state of the u.s. online retail economy in q2 2010

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State of the U.S. Online Retail Economy in Q2 2010 Gian Fulgoni, Chairman, comScore, Inc. Note: A copy of this presentation will be sent to all attendees within 24 hours of today’s webinar

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comScore Chairman Gian Fulgoni presents his quarterly review of the state of the U.S. online retail economy during this webinar from Thursday, August 19. This installment includes an overview of e-commerce trends in the second quarter of 2010 and survey findings that highlight consumer sentiment about the current state of the economy.

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Page 1: State of the U.S. Online Retail Economy in Q2 2010

State of the U.S. Online Retail Economy in Q2 2010

Gian Fulgoni, Chairman, comScore, Inc.

Note: A copy of this presentation will be sent to all attendees within 24 hours of today’s webinar

Page 2: State of the U.S. Online Retail Economy in Q2 2010

Data sourced from comScore’s global panel of 2 mill ion Internet users

� E-commerce data includes all worldwide buying on U. S. sites

� Unless explicitly stated otherwise, the term e-comm erce refers to online retail spending, which excludes travel, autos and auctions

� Behavioral activity through July 2010

360°°°°View of Consumer Behavior Analysis Parameters

2© comScore, Inc. Proprietary and Confidential.

� Behavioral activity through July 2010

� Survey issued in July 2010, n=1086

� Consumer Measurements:

– Site Visitation

– Online Buying

– Video Viewing

– Attitudes and Intentions

– Behavioral Segments

� Retailer Views:

– Large vs. Small Retailers

– Multi-Channel vs. Pure-Play Retailers

Page 3: State of the U.S. Online Retail Economy in Q2 2010

Validation of comScore Sales Data:Comparison of comScore data to U.S. Department of C ommerce

Bill

ions

($)

Dept. of Commerce (DOC) comScore Estimate of DOC

Quarterly U.S. e-Commerce Sales* ($ Billions)Source: comScore & U.S. Department of Commerce (DOC )

Quarterly U.S. e-Commerce Growth* vs. YASource: comScore & U.S. Department of Commerce (DOC )

% G

row

th v

s. Y

A

Dept. of Commerce (DOC) comScore Estimate of DOC

30

35

40

45

50

20.0%

25.0%

30.0%

35.0%

Correlation: 0.96

3© comScore, Inc. Proprietary and Confidential.

Bill

ions

($)

% G

row

th v

s. Y

A

0

5

10

15

20

25

30

2005

-Q

120

05 -

Q2

2005

-Q

320

05 -

Q4

2006

-Q

120

06 -

Q2

2006

-Q

320

06 -

Q4

2007

-Q

120

07 -

Q2

2007

-Q

320

07 -

Q4

2008

-Q

120

08 -

Q2

2008

-Q

320

08 -

Q4

2009

-Q

120

09 -

Q2

2009

-Q

320

09 -

Q4

2010

-Q

120

10 -

Q2 -10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

2005

-Q

120

05 -

Q2

2005

-Q

320

05 -

Q4

2006

-Q

120

06 -

Q2

2006

-Q

320

06 -

Q4

2007

-Q

120

07 -

Q2

2007

-Q

320

07 -

Q4

2008

-Q

120

08 -

Q2

2008

-Q

320

08 -

Q4

2009

-Q

120

09 -

Q2

2009

-Q

320

09 -

Q4

2010

-Q

120

10 -

Q2

*Note: To be consistent with DOC, comScore estimate excludes travel and event tickets but includes auction fees and autos.

Page 4: State of the U.S. Online Retail Economy in Q2 2010

$77 $84 $80$143+29%

+26%

+22%

+19%

$171$200

+17%

+12%+9%

+7%

Following a soft 2009, total e-commerce sales throu gh Q2 2010 were up 7% versus year ago. Travel and non-travel up 5% and 9%, respectively.

$214

-5%

$209-2%

e-Commerce Dollar Sales Growth ($ Billions)Source: comScore e-Commerce Measurement

+7%

4© comScore, Inc. Proprietary and Confidential.

