AN EXCLUSIVE RETAILWIRE WEBINAR, SPONSORED BY:

Transcription

1 AN EXCLUSIVE RETAILWIRE WEBINAR, SPONSORED BY:

2 Moderating Al McClain CEO, Co-founder, RetailWire Al McClain has spent 30+ years in the retail, tech, and CPG spaces. Al's career highlights include sales and management stints with Luzianne-Blue Plate Foods, Bestfoods, Red Rose Tea, and Progressive Grocer (Trade Dimensions and Retail Insights divisions). Al has also spoken extensively at industry events for the National Grocers Association, the Institute for International Research, the Magazine Publishers Association, and the Category Management Association. He has written for publications such as Nielsen Wire, Loyalty Management, and Forbes.com.

3 About RetailWire Largest expert discussion site in the retailing industry 60,000 active users per month Three daily online Discussions where YOU can participate! PLUS... News headlines, Webinars, m Papers and Research Studies

4 Today s agenda PRESENTATION Online Trip Segments: Driving success through a deeper understanding of online trip missions (30 min) Ken Cassar, VP, Principal Analyst, Slice Intelligence INTERVIEW Al McClain and Ken Cassar (15 min) AUDIENCE Q&A (10 min)

5 Our presenter Ken Cassar VP, Principal Analyst, Slice Intelligence Ken oversees Slice's research agenda, identifying and contextualizing e- commerce industry trends from Slice's panel of over 4 million U.S. online consumers. Ken brings a rich online retail background to Slice Intelligence. Most recently, he was the senior vice president, media analytic solutions at Nielsen, where he developed several innovative digital commerce measurement and advertising effectiveness solutions. Prior to Nielsen, Ken was an analyst at Jupiter Research, where he was an early thought leader, trusted adviser and media source on e-commerce. His prescient outlook on fledgling e-commerce industry was a key contributor to Jupiter s dominance as a digital media zeitgeist at the dawn of the Internet.

6 how online trips became unprofitable (and what you can do about it) Ken Cassar Principal Analyst, Slice Intelligence

7 agenda 1. Slice s segmentation methodology 2. analyzing trip types 3. implications and actions 4. closing thoughts 7

8 where does Slice get its data? largest consumer e-commerce purchase panel in the world passive tracking of e-commerce sales from consumer inboxes across all platforms longitudinal tracking of the consumer, with two years of history we know: who made the purchase what was bought where it was bought when it was bought how much was paid how quickly it was shipped 8

9 who uses our data? 9

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11 trip segmentation details time period January March 2017 January March 2016 trips included any trip that included at least one CPG item in the basket grocery health & beauty baby home care pet key statistics 2,521,975 trips analyzed same-day delivery Amazon Prime Now Google Shopping Express click and carry Target.com Walgreens.com Walmart.com Walmart Grocery full assortment grocery delivery Fresh Direct Peapod Shipt third-party ship from remote distribution center Amazon.com Bath & Body Works Boxed Costco Delivery.com Diapers.com Honest.com Jet.com Keurig.com Chewy.com Nespresso.com Omaha Steaks.com Petco.com Sam s Club.com Target.com Thrive Market.com Walgreens.com Walmart.com 11

12 % of orders with x items fulfillment forms drive very different online basket sizes 100% 90% cumulative item count by delivery type 80% 70% 60% 50% 40% 30% 20% 10% 0% items per order click & carry full assortment grocery delivery same day 3rd party ship 12

13 third party ship and small item counts define CPG e- commerce today creating tough economics distribution of CPG orders Jan Mar rd party ship from click & carry full assortment grocery delivery same-day 1-3 items 58%.9% 0% 1.1% 60% 4-30 items 31% 1.4% 1.5% 2.9% 31+ items 1% 1.0% 1.3%.1% 90% 13

14 so let s use trip types to help center ourselves on getting the business to stronger footing distribution of CPG dollars Jan Mar rd party ship click & carry full assortment grocery delivery same day 1-3 items 58%.9% 1.5% 1.1% 4-30 items 32% 1.4% 3.0% 31+ items 1.0% 1.3% fill in stock up urgent targeted intent 14

15 let s dive into our four trip types stock-up fill-in urgent targeted intent 15

16 targeted intent trips dominate today share of CPG trips 1Q % 38% 59% 2% urgent fill in stock up targeted intent 16

17 but growth is coming from larger trips share of CPG trips 1Q 2017 change in CPG trips 1Q 2017 v. 1Q % targeted intent 24% 38% stock up 104% 59% fill in 45% 2% urgent fill in stock up targeted intent urgent 21% 0% 20% 40% 60% 80% 100% 120% 17

18 key statistics Stock Up Y to Y growth +104% % of CPG trips 2.5% % of CPG dollars 6.6% % of CPG items sold 24% average order size $155 average items/order 54 average price/item $2.85 Urgent Y to Y growth +21% % of CPG trips.9% % of CPG dollars.5% % of CPG items sold.3% average order size $31 average items/order 3 average price/item $12.32 Targeted Intent Y to Y growth +24% % of CPG trips 59% % of CPG dollars 36% % of CPG items sold 17% average order size $36 average items/order 2 average price/item $20.60 Fill In Y to Y growth +45% % of CPG trips 38% % of CPG dollars 57% % of CPG items sold 59% average order size $90 average items/order 12 average price/item $7.56

