MAGENTO YEAR IN REVIEW. Reflection on ecommerce Trends from Magento Merchants in 2016

Transcription

1 2016 MAGENTO YEAR IN REVIEW Reflection on ecommerce Trends from Magento Merchants in 2016

2 CONTENTS INTRODUCTION... 3 EXECUTIVE SUMMARY... 4 REVENUE... 5 Analysis... 5 TRAFFIC... 6 Analysis... 6 Tips to improve these metrics... 7 CONVERSION RATE... 9 Analysis... 9 Tips to improve this metric VISITS BEFORE ORDER Analysis Tips to improve this metric AVERAGE BASKET SIZE Analysis Tips to improve this metric AVERAGE ORDER VALUE Analysis Tips to improve this metric BOUNCE RATE Analysis Tips to improve this metric... 19

3 INTRODUCTION Magento is undoubtedly one of the most well known names in ecommerce - a cornerstone of the industry, providing retailers with a robust, scalable and advanced platform from which to launch their business. With $101 billion in digital commerce sold by merchants using Magento in 2016*, it is also a market place of considerable standing and interest in its own right - a community, with specific qualities and needs. Which is why it is important to look at it on an individual level, identifying the trends and patterns that are unique to it. This is why we have created Magento Year in Review, a Magento-specific report built using Nosto s proprietary data, coupled with first-hand experience. The aim of this is to not only paint a picture of the Magento community as it stands but to also provide actionable advice for the future. In doing this we looked at Magento-specific activity, as registered by Nosto s customers running on the Magento platform, for the year a total of 800 million visits from across Europe and the US. IN THIS REPORT WE WILL LOOK AT THE FOLLOWING CORE KPIS: Revenue Traffic Conversion rate Average basket size Average order value Visits before order Bounce rate These metrics hold significant information about the success of an ecommerce company but also areas necessary to improve upon for success. Within each KPI we will look at device breakdown, so that we are able to understand the browsing and buying habits of consumers on different channels. *Source: Magento Blog: $101 billion in digital commerce sold by merchants using Magento in 2016 (Published January 15th, 2017) MAGENTO YEAR IN REVIEW 3

4 EXECUTIVE SUMMARY In this report we have found that, for Magento retailers, in many ways desktop is still king. As a channel it brings the highest percentage of revenue (57.9%), is one of the biggest traffic sources (42.5%) and also has a higher average conversion rate (4.31% excluding bounce) and average order value (131 USD) than mobile and tablet. But so too is the opportunity that lays in mobile clear. This a channel that has evolved at great speed from a juvenile market position. In fact, for Magento merchants mobile is now bringing the highest percentage share of traffic (43.7%). This highlights a discrepancy in ecommerce shopping behaviour - with shoppers happy to use smartphones as a method of exploration but a hesitation to commit and convert on this channel. Merchants should take this as a possible indication of mobile strategy failings but also not disregard the possibility that they need to think about mobile engagement in a completely new and evolving way. For Magento retailers, in many ways desktop is still king, but so too is the opportunity that lays in mobile clear MAGENTO YEAR IN REVIEW

5 REVENUE Effectively the combination of traffic, conversion and average order value are the top line figures from which an ecommerce business fails or flourishes. REVENUE SPLIT ACROSS DEVICES % 13.5% 28.6% Tablet Mobile 57.9% Desktop ANALYSIS For Magento retailers the majority of revenue in 2016, 57.9%, still came from desktop. This was followed by mobile, which a 28.6% share, and then tablet with just 13.5%. Perhaps the most interesting things about this is that mobile, as we will see in the next section, brings the most traffic (43%) - yet, in terms of revenue, still trails behind. This seems to indicate that while shoppers are comfortable using mobile for ecommerce exploration, they still prefer to use desktop to complete a purchase MAGENTO YEAR IN REVIEW 5

