I don’t know if teak or maple is better, I know nothing, so I’m really leveraging this content and that’s really important for brands to consider during these key gifting times of year. The last one I’ll just hit is placement, you really need to be “on shelf” by winning on key category search terms, so if you are, I don’t know, Nike, you need to be winning on athletic shoes, running shoes, you need to set goals for yourself, you need to have goals for desktop which might be the top 20 against that key category search term, might be top 5 for mobile, because on a mobile phone, consumers may not really scroll beyond the first few returns against that search term, and you want to make sure you’re available in multiple menu locations. One note, only 30% of consumers really ever go to the second page of search results, so to be “on self” for 70% of consumers who are shopping and never going to the second page, you need to set pretty high search goals.
The example I have here is a brand doing it very well. I did use the TMall example because they offer such a beautiful palette for brands to showcase themselves. What we have here is one of the top discounts, a pair of women’s Aussie Chen [SP] snowboots on TMall on 11.11, a discount of about 80%. What I want to highlight here are a couple of things, a lot of variety in the different shoe colors, sizes, all of that, but they have almost 200,000 reviews on TMall, it’s amazing. These are almost all positive reviews, they often include pictures, so a lot of interaction there with the consumer base, which surely helped drive sales even higher on 11.11, and then in terms of product content, there’s no way I could have included it all on this page you just keep scrolling and scrolling to see care instructions, what is it made out of, lots of pictures of people wearing it, I mean, it really showcases the brand and the product specifically, really beautifully.
So, just to sum things up, we really want to look at these mega-sales events to see the future of eCommerce. Each year these events are hitting record highs, due to more consumers moving their shopping to online, and also because brands and retailers are use these events as inflection points to drive online penetration. We’re also seeing these mega-events increase their global reach, so we’re seeing Singles’ Day edge out beyond the edges of China, but even beyond the edges of the region. We’re absolutely seeing Black Friday and Cyber Monday cross over into multiple different international markets beyond the US. They also show us the future of eCommerce, because again, it’s just such a massive event that really, really shows up, what happens when so many people move their shopping to online, how does the system work and what should that look like. We’re seeing promotional calendars that satisfy consumers’ desire to shop across multiple days, while protecting retailer margins with selective discounts, increased mobile, and omnichannel shopping, and we’re seeing a system of websites and fulfillment models that’s going to be able to accommodate that increasing volume that we’re generally seeing as sales move online, both through deeper penetration of eCommerce, and through greater share of wallet, as consumers are taking more of their spending and moving it online. So brands and retailers can really use these mega-sales events to prep themselves and to prepare themselves for the ever increasing growth that we’re seeing online.
So what we do at Clavis Insight is we’re simulating the online shopper interaction with online stores, brands, and products. So what we do is we visit online stores, we can go to your TMall, your Souq, your Target, your Walmart, your Amazon, whatever the case may be, and we’re looking at everything as the consumer and we’re pulling all of that information back. What is the portfolio of your brand online at these stores? What does content look like, availability, placement, etc.? We’re again, pulling back everything a consumer would see on the product page and we’re also simulating search results, so we take those key terms, running shoes for Nike, and plugging it in and bringing back the search result for the particular brand and also any competitive products that our customers want to look at. We take all of that, and we organize it into our Fast-Platform, no download needed, available via any device, to really really help our clients take that data, and take it to insights and action.
What you see here is really a sampling of the retailers we cover, we’re adding new retailers all the time, but we are absolutely global and able to look at and analyze retailers, and work with you anywhere from Brazil to Japan, to Canada, and everything in between, in any language.
Paul: Some excellent questions have come in. Let’s start with this one: “So how do you think the less in-store traffic will affect this year’s overall Black Friday statistics, and how will the retailers react?”
Tim: I’ll take that one. The traffic numbers were interesting, a little bit down, but I think that’s more just reflective of the shifts to more people shopping online, were you actually see higher traffic numbers this year. So, judging overall on Black Friday, is going to be more difficult and we’ll only do so as the shopping season spreads out, and we’ll have to judge basically on the entire season and so that’ll be more after the fact, in next year, but consumers seem to have reacted well to the shift, and everybody seems to be liking the fact that they can do things at their own pace, so I am cautiously optimistic.
Katherine: I would agree, I think retailers just have to make sure that an equal share of their dollars are shifting online as we’re seeing total dollars shift online, so if a certain retailers online strategies is really not panning out, that’s obviously going to be a negative impact, but I agree, overall I think we’re just shifting our dollars to a different place, but the spend is still there.
Paul: Yeah, there seem to be a lot of, as the brick and mortar traffic was going down, there was a lot more traffic mobile, do you think that accounted for some of the decrease in the foot traffic in the stores?