19 fill in trips account for majority of home care and grocery sales home care trip type contribution to category sales (dollars) grocery 10% 3% 5% 1% 18% 42% 53% 69% targeted intent fill in stock up urgent 19

20 targeted intent dominates baby, fill ins dominate health & beauty health & beauty 3% trip type contribution to category sales (dollars) baby 2% 25% 39% 7% 56% 65% targeted intent fill in stock up urgent 3% 20

21 key challenges and opportunities the dominance of delivered targeted intent trips in CPG is a problem that will suppress profitability and long term growth growth in stock-up orders will accelerate, forcing fast change upon grocers the future of the urgent trip is murky 21

22 how can we elevate the targeted intent trip to fill ins? 22

23 minimum order sizes to qualify for free shipping has been a tried and true tactic 23

24 but retailers are succumbing to pressure to drop minimum order sizes 24

25 cross-selling of complementary items is a common tactic for basket expansion 25

26 Amazon suggests bundling without incentive 26

27 Jet.com pioneered an alignment of consumer and retailer economics 27

28 Amazon Prime Pantry aspires to improve delivery economics and rationalize pack sizes 28

29 Target is testing a similar model, but with next day delivery 29

30 retailers and brands need to think creatively about development of basket-expanding solutions 30

31 until recently, growth in stock up trips was constrained by delivery costs 31

32 however, Walmart s big bet on Walmart Grocery click and carry changed the game 32

33 accounting for 10 percent of Walmart online sales in 2016, from zero the year before Walmart sales 2015 v (includes Jet and Walmart Grocery, excludes Hayneedle and Shoebuy) 2016 sales +32% 10% 12% 78% Walmart Grocery Jet Walmart.com Source: Slice Intelligence. n= 521,110 US online shoppers 33

34 Amazon s acquisition of Whole Foods will undoubtedly accelerate growth of stock up trips 34

35 forcing grocers to get comfortable with the likelihood that their online channel will cannibalize offline 35

36 the future of the stock up trip click and carry will dominate delivery for the time-starved affluent revolution, not evolution in store formats hybrid online / offline shopping trips for need to touch items rethink store location strategies re-imagine the user experience in online stock up trips 36

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39 need it now delivery capabilities open up e- commerce for many categories contribution to sales select need it now categories Cough & Cold +14x Candy & Chocolate +3.6x Prime Now Amazon Source: Slice Intelligence. n=89,115 39

40 Prime Now, the leading player in immediate delivery has grown well nationally... Prime Now sales total US +53% Source: Slice Intelligence. n=69,905 40

41 ...but organic growth is far more modest Prime Now sales Manhattan +14% Source: Slice Intelligence. n=69,905 41

42 Prime Now sales account for a small percent of Amazon sales prime now % Amazon sales (June 2016 May 2017).9% Amazon.com Prime Now Source: Slice Intelligence. n= 1,180,913 US online shoppers 42

43 and consumer interest shows signs of ambivalence principal reason for same-day delivery I needed the product right away 52% It didn't cost extra 31% I wanted, but didn t need the product right away 18% 0% 10% 20% 30% 40% 50% 60% Source: Slice Intelligence. n= 1,180,913 US online shoppers 43

44 the key question in urgent trips: will consumer interest pay for the increased costs? 44

45 bets on urgent trips are worth making, but they ought to be calculated bets in highly relevant categories 45

46 closing thoughts armed with granular online panel data we are positioned to understand trips like never before retailers and brands need to think about their role in these trips, whether seasonality is material in their categories, and whether they require their own specific trip segmentations thinking about strategy and tactics through a trip-based approach allows brands and retailers to think collaboratively how can we drive more of the right kinds of trips? how can we change existing trip habits to drive more value? 46

47 thank you Slice information follow Slice Intelligence on follow Ken on 4 7

48 Interview Ken Cassar VP, Principal Analyst Slice Intelligence Al McClain CEO RetailWire

49 Audience Poll Question On the Richter scale, how big of a disrupter will Amazon s purchase of Whole Foods prove to be for the grocery business?

50 Interview What Amazon/Whole Foods will mean for online trips. Ken Cassar Al McClain

51 Audience Poll Question Are CPG subscription services, like meal kits and shaving clubs, a healthy or unhealthy thing for trip profitability?

52 Interview Should CPG brands go direct-to-consumer? Ken Cassar Al McClain

53 Audience Poll Question What tactic is most effective in expanding targeted intent baskets into larger ones?

54 Interview What role will urgent trips play? Ken Cassar Al McClain

55 Interview Can "try-before-you-buy" be profitable? Ken Cassar Al McClain

56 Audience Q&A Your questions for Ken... Ken Cassar VP, Principal Analyst Slice Intelligence

57 thank you Slice information follow Slice Intelligence on follow Ken on 5 7

58 For more information Contact information for RetailWire: Al McClain (561)

59 Thanks for attending! PLEASE STICK AROUND FOR A MINUTE LONGER. Take our brief post-webinar survey and download this great white paper on IoT disruption! The Disruption of Things by Ken Cassar