$42 $53 $67 $82 $102$123 $130 $130

$67 $30

$40$51

$61$69

$77

$44

2002 2003 2004 2005 2006 2007 2008 2009 2010 YTD

$72$93

$117$143

Non-Travel

Travel

+29%

+26%

+33%

+26%

+28%

+20%

+24%+24%

+13%

+20%+6%

0%

+9%

+5%

YTD2010

$111

Page 5: State of the U.S. Online Retail Economy in Q2 2010

Monthly e-Commerce Sales Growth vs. YASource: comScore e-Commerce Measurement

Positive growth returned in 2010, with notably stro ng growth rates in March & April, a possible result of heavier promoti on activity in Spring of 2010

Month Growth Rate vs. YA

January 2010 +7%

February 2010 +4%

March 2010* +17% 300

350

4002009 2010

ShopLocal Index of Weekly Offers Per StoreSource: ShopLocal

5© comScore, Inc. Proprietary and Confidential.

April 2010 +12%

May 2010 +8%

June 2010 +7%

July 2010 +9%*March saw an additional bump in activity due to timing of Easter in 2010

For January through July 2010, non-US residents acc ounted for 6.6% of ecommerce sales at U.S. sites

Note: International contribution is defined as the percent of e-commerce sales made on U.S. sites by consumers residing outside of the U.S. It excludes U.S. sites with non-U.S. addresses (e.g. amazon.co.uk).

150

200

250

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31Week

Page 6: State of the U.S. Online Retail Economy in Q2 2010

After two quarters of accelerating sales, e-commerc e growth plateaued in Q2

Quarterly e-Commerce Sales Growth vs. YASource: comScore e-Commerce Measurement

17%23%

19%

11% 13%

6%

-3% 0% -1% -2%

23%

3%

0%

5%

10%

15%

20%

25%

Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10

10% 9%

6© comScore, Inc. Proprietary and Confidential.

Quarterly Retail & Food Services Sales Growth* vs. YASource: U.S. Department of Commerce (DOC)

4%4% 5%4%3%

-8%

1%2%

-9%-10%

-7%

2%

7%6%

-15%

-10%

-5%

0%

5%

10%

Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10

-5%Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10

When excluding autos, gas and food/beverage, Q2

retail sales growth was marginally softer at +6%

*Note: The U.S. Department of Commerce calculation includes total retail and food service sales, which also includes motor vehicles and parts dealers.

Page 7: State of the U.S. Online Retail Economy in Q2 2010

e-Commerce continues to gain share of retail spendi ng on an apples-to-apples basis

e-Commerce Share of Corresponding Retail Spending*Source: comScore for e-Commerce & U.S. Department o f Commerce (DOC) for Retail

Com

mer

ceS

hare

5.1%

5.3%

5.9%

5.3%

6.4%

6.7%

5.9%

6.3%

7.4% 7.3%

6.5% 6.6%

7.6% 7.7%

6.8%6.9%

7.7%8.1%

7.1%

5.0%

6.0%

7.0%

8.0%

9.0%

7© comScore, Inc. Proprietary and Confidential.

*Note: e-Commerce share is shown as a percent of DOC’s Total Retail Sales excluding Food Service & Drinking, Food & Bev. Stores, Motor Vehicles & Parts, Gasoline Stations and Health & Personal Care Stores.

e-C

omm

erce

e-Commerce share peaks in colder seasons (Q4 & Q1)

4.3%

3.7%4.0%

4.6%4.3%

4.5%

5.3%5.0%

5.3%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

Page 8: State of the U.S. Online Retail Economy in Q2 2010

Lower -and-upper income segments are drivers of online growth in Q2 2010, but the large mid-income segment shows no growth an d is down versus pre-recession periods two years ago

Income SegmentOnline Retail

Online Retail

Spending

Under $50,000 +14% +22%

Income Segment Online Retail Spending Online Retail Spending Growth in Q2 ‘10 vs. Q2 ‘08 Growth in Q2 ‘10 vs. YA

