ChannelAdvisor Same Store Sales (SSS) for September 2011
Note: This is a monthly feature published by ChannelAdvisor highlighting the Same Store Sales (SSS) across our wide range of over 3000 retailers and ~$3.5b in GMV. Details on the SSS including methodology and schedule can be found in this post. If you are interested in last month's (August 2011) results you can find them here.
Today we are releasing September data for Marketplaces (eBay/Amazon), Search and Comparison Shopping Engines (CSE) along with extra supplemental data for those that were upset we didn't get to that in August (apologies!).
September 2011 results
September wrapped up Q3 with good strength in most channels and set us up for a solid Q4 2011 (more details coming). In the World of retail, September gets us out of back to school season and ready for Fall/Halloween costume season which leads us right into holiday.
Here are the highlights from September 2011's SSS:
- Amazon - Amazon came in at 82%, wrapping up Q3 with a strong showing which I'm sure benefited from the Kindle Fire excitement last week (details on our thoughts here) and more thoughts below.
- eBay - eBay had a solid September, coming in at 15% y/y growth which was down slightly from August's 17.8%, more analysis on eBay later in the report.
- CSE - Comparison Shopping Engines continued to claw back from the Panda debacle and showed only down 11%. Hopefully they'll get to 'even' for the holiday season. The big news in CSE land was the new Google Product Search (GPS) requirements that went live 9/22 and you can see the fruits of that data here with more to come for the holidays I imagine.
- Search - Search had a good pop in September, rising 20.1% - details follow in the Search details section.
The following chart details the SSS data for September 2010 through September 2011: (click to enlarge)
We had a lot of questions from Wall St. and the media about reported softness in the end of September. Often deteriorating consumer confidence was mentioned. Looking at the September data, the only channel that declined from the August SSS was eBay and even that was very minor and not cause for alarm. Based on September's SSS, we are not seeing any signs of softness. In fact as you read the channel detail sections below, you'll find some other evidence (e.g. search AOV and CR) that indicate the consumer is very much alive and kicking (even with their sentiment in the dumps).
We always declaim in the SSS data that sometimes the SSS data is influenced by software cycles at ChannelAdvisor. For Amazon in September at Shop.org's annual summit we launched our Amazon 360 major release which in beta we saw materially increase sales for customers. This likely had some small (2-3%) impact on Amazon in Q3 and should play a more material role as the software is adopted by our customer base now that it's GA (generally available).
Review of our Amazon Estimates
In our prime coverage we also introduced several ChannelAdvisor-proprietary estimates:
- Prime - We believe that as of Amazon has 10-12m Prime customers.
- Prime 'Juice' - When an Amazon buyer joins Prime, their purchase volume goes up 3-4X
- Kindle Fire - We believe that Amazon will sell 5m units in Q4 and 20m in 2012.
The real question is how many of these Fire users will add Prime (we believe a large > 50% will as the device isn't as useful without the Instant Video, etc.), and how many will be 'adds' or incrementally new users to Amazon and how many will be (like me) - part of the Amazon ecosystem already. We'll be carefully monitoring the active buyer count as a key way of looking for the lift we expect to come in on Fire and an indication of magnitude.
Why is Amazon growing > 80% (5X e-commerce)
Other than Amazon 360, the key contributors to the Amazon growth story are what I think of as three intertwined and increasingly amplifying flywheels:
- Flywheel 1 -> 3P: Consumers love selection / Sellers love consumers -> 3P explodes the Amazon selection, making it the best-stocked store on the internet.
- Flywheel2 -> Prime: Consumers love free shipping / Prime gives Consumers all they can eat / Consumers 'lock-in' on Amazon and spend 3-4X / 3P (flywheel intersection!) Sellers love consumers, but need FBA to get to Prime / Amazon keeps large selection, adds an improvement to the consumer experience.
- Flywheel3-> Kindle: Devices on-ramp people into the Amazon ecosystem / They buy Prime (flywheel intersection) / They also buy a ton of e-books and generally are 'on Amazon' shopping more, which drives more demand for 3p sellers (flywheel intersection).
The last Flywheel is just getting going and we expect the Kindle Fire to add material growth in 2012 on the order of 20-25%. If these flywheels act the way they have for the last 4+ years, we would not be surprised to see accelerating growth from Amazon in 2012 which is really amazing given the scale they already enjoy.
eBay had a solid showing in September. Here are a couple of interior datapoints that maybe of interest.
