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February 12, 2013

2013 ChannelAdvisor Same Store Sales Backgrounder and Schedule

2013 ChannelAdvisor Same Store Sales (SSS) Backgrounder

 Since 2009, ChannelAdvisor has been producing a monthly report we refer to as “Same Store Sales” (SSS) as a benchmark for our customers and the industry.  These reports are intended to measure the relative performance of various online channels (e.g. eBay, Amazon, Buy.com, Search, Shopping.com, etc.) through which our customers, who are online retailers, sell their merchandise, and this information helps our customers make educated decisions about their use of various channels.  Unlike survey-based reports or reports based on small sample sets, the ChannelAdvisor SSS data is created using the real transactional data captured by ChannelAdvisor's software across our global customer base of thousands of online retailers, hundreds of e-commerce channels and billions of dollars in Gross Merchandise Value.  

Gross Merchandise Value (or GMV) is commonly used in the e-commerce world because for some channels product sales are different than revenue, so a new metric was created, GMV, to represent the overall volume of product sales that go through a channel.  For example, eBay's GMV is a very large number (> $60b) and their revenue is a subset of that based on their take rate (the % they charge retailers for selling on their platform and other associated fees).   Search engines like Google recognize their revenue based on advertising spend in the form of costs-per-click, but again, we are focused on GMV.  We focus on GMV because that is what matters to our customers, the online retailers, plus we believe it is the best way to measure the impact that a channel is having on the overall industry.

ChannelAdvisor SSS Methodology

The way SSS is compiled is as follows:

  • Each ChannelAdvisor customer's GMV  is recorded on a monthly basis by channel.
  • We think of a “store” metaphorically as one customer selling through a particular channel – in other words, one of our online retailer customers can have multiple “stores” if they use more than one channel to sell their merchandise.
  • Once a “store” has been active with ChannelAdvisor for a year (that is, the customer has been with us for at least a year and has been utilizing the particular channel for at least a year), then we begin to include it in the SSS data.
  • If a customer stops working with ChannelAdvisor or stops selling on a particular channel, then that combination of  customer and channel, that “store”, is no longer included (assuming it made it past the year mark in the first place).  When ever an online retailer stops selling on a channel or stops utilizing ChannelAdvisor, they are immediately taken out of the SSS data. 
  • GMV is measured in native currency and compared in native currency.

Here is an example of how this works:

Customer A first began selling on Amazon in mid-April 2011.  This customer’s Amazon GMV is first included in the monthly SSS calculation in May 2012 and will be first reflected in Y/Y Amazon comparisons in the monthly report for May 2013.

The end-result is a SSS metric that is equivalent to that used by off-line retailers like Wal-mart, Target, etc. called same store sales metrics - in other words it is designed to take out the skewing effects from new customer additions and to give a clear year over year growth picture.  Our customers have found this data to be very helpful for several use cases:

  • Existing channel benchmarking - You are a online retailer participating in Search and CSE.  You are growing at 10% in search y/y and 5% y/y in CSE - by using the ChannelAdvisor SSS data, you can benchmark how you are doing against your peers.
  • New channel expansion - If you are an online retailer and you are active in Search and CSE, and want to explore new channels, the SSS data can be a guide to finding those channels that are growing at rates you find attractive.

We also publish data in many of our SSS reports that show the breakdown of overall traffic  by device type (e.g. Computer, SmartPhone, Tablet, Total Mobile ).  This is simply a calculation of how much of the traffic driven by search and CSE channels across our platform during the relevant period originated from the specified types of devices.   (Computer + SmartPhone + Tablet = 100%.   Total Mobile = SmartPhone + Tablet.)

SSS Disclaimers

There are many reasons this data is not a proxy for overall e-commerce activity as well as individual channel total performance including, but not limited to:

  • Customer variance - ChannelAdvisor's customers may not be representative of the overall customer mix of any individual channel.  For example, on eBay, our customers are skewed towards a larger eBay customer set, not the average.
  • Category variance – ChannelAdvisor’s customers are over-represented in some categories (electronics, sporting goods and auto parts) and under-represented in others (collectibles, BMV/media, etc.)  For example, on Amazon, ChannelAdvisor has very few media customers so we have no visibility into that large chunk of Amazon's business.
  • Cross Border Trade variance - While ChannelAdvisor does have a fair amount of non-domestic GMV, our mix of domestic and international customers is not necessarily equivalent to that of other e-commerce players.
  • Software Impact - At the end of the day, we are a software company. Some of our features cause a short-term bump in sales that may skew results high at the beginning and then lower at the end of a one year SSS cycle.
  • Channel impact - Certain changes at e-commerce channels may cause disproportionate good or harm to our customer base, category mix, international mix and software.  While the data shows these changes, because we are not a material part of every channel, over 90% of that channel's business may not have the same impact (positive or negative).
  • SSS is a metric unique to ChannelAdvisor- eBay, Amazon, Google and other e-commerce businesses do not measure SSS.  They look at overall growth when they report their financial metrics. We believe SSS is important to our customers from a benchmarking standpoint, which is why we do it this way - it is not intended to be a proxy for the overall performance of any of these e-commerce channels.

How should online retailers benchmark with the SSS?

For online retailers, we recommend looking at your Y/Y performance on each of the channels and comparing it to what we are reporting here to see how you are doing compared to your peers.  For example, you may feel that your 25% January 2013 vs. January 2012 growth on Amazon is very strong, but when you compare to the 34.3% share we are reporting across our customer base, you are effectively behind the average and may need to re-evaluate what looked like a great result to see why you are lagging and/or losing share in this channel. There are a lot of 'dials to turn' to increase your performance on any channel and we can work with you to formulate a strategy to get back to above-market sales growth.

Conversely, maybe you are growing at 15% on CSE and feel that wasn't strong enough, but you look at the ChannelAdvisor SSS and realize you may be being too tough on yourself because you are actually growing close to double what we are seeing out there as the average. You are effectively gaining share in this channel when compared to your peers.

Finally, maybe you are only selling on one channel and want to pick a channel that is going to super-charge some growth.  Hopefully you can utilize this data as one input into that decision.  For online retailers that want a category view or deeper dive into any of these, we do this on an on-demand basis.  Contact your ChannelAdvisor sales rep/account manager to learn more.

2013 SSS Schedule

Here is the schedule for 2012's SSS releases:

  • February11th - January SSS
  • March 8th- February SSS
  • April 9th - March SSS
  • May 10th - April SSS
  • June 11th- May SSS
  • July 9th - June SSS
  • August 9th - July SSS
  • September 10th  - August SSS
  • October 8th - September SSS
  • November 11th - October SSS
  • Holiday 2011 - TBD - we will have our usual regular updates through the 2013 Holiday season and will post a Holiday SSS schedule in early November.

Questions?

If you have any questions about ChannelAdvisor's SSS data, our methodology, the disclaimers or the schedule, feel free to ask in comments.  

Updates to this post:

This placeholder will note any changes we make to the SSS 2013 post in the future.

 

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