Last year, US internet users spent more than $79 billion on digital purchases during the holiday season of November and December. Register here for a complimentary eMarketer webinar, Online Holiday Shopping Forecast and Trends 2016, and learn what to expect for this year’s holiday shopping season, including eMarketer’s latest projection for holiday ecommerce sales. Topics in this webinar include: How long will the ecommerce holiday shopping season be this year? How will the convergence of online and offline retail accelerate this season? How will mobile continue to change the holiday shopping landscape? What role will augmented reality and conversational commerce play in this year’s holiday shopping season?

1. © 2016 eMarketer Inc.
Made possible by
Online Holiday Shopping Forecast
and Trends 2016
Yory Wurmser
Retail Analyst
September 8, 2016

2. © 2016 eMarketer Inc.
Story of online Holiday 2016 has two big themes
Retail ecommerce sales
will continue to skyrocket
Brick-and-mortar retailers will build
stronger bridges to online shoppers
Source: commons.Wikimedia.org Source: commons.Wikimedia.org

3. © 2016 eMarketer Inc.
US Retail Ecommerce
Growth Will Skyrocket

4. © 2016 eMarketer Inc.
Overall retail sales growth will be moderate, but
ecommerce will rise rapidly this holiday season
 Retail ecommerce
sales will jump 17.2%
for the season, the
highest rate since
2011
 Retail sales will
rebound slightly, up
3.3% from a weak
2015
#eMwebinar

5. © 2016 eMarketer Inc.
2015 was a strong year for retail ecommerce,
but 2016 will be even better
 Retail ecommerce
sales will grow
16.1% in 2016
 Ecommerce’s
share of US retail
sales will increase
to 8.2% in 2016
#eMwebinar

6. © 2016 eMarketer Inc.
US retail ecommerce will increase in each
quarter of 2016, with the largest gain in Q4
#eMwebinar

7. © 2016 eMarketer Inc.
The two-month
holiday season
will have an
even higher
ecommerce
growth rate
(17.2%),
pushing
ecommerce to
10.7% of retail
sales
#eMwebinar

8. © 2016 eMarketer Inc.
So What’s Behind
Ecommerce’s Torrid Growth?

9. © 2016 eMarketer Inc.
Two factors are driving up ecommerce in 2016
Source: Yory Wurmser

10. © 2016 eMarketer Inc.
One big factor powering US retail ecommerce is
the rapid growth of retail mcommerce
 US retail
mcommerce
will grow
43.2% in 2016
 Mcommerce’s
share of retail
ecommerce
sales will hit
29.1% in 2016
#eMwebinar

11. © 2016 eMarketer Inc.
The largest part of mcommerce growth will
come from purchases via smartphones
 US smartphone retail
mcommerce will surge
78.3% in 2016, an
improvement over a
spectacular 2015
 2016 will be the first year
that smartphones account
for more than half of US
mcommerce sales
#eMwebinar

12. © 2016 eMarketer Inc.
Mobile
accounted for
the majority
of retail
ecommerce
site traffic*
during Holiday
2015
* On IBM’s platform
#eMwebinar

13. © 2016 eMarketer Inc.
The Amazon Effect
 Amazon captured 36% of US ecommerce sales on Cyber Monday in
2015 (Source: Slice Intelligence)
 Amazon’s share of holiday ecommerce will rise from 26% in 2015
to 28% to 30% in 2016 (Source: NetElixir)
 Amazon’s ecommerce sales grew 18.4% in trailing 12 months
(through Q2 2016) vs. roughly 15% for ecommerce overall in the US
(Source: eMarketer and Amazon)
 63 million US consumers using Prime as of June 2016
(Source: Consumer Intelligence Research Group)
 Nearly 70% of Amazon shoppers in Holiday 2015 made a purchase
on a mobile device (Source: Amazon)
#eMwebinar

14. © 2016 eMarketer Inc.
Amazon is
increasingly
used as a
de facto
search engine
during the
holiday
season
#eMwebinar

15. © 2016 eMarketer Inc.
Offline Sales Lag

16. © 2016 eMarketer Inc.
In fact, foot traffic continues to fall
 RetailNext found
that same store
sales and foot
traffic shrunk
each month
between
February and
July 2016
#eMwebinar

17. © 2016 eMarketer Inc.
Total retail sales will improve in 2016 vs. a weak
2015, but won’t herald an era of fast growth
 eMarketer expects
that overall US
retail sales will
grow 2.9% this
year, up from a
1.4% increase in
2015
#eMwebinar