Income Segment Online Retail Spending Online Retail Spending Growth in Q2 ‘10 vs. Q2 ‘08 Growth in Q2 ‘10 vs. YA

$50,000 - $99,999 -8% -2%

e-Commerce Sales vs. YA by Income SegmentSource: comScore e-Commerce Measurement

Contribution of Total e-Commerce Growth

for Q2 ‘10

Contribution of Total e-Commerce Growth

for Q2 ‘10

+5%

-1%

Bracket Share of

Spending in Q2 ‘10

Bracket Share of

Spending in Q2 ‘10

22%

41%

8© comScore, Inc. Proprietary and Confidential.

Total +8%

$100,000 or more +28% +17%

+9%

+6%

+9%

37%

100%

Page 9: State of the U.S. Online Retail Economy in Q2 2010

Worries of double-dip recession are mounting, stoki ng fear among consumers

“The recovery just isn’t looking

that great. The job market has lost

some positive momentum. This

suggests another weak reading on

consumer spending in the third

quarter.” – Julia Coronado, Sr. Economist at BNP

Paribas, August 13, 2010

9© comScore, Inc. Proprietary and Confidential.

“With unemployment at 9.5%, people in

the U.S. are worried about the recovery.

And a record string of 22 straight

federal government budget deficits has

raised fears of higher taxes. Caution by

Americans over their finances means

higher saving, which restrains

spending.”

– Wall Street Journal, August 12, 2010

Page 10: State of the U.S. Online Retail Economy in Q2 2010

The ‘Scariest Jobs Chart Ever’ is beginning to look even scarier

% Job Losses Relative to Peak Employment Month in P ost WWII RecessionsSource: CalculatedRiskBlog.com

10© comScore, Inc. Proprietary and Confidential.

Number of Months After Peak Employment

Page 11: State of the U.S. Online Retail Economy in Q2 2010

An increase in pessimism regarding the unemployment rate coincides with findings from the Pew Research Cente r showing the surge in long-term unemployment

63%

Q. When do you think the unemployment rate will begin to improve?

Source: comScore Surveys - April & July 2010

+10% vs. April 2010

11© comScore, Inc. Proprietary and Confidential.

1%4%

10%

22%

Next Month

Next 2-3 Months

Next 4-6 Months

Next 7-12 Months

More Than 12 Months From Now

The typical unemployed worker today has been out of work for nearly six months or 23.2 weeks. This i s almost double the previous post-World War II peak

for this measure –12.3 weeks – in 1982/83. – Pew Research Center

Page 12: State of the U.S. Online Retail Economy in Q2 2010

Unemployment remains the top concern among consumer s; financial-market concerns have risen, especially among the up per-income segment

Rising Prices

Unemployment/ Job Security

FinancialMarkets

Real Estate/ Home Values

Oct09

Jan10

April10

July 10

Oct09

Jan10

April10

July10

Oct09

Jan10

April10

July10

Oct09

Jan10

April10

July 10

Q. Based on your current situation, which one of the following economic conditions most concerns you?

Source: comScore Surveys - October 2009 & January, April & July 2010

Percent of Respondents Citing Their One Most Import ant Issue

12© comScore, Inc. Proprietary and Confidential.

09 10 10 10 09 10 10 10 09 10 10 10 09 10 10 10

Total 32% 29% 33% 30% 42% 50% 42% 44% 13% 9% 10% 13% 8% 7% 9% 8%

Household Income

$100K or more 19% 22% 23% 13% 34% 44% 34% 45% 27% 13% 17% 26% 15% 17% 18% 13%

$50K-$99,999 28% 23% 26% 22% 43% 50% 49% 46% 13% 12% 11% 16% 12% 10% 11% 11%

Under $50K 39% 36% 41% 40% 42% 50% 39% 42% 9% 6% 7% 9% 4% 4% 5% 6%

Page 13: State of the U.S. Online Retail Economy in Q2 2010

Lifestyle Changes Based on Recession

76% of consumers have changed how they spend money based on the recession and 43% of them say these changes are permanent

Q. Have you changed how you spend money based on the recession? Q. In what ways have you changed how you spend mone y, based on the recession?

