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January 09, 2014

2014 ChannelAdvisor Same Store Sales Backgrounder and Schedule

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2014 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, Rakuten Shopping (Buy.com), Search, Comparison Shopping Engines (or CSEs) , 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).  Whenever 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 2013.  This customer’s Amazon GMV is first included in the monthly SSS calculation in May 2014 and will be first reflected in Y/Y Amazon comparisons in the monthly report for May 2014.

The end-result is a SSS metric that is equivalent to that used by offline retailers like Walmart, 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 2014 vs. January 2013 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.

2014 SSS Schedule

Here is the schedule for 2014s SSS releases:

  • January 9th - December 2013 SSS
  • February 10th - January SSS
  • March 10th- February SSS
  • April 8th - March SSS
  • May 12th - April SSS
  • June 6th- May SSS
  • July 9th - June SSS
  • August 11th - July SSS
  • September 10th  - August SSS
  • October 8th - September SSS
  • November 11th - October SSS
  • Holiday 2014 - TBD - we will have our usual regular updates through the 2014 Holiday season and will post a Holiday SSS schedule in early November.

 

SSS Frequently Asked Questions (FAQs)

Q. You said eBay (or Amazon, Google) did X and when they reported their earnings it was Y - why were you so wrong?

A: The ChannelAdvisor SSS data is in no way a prediction of any e-commerce channel's (eBay, Amazon, Google, etc.) results.  It is designed to be a benchmark for ChannelAdvisor's customers to give them an idea of how they are doing vs. their peers.  While we have over 2000 retailers as customers and over $3b in GMV through our system which we believe makes this data a meaningful benchmark, there are many reasons (outlined earlier in this post) our data does not correlate at all with the performance with companies.  

We have a different international, seller, category mix and also those companies are not reporting SSS they are reporting all-in sales so it is quite apples and oranges on all levels.

Q: What do all these acronyms you use mean?  SSS, AOV, ASP, CR, GMV, CPC, 

A:  Here is a quick dictionary of common TLAs we use:

SSS - Same store sales - see above for details.

CSE - Comparison Shopping Engines - We track over 100 global CSEs including Shopping.com, PriceGrabber, Shopzilla, Kelkoo, Google Shopping, etc.

AOV - Average Order Value - The average value of an order - in other words when we look across our vast network at all of the carts going through checkout, what is the average cart value?

ASP - Average selling price - for a specific product (e.g. an iPad) you can track the selling price of that product over time.  Before eBay had a cart we used ASP in the industry because there was only one product being purchased at a time and now generally use AOV. 

PLA/GS - A Google program with two names Product Listing Ads and Google Shopping - this is their paid comparison shopping engine that shows up embedded in search results.

CR - Conversion Rate - retailers spend a lot of time and effort acquiring traffic -only a small % turns into an order - that % is the Conversion Rate.  traffic * CR * AOV = GMV

GMV -Gross merchandise value - the value of items being sold through any given e-commerce channel.  We use GMV instead of revenue because the two are actually different in the world of marketplaces. For example, eBay and Amazon may facilitate of $1,000,000 in GMV - but their revenue/sales are 10% or $100,000 - therefore in the industry we use GMV to make that clear.

CPC - Cost per Click - The typical way retailers pay for traffic from search engines (Google, Yahoo!, Bing) and Comparison Shopping Engines (CSEs) Google

FBA - Fulfillment by Amazon - Amazon's program that allows retailers to use their large fulfillment center network.

FC - Fulfillment Center - a warehouse that is oriented towards individual package fulfillment for e-commerce

DC - Data Center - a nice cool dry house for a bunch of servers

Q: You said the results would be out on X day, and they have not come out yet - why?

A: We make every effort to adhere to the schedule, but our top priority is our customers and sometimes that can create delays in getting the data out.  We reserve the right to issue the data after the scheduled date.

Q: How can I be notified by email or sms message when new SSS data is out?

A: Since this is a blog with RSS you can use a service like feedburner or blogtrottr to automate the creation of emails.  You can also subscribe to the blog via the 'subscribe' field.  Also, within minutes of a new blog we will tweet via:

ChannelAdvisor's main twitter account: www.twitter.com/channeladvisor

Scot Wingo's main twitter account: www.twitter.com/scotwingo

Twitter gives you flexibility to receive SMS messages and emails when new tweets arrive. 

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 2014 post in the future.

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