Table of Contents
Executive Summary
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- The market
- Online sales growth slows in 2014
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- Figure 1: Internet retail sales (incl. VAT), 2010-20
- Share of the retail market
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- Figure 2: Internet retail sales as % of all retail sales, 2010-20
- Store-based retailers catching up with market
- Market segmentation
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- Figure 3: Breakdown of online retail sales by major category, 2015 (est)
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- Figure 4: Online sales as % of total category sales, 2013-15
- Companies and market shares
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- Figure 5: Leading online retailers: share of all online retail sales, 2014
- The consumer
- Devices used for online shopping
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- Figure 6: Online shopping in last 12 months, by device used, May 2015
- Product categories purchased
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- Figure 7: Products bought online, May 2015
- Figure 8: Products bought by device used, May 2015
- Where they shopped
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- Figure 9: Websites bought from in the last 12 months, May 2015
- Who shops where
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- Figure 10: Profile of online shoppers, by retailer used, May 2015
- Attitudes towards buying online
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- Figure 11: Attitudes towards buying online, May 2015
- What we think
Issues and Insights
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- It is who people buy from, not how, that matters
- The facts
- The implications
- So is there a ceiling to online sales?
- The facts
- The implications
- But aren’t some pureplays already opening stores?
- The facts
- The implications
- Does it really matter which device is used?
- The facts
- The implications
The Market – What You Need To Know
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- Online shopping peaks for Black Friday
- Tablets becoming the device of choice
- Online market will rise to £71.2 billion by 2020
- Market growth is slowing
- Impact of m-commerce will diminish
- Non-store channel still nudging ahead
- Three major product categories
- Sales of digital entertainment products exceed £2 billion in 2014
Market Drivers
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- Who’s shopping online?
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- Figure 12: Proportion of people who have shopped online in the past three months by age group, April 2014-15
- Devices used to shop online
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- Figure 13: Devices used to shop online in the past year, May 2015
- Device ownership
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- Figure 14: Internet-enabled technology products personally owned, April 2014-15
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- Figure 15: Internet-enabled technology products in the household, June 2013-November 2014
- Broadband access
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- Figure 16: Percentage of households with broadband access, 2011-14
- Consumer context
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- Figure 17: Consumer confidence levels, March 2011-15
- Figure 18: Annual % change in average weekly earnings versus annual % change in consumer prices, January 2011-April 2015
Market Size and Forecast
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- Growth slows in 2014
- But picks up again in 2015 first quarter
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- Figure 19: Internet retail sales (incl. VAT), 2010-20
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- Figure 20: Internet retail sales as % of all retail sales, 2010-20
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- Figure 21: Internet retail sales (incl. VAT), in current and constant prices, 2010-20
- Segmentation: store-based growth starts to move in line with market total
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- Figure 22: Internet retail sales by store-based retailers (incl. VAT), 2010-20
- Figure 23: Internet retail sales by store-based retailers (incl. VAT), in current and constant prices, 2010-20
- Segmentation: non-store retailers still nudging ahead
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- Figure 24: Internet retail sales by retailers without stores (incl. VAT), 2010-20
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- Figure 25: Internet retail sales by retailers without stores (incl. VAT), in current and constant prices, 2010-20
- Forecast methodology
- The fan chart
Market Segmentation
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- Electricals, clothing and grocery dominate online
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- Figure 26: Breakdown of online retail sales by major category (incl. VAT where applicable), 2013-2015 (est)
- Proportion of sales online by category
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- Figure 27: Online sales as % of total category sales, 2013-15
- Review of major product categories
- Electrical goods
- Clothing and footwear
- Grocery
Digital Spending
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- Digital sales exceed £2.4 billion in 2014
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- Figure 28: Breakdown of estimated spending on digital entertainment products, 2014
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- Figure 29: Digital sales – music, 2013-15
- Figure 30: Digital sales – video, 2013-15
- Figure 31: Digital sales – e-books, 2013-15
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- Figure 32: Digital sales – computer/console games, 2013 -15
Key Players – What You Need to Know
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- Amazon’s growth slows
- Store-based retailers catching up
- Grocers still see the lowest proportion of their sales generated online
- Buy it now
- Flexible delivery options
- Online retail advertising spend returns to growth
- TV dominates advertising spend but eBay favours the internet
Leading Online Retailers
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- The top 25 online retailers
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- Figure 33: Leading online retailers’ net online revenues, 2012-14
- Top 25: Pureplays versus multichannel
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- Figure 34: Distribution of the revenues of the top 25 online retailers (as ranked in 2014) by type of retailer, 2012-14
- Top 25: Proportion of sales generated online
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- Figure 35: Top 25 online retailers: Proportion of total sales transacted online, 2014
- Top 25: By major product category
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- Figure 36: Top 25 retailer, by major product category, 2014
Market Shares
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- Top 25 retailers increase their share of total spending
- Store-based retailers are the biggest winners
- Amazon drops share for two years running
