Venture Bytes #20 – Clicks over Bricks?

Venture Bytes #20 – Clicks over Bricks?

on December 14, 2015

Clicks over Bricks?

We all know retail is in the midst of an evolution. E-tailing is on the rise. Brick-and-mortar stores are under pressure. Shoppers are looking for deals online before heading to stores. The ease of online shopping through mobile devices now lets millions of people research what they want as well as make timely purchases any day of the week. Against this backdrop, the 2015 holiday weekend gave us some interesting insight into e-tailing versus retailing interplay. While the headline suggests a sharp rise in e-tailing, which shouldn’t be a surprise, a closer look at the numbers shows that e-tailing is still a long way from becoming the primary method of shopping.

Black Friday sales growth declined once again, with total spending in brick-and-mortar stores down 10.4%, following declines of 11.3% in 2014 and 2.9% in 2013. Cyber Monday sales, as widely expected, made up for the poor start to the holiday shopping weekend, with spending hitting an all-time high of $3.1 billion, up 14.6% year/year. Mobile sales powered this growth, hitting a high of $799 million.

Retail sales at brick-and-mortar stores have been on a sequential decline over the past few years. However, it still remains a dominant way to shop. Black Friday sales totalled around $45.6 billion, or roughly 94% of all spending. While e-tailing is on a robust growth trajectory, at roughly 6.0% of total spending in the US, it has a long way to go before it surpasses traditional retailing.

This holiday weekend also provided interesting data points on the preferred method of shopping online and the average order values. While mobile purchases were robust, desktop still remains the preferred way to purchase online. On Cyber Monday, traffic from mobile devices accounted for roughly 50% of all web traffic but comprised only 28% of all online purchases.

Additionally, the average order value on Cyber Monday declined 7% to $115 from $124 in 2014 and $128 in 2013, and well below $198 in 2011. This suggests that shoppers are getting more comfortable browsing the web and looking for deals on their smartphone or tablet, but still prefer to make the actual purchase on a desktop, or going to the physical stores. One could probably attribute this to better visual layouts and a higher sense of security on a desktop – recent cyber breaches at major retail chains notwithstanding.

So who came out ahead this year, clicks or bricks? We believe both held their own but two facts stood out: One, e-tailing is going to be a big part of retailing but it is still early to write off the tried and tested brick-and- mortar shopping experience. Second, the Black Friday super deals shopping experience as we know it has lost its appeal in the face of earlier and more frequent deals – both online and offline. The 4 A.M. mayhem is history; the future is round the clock deals 24/7, 365 days a year.

Also featured in this edition is our news section containing articles from Techcrunch, Billboard, and The Wall Street Journal

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