Ecommerce websites Profitability levers Foreword Foreword The share
E-commerce websites: Profitability levers
Foreword
Foreword The share of profitable websites decreases since 2011. . but stabilizes since 2013. Evolution of the websites that have reached their break even point 80% 60% 2011 2012 70% 69% 2013 2014 Evolution of the websites that have increased their profitability For 4 years, it is rather the leading websites that manage to increase profitability (vs all websites). Leading websites All 83% 64% 25% 2011 64% 50% 59% 35% 2012 Sources : étude CCM Benchmark 2012, 2013, 2014 et étude TNS Sofres 2015 pour Webloyalty 2013 49% 2014 3
Study Methodology
Study Methodology Sample Type of collection 105 e-commerce decision-makers Turnover Small ( <1 M€) Medium (between 1 and 10 M€) Big (between 10 and 50 M€) 18% 37% Fashion Tourism Home equipment Culture, high tech, Autre 23% 22% 4% 18% 13% 27% 38% Etude TNS Sofres pour Webloyalty - 2016 Interviews made by phone Field time From 03/29/2016 to 04/13/2016 5
Key questions of the study Profitability of ecommerce websites in France Are e-commerce websites profitable ? What are the key evolution factors of profitability ? What are the levers used to monetize websites audience ? 6
E-commerce websites profitability
Are e-commerce websites profitable ? 7 websites out of 10 have reached their break even point in 2015, almost as in 2014. 70% 16% 10% Of profitables websites (69% in 2014 ) 71% Leading websites 89% Big websites 14% 87% Medium websites Small websites 60% Yes since 2015 Yes for several years No, it's the objective of the year to come Not yet 45% 81% Click & Mortar Pure Players Etude TNS Sofres pour Webloyalty - 2016 65% 8
Is the profitability of websites increasing ? Nearly half of the websites have improved their profitability in 2015, while just over a quarter saw their profitability decline, a stable trend vs. 2014. The proportion of websites with profitability in strong decline has still quadrupled. Profitability Evolution Decrease 28% (24% en 2014) Increase (3% in 2014) 12% Increase strongly 19% Increase a little Stay stable 16% 48% (49% in 2014) 4% 29% 20% Decrease a little Decline strongly NSP Etude TNS Sofres pour Webloyalty - 2016
Is the profitability of websites increasing ? The profitability of leading websites tended to stagnate in 2015, while that of large sites progressed. Medium size websites are struggling to stabilize. Profitability Evolution according to size and type of websites Increase Leading websites Stay stable 21% 50% 63% Big websites Click & Mortar Pure Players 11% 62% 0% Medium websites Small websites Decrease 44% 23% 46% 51% Etude TNS Sofres pour Webloyalty - 2016 18% NSP 21% 7% 26% 0% 37% 0% 27% 6% 32% 3% 21% 25% 3% 10
Factors of profitability evolution
Factors of profitability evolution Customer loyalty is the most important factor in the evolution of the profitability of the websites after the turnover. Factors of increase / Decrease of profitability Decreased profitability Increased profitability 87% 75% 70% 68% L'évolutio. . . L'évolution du chiffre d'affaires, des ventes Turnover evolution La fidélité. . . La fidélité des clients Customers loyalty La marge. . . La marge commerciale Les taux d. . . 57% 51% 66% 51% 36% Mark up 38% Les taux de transformation Conversion rate La part des. . . La part des produits à forte marge dans le chiffre d'affaires Share of high-margin products in turnover Les coûts. . . Les coûts d'exploitation Exploitation costs 28%Des. . . Des investissements récents réalisés Recent investments made Les coûts. . . 26% Les coûts de recrutements de clients Customers recruitment costs 10% Les recett. . . Revenues excluding distribution activities Les recettes des activités hors distribution Etude TNS Sofres pour Webloyalty - 2016 (29% in 2014 ) 25% 38% 21% 32% 28% 12
Growth drivers To achieve their growth objectives, the sites will rely first on social networks, much more than in 2014, as well as diversifying and customizing their offer. Future growth drivers 81% Social networks (69% in 2014) 74% Diversification 72% Customization 69% Multi channels 65% M-commerce 52% Internationalization Marketplace creation or development 25% Etude TNS Sofres pour Webloyalty - 2016
Audience monetization
Using audience monetization More than half of the websites monetize its audience in 2015 (+ 8 points vs. 2014). A lever mostly adopted by leading sites and Click & Mortar. Using audience monetization 53% Small and Big medium websites 43% 63% Of websites have monetized their audience in 2015 (45% in 2014) Leading websites Pure player Click & Mortar 79% 49% 63% (32% in 2014 ) Etude TNS Sofres pour Webloyalty - 2016 15
Using audience monetization Shopping websites are becoming more likely to increase the monetization levers (35% in 2015 vs. 13% in 2014). A trend driven by leading sites. Using audience monetization 53% At least one lever 58% 35% Several levers (13% en 2014 ) (38% en 2014 ) 21% 18% Leading websites One lever 47% 72% No lever Etude TNS Sofres pour Webloyalty - 2016 Small websites
Levers used to monetize the audience The sale of advertising space and other services are the most used levers in 2015. A confirmed trend among leading and large websites. All websites (26% en 2014) Focus leading and big websites Monetization levers V e 58% Sale of advertising space. . . 67% (36% en 2014) 55% Sale of other services 67% (30% en 2014) (45% en 2014) A 29% s. . . Advertising insert in mail-order parcels 44% 33% Resale of clients database M 24% ar Marketplace. . . Etude TNS Sofres pour Webloyalty - 2016 33% 15% 17
Contribution of these levers in the turnover Resale of customer database (23%), marketplace (20%) and advertising space (13%) contribute to over 10% in the turnover of e-commerce websites. Effectiveness of monetization levers Contribution to turnover < 3% between 3 and 5% Resale of clients database Marketplace Sales of advertising spaces between 5 and 10% 70% 10% and + 23% 7% 52% NSP 20% 28% 2% 79% 13% 6% 3% Sales of services 80% 11% Advertising insert in mail-order parcels 80% 12% Etude TNS Sofres pour Webloyalty - 2016 2% 4% 8% 18
Contribution of these levers in the operating result And those same levers sometimes contribute to over 20% of the websites operating income. Effectiveness of monetization levers Contribution to operating income < 10% Marketplace 10 to 20% 28% 44% Resale of clients database 74% Sale of advertising spaces 72% Sale of services advertising insert in mailorder parcels 20% and + NSP 28% 3% 23% 8% 11% 93% 88% 9% 4% 3% 12% 19
How is reinvested the additional income? The development of the site features is the first area that takes advantage of revenues from audience monetization. Reinvestment of additional income Development of site features 25% Increase of marketing and media development 20% Profitability improvement 20% Investment in logistics 13% Recruitement of new clients 8% Hiring new co-workers Creation of new mobile site / apps 7% 5% Etude TNS Sofres pour Webloyalty - 2016 20
Key figures § 7 of 10 sites are profitable in France. § Customer loyalty is the second most important factor in the evolution of profitability. § 81% of sites will rely on social networks to accelerate their growth. § Selling advertising space is the main lever of monetization used § Revenues generated by monetization are reinvested in priority to develop the site's features. 21
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