Source: comScore Survey July 2010

80%

69%

67%

54%

Eating at home instead of eating out

Only making planned purchases

Reducing entertainment expenses

Using cash/debit card/checks instead of credit

76%

13© comScore, Inc. Proprietary and Confidential.

54%

48%

42%

33%

23%

21%

14%

2%

0%

Using cash/debit card/checks instead of credit cards

Sticking to a personal budget

Changing travel plans

Changing driving habits

Reducing or canceling cable/Internet plans

Reducing or canceling cell phone plans

Changing living arrangements

Other

None of these

% of those who changed how they spend money based o n the recession

24%

Yes No

43% of these consumers say these changes are permanent

and will be continued even when the economy recovers

Page 14: State of the U.S. Online Retail Economy in Q2 2010

Consumer Agreement with Economic Statements

76% hold a pessimistic view of current economic con ditions; 3 in 10 predict conditions will worsen in the futur e

29%

21%

“We haven’t hit bottom yet; the worst is still to come.”

“We’ve turned the corner, but I would not be surprised if the economy dropped again before it

fully recovers.”

Q. Which statement best describes how you feel about the current economic conditions?Source: comScore Survey July 2010

Pessimistic 76%

14© comScore, Inc. Proprietary and Confidential.

21%

26%

16%

8%

fully recovers.”

“We might be headed in the right direction but the signs of improvement are hard to see.”

“The economy is stagnant, not going up or down.”

“We’ve turned the corner and are beginning to see signs of improvement.”

% of All Respondents

Pessimistic 76%

Neutral/Positive 24%

Chg from Q1 (+3%)

Chg from Q1 (-3%)

Page 15: State of the U.S. Online Retail Economy in Q2 2010

Who is Today’s Online Consumer?

15© comScore, Inc. Proprietary and Confidential.

Page 16: State of the U.S. Online Retail Economy in Q2 2010

The average heavy online buyer spent $615 in Q2 201 0, nearly 5X more than medium buyers and 20X more than light buy ers

Heavy Medium Light

% of Buyers 20% 30% 50%

% of e-Commerce Dollars 69% 22% 8%

% of Transactions 40% 30% 30%

Dollars per Buyer $615 $133 $30

Key Shopping Metrics for Heavy/Medium/Light Buyer i n Q2 2010Source: comScore e-Commerce Measurement

16© comScore, Inc. Proprietary and Confidential.

Amazon Attracts a Higher Proportion of Heavy Online Buyers

H/M/L Definition:Heavy = Top 20% of buyers based on dollars spent in Q2 2010Medium = Next 30% of buyers based on dollars spent in Q2 2010Light = Bottom 50% of buyers based on dollars spent in Q2 2010

Dollars per Buyer $615 $133 $30

Transactions per Buyer 4.7 2.4 1.4

Segment

Amazon Buyer Reach

Within Segment

% CHG in Reach vs. Q1 2010

%Composition

Amazon Buyers

Heavy 34% +3 points 28%

Medium 25% 0 points 31%

Light 20% 0 points 41%

Amazon reaches a third of heavy

online buyers, up 3 percentage points

from Q1 2010

Page 17: State of the U.S. Online Retail Economy in Q2 2010

The leading ten retailers within the heavy e -commerce buyer segment are split between multi-channel and pure-play retai lers, but Amazon leads the pack with 10% share

Top 20 Selected Retailers by Share of Heavy Buyers’ Dollar Spending in Q2 2010Source: comScore e-Commerce Measurement

Top RetailersShare of Heavy Buyers

Dollar SpendingAmazon 10%

Dell 8%Staples 4%Costco 4%

Walmart 3%Ticketmaster 3%

17© comScore, Inc. Proprietary and Confidential.