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- Figure 37: Top 25 online retailers: Share of all online retail sales, 2012-14
Innovation
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- Buy now
- Flexible delivery options
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- Figure 38: An artist’s impression of an Argos digital store within Sainsbury's
- Unlocking the potential of social commerce
- Personalised digital stores
- Option to buy non-groceries that can be delivered with a grocery order
- Access all areas
Brand Communication and Promotion
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- Online retail advertising spend up in 2014
- Online marketplace operators are the biggest ad spenders
- Specialist pure play online retailers
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- Figure 39: Recorded above-the-line, online display and direct mail total advertising expenditure on online retail by leading UK pure play online retail operators, 2011-14
- TV dominates
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- Figure 40: Recorded above-the-line, online display and direct mail total advertising expenditure on online retail by leading UK pure play online retail operators, by media type, 2011-14
- eBay favours the internet over TV
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- Figure 41: Main media ad spend by leading UK Pure Play online retail operators, by media type, 2014
Brand Research
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- What you need to know
- Brand map
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- Figure 42: Attitudes towards and usage of selected brands, September 2014, November 2014, December 2014, January 2015 and June 2015
- Key brand metrics
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- Figure 43: Key metrics for selected brands, September 2014, November 2014, December 2014, January 2015 and June 2015
- Brand attitudes: Consumers see Amazon.co.uk and eBay.co.uk as providing a strong, innovative service for good value
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- Figure 44: Attitudes, by brand, September 2014, November 2014, December 2014, January 2015 and June 2015
- Brand personality: Currys PC World and Tesco have closest association with negative traits
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- Figure 45: Brand personality – macro image, September 2014, November 2014, December 2014, January 2015 and June 2015
- John Lewis, Marks & Spencer and Next are most likely to be seen as stylish, but have prices that may deter some
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- Figure 46: Brand personality – micro image, September 2014, November 2014, December 2014, January 2015 and June 2015
- Brand analysis
- Amazon.co.uk has a very strong performance
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- Figure 47: User profile of Amazon.co.uk, December 2014
- eBay.co.uk also scores highly on recommendation
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- Figure 48: User profile of eBay.co.uk, June 2015
- Argos lacks some glamour, but has a reliable, trustworthy image that encourages consideration
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- Figure 49: User profile of Argos, December 2014
- Next sits in the middle of both ends of the market
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- Figure 50: User profile of Next, January 2015
- John Lewis has exclusive and expensive brand image that limits usage
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- Figure 51: User profile of John Lewis, November 2014
- Marks & Spencer’s wider availability helps to create more usage than John Lewis
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- Figure 52: User profile of Marks & Spencer, November 2014
- Currys PC World lags behind other brands on a number of traits
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- Figure 53: User profile of Currys PC World, December 2014
- Tesco has high penetration despite certain negative traits
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- Figure 54: User profile of Tesco, September 2014
The Consumer – What You Need to Know
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- Mobile devices still only a small part of the market
- Clothing the most bought product online
- Amazon dominant by frequency of use
- Satisfaction high
- People like reviews, but concerns over security won’t go away
Devices Used For Online Shopping
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- Figure 55: Online shopping in last 12 months, by device used, May 2015
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- Figure 56: Profile of those who shop, by device and location, May 2015
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- Figure 57: Use of mobile devices for shopping, regional profile, May 2015
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Products Bought Online
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- Figure 58: Products bought online, May 2015
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- Figure 59: Products bought by device used, May 2015
- Figure 60: Products bought by device used, May 2015
- Who buys what?
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- Figure 61: Profile of shoppers by product on a laptop/desktop, May 2015
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- Figure 62: Smartphone buyers by product, May 2015
- Number of products bought
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- Figure 63: Number of different types of product bought online, May 2015
- Figure 64: Profile of online shoppers by the number of products bought, May 2015
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Who Shops Where
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- Figure 65: Websites bought from in the last 12 months, May 2015
- Who shops where?
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- Figure 66: Profile of online shoppers, by retailer used, May 2015
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- Figure 67: Number of different retailers bought from in the last 12 months, May 2015
- Figure 68: Profile of online shoppers by the number of retailers bought from, May 2015
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- Figure 69: Retailers bought from by the number of retailers used, May 2015
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Retail Consumer Comparisons
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- Regional differences
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- Figure 70: Leading online retailers, relative strength, by region, May 2015
- Location
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- Figure 71: Leading online retailers, relative strength, by location, May 2015
- Education
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- Figure 72: Leading online retailers, relative strength, by education, May 2015
- Size of household
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- Figure 73: Leading online retailers, relative strength, by number of people in household, May 2015
- Online retailer used most recently
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- Figure 74: Websites bought from most recently, May 2015
- Who bought what from where?