6 TRAFFIC Traffic, representing the first part of the customer journey, is of the utmost importance. While capturing it doesn t guarantee a successful ecommerce business, it is a solid foundation for conversion and, ultimately, revenue. VISITS SPLIT ACROSS DEVICES % 13.8% 43.7% Mobile Tablet 42.5% Desktop ANALYSIS Here we can see the huge steps that have been made in mobile commerce, with the majority of traffic for Magento merchants now coming from this source (albeit by a negligible margin). While, as we have and will continue to see, mobile struggles to compete in a financially meaningful way, the potential for it to do is certainly there. This must lead retailers to ask why and where the mobile experience is failing and how improvements can be made in this area. Or, at the very least, it should lead them to strive to encourage mobile browsers to continue their journey later on, using their desktops MAGENTO YEAR IN REVIEW

7 TIPS TO IMPROVE THESE METRICS Become a publisher. Content marketing is a huge trend right now, and with good reason - because it allows you to build trust, brand awareness and bring customers to your site. All without being overly salesy. Trend pieces, tip lists and interviews are all popular types of posts that can be used to drive traffic to your site. Become engaged on social media. Identify social media stars with large followings, as well as popular publications for your target audience. And then go about sending free samples to them in order to encourage them to feature your store. Make sure to also share their content (as well as your own), engage in trending topics and grow your own following with compelling content and competitions. Optimize your store for SEO. Search engines are one of the biggest sources of traffic for any site and ecommerce is no exception. Making sure that your site appears at the top of search engine results could transform the number of visitors to your site. Identify your key words, both short and long-tail, and go about optimizing your site for them. Use digital advertising. Advertising is still key in driving traffic in the digital world - and when done correctly, can be inexpensive. It can also be a quicker win than some of the tactics mentioned above, which can take time and patience to become effective. Social advertising particularly offers very specific targeting options, which will allow you to hone your message and give higher returns. For your digital advertising efforts consider dynamic, product-level ads that show your best sellers and those items that are most likely to convert MAGENTO YEAR IN REVIEW 7

8 blingjewelry.com is driving traffic to their site with a blog MAGENTO YEAR IN REVIEW

9 CONVERSION RATE One of the most important metrics for any store is the percentage of customers that go on to make a purchase. With high competition and increasing customer acquisition costs, if someone lands on your site, it is important to make sure they don t go elsewhere. 4.50% 4.31% 3.75% 3.66% Conversion rate % 3.00% 2.25% 2.26% 1.50% Mobile PC Tablet ANALYSIS Desktop for Magento merchants, remains the leading channel in terms of conversion - with an average rate of 4.3% (excluding bounce). Tablet follows not far behind at 3.7% but mobile, despite the large share of traffic, is converting at only 2.3%. Mobile conversion, however, is not an aim in itself - as people should convert on the channel that they feel is most suited to their needs. In this sense, retailers need to re-think their approach to mobile and mobile behaviour. Mobile shopping can be more of a game or fun form of exploration - making engagement, communication of brand values and the capturing of valuable indications of interests the main priority. These then work towards the larger MAGENTO YEAR IN REVIEW 9

10 conversion of a purchase, which can happen on a desktop, tablet or offline. Think of it more as cross-device conversions instead of channel specific conversions. That said, it is an issue if mobile is simply failing from a UX perspective. From the data that we have seen, and the discrepancy between the large amount of mobile traffic and mobile purchases, this must be considered to be an option. TIPS TO IMPROVE THIS METRIC Streamline payments and make these exceptionally smooth for mobile users. Communicate your unique selling proposition throughout the customer journey and enforce it with free shipping where and if possible. Create a clear and fair returns policy, making it easy for customers to find and to understand. Assess your consumer s preferred channels of communication and offer live chat onsite or with tools such as Whatsapp or Facebook Messenger. By allowing hesitant customers to ask for help or advice you are given an opportunity to remove any barriers to purchase that might still be present. Make sure you have quality product images, supported by clear and wellwritten product copy. The more a customer feels they know about a product, the more likely they are to feel secure purchasing it. Enable customer reviews on your site. Shoppers often feel more confident buying an item if they know it is peer approved. These reviews in many cases will include commentary on the ordering and delivery process too, boosting the trustworthiness of your store. Offer personalized and smart discounts. There will always be some shoppers that are discount driven and will only buy if they feel like they are getting a good deal. So consider offering money off to capture more shoppers in the long-run. But remember, the idea here is to offer a deal only when buying hesitation hits in. Consider a cart abandonment pop-ups, triggered only when a purchase is over a certain value threshold MAGENTO YEAR IN REVIEW

