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Why Read This BRief

Cyber Monday, the Monday after Black Friday, is now the biggest shopping day of the year for online retailers in the US. In fact, online retail sales exceeded $2 billion on Cyber Monday in 2014. In partnership with Bizrate Insights, Forrester has tracked consumer sentiment and retailer promotions on this critical date since 2010 and discovered that the keys to the day’s success are simple: compelling promotions with strong execution. Ubiquitous free shipping offers, aggressive email marketing, and an effective mobile presence are three of the factors that enable retailers to drive more sales on Cyber Monday every year. This report outlines the key success factors and metrics for eBusiness and channel strategy professionals and also offers advice for driving even more sales on this date in 2015.

Brief: five Lessons from five Cyber Mondaysinsights From us eCommerce’s Biggest Day of the yearby sucharita Mulpuruwith Carrie Johnson and laura naparstek

FeBruary 6, 2015

CyBeR Monday is noW The BiggesT day of The yeaR . . . and gRoWing

The term “Cyber Monday” came into official use in 2005 following a press release by Shop.org, a division of the National Retail Federation, which called out a spike in online sales on the Monday following Thanksgiving.1 Since then, online retailers have aggressively promoted offers on this date, and their efforts have been wildly successful: While Cyber Monday in the US comes a distant second to China’s Singles Day, which is a similar eCommerce marketing push, Cyber Monday has now grown into the US’ single biggest online shopping day of the year.2 Just how big? We estimate that Cyber Monday in 2014 (December 1) generated more than $2 billion in sales, out of a total of $89 billion in eCommerce holiday sales projected for 2014.3 And in 2014, 39% of online shoppers who purchased on Cyber Monday said that it would be their biggest shopping day of the year, up from 17% who said the same thing in 2010.4 eBusiness professionals in retail need to know how to maximize the opportunity that Cyber Monday offers.

aggressive all-day online deals extend Black friday’s success

In partnership with Bizrate Insights, a division of retail marketing services firm Connexity, we have studied consumer sentiment and retailer promotions since 2010.5 We’ve discovered that the secrets to Cyber Monday’s success aren’t unique or mysterious.6 Rather, success is due to the effective execution of eCommerce best practices and the momentum of the day: Merchants provide substantial discounts and promote them heavily, and more merchants around the world are joining the effort every year. Cyber Monday continues to grow year after year because:

■ Free shipping and sitewide offers are ubiquitous. While consumers already view online retail as a value channel, Cyber Monday takes promotions to a new level. Virtually all retailers have a broad, sitewide offer, often accompanied by some type of free shipping offer. These offers are often more generous now than they were in 2010 (see Figure 1). Of the 50 retailers we’ve evaluated since 2010, no

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Brief: Five lessons From Five Cyber Mondays 2

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less than 50% have offered free shipping (with or without a threshold) on this date (see Figure 2). Additionally, retailers find that sitewide offers often generate more sales than traditional

“doorbusters” — single-product promotions available in limited supply for a limited time.7 Fifty-two percent of shoppers who bought on Cyber Monday in 2014 said they received a discount on their total purchase versus 29% who received discounts on specific items.8

■ Email marketing is aggressive. Emails from retailers are still the most cost-effective way for merchants to reach customers, and they are particularly effective on Cyber Monday when shoppers are eager to find deals. We found some merchants to be so aggressive that they sent multiple emails with the same content multiple times during the day to the same audience to ensure they are at the top of the customer’s inbox on this all-important date. In 2014, 43% of Cyber Monday buyers said that they discovered the deals they ultimately purchased through email, significantly more than for social or even search.9 This figure has held steady over time: In 2013, it was 43%; in 2012, it was 44%.

■ Mobile devices enable more shopping. More consumers now own and use mobile phones and tablets than ever before, which has increased shoppers’ access to the Web. On dates like Cyber Monday when the day itself creates urgency, mobile access is an increasingly important enabler of online shopping. In 2014, 37% of consumers said they shopped via a mobile device, up from 10% who said they did so in 2010.10 Retailers also saw significant mobile numbers; IBM reported that mobile traffic accounted for more than 40% of all web traffic on Cyber Monday.11

■ It is pulling sales from brick-and-mortar stores. The National Retail Federation projected that all holiday shopping sales would total $619.9 billion, a 4% increase over 2013.12 In contrast, Forrester forecast that online holiday sales for the same time period (November and December) would grow by 13%.13 Cyber Monday, like other key dates such as Black Friday, is driving customers to shop online: 74% of Cyber Monday buyers said they shopped in stores less because they shopped online on that date.14 Additionally, consumers are now considering a bigger and broader assortment of pure-play merchants on key dates like Cyber Monday, and many of these merchants have displaced traditional store retailers. In our 2010 Cyber Monday retailer evaluations, we included Blockbuster, Circuit City, and Coldwater Creek, all of which are now defunct. Our 2014 evaluation included Etsy, Fanatics, Gilt Groupe, Groupon Goods, and Wayfair — all fast-growing pure plays.