Online Consumer Satisfaction
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- Figure 75: Overall satisfaction with the last website bought from, May 2015
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- Figure 76: Profile of those who are satisfied or indifferent, May 2015
- Satisfaction by retailer last used
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- Figure 77: Overall satisfaction by retailer, May 2015
- Key Driver Analysis
- Methodology
- Service lacking
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- Figure 78: Key drivers of overall satisfaction with Amazon, May 2015
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- Figure 79: Overall satisfaction with Amazon – key driver output, May 2015
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Attitudes towards Buying Online
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- Figure 80: Attitudes towards buying online, May 2015
- Figure 81: Profile of those agreeing with attitudinal statements, May 2015
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Amazon.com
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- What we think
- Strategy
- Profitability
- Making the most of online
- Company background
- Company performance
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- Figure 82: Amazon.com Inc: Group financial performance, 2010-2014
- Retail offering
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- Figure 83: Amazon UK: Estimated sales mix, 2014
- Figure 84: Amazon: Product mix by item count, 2015
AO World
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- What we think
- New product categories
- Building brand awareness
- Eyeing further expansion
- Dixons Carphone threat
- Company background
- Company performance
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- Figure 85: AO World Plc: Group financial performance, 2012/13-2014/15
- Retail offering
Argos
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- What we think
- ‘GET SET GO ARGOS’
- Customers being won over by the new-look digital stores
- Digital enhancements driving traffic to Argos’ digital channels and online sales
- Store network advantage
- Fulfilment partnerships
- Concession opportunities
- New hub-and-spoke distribution model
- Same-day delivery service coming
- More product choice
- Company background
- Company performance
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- Figure 86: Argos: Group financial performance, 2010/11-2014/15
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- Figure 87: Argos: Outlet data, 2010/11-2014/15
- Retail offering
ASOS
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- What we think
- A comprehensive product offering that caters to all its target audience
- Expanded fulfilment options
- Adjusting prices for different territories
- Innovative customer engagement feature
- Website enhancements
- Company background
- Company performance
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- Figure 88: ASOS: Group financial performance, 2010/11-2013/14
- Retail offering
Debenhams.com
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- What we think
- Speedier online delivery
- New stores support multi-channel service
- Targeted promotions through single customer view
- Enhanced online experience
- Meeting the demand for increased international online orders
- Unique product offering
- Company background
- Company performance
- Record online sales in the week leading up to Christmas
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- Figure 89: Debenhams: Group financial performance, 2009/10-2013/14
- Retail offering
Dixons Carphone
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- What we think
- Online and in-store working together
- Integration of the brands
- International
- Longer term threats remain
- Company background
- Dixons
- Carphone Warehouse
- Dixons Carphone
- Company performance
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- Figure 90: Dixons Carphone: Group financial performance, 2010/11-2014/15
- Figure 91: Dixons Carphone: Outlet data, 2010/11-2014/15
- Retail offering
Johnlewis.com
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- What we think
- Click & collect boosted by increase in the number of collection pick-up points
- New £95m distribution site to fulfil growing demand for click & collect
- New ways to help customers shop across multiple channels
- Asian store expansion opens up multichannel growth possibilities in the region
- Added value services
- Company background
- Company performance
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- Figure 92: John Lewis Partnership: Group financial performance, 2010/11-2014/15
- Retail offering
Next Directory
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- What we think
- Extended last ordering times
- “New In” catalogues ensures “weather appropriate” fashion
- New premium branded business, LABEL expands product breadth
- Overseas online sales growth expected to slow, but China holds potential
- Regional hub and overseas delivery lead times
- Company background
- Company performance
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- Figure 93: Next Directory: Group financial performance, 2010/11-2014/15
- Retail offering
Ocado
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- What we think
- Website interface enhancements encouraging customer retention
- Physical pick-up collection points
- Expanded product offering
- Market-leading IP potential
- Company background
- Company performance
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- Figure 94: Ocado Ltd: Group financial performance, 2009/10-2013/14
- Retail offering
Otto Group (Multichannel Retail)
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- What we think
- Innovation at its core
- Transformation of 3SI
- Russian troubles
- Company background
- Company performance
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- Figure 95: Otto Group (multichannel retail): Group sales performance 2010/11-2014/15
- Retail offering
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- Figure 96: Otto group main brands, June 2015
Shop Direct Group
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- What we think
- Brands
- Credit remains important
- Looking forward
- Company background
- Company performance
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- Figure 97: Shop Direct Group: Group financial performance, 2009/10-2014/15
- Retail offering
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- Figure 98: Shop Direct: Estimated sales breakdown, 2013/14
Tesco Direct
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- What we think
- Online and stores working hand-in-hand
- Streamlining to succeed
- Direct maintains wider offer as stores focus on key ranges
- A broad appeal
- Company background
- Company performance
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- Figure 99: Tesco Plc: Group financial performance, 2010/11-2014/15
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- Figure 100: Tesco Plc: Estimated net internet revenues, 2012/13-2014/15
- Retail offering
Zalando
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- What we think
- Successful IPO
- Technology at its heart
- Underwhelming expansion in the UK
- Company background
- Company performance
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- Figure 101: Zalando: Group financial performance, 2010-2014
- Retail offering
Appendix – Key Driver Analysis
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- Interpretation of results
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- Figure 102: Overall satisfaction with Amazon – key driver output, May 2015
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- Figure 103: Satisfaction with Amazon, May 2015
Appendix – Data Sources and Abbreviations
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- Data sources
- Fan chart forecast
- VAT
- Financial definitions
- Abbreviations
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