The Expanding Community Of Web Buyers Boosts EU And US Online Retail Growth In 2011

Patti Freeman Evans

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.
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Forrester’s US Online Retail Forecast Reports 12.6% Growth In 2010

Sucharita  Mulpuru

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 smulpuru@forrester.com to participate in the survey and receive the report. 

 Want more details? US Online Retail Forecast, 2010 To 2015

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The Eerie Similarities Between Groupon And Priceline

Sucharita  Mulpuru

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 used tacky and expensive celebrity ads to promote their quirky brands (let’s call Timothy Hutton the William Shatner of this bubble).
  • 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).   
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Mobile Investing Heats Up

Bill Doyle

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.

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Unleashing The Location Potential In Your Mobile Commerce App

Peter Sheldon

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.

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Survey: Are Operating And Acquisition Costs Higher Or Lower For Digital Channels?

Carrie Johnson

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!

Some Observations From Finovate Europe

Benjamin Ensor

For the past few years I have watched enviously as the Finovate online financial technology show has gone from strength to strength in San Francisco and New York. So I was thrilled to hear that Finovate was coming to Europe and today I was lucky enough to go along to the show in London.

For those of you who aren’t familiar with Finovate, it’s a fast-paced format with seven-minute live demos and pitches from 35 financial technology vendors. It’s produced by Online Financial Innovations, the people behind the excellent NetBanker blog.

The big themes were:

                Money management: Figlo; IND Group;  Linxo; Lodo Software; LoveMoney.com; Meniga; Strands Personal Finance; Yodlee.

                Security: Business Forensics; miicard; SilverTail Systems; SolidPass; Voice Commerce.

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Software App Stores And The Implications For eCommerce

Peter Sheldon

For eBusiness leaders, software app stores represent a new and disruptive distribution channel for PC and Mac software.

Three weeks ago, Apple launched its App Store for Macs, following in the footsteps of the hugely successful app store for the iPhone, iPad and iPod touch. With the new Mac app store, Apple is hoping to change the way Mac users discover, download and purchase software. At launch the store contained more than 1,000 apps, and Apple was keen to report an impressive 1 million downloads on the first day. For Mac users it’s a compelling story:

  • A convenient one-stop shop. Users can launch the app store right from the Mac dock, revealing a powerful set of discovery tools to browse and search the library of apps on offer. eCommerce best practices are employed throughout including search, faceted navigation, what’s hot, top sellers, favorites and customer reviews to create an intuitive discovery experience.
  • Frictionless purchase and install experience. Downloading and buying in the app store is a simple one-click process. By linking the checkout and payment process to users' iTunes accounts, Apple is able to streamline the buying process significantly versus a typical multipage checkout process common on software publishers' eCommerce sites. The apps in the Mac store have been packaged to comply with the Mac app install process, making the installation quick and seamless compared to the multistep install process common with most software.
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The Evolving Behavior Of Smartphone Owners

Julie Ask

"A phone is a phone. A  phone stays at home. A phone doesn't go with me in the car or out on the town." Not quite the skill set of Dr. Seuss, but this is a direct quote from my 78-year-old friend from the pool. She just disconnected her home phone and now relies solely on a new iPhone 4.

Our clients have watched their traffic (and sales) from mobile devices explode in 2010. Much of this excitement stems from their observations of those customers with either iPads or what we call smartphones — all of the Apple, Android, BlackBerry, HP/Palm, Symbian, and Windows devices consumers own. Adoption of these devices has been growing rapidly. It is hard to name a media outlet, retailer, airline, hotel, bank, insurance provider, fast food company, beverage company, or consumer packaged goods company without an iPhone and/or Android application today. When these same consumer product and service companies look forward at smartphone sales forecasts for the next couple of years, the excitement around the potential opportunities is even greater. They are thinking, "... more smartphone owners will mean more downloads of my applications will mean more sales via the mobile device ...." Will it?

My colleagues Charles Golvin and Thomas Husson and I began to describe this phenomenon in our recent Mobile Technographics report. Will consumers move up the ladder? Or leap over steps? Will increased smartphone adoption translate directly into more usage and sales to companies with mobile services?

I offer two more personal observations.

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The Globalization Of eCommerce In 2011

Zia Daniell Wigder

Nearly one year ago, I asserted that the global economic downturn had not slowed the international expansion of eCommerce initiatives. In 2010, online retailers continued their push into new global markets: Gap launched eCommerce sites in the UK and China while starting to ship internationally to other markets; Amazon launched its first new localized Web site in six years;  Zara went live with eCommerce sites in six European markets.

The push toward global expansion is poised to continue in 2011, with few companies suggesting that international markets will represent a decreasing percentage of revenues in the future. And while Canada and the UK still rank as the top destinations for US online retailers operating abroad, it’s not just the markets of North America and Europe that are attracting attention. Indeed, companies increasingly cite emerging markets as key to long-term growth. A survey of business executives just released in the McKinsey Quarterly indicates that more than 75% of those surveyed expect to see revenues from emerging markets within the next five years; more than one-third of companies expect those revenues to represent more than 25% of the total.

Looking forward to 2011, we expect to see the following trends:

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