Table of Contents
Overview
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- What you need to know
- Scope
Executive Summary
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- Overview
- eCommerce shows no sign of slowing down
- Free shipping and returns have become table stakes
- More products draw in more online shoppers
- Maintain an active online presence to build trust
- Consumables are set to gain ground in 2019 and beyond
- Social media is essential to selling to younger online shoppers
- What it means
What We Learned in 2018
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- Online product discovery isn’t always intentional
- Shipping costs can lose – and win back – an online sale
- Shoppers have a largely transactional relationship with Amazon
- Online hasn’t replicated the experience of seeing something in person
- Shoppers value post-purchase communication from retailers
- User generated content builds trust
The Industry – What You Need to Know
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- eCommerce is growing much faster than overall retail
- Consumables present an opportunity
- The paths to purchase can start anywhere on any device
Industry Size and Forecast
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- Online sales forecast to approach $900 billion by 2023
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- Figure 1: Total US online retail sales and fan chart forecast with best- and worst-case scenarios, at current prices, 2013-23
- Figure 2: Total US online retail sales and forecast, at current prices, 2013-23
- eCommerce growth outpaces total retail sales growth
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- Figure 3: Estimated quarterly total US retail sales growth vs online sales growth, by quarter, Q3 2017-Q3 2018
- Figure 4: Estimated quarterly total US retail sales vs online sales, Q3 2017-Q3 2018
Analyst Perspective
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- Everyday essentials have room for growth
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- Figure 5: How consumers buy products (by category) – Any online, November 2018
- AR to become more of a reality
- Increasingly connected consumers drive the industry
- Connected consumers result in savvier online shoppers
- Blurring lines between in-store and online creates opportunities
- Don’t discount the power of rural America
Key Trends – What You Need to Know
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- Amazon and Walmart lead the way
- Prime Day inspires others to get in on the action
- Social media creates more shopping moments
- Physical stores will serve more online shoppers
- Retailers will partner up to drive online – and offline – business
Industry Influencers
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- Amazon
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- Figure 6: Online shopping frequency, by retailer/website type, April 2018
- Walmart
- Facebook and Pinterest
Online Shopping Events
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- Singles’ Day gains ground in the US
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- Figure 7: American Apparel Singles’ Day marketing email, November 2018
- Black Friday and Cyber Monday generate record setting sales
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- Figure 8: Shoe Carnival Cyber Monday marketing email, November 2018
- Prime Day gives Amazon and others a boost
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- Figure 9: Amazon Prime Day marketing email, July 2018
- Wayfair rolls out Way Day
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- Figure 10: Wayfair Way Day promotional email, April 2018
Biggest Impacts of 2018
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- Social shopping
- Snapchat
- Prime Wardrobe
- Joining forces
- Amazon and Kohl’s
- Kroger and Walgreens
- L’Oreal buys ModiFace
What Will Impact in 2019
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- Physical stores will play a greater role
- Retailers will seek out more partnerships and acquisitions
- One-click ordering will be more accessible
- Retailers will focus more on promotional sales “events”
- Online grocery will continue to expand
- Packaging will become more efficient
- Social media will create more purchasing moments
- Take a picture, find a product, make a purchase
- Shoppers will have more voice-activated shopping options
The Consumer – What You Need to Know
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- Current behaviors
- Brands need to have extensive digital footprints to build trust
- Cost and trust are top-of-mind
- Small screens provide opportunities for product discovery
- Apps lag far behind mobile websites in popularity
- In-store pickup and faster delivery can set online retailers apart
- Attitudes toward promotions and personalization
- Younger online shoppers check out new retailers during online sales
- Too many promotional emails can be a turnoff
- Shoppers would rather their experience be personalized based on their own history
- Future behaviors
- Shopping online for everyday essentials is catching on
- Give shoppers more control over when they receive orders
The eCommerce Shopper
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- Almost everyone shops online
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- Figure 11: Online shopping frequency, November 2018
- Online shopping is a habit for many
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- Figure 12: Change in online shopping compared to last year, by online shopping frequency, November 2018
- Who is shopping more online compared to last year
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- Figure 13: Change in online shopping compared to last year, by key demographics, November 2018
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- Figure 14: Change in online shopping compared to last year, by annual household income, November 2018
Attitudes toward Shopping Online
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- Ease: online shoppers feel like they can find what they’re looking for
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- Figure 15: Ease of finding products online, by generations, November 2018
- Shopping preferences: brand variety draws in more online shoppers
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- Figure 16: Online retailer shopping preference, November 2018
- Building trust: smaller retailers must be easy to find online