18. © 2016 eMarketer Inc.
Gas station
sales have
suppressed
retail sales
over the past
two years, but
the effect is
lessening in
2016
#eMwebinar

19. © 2016 eMarketer Inc.
Car sales boosted retail sales from 2012 to 2015,
but haven’t done so this year
 H1 retail sales
without gas
stations or auto
dealers hovered
around a 3% gain
between H1 2013
and H1 2015, but
growth was
stronger in H1
2016

20. © 2016 eMarketer Inc.
Brick-and-Mortar Retailers Are
Building Better Bridges to
Digital Shoppers

21. © 2016 eMarketer Inc.
The 2016 holiday season should see advances in
four areas that bind online and offline commerce
1. Better fulfillment
2. Better local advertising products
3. Local digital merchandising
4. Better offline attribution
#eMwebinar

22. © 2016 eMarketer Inc.
1. Better
fulfillment
Fast, free
shipping is
the leading
factor for
influencing
holiday
purchases
#eMwebinar

23. © 2016 eMarketer Inc.
Demand for
variable
fulfillment options
is growing
More than half of back-to-school
shoppers in 2016 planned to
use buy online, pick up in-store
fulfillment options
#eMwebinar

24. © 2016 eMarketer Inc.
In-store pickup is spreading, but retailers are
still working out the kinks
42%
Of retailers reported offering in-store pickup, but nearly
half of those reported that it was not working well yet
Source: Boston Retail Partners, June 2016
#eMwebinar

25. © 2016 eMarketer Inc.
Retailers in 2015 pushed the cutoff date for
holiday deliveries right up to Christmas
 In 2014, 39% of
retailers had a
cutoff date of
December 21 or
later
 In 2015, 54%
had a cutoff
date of
December 21 or
later
#eMwebinar

26. © 2016 eMarketer Inc.
Last year,
only 39% of
US internet
users were
finished with
holiday
shopping by
December 21
#eMwebinar

27. © 2016 eMarketer Inc.
2. Better local
advertising
US mobile
local ad
spending will
rise by almost
a third in 2016
#eMwebinar

28. © 2016 eMarketer Inc.
Local search drives brick-and-mortar traffic
50%
of mobile local searches lead to an in-store visit
Source: Google, 2014
#eMwebinar

29. © 2016 eMarketer Inc.
Mobile’s share of paid search is increasing
 40% of paid
search ad
spending in
North America
in Q2 2016 was
for mobile
searches
 58% of clicks
were on mobile
#eMwebinar

30. © 2016 eMarketer Inc.
Mobile Product Listing Ad (PLA) clicks more than
doubled during the 2015 holiday season
 Growth of
mobile PLAs
exceeded the
growth of
mobile search
more broadly
#eMwebinar

31. © 2016 eMarketer Inc.
Local Inventory Ads (LIAs) have become more
prominent
 Require real-time inventory visibility and integration with
point-of-sale and marketing systems
 5% to 7% of total Google Shopping clicks now come from
LIAs (Source: Merkle)
 Clickthrough rates 50% higher for LIAs than for standard
mobile PLAs (Source: Merkle)
#eMwebinar

32. © 2016 eMarketer Inc.
LIAs could play a pivotal role in the final days
before Christmas
“One week in particular that’s always a
little slow for us is the week right before
Christmas. Even after the shipping cutoff,
in those few days right before Christmas,
[LIAs are] a great opportunity to get out
there and drive people into your stores.”
—Jared DeSisto, Senior Manager, SEM and Feeds,
Merkle
#eMwebinar

33. © 2016 eMarketer Inc.
3. Local digital
merchandising
Site merchandising
was a leading priority
for US digital retailers
following last year’s
holiday season
#eMwebinar

34. © 2016 eMarketer Inc.
Retailers can import offline information to create
more personalized digital merchandising
“Retailers already have my offline data—they
know what I like; they know the prices I like; they
know that I’m a female; they know how old I am,
all of that. They can import the information and
utilize both the offline and the online behavioral
data to show to me the kinds of products [like
those] I’m searching.”
—Madeline Ng, Product Marketing Lead, BloomReach
#eMwebinar

35. © 2016 eMarketer Inc.
Digital merchandising
is starting to reflect
the shopper’s current
location
#eMwebinar
(Images source: Jetlore)

36. © 2016 eMarketer Inc.
4. Better local attribution: Many new ways to
track offline purchases back to online ads
 Facebook
– Offline conversions API
– Store visits
 Google
– Offline conversion and store visits tracking in AdWords
– Attribution 360
 Others
#eMwebinar