- eBay Motors Parts and Accessories - In July P+A grew over 33% and in August ~30%. In September, P+A cooled slightly coming down to 20.1%. P+A is seasonal towards the summer months so as we enter the Fall, it could be we're seeing some normal seasonality. Also we had some very large customers really ramp during that time which contributed to the growth.
- Format shift - We continued to see significant growth in the fixed-price format vs. auctions. In September, fixed-price grew at a steady 21.7%, continuing to validate eBay's decision to make fixed-price listings a priority. Auctions were under pressure decreasing at about 9% y/y on a SSS basis as both sellers and consumers and to some degree (via search mix and what-not) eBay abandon the format.
- Large Merchants- On September 19th, we covered eBay's launch of EFO in the US which illustrated eBay's success at getting large merchants onto the platform. Throughout Q3, in addition to EFO, eBay launched some substantial new brands (not in SSS) and we saw good growth in the large merchants over a year old that are in the SSS data.
eBay launched their TV campaign and we have no idea how hard they are running that program. We haven't seen any evidence positive or negative on the program.
The theme of the Ads is: "When it's on your mind, it's on eBay" and eBay has revealed 5 of the reported 6 ads if you haven't seen them:
- Mom Jeans
- Pest Control
- School Play
- Left Out
- 12 days of Christmas (not out yet, here's a sneak peek - remember you saw it here first!!)->
Advertising industry magazine, Ad Week, largely found the ads to be..., well, you have to read their review as I don't think I can give it justice. Maybe the 12 days of Christmas will turn their thinking around. Interesting in these days of political correctness they are going with a hard Christmas theme.
Search Details and Observations
In August, we didn't have an opportunity to share the search data so we are catching up this time with two months worth of data.
August search details: (click to enlarge)
September search details: (click to enlarge)
As mentioned in the Amazon section, frequently software releases can impact our SSS data. IDS is one that we released in Q1 and is really cooking and a big part of the growth you saw come in for September. Also, from the metrics you can see positive trends:
- AOV is up nicely y/y - Consumers are still comfortable with a > $100 cart. In the 08 recession, AOV and CR were two of the leading indicators that showed the consumer was exiting stage left.
- CR - Conversion rate is up nicely y/y - again showing stable consumer confidence, but also Google continues to improve the quality of traffic.
- Clicks - Google continues to increase clicks. That can be any number of things on the pre-click side - e.g. Google showing more ads, quality is higher and getting a higher CTR, and with IDS we are buying a TON of long-tail terms now for our clients so our coverage is surging.
- Orders - More clicks and higher CR equals... More orders - up 15% plus 4% AOV bump - boom you are up 20%.
Given this last datapoint before we head into Q4, we still feel very good about the holiday and have been offering this forecast to customers:
- 80% probability - We'll have mid teens y/y growth in e-commerce for Holiday 2011. I'd say 17% is right where we see it heading today.
- 15% probability - While the consumer seems to be ignoring the EU problems that are causing gyrations in the stock market while they also plow through the domestic bad news around debt, budgets, joblessness, etc., at some point that could cause a double dip recession. If we do see a material slow down in Q4, e-commerce growth could trim its sails and slow to the 0-10% range. That seems unlikely given what we see today, but it's a cloud that still looms out on the horizon.
- 5% probability - Along with the double-dip cloud is the ray of sunshine that the economy starts picking up steam and we end up with a holiday that is in the > 20% y/y growth range here in the US.
As for each channel, I think you'll see performance similar to what we saw in Q3, with these caveats/predictions:
- Amazon - I believe we'll see the holiday continue to front-end load, so Oct/Nov will be > 80% growth y/y fueled by earlier shopping, couch shopping on Tgiving and Kindle Fire excitement. Overall for Q4, we expect Amazon to come in up 80% y/y with plenty of upside potential.
- eBay - eBay should continue to grow in-line with e-commerce so the same forecast generally applies. eBay has a broader mix of upside/downside than Amazon. Upside: Mobile/Tablet shopping, ad campaign, large merchants. Downside: CE is sluggish, apparel hasn't been really burning it up, P+A seasonality.
- CSE - As mentioned, I think CSE goes neutral to slightly positive as they get a year's worth of Panda under the belt.
- Search - Google has a ton of programs coming that should help them stay in the 5% above e-commerce growth range so I'd put them at 20-25% y/y growth for Holiday 2011
SeekingAlpha disclosure: I am long Google and Amazon. eBay is an investor in ChannelAdvisor where I am CEO.