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- Figure 17: Trust in brands and online retailers, November 2018
What Online Shoppers Value
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- Online shoppers are cost conscious
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- Figure 18: Factors most important when shopping online, November 2018
- Trust is almost as important as easy returns
- Older shoppers are more likely to prioritize product selection
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- Figure 19: Factors most important when shopping online – Product selection vs reviews, by generation, November 2018
- A human connection is not as important to online shoppers
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- Figure 20: Factors least important when shopping online, November 2018
The Impact of Mobile
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- Most people own smartphones and many use them to shop online
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- Figure 21: Devices used to browse and buy online, October 2018
- Retail smartphone apps haven’t caught on with most shoppers
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- Figure 22: Attitudes toward and usage of smartphones for online shopping, November 2018
- A good smartphone shopping experience is key to reaching younger women
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- Figure 23: Smartphone shopping activities, by gender and age, November 2018
- Parents are more likely to use mobile apps while in-store
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- Figure 24: In-store mobile app usage, by parental status, November 2018
- iGens and Millennials are key to turning the tide when it comes to using mobile apps
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- Figure 25: Mobile app shopping preference, by generation, November 2018
Attitudes toward Promotional Activity
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- Familiarity beats the unknown during major online sales
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- Figure 26: Attitudes toward online promotional activity, November 2018
- iGens and Millennials are more open to checking out new retailers during sales
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- Figure 27: Attitudes toward online promotional activity – Select items, by generation, November 2018
- Beware of too much of a good thing with email marketing
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- Figure 28: Attitudes toward marketing emails, November 2018
- Products in subject lines are key to reaching older online shoppers
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- Figure 29: Attitudes toward email subject lines – Product vs sale, by generation November 2018
Attitudes toward Personalization
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- Personalize online based on a shopper’s history, not their name
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- Figure 30: Desire to be shown products based on past behaviors, by household income, November 2018
- Most shoppers don’t like being addressed by name in promotional emails
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- Figure 31: Attitudes toward personalization in marketing emails, by gender and age, November 2018
- Introduce products that similar shoppers have bought to appeal to younger women
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- Figure 32: Desire to be shown products based on what similar people have purchased/looked at, by gender and age, November 2018
- Show dads what people who live near them are buying and looking at
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- Figure 33: Desire to be shown products based on what nearby people have purchased/looked at, by gender and parental status, November 2018
Last-mile Considerations
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- Free returns and free shipping are must-haves
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- Figure 34: Important factors when deciding whether or not to buy online, November 2018
- Combine free and fast shipping and returns for broadest appeal
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- Figure 35: TURF analysis – Attitudes toward delivery options, November 2018
- Delivery speed: younger online shoppers don’t want to wait
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- Figure 36: Importance of delivery speed in online purchasing decisions, by generation, November 2018
- Pickup: dads are more likely to prioritize online order pickup
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- Figure 37: Importance of delivery speed in online purchasing decisions, by gender and parental status, November 2018
- Shoppers in less-populated areas interested in more options
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- Figure 38: Importance of same day delivery and curbside pickup when deciding to buy online, by area, November 2018
- Don’t forget the packaging
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- Figure 39: Packaging concerns as a deterrent to buying online, November 2018
Future Behaviors
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- Parents expect to shop more online
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- Figure 40: Future online shopping expectations, by gender and parental status, November 2018
- Frequent online shoppers want more control over deliveries
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- Figure 41: Future online order delivery expectations, by change in online shopping compared to last year, November 2018
- Millennials are more likely to expect AR features
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- Figure 42: Future online shopping expectations, by generation, November 2018
Appendix – Data Sources and Abbreviations
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- Data sources
- Sales data
- Fan chart forecast
- Consumer survey data
- Direct marketing creative
- Abbreviations and terms
- Abbreviations
- Terms
- TURF analysis – Methodology
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- Figure 43: Table – TURF analysis – Attitudes toward delivery options, November 2018
Appendix – The Industry
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- Figure 44: Total US online retail sales and forecast, at inflation-adjusted prices, 2013-23
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