Ticketmaster 3%QVC 3%Apple 3%

Office Depot 2%HSN 2%

JCPenney 2%Quill 2%

Best Buy 2%Sears 2%

Tiger Direct 2%Victoria’s Secret 2%

Stub Hub 1%Home Depot 1%

Target 1%Gap 1%

Page 18: State of the U.S. Online Retail Economy in Q2 2010

Six in ten consumers say the Internet has become im portant when making buying decisions and 59% of them say it has increased in the past year

Importance of the Internet in Making Purchasing Dec isions

Q. In the past 3 months, how important has the Inte rnet become in providing you with information to help you make buying decisi ons?

Q. How has this changed versus a year ago? Source: comScore Survey – July 2010

31%

18© comScore, Inc. Proprietary and Confidential.

43%

16%

% of those who found the Internet important

Significantly Increased

Somewhat Increased

59%

10%

31%

Slightly/very important

Slightly/very unimportant

Neither important nor unimportant

59%

Page 19: State of the U.S. Online Retail Economy in Q2 2010

How Consumers Are Cutting Shopping Expenses

Consumer loyalty to specific retailers and brands h as steadily decreased over the past two years, while likelihood to shop online for deals has risen

Q. Please indicate how you are cutting your shopping expensesSource: comScore Surveys – July & October 2008, Apr il 2009, April & July 2010

July 2008

Oct2008

April 2009

April 2010

July 2010

% Chg(07/08 to 07/10)

Reducing gift spending 41% 51% 59% 57% 56% +15%

Shopping at different retailers 20% 25% 30% 33% 32% +12%

Buying different brands (including generic brands) 52% 51% 58% 57% 62% +10%

19© comScore, Inc. Proprietary and Confidential.

Buying different brands (including generic brands) 52% 51% 58% 57% 62% +10%

Shopping online for deals 24% 25% 33% 32% 32% +8%Signing up for retail point programs or customer loyalty programs 22% 22% 27% 29% 29% +7%

Using coupons more often when making purchases 59% 62% 68% 64% 66% +7%

Shopping only when there are sales (i.e. one day sales) 40% 43% 41% 43% 44% +4%

Shopping at secondhand stores, garage sales, etc. 30% 33% 30% 31% 33% +3%

Shopping less frequently 68% 71% 70% 72% 69% +1%

Buying in bulk at warehouse/discount retailers like Costco, Sam`s Club, BJ`s etc. 27% 28% 31% 28% 28% +1%

Shopping at auction sites such as ebay.com 13% 14% 14% 13% 13% 0%

Only shopping for basic necessities 66% 67% 60% 62% 65% -1%

Page 20: State of the U.S. Online Retail Economy in Q2 2010

Amazon has the largest audience with 76 million UVs in Q2 2010; it’s one of the fastest growing sites in the category, s econd only to Netflix

Average Monthly Unique Visitors (MM) and % Growth v s. YA on Selected Retail Sites in Q2 2010

Source: comScore Media Metrix

+13%

+21%

+15%

+5%

168.7

76.2

40.2

34.9

Retail Sites

Amazon Sites

Apple.com Sites

Walmart

20© comScore, Inc. Proprietary and Confidential.

-3%

+34%

+8%

+6%

+8%

-3%

+1%

26.1

19.0

16.7

14.8

13.1

12.0

11.0

Target Corporation

Netflix.com

Best Buy Sites

Hewlett Packard

The Home Depot, Inc.

JC Penny Sites

Sears.com

Page 21: State of the U.S. Online Retail Economy in Q2 2010

Pure-play retailers have gained market share over t he past two years. Multi-channel retailers have lost share

47.2% 51.1%44.3%

48.6% 44.8% 44.6% 42.5% 40.1% 36.0%41.3%

60%

70%

80%

90%

100%

Multi-channel vs. Pure-play: Share of Quarterly U.S . e-Commerce SalesSource: comScore

21© comScore, Inc. Proprietary and Confidential.

