Forrester has just released its US Online Retail Forecast, 2010 to 2015, and EU Online Retail Forecast, 2010 to 2015. It is clear from our forecast data that online sales in the US and EU will continue to rise as users become increasingly comfortable buying in the online space. In 2010, US online retail sales grew 12.6% to a total of $176 billion. Similarly, EU online retails sales grew 18% in 2010 to a total of $81 billion. The US and EU markets are projected to grow 12% and 13%, respectively, in 2011.
Why is retail eCommerce continuing to grow?
There is an increase in overall web buyers. There were 5.5 million new US online shoppers who accounted for 30% of the total eCommerce sales. The EU online population grew by 13.4 million users in 2010.
Web buyers are spending more online. 70% of growth in US retail eCommerce sales came from existing shoppers spending more. Similarly, EU average online spend has increased 8% from 2010.
There is an increased level of penetration for online retail. Mobile devices and the proliferation of touchpoints have contributed to the US online retail penetration growing to 8% in 2010. The EU is also seeing steady growth; Forrester is estimating 10% penetration in the UK by 2012.
Forrester’s US Online Retail Forecast, 2010 To 2015, launches today, reporting strong growth in the last year. “The Great Recession” appears to have ended as sales charge ahead, driven by ubiquitous connectivity and an increasing familiarity with the Web. Growth was driven by a few key factors:
Several million new web buyers. In 2010, 5.5 million shopped online for the first time.
Greater spend per buyer online. 70% of the overall growth came from existing shoppers simply buying more.
Online penetration of total retail sales. This rose to 8% during 2010.
According to our forecast, the web channel will grow steadily through 2015, with an emphasis on customer empowerment. Bricks-and-mortar stores will continue to be hampered by this web growth as people become more in tune with the Web and less interested in traffic and long lines. We’ll be continuing our online retail research with our long-standing partnership with Shop.org this year. Next up: The State of Retailing Online report in Q2. If you’re an online retailer, contact me at email@example.com to participate in the survey and receive the report.
The European online retail market, which includes the EU-17 — Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the UK — grew by 18% from 2009 to 2010.
Buyers will continue to flock to the web to buy: By 2015 68% of online users will have made a purchase. The north/south maturity divide continues through the time of this forecast whereas 80% of online users will have made a purchase in northern EU countries versus only 50% in the south. Sales penetration will follow suit.
Because of this divide eBusiness retailers operating in multiple EU countries must localize online strategies and tactics. Consumers in northern EU countries need sophisticated tools designed to meet their needs like the ability to view multiple products together to create a customized look or product composition. In contrast, online buyers in southern EU countries are relatively new to shopping and retailers must reassure them that their online transactions are secure and that products will be as expected and delivered on time.
Most eBusiness executives wouldn't dream of putting comparisons of their products with those of their competitors on their own sites. But it's time to start dreaming. If the number of customers visiting comparison sites continues to grow, we will eventually reach the point where the majority of customers use them. It will make sense for some companies to offer comparisons long before that point is reached.
Since a couple of weeks, Dutch online insurer AllSecure — which is the online brand of Allianz — provides site visitors access to price comparison site premie.nl directly from its site. After filling in the license plate of the car that they want to insure, the site automatically pulls required car information like car brand, type, age, and price. Based on this information — and some personal data that the user needs to enter— he receives a personal quote that can be customized. Next to the quote, a box with a link to price comparison site premie.nl is presented.
Once the user clicks on the link, the personal data and car information is automatically used for a comparison query on premie.nl. A new browser window is opened that shows how AllSecur compares to four other providers.
AllSecure's initiative clearly makes sense: If online buyers use a comparison site as part of their research process anyway, why not offer them access to it directly on the provider’s site? By providing a “one-stop-shop” experience, the firm can limit the chance that the buyer will go to a comparison site directly and eventually buys somewhere else.
At the risk of someone saying I can’t let this Groupon thing go (I can’t), I saw a fascinating graphic the other day. Groupon has, as its proponents like to tell everyone they meet, the dubious distinction of being the fastest company to get to $1B in sales. Why I say dubious (and what I found fascinating about the graphic) is that the second-fastest ever to achieve the same milestone was none other than Priceline. How apropos because I can’t resist pointing out the similarities:
Both thrive on the thrill of finding an outrageous deal (sales and scarcity go together like a horse and carriage; they’re two of the most effective merchandising tactics that exist).
Both are called disruptive models (Priceline lets travel buyers name their price; whereas, Groupon essentially lets companies split marketing costs directly with customers rather than with media companies).
Both have a “gross merchandise value” model (that basically means a lot of mystery around what customers pay and what the company actually earns).