11 karenkane.com not only displays free shipping terms, quality product images and clear and well-written product copy, they also display customer reviews for items MAGENTO YEAR IN REVIEW 11

12 VISITS BEFORE ORDER This metric refers to the the number of times a customer visits a site before they place an order. This is important for a number of reasons - it shows the length of your buying cycle, how convincing you are as a brand, how quickly your site can deliver what is necessary to make a sale and how important it is to re-target your market visits 1.84 Visits Before Order visits 1.80 visits 1.78 Mobile PC Tablet ANALYSIS Magento merchants saw on average 1.80 to 1.85 visits before a customer returned to make a purchase. This means that, on average, the buying decision was made closer to the third visit than the second. Perhaps the most interesting thing about this metric, was the extent to which it remained stable across devices - with very little fluctuation between them. With the other metrics demonstrating distinct differences in how people shop on different channels (for example, the size or value of the order that tends to be placed on them) we might expect the buying cycle to also differ - yet for each device it sat at between 1.80 and 1.85 visits MAGENTO YEAR IN REVIEW

13 TIPS TO IMPROVE THIS METRIC For some purchases, for example very expensive items, it may be natural for a customer to come and go before they commit. However, the fact that the majority of buyers needed more than one visit to make a purchase highlights retargeting to be an important tool. To improve your retargeting and shorten the sales cycle consider the following: Use dynamic ads to not only maximise the number of products you are able to present to a customer but also to ensure that they are the most relevant products at all times. Retarget customers not with a generic message, but with items they have actually engaged with. This uses indicators of interest to your advantage. Ensure that you retarget in a timely manner. This ensure that the products they engaged with are still relevant and of interest. Allow users to send the products in their cart to their inboxes. This allows you to reach back out to them should they fail to complete the purchase. na-kd.com allows users to send the products in their cart to their inboxes. This allows the retailer to reach back out at a later stage MAGENTO YEAR IN REVIEW 13

14 AVERAGE BASKET SIZE Average basket size (ABS) refers to the number of unique items bought by a customer in one transaction. This, of course, contributes directly to the revenue a single customer provides and can be key in determining customer lifetime value. It can also reveal how successfully you have presented your product offerings, as often a number of complimentary items can be packaged together. A low ABS could therefore be an indicator that you have failed to do so Average Basket Size items 2.21 items 2.22 items 1.90 Mobile PC Tablet ANALYSIS When we break average basket size down by device, tablet comes out on top - with 2.22 items in the average basket. This is followed closely by desktop at 2.21 items and, finally, mobile at 1.96 items in cart. When device traffic is taken into account, these figures demonstrate something particularly interesting in relation. Traffic was found to be highest on mobile, yet yielded a lower basket size, indicating that while people may be happy to browse on their mobile phones they are still happier to make large orders on a desktop MAGENTO YEAR IN REVIEW

15 TIPS TO IMPROVE THIS METRIC Implement cross-selling and upselling techniques such as Shop the look options and personalized recommendations on the product and cart page. Use aspirational photography to show your items together in a way that inspires pieces to be bought as a set. Bundle smaller items, offering a slight discount for multi purchases. Save previous baskets and enable wish lists to help people remember what they want and encourage them to buy more. Present the full breadth of your inventory so that new and returning customers know what your store has to offer. Increase image use and prioritisation when thinking mobile first - mobile users are very inclined to click visual cues instead of text. By appealing to this trait you can push this metric (and consequently other metrics like conversion, AOV and revenue) to hockey stick growth. Magento 2 store johnnie-o.com allows customers to shop the look. A great strategy for cross- and upselling MAGENTO YEAR IN REVIEW 15

16 AVERAGE ORDER VALUE Average Order Value (AOV) looks specifically at the monetary value of a customer s order, rather than the number of items they have bought. With customer acquisition costs high in the ever increasingly ecommerce market, AOV is a vital metric and one which will improve the CAC:LTV ratio USD Average Order Value (USD) USD USD 108 Mobile PC Tablet ANALYSIS As we have already seen, mobile users are responsible for a lot of ecommerce traffic, but more hesitant to buy. From this metric we can see that they also make smaller purchases when they do so - with sales on this channel 13% lower on average. This can be attributed to the fact that ecommerce merchants struggle to encourage further browsing on the limited screen size of smart devices. It may also represent a persistent hesitancy in shoppers to make important purchasing decisions on the move MAGENTO YEAR IN REVIEW

