holiday
TECHNOLOGY

Adobe: Online holiday revenues hit record high amid surging mobile growth

BY Marianne Wilson

Adobe has released its final recap of online spending for the 2017 holiday season, and the results testify to the growing popularity of mobile commerce.

Online sales hit a record $108.2 billion for the combined November to December period, up 14.7% over last year and slightly over 2016’s 14.4% growth, according to Adobe 2017 Online Shopping Holiday Report. Revenue from mobile totaled $35.9 billion, making up 33.1% of online revenue during the holiday season, with 28% year-over-year revenue growth. (Adobe’s retail report measures 80% percent of online transactions at the largest 100 U.S. web retailers.)

Additional insights from Adobe’s report include:

• Search, email led as retail promotion drivers: Search drove the most revenue during the holiday season at 44.8% (natural search at 21.3% and paid search at 23.5%).

• Big retailers won big, but small retailers were competitive on Thanksgiving weekend: Between Thanksgiving and Cyber Monday, the average daily growth rate for medium-to-large retailers is 30% less than smaller retailers per year. During the full holiday season (Nov. 1 to Dec. 31), the average daily growth rate for medium-to-large retailers is 2.3 times that of smaller retailers per year. Large retailers’ average order value volume (AOV) is 2 times more than smaller retailers during the Thanksgiving weekend. Smaller retailers have an advantage in converting visits to purchases during that weekend, especially on mobile devices.

• Retailers’ success early in the year predicts Thanksgiving gains: Retailers that grew more than 10% in the first half of the year saw revenue increases of 2.1 times over the average retailer on Thanksgiving weekend. In comparison, retailers that struggled early in the year stayed even with last year’s performance.

• The largest markets drove the most online shopping growth: On average, large markets will see about 15–20% more growth per household during the Thanksgiving weekend than markets half their size. Two-million-person markets will grow 15–20% faster than 1-million-person markets, and 4-million-person markets will grow 15–20% faster yet, etc.

Fast-growing populations, high levels of international migration and younger populations were also associated with fastest growing e-commerce sales. DMAs with the fastest online sales growth during the holiday shopping weekend include: San Antonio, Orlando and Charlotte. DMAs with slowest growth include: Cleveland, Kansas City and Baltimore.

• Record spend during Thanksgiving weekend: Revenue between Thanksgiving and Cyber Monday totaled $19.6 billion, a 15.2% increase year-over-year. Black Friday ($5.0 billion) and Cyber Monday ($6.6 billion) steadily increased in importance since 2013. Black Friday 2017 represented 21% more of the shopping season in 2017 (4.6%) than it did in 2013 (3.8%).

Cyber Monday 2017 represented 15% more of the shopping season in 2017 (6.1%) than it did in 2013 (5.3%).

• Cyber Monday and Black Friday were massive mobile days: Over $7 billion was spent on tablets or smartphones between Thanksgiving and Cyber Monday ($2.1 billion on tablets, $4.9 billion on smartphones). Mobile drove 52% of visits and 36% of revenue during that period. Smartphone transactions closed at a 14.2% higher rate year-over-year and smartphone AOV increased 1.9%year-over-year between Thanksgiving and Cyber Monday.

For purchases made on smartphones, the average visit from an Apple iOS device led Android by $0.58. Cyber Monday saw the first-ever mobile shopping day over $2 billion, with 30.4% of the day’s revenue from mobile devices. Thanksgiving was the most mobile day with 41% share ($1.2 billion spent on mobile devices).

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Amazon
TECHNOLOGY

Amazon accounted for 18% of U.S. online grocery sales in 2017

BY Marianne Wilson

A new report reveals Amazon’s growing impact in the online grocery market.

Amazon attained an estimated $2 billion in food and beverage sales, with a market share of 18% of online grocery sales in the United States, according to One Click Retail’s Amazon Grocery 2017 Review. One Click Retail found that U.S. Amazon sales of cold beverages and coffee earned more than double the next leading categories, with cold beverages growing 65% year-over-year. The remaining top categories — snack food, breakfast foods and candy and gum — demonstrate that non-perishables continue to dominate Amazon’s grocery sales.