2010 has shown us that mobile banking's time has finally come. Thanks to growing smartphone adoption, fast all-you-can-eat data plans, and more compelling mobile content, more people will start using mobile banking in the coming years.
Although this won’t happen overnight, the unique benefits of mobile banking, like simplicity, immediacy, and context, mean that it will eventually displace online banking for frequently used day-to-day banking tasks like checking account balances, viewing transaction histories, making transfers, and paying bills. By contrast, online banking will remain a more important sales channel.
If you are a Forrester client and want to read more about this topic, I encourage you to read my recent Forrester report.
Most wealth management firms have gotten a pass on mobile, because the people with the most money – older Boomers and Seniors – are the ones least likely to use the mobile Web or mobile apps.
But that pass is expiring. Mobile is exploding, and even the older investors are part of the surge. As we show in the just-published The State of Mobile Investing, 11% of online adults with investment accounts are now mobile investors, up from 8% six months ago (see Figure 1). Two thirds of these mobile investors use their mobile devices to check investment account balances. Half get stock quotes or other market information via mobile. A quarter are mobile traders.
Figure 1: More Than One In 10 Investors Is A Mobile Investor
As channel managers at investment firms scramble to map out a mobile strategy, they face one particular dilemma: mobile apps or Mobile Web sites? While downloadable apps command lots of attention today, we believes that the mobile Web will remain a critical delivery method for the foreseeable future. The simple answer to the app versus mobile Web debate is: both. We recommend that firms develop a high-quality dedicated mobile Web to get the broadest possible reach, and choose a single platform on which to pilot downloadable apps. Then buckle your seat belts! The pace of mobile market innovation won’t slow down for the next few years.
The consumer appetite for smartphones shows no signs of slowing in 2011 and neither does the growth of the mobile channel at leading retailers. eBusiness leaders, who have been focused on replicating the online store experience on mobile are now turning their attention to new mobile innovations that will not only drive revenue growth for the mobile channel but create an immersive multichannel consumer experience that bridges the gap between online and in-store shopping.
Location-based commerce is one such innovation that is gaining interest among eBusiness leaders responsible for mobile strategy. Some retailers have experimented with third-party location-based services including foursquare and Shopkick to roll out location-aware mobile coupons. A few retailers have innovated further and are developing location services into their own mobile shopping apps beyond the basic "store finder" feature to create new ways to interact with shoppers via their smartphones. With my latest research, Location-Based Commerce: An Evolution In Mobile Shopping, we look at how consumers' mobile shopping habits, location technology available in newer generation smartphones, and mobile push notifications have matured sufficiently to empower a new set of location aware multichannel experiences. Retailers are using geo-fences defined in the vicinity of their brick-and-mortar stores to attract nearby consumers by sending relevant, timely, and location-aware messages to customers' phones.
Are costs to run your eBusiness operations increasing or decreasing? Last year eBusiness professionals reported that on average they spent over $25 million annually to run their eBusiness channels. With the pace of innovation and investment in digital channels barreling forward, we expect that number to increase in 2011. The only way for us to know though is for you to help us. As part of our quarterly panel survey of eBusiness professionals, we have deployed a survey to get to the heart of the cost of running digital channels -- namely the Web and mobile -- and also to understand how the cost of customer acquisition varies by channel. We'll publish the results in an upcoming research document.
Because this will be the third year fielding this survey, we'll be able to provide year-over-year data when we publish the results to highlight the key areas in which eBusiness costs are rising and falling, with more emphasis on mobile in particular than before.
Please take our survey today. It should take about 15 minutes to complete, and you'll get to choose some free research as a thank you from us. As always we'll only publish aggregate results and will never list the names or companies of participants. It's Valentine's Day after all, please share some survey love!
Google recently released a savings account comparison tool to go along with a similar tool launched last year for mortgages.
In a June 2010 report, eBusiness Leaders: It's Time To Take Financial Service Comparison Web Sites Seriously, we showed that 26% of comparison site users were drawn to comparison tools because of advertisements and 22% came via an Internet search. The launch of Google’s savings account comparison tool will only increase the exposure of comparison tools and sites in the US and other markets (the tool became available in the UK in 2010), mostly because of its strong tie to the buying process and prowess as a search engine.
Google’s comparison tool covers other retail banking products as well as mortgages, credit cards and checking accounts. The focus on personal finances instead of solely investment products — which for some US companies is a missed opportunity — increases the pressure on smaller firms like Bankrate.com or CreditCards.com, since it aggregates information for all key retail banking products and will likely benefit from greater exposure by virtue of being associated with Google.
The only major downside of Google’s tool is the lack of major players in the space like big traditional banks. This will be more an issue for less rate driven products like checking, where choice is based on factorsother than just interest rate.