■ It is now a global phenomenon. Imitation is the sincerest form of flattery. Countries as diverse as India, Argentina, Australia, Canada, and Germany have adopted Cyber Monday (or similar) promotional dates during Q4. The more shoppers around the world know that they can find great deals during these promotions, the more consumers get into the habit of shopping on key dates like Cyber Monday. Cyber Monday is nearly as successful in the UK as it is in the US; Amazon.com’s UK operation announced that Cyber Monday in 2013 was the busiest day in its history. On 2014’s Cyber Monday, UK retailers saw, on average, a 22% increase over their 2013 levels.15

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Brief: Five lessons From Five Cyber Mondays 3

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Figure 1 Cyber Monday Offers Often Get More Generous Over Time

Source: Forrester Research, Inc. Unauthorized reproduction or distribution prohibited.120982

In 2010, L.L.Bean offered free shipping; in 2014, it also gave 10% off the order

Source: L.L.Bean website

1-1

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Brief: Five lessons From Five Cyber Mondays 4

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Figure 1 Cyber Monday Offers Often Get More Generous Over Time (Cont.)

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In 2010, Williams-Sonoma offered free shipping on select items; in 2014, it offered free shippingon top of sitewide discounts

Source: Williams-Sonoma website

1-2

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Brief: Five lessons From Five Cyber Mondays 5

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Figure 1 Cyber Monday Offers Often Get More Generous Over Time (Cont.)

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In 2010, Saks.com offered free shipping and select items for sale; in 2014, it also gave triplepoints in its loyalty program

Source: L.L.Bean website

1-3

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Brief: Five lessons From Five Cyber Mondays 6

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Figure 2 Retailers Promote Many Free Shipping And Sitewide Offers On Cyber Monday

Source: Forrester Research, Inc. Unauthorized reproduction or distribution prohibited.120982

% or $ discount sitewide, without minimumor specifically advertised BOGO/gift with purchase

Free shipping(WITH a minimum order value)

Free shipping(WITHOUT a minimum order value)

0%

10%

20%

30%

40%

50%

60%

Percentage of retailers offering promotionPercentage of consumers who took advantage of promotion*

2010 2011 2012 2013 2014

50%

48%

53%

0%

10%

20%

30%

40%

50%

60%

2010 2011 2012 2013 2014

15%20%

11%

0%

10%

20%

30%

40%

50%

60%

2010 2011 2012 2013 2014

22%

20%

28%

0%

10%

20%

30%

40%

50%

60%

2010 2011 2012 2013 2014

48%

37%

28%

10%

16%

30%

*Base: 129 to 2,276 US online consumers *Base: 38 to 469 US online consumers

*Base: 41 to 1,226 US online consumers *Base: 126 to 1,588 US online consumers

Base: 50 online retailers

Source: Forrester’s eBusiness & Channel Strategy Cyber Monday Web Tracks, 2010 to 2014; Internet RetailerTop 500 Guides, 2010 to 2014

*Source: Forrester/Bizrate Insights US Retail Holiday Online Flash Surveys, 2010 to 2014

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Recommendat i o n s

five Lessons To iMpRove CyBeR Monday saLes in 2015

While Cyber Monday continues to grow larger every year, merchants have significant opportunities to ensure that sales keep growing. To keep sales strong, eBusiness and channel strategy professionals at retailers need to:

■ Enforce threshold-based shipping promotions. In 2010, a significant percentage of retailers offered free shipping without a minimum order value on Cyber Monday; while the percentage of retailers offering such a promotion was similar in 2014, sales have grown rapidly. This is great news for a retailer’s profitability on this sales-obsessed date. Consumers expect some type of free shipping, but retailers can offer free shipping that encourages customers to put more items in their shopping cart and that improves a site’s average order value.