Katherine: I definitely think so. I saw on my bus on the way home yesterday, somebody shopping for shoes, I think that mobile allows you to do things anywhere, anytime, in a way that even desktops can’t allow, so I think that’s just further enabling the shift by allowing this amazingly convenient thing that we’re already addicted to, that we already are using all the time, maybe we’re checking our email or now we’re looking at our retailer apps, so yes, I think so.
Tim: Especially since no retailers have really quite cracked how to use mobile in-store to it’s greatest potential. Thinking of just any person that sells anything, Starbucks has done a really good job of business by tying it to loyalty, but in terms of shopping experience at your average store, very few people have yet to think to pull out their phones to help them out, so until that happens, I would agree, that more mobile traffic will likely be indicative of the shift to less in-store shopping.
Paul: Staying on the mobile phone topic here, Katherine just mentioned the true “anytime, any place” shopping experience, what do you think increasing use of mobile phones for purchasing is going to do for retailer fulfillment models and what does that mean for manufacturers?
Katherine: I think that this rapid adoption of mobile, it’s great for retailers but it does put further strain on fulfillment, and again, thinking about that last mile, trying to get those goods to consumers, to their homes, it’s a lot harder than it is for consumers going to their own retailers and picking it up in-store. So I think absolutely, the increase of mobile will continue to strain the last mile logistics, but I think these fulfillment models are improving, you know, we’re seeing brands, retailers create their own fulfillment and delivery models, and also just being creative. You can charge more and less for fast delivery, offer click and collect, and mobile really does capture the, “What I want, when I want it, how I want it,” mentality of shoppers and retailers really need to adjust to win that.
Tim: Totally agreed. I also think that moving forward as the holiday delivery season gets even more constrained because people are shopping more online in the future, this is going to incentivize retailers to continue to lengthen the shopping season and smooth out the demand so that their supply lines aren’t so much more stressed, and we’re already doing that a little bit, but you’ll probably see more marketing muscle put behind those efforts in order to get people to not always shop on one single day, or even a single week.
Paul: Last question here, just about out of time. So back to this mobile theme, are you seeing a difference in page layouts, in the overall user experience, in mobile versus desktop sites and apps?
Katherine: Sure, I just want to say first that I think it’s interesting and telling that so many of the questions are on mobile, I think it’s hot and it was surprising how big it was this year in the US, as we have been a little delayed and lagging in mobile adoption, so I think that that in itself is telling. But yes, I think the question is, are there differences between mobile and desktop, and the answer is yes, these formats are really diverging. These are very different usage occasions for when you have your mobile device, you might be in transit, you might be sitting on the couch with your tablet in your hand, versus desktop when you’re often now at work where we’re sitting at a desktop, so different occasions. Mobile web, focusing on mobile web first, it’s no longer a “little desktop”, you know, all these websites are optimized for mobile. And then apps offer an even higher functionality for the really loyal consumers, so, just thinking of some of the really cool apps, looking into the UK at House of Fraser’s “Scan and Explore” app, access a bar code scanner and a store finder and allows for click and collect, so I think that a lot of retailers are doing very cool things with their apps to really take advantage of the functionality of mobile, use those camera, use location finders for geo-enabled apps, so I really think that’s true and for brands, what we’ve seen in working with our clients, is that when you look on mobile, you have truncated titles, you have titles that may no longer make sense because that retailer has a character limit on mobile that isn’t the same as their desktop character limit.
We’ve seen key product content missing on mobile, in some cases ingredients were missing for a food item because the retailer had to cut down on the content, and we also really encourage our clients to set different search and menu goals, set them very high for mobile, because how a consumer is using search is different on mobile, and how it presents itself is different on mobile, so you want to make sure that you’re really winning against your key terms there. So yeah, I think, a long rambling answer to say yes, they’re different and they’re going to diverge further.
Tim: Yeah, there’s so much to talk about, Katherine, you’re totally right, you can go on and on, so I’ll try to keep it as limited to international layouts and how mobile is being developed from what we’ve seen from our analysts internationally, and I think the cool thing is that mobile is fundamentally sort of impulsive and limited, and also a very social sort of device, moreso than PCs which are kind of associated with work-type ideas and functions. So, we’ve heard from international analysts about shopping apps where people have the ability to chat with their friends and so this is like Line app which we’ve got over in Japan and elsewhere in Asia, and you can just send people stickers, which are huge these days, and you can also buy stuff, or you can buy stuff and send them to your friends via the app, but there’s a central sort of social component alongside the shopping component. Line actually started out as social only, so it’ll be interesting to see if that comes over across the pond, we’ve already got big messaging apps already and it’s already one of the main reasons people have their mobiles, are addicted to their mobiles, and are constantly looking at them, all the time. If retailers can find a way to unobtrusively integrate a shopping component, I think that’ll be a really interesting thing to see, if and how that happens.