52.8% 48.9%55.7%

51.4% 55.2% 55.4% 57.5% 59.9% 64.0% 58.7%

0%

10%

20%

30%

40%

50%

60%

Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010

Multi-Channel

Pure-Play

Page 22: State of the U.S. Online Retail Economy in Q2 2010

Larger retailers continue to benefit from leveragin g deeper discounts, free shipping incentives and inventory, garnering a n additional 5.6 share points from Q2 2009

Sales Share Q2 2009 Q2 2010Point Change

vs. YAQ2 2010

Total E-Commerce 100.0% 100.0% N/A

Largest 25 Retailers 59.8% 65.4% +5.6 pts

Share of Sales for Top 25 Retailers in Q2 2010 vs. YASource: comScore e-Commerce Measurement

22© comScore, Inc. Proprietary and Confidential.

All Other Retailers 40.2% 34.6% -5.6 pts

Q2 2010 vs. YA Q1 2010 vs. YA Q4 2009 vs. YA

Largest 25 Retailers +5.6 pts +3.6 pts 4.2 pts

All Other Retailers -5.6 pts -3.6 pts -4.2 pts

Share Shifts

Page 23: State of the U.S. Online Retail Economy in Q2 2010

Women are more avid online buyers than men, making up 58% of total dollars spent and 61% of online transactions

In the U.S., 12.5% of female

Internet users made an online purchase in February 2010,

61.1%58.2%

23© comScore, Inc. Proprietary and Confidential.

U.S. Consumers, Non-Travel Internet Purchases, February 2010Source: comScore e-Commerce Report

in February 2010, compared to 9.3%

of men.

38.9%41.8%

TransactionsDollars

WomenMen

Page 24: State of the U.S. Online Retail Economy in Q2 2010

60% of buying on multi-channel sites is attributabl e to women, whereas the distribution on pure-play sites is more evenly split

Women Men

Age <34 19% 14%

Age 35-54 28% 19%

Propensity to Buy on Multi-Channel vs. Pure-Play Re tailer Sites by Age and Gender% of Total Dollars Spent by Segment in June 2010

Source: comScore e-Commerce Measurement

Multi-Channel Retailers

Women Men

Age <34 12% 14%

Age 35-54 24% 22%

Pure-Play Retailers

24© comScore, Inc. Proprietary and Confidential.

Age 35-54 28% 19%

Age 55+ 13% 7%

Total 60% 40%

Multi-Channel: Utilizes more than one channel to conduct business (e.g. Best Buy)

Pure-Play: Utilizes a single channel to conduct business (e.g. Amazon)

Age 35-54 24% 22%

Age 55+ 17% 11%

Total 53% 47%

Page 25: State of the U.S. Online Retail Economy in Q2 2010

Most product categories showed sales growth versus year ago. Consumer electronics and computers have shown stren gth throughout 2010

Q2 2010 e-Commerce Sales Growth vs. YA by Retail Ca tegorySource: comScore e-Commerce Measurement

Category Change vs. YA

CONSUMER ELECTRONICS (x PC PERIPHERALS)Strong

COMPUTERS / PERIPHERALS / PDAsStrong

BOOKS & MAGAZINESStrong

VIDEO GAMES, CONSOLES & ACCESSORIESStrong

JEWELRY & WATCHESModerate

HOME & GARDENModerate

Out-Performing Total Internet(Growth rates of 9% or higher)

25© comScore, Inc. Proprietary and Confidential.

HOME & GARDENModerate

FURNITURE, APPLIANCES & EQUIPMENTModerate

CONSUMER PACKAGED GOODSModerate

FLOWERS, GREETINGS & MISC GIFTSModerate

OFFICE SUPPLIESModerate

EVENT TICKETSModerate

APPAREL & ACCESSORIESFlat

SPORT & FITNESSWeak

Under-Performing Total Internet(Growth rates of 1%-8%)

Flat/Negative Growth

Page 26: State of the U.S. Online Retail Economy in Q2 2010

The Impact of Promotions & Price Incentives on Internet Behavior

26© comScore, Inc. Proprietary and Confidential.

Internet Behavior

Page 27: State of the U.S. Online Retail Economy in Q2 2010

50,00055,00060,00065,00070,00075,00080,00085,00090,000

Unique Visitors (000) to Comparison Shopping SitesSource: comScore Media Metrix

Comparison Shopping sites, such as Nextag and Shopp ing.com, have gained visitors and increased time spent on th eir sites

85.5 Million in Jul ‘10+30% vs. Jul ‘08

27© comScore, Inc. Proprietary and Confidential.