17 TIPS TO IMPROVE THIS METRIC Offer free delivery on orders over a set value, showing customers a free shipping reminder during the checkout process. Specifically target repeat customers. Not just because repeat customers are cheaper to acquire, but because they are more profitable too - having been shown to spend more on each order. Bundle items together - as mentioned in the last section, this will not only increase your basket size but also the average order size. Use personalized recommendations to highlight complementary items relevant to what customers are buying. If other tempting pieces are easy to see, they are more likely to buy, therefore increasing the value of their order. Consider implementing this on the cart page with recommendations based on its content. golfdiscount.com displays cart based items to inspire customers to further shopping MAGENTO YEAR IN REVIEW 17

18 BOUNCE RATE Bounce refers to people that come to your store but leave immediately, without making a purchase. Effectively it represents lost opportunities, people who you managed to get to your store but failed to tempt any further. For merchants it can also provide a valuable lesson in what you should be highlighting and how to balance product range and inspiration. 60% 55% 55.3% Bounce Rate 50% 45% 44.2% 46.3% 40% Mobile PC Tablet ANALYSIS A clear picture emerges when we look at bounce rate by device, with the figure for mobile users being 11 percentage points higher than for their desktop counterparts. This can be seen as symptomatic of the wider issues surrounding mobile, including smaller screen estate, a generally poorer UX experience and the sometimes fickle browsing behavior of people who are on the move. For this reason mobile, even more than the other channels, needs to concentrate on what is shown and prioritised on landing pages MAGENTO YEAR IN REVIEW

19 TIPS TO IMPROVE THIS METRIC Ensure your advertising is targeted. There are two things that you can do with your advertising efforts to decrease bounce: Make sure you are targeting the right people - if you are bringing totally irrelevant shoppers to your store they are going to leave straight away. Digital advertising, including social media, gives you targeting options for a reason - so that you can whittle down the audience to a relevant one. Target that relevant audience with relevant items. Shoppers who are interested in specific items are more engaged and less likely to leave without making a purchase. Use the data on your store to automatically update product level ads with personalized product recommendations and your bounce rate will go down. Make sure that shoppers can tell both what you sell and what is relevant to them when they get to your store. On homepage and product pages include a wide enough range of your items in the hero image, giving a complete oversight of what is available. Use best seller recommendations to show an ever-changing example of what you offer - this will highlight range. But if you want to show relevance then go for one-to-one recommendations which will highlight the items most relevant to the shopper. Ensure your site is optimized for mobile. If it isn t, the poor UX will have users browsing on this type of device leaving in droves. Make sure your site is optimized for speed. If a page is too slow to load, shoppers will go elsewhere. If bounce rates are high on certain product ranges, test if a targeted pop-up offer can decrease it and consequently increase conversions MAGENTO YEAR IN REVIEW 19

20 everlast.com showcases a wide range of items in its hero image and a best seller list to clearly show what the store offers. The site is also mobile optimized MAGENTO YEAR IN REVIEW

21 WANT TO BE AN INDUSTRY LEADER? Nosto enables online retailers to deliver their customers personalized shopping experiences at every touch point, across every device. A powerful personalization platform designed for ease of use, Nosto empowers retailers to build, launch and optimize 1:1 multichannel marketing campaigns without the need for dedicated IT resources. Over 20,000 ecommerce professionals in over 100 countries are using Nosto to grow their business and delight their customers. Nosto supports its retailers from its offices in Helsinki, Berlin, Stockholm, London and New York. Request a demo Try Nosto for free for 14 days...or meet us at: MagentoLive France February 6 - February 7, 2017 I Paris, France Imagine 2017 April 3 - April 5, 2017 I Las Vegas, Nevada MagentoLive UK June 27 - June 28, 2017 I London, UK MAGENTO YEAR IN REVIEW 21