■ Try doorbusters. While sitewide promotions are extremely common and shopping on Cyber Monday is heavy even as the day comes to a close, one historic lesson from Black Friday is that retailers can manipulate traffic to their sites based on the limited availability of key items at certain times. Flash sale retailers have replicated the Black Friday model for years, but few Cyber Monday sales have taken advantage of such approaches to drive more morning traffic and boost sales earlier in the day.

■ Keep expanding their email lists. While email is a mature marketing channel and, as such, “old news,” it is nonetheless extremely effective and essential to success on key dates such as Cyber Monday. Retailers need to continue growing their email lists with all the tactics available to them: pop-up boxes on home pages, email appends, and store transactions (if a merchant has a brick-and-mortar presence). It is a slow process but essential to maintaining the health of your eCommerce site.

■ Optimize their entire mobile presence. Mobile traffic and sales continue to grow, so eBusiness and channel strategy professionals must test how their content renders both on their mobile websites and through mobile email. Mobile phones have contributed to the effectiveness of email marketing in recent years, but many retailers have complex or difficult-to-load content, which stops shoppers from interacting easily with it. To address this, many eBusiness professionals are changing their code to be responsive-design-friendly. Others employ third-party developers to ease their mobile development demands.

■ Personalize offers. Retailers talk eagerly about their personalization efforts, and Cyber Monday presents a wonderful opportunity to test different executions. Traffic is heavy, retail competition is fierce, and consumers are often shopping for themselves. eBusiness professionals should take information gleaned from site searches and inbound search terms to match shoppers to the most promising items and offers. Retailers now cast a wide net

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Brief: Five lessons From Five Cyber Mondays 8

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with broad sitewide offers, but they also have an opportunity to showcase specific items of interest to a customer along with personalized offers that may vary from (or be in addition to) a sitewide special.

suppLeMenTaL MaTeRiaL

Methodology

For its eBusiness & Channel Strategy Cyber Monday Web Tracks, 2010 to 2014, Forrester collected screen shots of the Cyber Monday home pages of Internet Retailer’s Top 50 retailers from 2010 to 2014. We chose six common promotional tactics to track among retailer sites: buy one, get one (BOGO) and/or gift-with-purchase promotions; free shipping with a minimum order value; free shipping without a minimum order value; promotions related to shipping to store and/or online purchase; store pickup discounts; and sitewide promotions and/or clearly demarcated percentage or dollar amount promotions above the fold on home pages.

Since 2010, Forrester has partnered with Bizrate Insights, a division of retail marketing services firm Connexity, to survey US online shoppers about their holiday behavior. These annual surveys were conducted in the days prior to Thanksgiving, Thanksgiving Weekend, Cyber Monday, and Cyber Week. Bizrate surveyed consumers who purchased online during those time periods. Each of the surveys had between 1,000 and 7,000 respondents. The individual survey names are as follows: Forrester/Bizrate Insights Q4 2010 US Retail Holiday Online Survey; Forrester/Bizrate Insights Q4 2011 Holiday Study; Forrester/Bizrate Insights Q4 2012 Holiday Study; Forrester/Bizrate Insights Q4 2013 US Retail Holiday Online Flash Survey; Forrester/Bizrate Insights Q4 2014 US Retail Holiday Online Flash Survey.

All Bizrate Insights Holiday Studies are conducted via the Bizrate Insights survey platform and offered to online buyers immediately after purchasing from the Bizrate Insights Network of over 5,000 eCommerce retailers in the US and Canada. For 18 years, Bizrate has helped retailers listen to their customers in a way that is fast and measurable, resulting in insights, action, conversation, and customer loyalty. The Bizrate Insights customer feedback and ratings platform allows retailers to collect seller ratings directly from verified customers. Standard ratings are published across the leading comparison shopping site, Bizrate.com, and syndicated across the Web’s largest search engines to help drive conversion and traffic. Collecting over 27 million surveys annually, Bizrate Insights is one of the largest sources of consumer-generated review content in the world, delivering actionable insights and valuable shopper data to key decision-makers in eCommerce. Bizrate Insights is used by over 40% of Internet Retailer Top 500 retailers, as well as thousands of smaller boutiques.

To subscribe to Bizrate Insights’ services, contact bizrateinsights@bizrate.com or visit http://connexity.com/subscriptions/. Bizrate Insights is a division of retail marketing services firm Connexity.