200250300350400450500550600

Total Minutes (MM) Spent on Comparison Shopping Sit esSource: comScore Media Metrix

440 Million in Jul ‘10+51% vs. Jul ‘08

Page 28: State of the U.S. Online Retail Economy in Q2 2010

0

20,000

40,000

60,000

80,000

100,000

120,000

Jul -2008 Sep-2008 Nov-2008 Jan-2009 Mar-2009 May-2009 Jul -2009 Sep-2009 Nov-2009 Jan-2010 Mar-2010 May-2010 Jul -2010

Total Unique Visitors (000) and Total Visits (000) to Coupon SitesSource: comScore Media Metrix

Coupon sites continue to grow in importance; catego ry visitors tend to skew slightly older and female

34.5 million UVs+34% vs. Jul ‘08

101.1 million visits+56% vs. Jul ‘08

28© comScore, Inc. Proprietary and Confidential.

Jul -2008 Sep-2008 Nov-2008 Jan-2009 Mar-2009 May-2009 Jul -2009 Sep-2009 Nov-2009 Jan-2010 Mar-2010 May-2010 Jul -2010

Total Unique Visitors (000) Total Visits (000)

UV Composition Index by Income UV Composition Index by Gender

Females

Males

114

86

97

104

101

104

Under $60K

$60K -$74,999

$75K -$99,999

$100K or more

Page 29: State of the U.S. Online Retail Economy in Q2 2010

4.4

5.3

6.8

7.2

RetailMeNot.com

Groupon.com

LivingSocial*

Coupons, Inc.

Top Coupon Sites by Unique Visitors (MM)July 2010

Source: comScore Media Metrix

Coupons.com, which leads the Coupon category in ter ms of UVs, reports $1 billion in redemption value in first hal f of 2010

“[Coupons.com] said savings from coupons printed out or loaded to a loyalty card from its online properties doubled to more than $1 billion from $529 million a year ago. The value of savings in June

alone hit $110 million, the highest total to date for any single month via

Coupons.com.” (MediaPost, July 2010)

29© comScore, Inc. Proprietary and Confidential.

1.4

1.6

2.2

2.2

2.4

4.0

4.4

CouponCabin.com

CouponMountain.com

MyPoints Sites

RebateGiant.com

eBayCoupon.US

EverSave.com

RetailMeNot.com

With only 2.2 million UVs, MyPoints Sites generated 14.5 million visits or an average

of 6.6 visits per visitor in July 2010.

*Note: LivingSocial is currently included in the Social Networking category within comScore Media Metrix. For the purpose of this analysis, it has been included in the above Coupon ranking.

Page 30: State of the U.S. Online Retail Economy in Q2 2010

1000

1200

1400

1600

1800

2000

Flash Sale sites continue to gain traction with hig h growth rates versus year ago, although we’re seeing a slight slo wdown during the summer months

HauteLook+12% vs. July ‘09

U.S. Unique Visitors to Flash Sale SitesSource: comScore Media Metrix

30© comScore, Inc. Proprietary and Confidential.

0

200

400

600

800

1000

HAUTELOOK.COM IDEELI.COM GILT.COM RUELALA.COM

Ideeli+382% vs. July ‘09

Gilt+46% vs. July ‘09

RueLaLa+15% vs. July ‘09

Page 31: State of the U.S. Online Retail Economy in Q2 2010

Group buying is surging. Groupon.com and LivingSoci al continue to execute against strategies that enhance the user ex perience and entice consumers from across the Web

U.S. Unique Visitors (000)Source: comScore Media Metrix

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Groupon.com+3300+% vs. YA

LivingSocial.com+8300+% vs. YA

31© comScore, Inc. Proprietary and Confidential.

