ChannelAdvisor is a key resource for tracking online retail trends
I grew up as a "Store Guy". Retail was only stores and catalogs when I started my career. Even two decades ago, there were no concerns about showrooming because there were no significant online retailers. Fast forward to today and online retailing is exploding worldwide. While many stats are published on the retail store giants like Walmart, far less is known and published about ecommerce metrics and trends. If you want to compete online, you need to know both the KPI metrics and the trends. A great place to start and terrific resource is ChannelAdvisor's monthly of SSS and GMV for ecommerce and CSE.
Why this matters: You can't play the game or compete if you don't know how to keep score. Bricks and mortar retailers must develop competitive insights and intelligence about ecommerce trends if they are going to survive and compete in an omni-channel world.
ChannelAdvisor – Add this one to your list of key resources for retail!
SSS "Same Store Sales" reports have been a standard for bricks and mortar retailers where they compare "comp stores" (stores open at least a year) to monthly and annual performance targets. What has been missing is a historical comparative index for online retail. The challenge has been getting the data, and adapting the metrics to fit ecommerce.
Since 2009, ChannelAdvisor has been producing a monthly SSS benchmark report. What is significant about ChannelAdvisor's report is it includes the ability to benchmark various online retailers like Amazon, eBay and even Rakuten Shopping (Buy.com). Unlike surveys of online shopping, ChannelAdvisor has created the software and technology to capture online transactional data for online retailers as well as CSEs (Comparison Shopping Engines).
While their technology is not flawless, it is one of the best benchmarking tools out there for monthly trends on various channels. What impressed me is that ChannelAdvisor does a good job of explaining their methodology and metrics. Both retailers and consumer brands need to make ChannelAdvisor a primary resource in tracking and understanding the exploding world of internet retailing.
So what are the SSS stats for Amazon, eBay and e-taling?
ChannelAdvisor just published February 2014 SSS Results. The ChannelAdvisor SSS highlights include:
- Amazon - Amazon's February came in at 23.0% compared to January's 14.0%, a substantial m/m increase we believe due to the improvement in weather conditions.
- eBay - eBay's February came in at 15.0% up from January's 12.7%.
- CSE - Comparison Shopping Engines came in at 6.1% down from January's 12.0% (driven by softness in the non PLA engines)
- Search - Search came in at 4.3%, a decrease from January's 10.3% y/y growth. Later in the report they have more search details.
As ChannelAdvisor points out, the key is using the data is to map trends and establish benchmarks for retailers doing business online. Forrester has predicted that ecommerce is forecasted to grow 15% in 2014. So, one critical benchmark is to watch online retailers are meeting or beating that expectation. From the SSS stats provided by ChannelAdvisor, it is interesting to note that CSE (Comparison Shopping Engines) were in fact down in February vs. January. Of course, Amazon rarely misses a beat and continues to roll on.
It is perhaps most meaningful to look at ChannelAdvisor's monthly SSS trends:
Source: ChannelAdvisor February 2014 Monthly SSS sales trends report.
Where are the "data scientists" of retail … Working in ecommerce!
I had the opportunity to participate in an interesting RetailWire discussion this week. The discussion topic was: "Where have all the retail data scientists gone?" With all the talk of "Big Data" being the future of retail and personalized service, you would think that there would be a host of scientists or at least data analysts working in retail. On the retail store side, not so much. Bricks and mortar retailers are struggling to make ends meet and are even cutting floor staff.
We've said it before and I'll unequivocally state it again: Online retailing is a different beast with a different heritage and context. Ecommerce is built upon systems and data … mountains of data. Ecommerce is continually mining consumer information and ways to test how to best leverage. If there are retail data scientists, they are in ecommerce. It's a whole new world of data, metrics and precision.
The "alphabet soup" of online retail metrics, terms and tracking trends
Are there similarities between online and store based retailing? Sure. Take SSS for example. Both bricks and mortar and ecommerce track Same Store Sales (SSS). For store based retailers, the focus of the metric is comparing "comp stores" (stores open at least a year) growth for the same time period, typically year over year sales. But, many have absolutely no benchmarks for online.
In addition, there are a host of metrics specific to measuring online retailing:
CSE – Comparison Shopping Engines … retailers that don't necessarily fulfill orders but make their money by a "commission" on "referrals".
CPC – Cost per Click. Make no doubt about it that consumers are now using search engines like Google and Bing to shop for products, and another key source of revenue for these search engines is paid advertising for keywords, banner ads, referrals, etc.
AOV – Average Order Value. The key metric for online is calculated by looking across the network of all shopping carts going through checkout and calculating average cart value of all products. While stores are still product centric and tracking ASP (Average Selling Price), they must start focusing on market basket and AOV like online.
You can play, but you can't win if you don't know how to keep score!
I have been traveling around the world again this past year, and I've spent a lot of time working on measuring retail pilots in Western Europe. I'm absolutely shocked at how many retailers completely separate retail stores from their online retailing. Different staff, different buyers and no synergy for competing in an omni-channel world.
Even worse, no one seems to have standard benchmarks for what "good is" … especially for online sales. Is 12% growth in SSS month over month good? Depends upon your business model and who your competitors are. If you competing with the likes of Amazon, you would be quickly falling behind with a 12% SSS monthly growth in February when Amazon achieved 23% MoM SSS.
Retailers must start adopting and using resources like ChannelAdvisor to benchmark their business across all channels and competitors. If they don't, they are flying blind.
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Sources:
- ChannelAdvisor: February 2014 ChannelAdvisor Same Store Sales (SSS) for eBay, Amazon, Search and CSE; March 13, 2014
- ChannelAdvisor: 2014 ChannelAdvisor Same Store Sales Backgrounder and Schedule; January 9, 2014
- Stats Image: Stuart Miles; Freedigitalphotos.net
- RetailWire Discussion: Where have all the retail data scientists gone?
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