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Brief: Five lessons From Five Cyber Mondays 9

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endnoTes1 Presumably, this spike was due at the time to consumers going back to work and shopping from their computers

following the holiday weekend; much of Cyber Monday shopping is now done during primetime hours.

2 Singles Day is typically on November 11 each year. In 2014, Singles Day generated an estimated $10 billion. Source: Sophia Yan, “Chinese spend billions in world’s biggest online shopping day,” CNN Money, November 11, 2014 (http://money.cnn.com/2014/11/10/investing/alibaba-singles-day-china/).

3 We predict that US online retail sales during the critical months of November and December will be higher than ever. Forrester projects that the online channel will generate $89 billion during that time — 13% growth over the same time period in 2013. See the November 3, 2014, “US Online Holiday Retail Forecast, 2014” report.

4 Source: Forrester/Bizrate Insights Q4 2010 US Retail Holiday Online Survey; Forrester/Bizrate Insights Q4 2011 Holiday Study; Forrester/Bizrate Insights Q4 2012 Holiday Study; Forrester/Bizrate Insights Q4 2013 US Retail Holiday Online Flash Survey; Forrester/Bizrate Insights Q4 2014 US Retail Holiday Online Flash Survey. Bizrate surveyed shoppers who purchased on Cyber Monday; the percentages represent those who agreed with the statement “Cyber Monday, today, will be my biggest online shopping period of the year.”

5 Bizrate Insights has a subscription page. Bizrate Insights can be contacted at bizrateinsights@bizrate.com. Source: Connexity (http://connexity.com/subscriptions/).

6 For more details on how we arrived at our conclusions, see the methodology section of this report.

7 IBM captures data through its website analytics solution and provides annual benchmarks of traffic on key dates such as Cyber Monday. The largest volume on Cyber Monday in 2014 was at approximately 8:30 p.m. PT/11:30 p.m. ET. Source: “Cyber Monday Results 2014,” IBM (http://www-01.ibm.com/software/marketing-solutions/benchmark-reports/cyber-monday-2014.html).

8 Source: Forrester/Bizrate Insights Q4 2010 US Retail Holiday Online Survey; Forrester/Bizrate Insights Q4 2011 Holiday Study; Forrester/Bizrate Insights Q4 2012 Holiday Study; Forrester/Bizrate Insights Q4 2013 US Retail Holiday Online Flash Survey; Forrester/Bizrate Insights Q4 2014 US Retail Holiday Online Flash Survey.

9 Source: Forrester/Bizrate Insights Q4 2010 US Retail Holiday Online Survey; Forrester/Bizrate Insights Q4 2011 Holiday Study; Forrester/Bizrate Insights Q4 2012 Holiday Study; Forrester/Bizrate Insights Q4 2013 US Retail Holiday Online Flash Survey; Forrester/Bizrate Insights Q4 2014 US Retail Holiday Online Flash Survey.

10 Forrester/Bizrate Insights Q4 2010 US Retail Holiday Online Survey; Forrester/Bizrate Insights Q4 2014 US Retail Holiday Online Flash Survey.

11 Source: “Cyber Monday Results 2014,” IBM (http://www-01.ibm.com/software/marketing-solutions/benchmark-reports/cyber-monday-2014.html).

12 Source: Kathy Grannis, “Gift Givers Plan To Splurge On Friends, Family This Holiday Season,” National Retail Federation, October 16, 2014 (https://nrf.com/media/press-releases/gift-givers-plan-splurge-friends-family-this-holiday-season).

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Brief: Five lessons From Five Cyber Mondays 10

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13 Source: Forrester Research Online Holiday Retail Sales Forecast, 2014 (US).

14 Source: Forrester/Bizrate Insights Q4 2010 US Retail Holiday Online Survey; Forrester/Bizrate Insights Q4 2011 Holiday Study; Forrester/Bizrate Insights Q4 2012 Holiday Study; Forrester/Bizrate Insights Q4 2013 US Retail Holiday Online Flash Survey; Forrester/Bizrate Insights Q4 2014 US Retail Holiday Online Flash Survey.

15 Source: “Black Friday and Cyber Monday Set Online and Mobile Shopping Records in the UK, According to IBM Digital Analytics Benchmark,” IBM press release, December 2, 2014 (https://www-03.ibm.com/press/uk/en/pressrelease/45590.wss).