37. © 2016 eMarketer Inc.
Holiday Outlook for Two
Trends Generating Buzz

38. © 2016 eMarketer Inc.
1. Conversational
Commerce
Commerce
embedded within
AI-enhanced
conversations
(Images source: Kik)
#eMwebinar

39. © 2016 eMarketer Inc.
Conversational platforms have huge scale
 US Facebook
Messenger users will
top 100 million in 2016
#eMwebinar

40. © 2016 eMarketer Inc.
3% of US internet
users reported
having a smart
speaker (mostly
Amazon Echo) in
June 2016
#eMwebinar

41. © 2016 eMarketer Inc.
Conversational platforms are releasing
commerce-related bots and extensions
 Facebook Messenger introduced:
– Conversations with brands, mostly around clienteling or customer
service (2015)
– Chatbots and send/receive API (April 2016)
 Kik introduced a bot store in April 2016
 Apple will release iOS 10 next week with:
– Siri extensions that connect queries to apps via an API
– iMessage apps
 Alexa had 1,400 skills (as of July 2016)
#eMwebinar

42. © 2016 eMarketer Inc.
Conversational commerce is generating buzz,
but the big impact won’t happen until 2017
“There are a lot of retailers who are very
interested in this, but they’re waiting on the
sidelines to see it develop a little more
before they plunge in. So, I’m not 100%
convinced that this holiday season is going
to be a really massive time for
conversational commerce, but I would put it
on the next holiday.”
—Kent Deverell, CEO, Fluid
#eMwebinar

43. © 2016 eMarketer Inc.
2. Augmented Reality: Pokémon Go is just one
aspect of a burgeoning field
Pokémon Go:
 500 million downloads
(Source: Niantic, 9/7/2016)
 $440 million in revenue
(Source: Sensor Tower)
 On 12% of US
smartphones
(Source: Sensor Tower)
(Images source: www.pokemon.com)

44. © 2016 eMarketer Inc.
Pokémon Go has the potential to become an
advertising platform
(Images source: Toru Hanai/Reuters via Techinsider.io)
 McDonald’s Japan has
bought sponsored gyms for
400 restaurants and
Pokéstops for its 2,500
other restaurants
 Softbank in Japan will have
3,700 stores as a sponsored
location
#eMwebinar

45. © 2016 eMarketer Inc.
Most Pokémon players would be interested in
some form of sponsored content in the game
 The most acceptable
sponsored content:
– free coins
– redeemable items following a
purchase
– unique game items available
at physical stores
 59% would be open to
sponsored stops or gyms

46. © 2016 eMarketer Inc.
Interest in sponsored location in the US seems
muted
“Right now I am not sure that we
would have anybody in the holiday
season advertising within
Pokémon.”
—Scott Shamberg, US President, Performics
#eMwebinar

47. © 2016 eMarketer Inc.
At the launch
of Pokémon
Go, less than
a third of US
internet users
had heard of
augmented
reality
#eMwebinar

48. © 2016 eMarketer Inc.
Augmented reality as a whole has benefitted
from the awareness generated by Pokémon Go
“The understanding and interest in
augmented reality has spiked
since the launch of Pokémon Go.
Now people understand what it is,
what it does and why it’s so cool
and fun.”
—Jennifer Tidy, CMO, Modiface
#eMwebinar

49. © 2016 eMarketer Inc.
But various augmented reality retail applications
have been successful
 Keys to their success:
– Ease of use
– Accessibility
(Images source: Modiface
#eMwebinar

50. © 2016 eMarketer Inc.
Recap
 Overall US retail sales will grow by a tepid 3.1% during
the 2016 holiday season
 US retail ecommerce sales will expand by 17.2%
 US retailers will rely on four advances that will help
them bridge the online/offline gap:
– Better fulfillment; better local advertising products; local digital
merchandising; better offline attribution
 Conversational commerce and augmented reality have
generated recent buzz, but their holiday impact will be
minimal
#eMwebinar

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Yory Wurmser
Online Holiday Shopping
Forecast and Trends 2016
 Back-to-School Shopping Preview: The Shift to Ecommerce
Accelerates
 Facebook Messenger: Strategies for Customer Service,
Ecommerce, Content and Advertising
 US Mcommerce Update 2016: Behind the Rapid Growth
 US Holiday Shopping Preview 2016: Absorbing the Lessons of
2016