2018

HOLIDAY FORECASTS

SEPTEMBER 13, 2018

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ABOUT UDAYAN BOSE

Founder & CEO of NetElixir

Founded PartyBingo.com (PartyGaming, Plc)

Guest Lecturer: • Johnson School of Management, Cornell

University• City University of New York, Baruch• Indian School of Business

linkedin.com/in/udayanbose

AGENDA• BASIS OF OUR FORECAST &

METHODOLOGY

• HOLIDAYS 2018: 2 QUESTIONS

• 2018 HOLIDAY FORECAST

• 3 HOLIDAY RESOURCES

BASIS OF OUR FORECAST

• Ongoing analysis of ecommerce and search engine marketing metrics for our customer base of mid-size and large customers with > $600 MM online holiday revenue (November 22 -December 25).

• 320 Million+ unique website visits (forecasted for the upcoming holidays) across five main Holiday verticals – Gourmet Food, Apparel and Shoes, Home & Décor, Gifting and Consumer Electronics.

• We have been aggregating this data since August 2008. This is our 11th Annual Holiday Forecast.

FORECAST METHODOLOGY

• Our forecast uses actual week-wise website visits, website sales, channel-wise investments and CPC data. Based on these primary variables, we build our set of key metrics (calculated) and track them on a weekly basis starting the 1st day of the year.

• The above data is segmented into mobile and desktop data sets and Y/Y comparison is conducted with the previous 2 years (for this year, 2017 and 2016, week-wise key metrics).

• Our forecasting model has a significant weightage (>15%) placed on the Back to School metrics.

• Since 2015, we have included in our forecasting model indicative Amazon sales data for those customers in our dataset that have an active presence on Amazon Marketplace.

• Our model places significant weightage (>20%) on prior year Holiday Trends with a special emphasis on the inflection points (if any).

HOLIDAYS 2018

2 QUESTIONS

WHAT WERE SOME OF THE

KEY ECOMMERCE AND CHANNEL TRENDS

THAT YOU HAVE OBSERVED DURING THE FIRST HALF OF 2018?

HOW SHOULD RETAILERS BE THINKING ABOUT THEIR

SEARCH MARKETING GOING INTO THE HOLIDAY SEASON?

ANY GUIDANCE WITH RESPECT TO TRADITIONAL ENGINES LIKE

GOOGLE VS. ECOMMERCE PLATFORMS LIKE AMAZON?

Y/Y GROWTH HAS

BEEN STRONG (JANUARY - AUGUST 2018)

Source: NetElixir’s customers with over $600 MM in projected 2018 Holiday Ecommerce Sales (own website)

18%16%

19%

15% 16% 15%

-2% -5%Q1 Q2 JULY-AUG

Y/Y Growth (JAN-AUG 2018 VS. 2017)

Orders Revenue AOV

BACK TO SCHOOL

RESULTS HAVE BEEN

STRONG

17%

14%

-4%

ORDERS REVENUE AOV

Back To School Y/Y Growth

• Around 12% of a retailer’s total online sales

(website + marketplaces) now happens on

Amazon (Up from 9% in Q4,2017).

• Mobile devices drive over 42% of total website

sales (up from 34% in Q4,2017).

• GDPR (and the Facebook/Cambridge Analytica

fiasco) has led to stronger data privacy

regulations.

• Back to school y/y sales growth numbers have

been stronger than previous years.

KEY ECOMMERCE

TRENDS(JANUARY – AUGUST 2018)

• Amazon continues to increase its dominance on

product searches (we estimate 62%+ of all

product searches now happen on Amazon).

• % of all search queries that are voice activated

(voice search) continues to grow quickly (we

estimate 30% of all mobile searches to be voice

activated).

• Primary channels like Google, Bing and

Facebook have made this a year of AI.

• Consolidation of Marketing Assets into a unified

marketing platform (Google Ads and now,

Amazon Ads).

KEY CHANNEL

TRENDS

(JANUARY – AUGUST 2018)

AMAZON’S SHARE

OF TOTAL ONLINE

HOLIDAY SALES

IS POISED TO CROSS

40% THIS HOLIDAY

SEASON

22%26%

30%35%

40%

2014 2015 2016 2017 2018 (EST.)

Amazon's Share of Total US Online Sales % Share

• No online customer acquisition plan can afford to

ignore Amazon.

