Insight around the world

 

Chloe Rigby, Editor, InternetRetailing.net

2016 saw sales increase over the Black Friday weekend as UK shoppers went online for the pre-Christmas sales. At around £5bn, depending on whose reports you look at, the amount spent was just a tiny fraction of the world’s biggest online sales day, Singles Day. In 2016, a staggering $17.8bn (£14.3bn) was spent – 32% up on the same day last year.

Some 82% of the figure, which represents the total gross merchandise volume (GMV) settled through Alipay on Alibaba’s China and international retail marketplaces, or $14.6bn (£11.75bn) was spent over mobile devices.

“This year’s 11.11 is a preview of the future of retail, where entertainment, commerce and interactive engagement intersect seamlessly,” said Daniel Zhang, Chief Executive Officer of Alibaba Group. He said the event had seen “unprecedented engagement between consumers and merchants”, adding: “11.11 showcased how online and offline retail will be reinvented to offer brand new shopping experiences to our hundreds of millions of mobile, digitally savvy active users.”

Over the course of the day, Alipay, the Alibaba payment solution, processed more than a billion transactions in total, reaching 120,000 per second at peak while delivery arm Cainiao Network processed more than 657m delivery orders.

Japan, the United States, South Korea, Australia and Germany were the leading countries selling to China, by GMV, and the top brands by GMV included, from the US, Apple, Nike and New Balance, and from Europe, Siemens, Philips, Adidas and Jack Jones. In all, transactions took place from 235 countries, and 37% of buyers bought from international merchants or brands.

The 11.11 shopping festival began in 2009 when 27 merchants took part in an event that was designed for Tmall.com traders to raise awareness of the value that online shopping could offer. Seven years on, 11.11 – celebrated as Singles Day in China because the date contains only the number one – has become a global event.

Michael Ross, Co-Founder and Chief Scientist, DynamicAction

What was once a one-day, online-only American shopping event called Cyber Monday is now a week-long, all-channel, global phenomenon that is stretched out across Cyber Week. This year’s Cyber Week came onto the scene in a year with an unprecedented amount of promotional activity, where we saw European retailers chasing their North American counterparts and selling 144% more of their orders on promotion throughout 2016.

Make no mistake, this is not a race you want to win, as it is a race to the bottom. Retailers who will fare well are those who have an in-depth understanding of their customers’ true profitability. They have the ability to give the shopper the feeling that she got a good deal while promoting in a way that doesn’t destroy margins.

The DynamicAction Retail Index, an analysis of more than £3.2bn in consumer transactions, identified shifts in consumer shopping behaviours and determined how retailers were faring over the holidays. In the European region, the study found retailers differentiated themselves from US retailers by:

  • Holding the line on promotions: Whereas North American retailers increased promotions 49% on Cyber Monday versus last year, European retailers’ promotions remained flat on Cyber Monday versus last year. They managed to decrease price markdowns by 15% versus Cyber Monday 2015.
  • Upping the ante on marketing and free shipping: European retailers saw marketing costs and free shipping increase significantly over 2015, with a 64% spike in marketing costs and a 30% increase in free shipping on Cyber Monday 2016 versus 2015.
  • Increasing operational efficiency: This year, European retailers held more inventory (up 5%) heading out of Cyber Monday than in 2015, which could signal overstocks in the months ahead. However, compared to the US they excelled at providing in stock items shoppers are actually looking for. This 20% increase in inventory held that shoppers are actually viewing, provided a better customer experience.

Selling at full price is increasingly becoming a fallacy, and the customer expects a deal. However, in order to thrive or even survive in 2017, UK retailers must focus on a deep understanding of customer profitability: promoting more wisely, having a tight grasp on shipping margin, and focusing on service and product curation to protect profit margins.

Kees de Vos, Chief Product and Marketing Officer, MetaPack

Seldom will the need to balance customer expectations of ecommerce with commercial realities be more significant than as we enter 2017, particularly when it comes to the cost of delivery. In the UK, as in other mature markets, there is an increasing pressure on retailers to offer what were once considered premium services – next or same day delivery – for free.

Online marketplaces regard delivery as a crucial competitive differentiator and fund it as a cost of sale, but due to their more traditional sales models, this is often not possible for bricks and mortar retailers. The challenge for them in 2017 will be refining their delivery options to suit customers without incurring unsustainable operational expenditure. It’s time to start thinking creatively.

Research we recently carried out amongst consumers across Europe and the US indicated that whilst 47% ranked free delivery as the most important delivery consideration, a high number were prepared to purchase more items or products to take advantage of a minimum spend ‘free delivery’ offer. In addition, loyalty programmes that reward customers with free or quick delivery services in return for consistent custom are proving popular, with 84% of UK respondents saying they would prioritise shopping with sites offering this as an option.

Brexit will also shape the ecommerce market in 2017. The growth in overseas sales since the EU referendum in June, with consumers taking advantage of a weaker pound, hints strongly at what is likely to come. More importantly, we have to remember that consumers want choice, value for money and convenience – and often won’t be aware of a retailer’s location. So, it’s all the more important that existing cross-border trade and the systems already in place with non-EU countries set the benchmark for future EU trade agreements. Above all we must make sure that consumers can continue purchasing online from their choice of retailer, wherever they are located, with the same freedoms and expectations.

Len Shneyder, Vice President of Industry Relations, SendGrid

Black Friday and Cyber Monday are the busiest shopping days in the US, according to the National Retail Federation. This past year an estimated 137.4 million people shopped online and in-store, an increase of two million from 2015. In addition, no other shopping day generates as much email traffic as Black Friday. Cyber Monday comes close, but it didn’t top the massive volume generated on the day after Thanksgiving. After analyzing over 1.6bn emails sent on Black Friday, and nearly as many on Cyber Monday, SendGrid uncovered some interesting insights.

Open rates remained high but dipped, apparently in response to volume and bargain hunting in-store on Friday. Retailers should consider tying email to in-store engagement opportunities by adding in-store signage reminding customers to “check email for special offers” or to “sign up for email alerts” and then open with a discount vs. a standard welcome email. This will drive purchases in-store and remind customers of the value in the email.

Of the 1.6bn emails analyzed, nearly 50% were opened on a mobile device. Mobile users open their email 30 minutes sooner than desktop users — meaning email is becoming a near-real-time communication channel. However, email templates are frequently designed for a standard desktop, which is too wide for most phones. Be sure to include a plain text version in HTML and make use of responsive design templates to ensure neither spam filters nor poor rendering will hinder message delivery and engagement.

Nine-word subject lines seemed to be the most popular but 2-4 words had the highest engagement rates. If you want email opened right away, the word “now” is an effective way to drive action. The median delay between send and open is 3 hours, 23 minutes for a typical marketing email, but subject lines that used the word “now” had a median open delay of just 2 hours, 58 minutes.

Email continued to be an essential tool for retailers during the 2016 holiday season in the US but it could be better leveraged. By connecting email to in-store actions, creating responsive designs and rethinking subject lines, retailers can improve performance not only during the holidays but all year long.