According to the report, the key factors driving growth rates higher than 50% in Amazon’s three biggest markets (the United States, United Kingdom and Germany) include:

• Amazon’s penetration is at an all-time high in both North America and Europe and it is increasingly valued by young professionals — busy with their careers and/or raising young families — as a one-stop shop for their online shopping, including groceries.

• Sign-ups for Prime memberships, which includes access to Amazon’s Prime Pantry grocery items, were taking place in record numbers during the 2017 holiday season.

• Amazon Fresh continues to be available to more ZIP codes throughout the United States, United Kingdom, Germany, Japan and soon Australia.

According to the report, weekly sales of Amazon Fresh more than doubled over the course of the year, climbing from approximately $3 million in January to more than $7 million by the end of 2017 to reach an estimated $350 million in total sales. Dairy grew the highest sales by value, estimated at $85 million, while most of the top Fresh items were fruit and vegetables. “Organic” proved to be a key search term, with roughly 25% of all Amazon Fresh sales going to items which had the word “organic” in the title, including eight of the top 20 bestselling items of 2017.

“The biggest growth driver of late 2017, which will inevitably have a major influence on sales well into 2018 and beyond, is Amazon’s acquisition of Whole Foods,” said Spencer Millerberg, CEO at One Click Retail. “The impact has been felt primarily, but not exclusively, in the United States. Customer traffic in Whole Foods locations spiked by 25% in the first two days after the acquisition, and Amazon Fresh also experienced a strong increase in sales after the announcement, even before any new products were released on Amazon.com.”

One Click Retail’s report findings also reveal that Whole Foods’ 365 Everyday Value consistently sold as the No. 2 bestselling brand among Amazon’s private labels (second only to AmazonBasics) since its launch in late August, earning an estimated $11 million in sales by the end of 2017.

“The Amazon and Whole Foods partnership is a perfect match, doubling down on the campaign begun by Amazon Fresh to change consumer perceptions of online grocery sales from ‘non-perishables only’ to high quality, fresh, ‘whole’-some foods,” said Nathan Rigby, VP at One Click Retail. “For brands, this will have — and already has had — widespread implications, with food sales moving online in record volumes as consumer confidence soars. The growth potential for online sales of groceries in 2018, and fresh foods in particular, is huge. In all likelihood, this is the tipping point we have been waiting for.”

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Promotion
TECHNOLOGY

Study finds retailers send wrong promotions at wrong time to wrong customers

BY Marianne Wilson

More than half of all retail promotions are sent to customers who would be content to pay full price.

That’s according to a new Revionics-commissioned survey conducted by Forrester Consulting, which found that 52% of retailers’ weekly or monthly promotions go to customers who would happily have paid full price, resulting in lost margins that retailers can ill afford.

Revionics’ chief marketing and strategy officer Cheryl Sullivan, along with guest speaker Forrester VP and principal analyst George Lawrie, discussed the study results and implications for retailers at the NRF Big Ideas panel session titled “The Shoppers Speak: Shoppers Bust Long-Held Myths on Pricing and Promotions.” The panel, which took place on Monday, Jan. 15, at the Jacob K. Javits Convention Center EXPO Hall (Room 2, Level 1), also provided retailer perspectives from Luke Rauch, senior director of U.S. insights for Walgreens.

The survey, which questioned consumers in the United States, United Kingdom, France, Germany and Brazil, also debunks retailers’ hope of recouping margins by raising prices on limited-stock items. When asked how they would react if an item they wanted was available at a higher-than-expected price, nearly 60% of respondents said they would wait, not purchase the item at all, purchase it from a different retailer. A retailer seeking short-term gain faces the painful risk of losing sales and the hard-won loyalty of its shoppers.

“These incessant and poorly targeted promotions create a climate of perpetual abundance and undermine the customers’ sense of urgency to buy. Instead of wasting money and resources on indiscriminate campaigns, retailers should focus on personalized and timely promotions,” the study found. “Retailers should use customer insights and data science to design the promotions that are most appropriate for different groups of customers in context.”

Sullivan said she has seen a profound market shift as data science-based pricing and promotions change from “nice-to-haves” to now being “must-haves.”

“This confirms what we found in the earlier study: that today’s shoppers worldwide are incredibly savvy and discerning,” Sullivan said. “Retailers who want to effectively reach their customers with meaningful prices and promotions must embrace a science-based approach now if they want to remain relevant and competitive.”

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