• Create a Voice Search SEO Playbook for your

business, NOW!

• Product Listings ads are expected to drive 65%+ of

total paid search sales this holiday season. Ensure

that your PLA set up in well optimized.

• With the exponential growth in local + mobile

searches, you can use local inventory ads and

location targeted ads and capture instore signups.

But first, you need to have a mobile site that loads in

less than 3 seconds.

HOW SHOULD YOU

BE THINKING ABOUT

YOUR SEARCH

MARKETING

PROGRAM

HOLIDAYS 2018

17

2018 HOLIDAY

FORECAST

NETELIXIR PREDICTS STRONG GROWTH IN

ONLINE SALES THIS HOLIDAY SEASON

15% Y/Y GROWTH

Y/Y GROWTH (%)

ORDERS: 17% REVENUE: 15%

STRONGER

GROWTH THAN

PREVIOUS YEARS

Y/Y, US Ecommerce Growth (NRF)

2012 14%

2013 10%

2014 13%

2015 13%

2016 10%

2017 13%

2018 15% (NetElixir Forecast)

Source: NetElixir’s customers with over $600 MM in

projected 2018 Holiday Ecommerce Sales (own website)

CATEGORY LEVEL

Y/Y GROWTH

FORECASTS

Source: NetElixir’s customers with over $600 MM in projected 2018 Holiday Ecommerce

Sales (own website)

Revenue Order AOV

Gourmet

Food17% 17%

No

change

Apparel

& Shoes19% 23% -3%

Home Décor 13% 15% -1%

Gifting 15% 13% +1%

Consumer

Electronics15% 17% -2%

Y/Y Change (2018 vs. 2017)

TRENDS TO WATCH OUT FOR THIS HOLIDAY SEASON

• Holiday gifting related search query volume picks up from the Sunday after

October 20th. (10/21/2018)

• The number of days between Thanksgiving and Christmas is higher than previous

years (33 days). This will drive an incremental sales volume, as well.

• We anticipate 3 peak online shopping periods: 5 day period from Thanksgiving to

Cyber Monday (11/22-11/26); Green Monday Period (12/9-12/12); Mobile

Shopping Spike (12/18-12/21).

Mobile Shopping will continue to surge.

• We estimate 42% of all online purchases will happen through

mobile phones.

Growth of Voice search

• Lowering of friction in the search to purchase will to an increase in

purchase frequency as well as quicker purchase of staples due to

the shortening of search-shop-buy path.

Heavy Discounting by larger online retailers

• Will grow overall online sales (however, smaller merchants may

face the brunt) and also add to the continuing shift from brick and

mortar to online.

Strong Macro economic factors

• A strong economy that’s expected to top 3% GDP growth for this

calendar year, low unemployment %, increase in wage rate and

consumer sentiment returning to levels on par with early 2000s

4 FACTORS THAT WILL HELP DRIVE 15% Y/Y

ECOMMERCE REVENUE GROWTH

THE BIG WINNER WILL BE

15% Y/Y GROWTH ~ $97B (TOTAL US ECOM SALES)

INCREMENTAL $ GROWTH ~ $13B

LETS DO SOME MATH…

AMAZON’S SHARE

WILL GROW TO 40% (FROM 35% IN 2017)

• 2017 Amazon Holiday Sales

Projection:

40% x $97B = $38.8B.

• 2017 Amazon Holiday Sales:

35% X $84 B = $29.4 B.

• Amazon’s additional holiday

bounty: $9.4B.

PROJECTED INCREMENTAL REVENUE

GAIN BY OTHER RETAILERS AND ONLINE MARKETPLACES

(AGGREGATE ADDITIONAL ONLINE HOLIDAY SALES)

$3.6B

SUMMARY

• NETELIXIR PREDICTS A STRONG HOLIDAY SEASON

WITH 15% Y/Y GROWTH IN

ECOMMERCE REVENUE.

• AMAZON’S SHARE OF TOTAL ONLINE HOLIDAY SALES

THIS YEAR IS LIKELY TO EXCEED 40%.

• MOBILE SHOPPING WILL CONTINUE TO SURGE AND EXCEED 42% OF TOTAL ONLINE SALES.

3 RESOURCES

FOR

2018 HOLIDAY SUCCESS

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UDAYAN@NETELIXIR.COM