19% of UVs to Living Social are sourced from Evite and

15% from Facebook. Source: comScore Media Metrix, July 2010

LIVINGSOCIAL.COM GROUPON.COM

Page 32: State of the U.S. Online Retail Economy in Q2 2010

Half of consumers say they’ll abandon their shoppin g cart if free shipping isn’t offered, a quarter will only buy whe n free shipping is an option and 90% won’t pay more than $10

Q. In general, how much are you willing to pay for shipping on a purchase made online?Source: comScore Survey – July 2010

23%

47%

I only purchase items with free shipping

Between $0.01 and $4.99

51% of consumers are at least ‘somewhat likely’ to cancel their entire purchase if free shipping is not offered.*

32© comScore, Inc. Proprietary and Confidential.

47%

20%

4%

1%

0%

0%

4%

Between $0.01 and $4.99

Between $6 and $9.99

Between $10 and $14.99

Between $15 and $19.99

Between $20 and $49.99

More than $50

Shipping charges do not matter to me

% of All Respondents

*Q. If you reached the end of your online checkout and found that free shipping was not offered, how likely would you be to cancel your purchase? (comScore Survey, July 2010)

Page 33: State of the U.S. Online Retail Economy in Q2 2010

Free Shipping Alternatives

Special pricing, future discounts and rewards/incen tives are appealing alternatives to free shipping for consume rs

54%

31%

Special pricing on items

Discounts on future purchases and/or Reward Points/ Incentives

Q. If free shipping was not offered on an order, which of the following would m ake you more likely to continue with your purchase anyway?

Source: comScore Survey July 2010

33© comScore, Inc. Proprietary and Confidential.

31%

16%

11%

13%

16%

Discounts on future purchases and/or Reward Points/ Incentives

Faster shipping

Money back through branded credit card offers

Not sure

None of these % of All Respondents

66% would be more likely to continue their purchase if

special pricing or discounts/rewards on future

purchases were offered

Page 34: State of the U.S. Online Retail Economy in Q2 2010

Other Digital Trends Retailers Can’t Afford to Igno re

34© comScore, Inc. Proprietary and Confidential.

Page 35: State of the U.S. Online Retail Economy in Q2 2010

130,000

150,000

Facebook monthly UVs now over 145 million in the U. S. while MySpace still reaches 60 million – more people than any single multi-channel retailer site

Uni

que

Vis

itors

(000

)

Number of Unique U.S. Visitors (000) to Facebook.co m and MySpace.com Source: comScore Media Metrix

+66% in July 2010 vs. YA

35© comScore, Inc. Proprietary and Confidential.

50,000

70,000

90,000

110,000

Uni

que

Vis

itors

(000

)

-11% in July 2010vs. YA

In May 2009, Facebook surpassed MySpace for the fir st time in terms of total U.S. UVs, and the site is continuing to experience explosive growth, now with more than 2X the monthly UVs of MySpace.

Page 36: State of the U.S. Online Retail Economy in Q2 2010

On fixed Internet, Retail sites and Search have a c omparable reach, however, with Smartphones and Mobile, Search’s reac h is about 3X and 5X greater than Retail sites, respectively

78.3%88.8%

51.2%

% Reach for Search and Retail On Fixed Internet, Sm artphone & MobileSource: Media Metrix + MobiLens, June 2010

36© comScore, Inc. Proprietary and Confidential.

15.8%5.6%

19.6%

Internet Smartphone Mobile

Retail Search

Page 37: State of the U.S. Online Retail Economy in Q2 2010

Among Smartphone users, only 10% have purchased phy sical items via their phones. On average, these users spent $121 in the last 3 months

Q. Do you own or use a smart phone or digital media device, such as an iPhone, iPad, Droid,

Blackberry, Kindle or similar device?

Source: comScore Survey July 2010

In the past 3 months, approximately how much money have you spent on each of the following types of digital content via a mobile device, Smartphone or other wireless device?

Average dollars spent (among

those who purchased)

% of Smartphone users who purchased

Movies/videos/TV shows $28 13%

Games $24 17%

Music $19 17%

Kindle books $15 9%

Applications $10 14%

Other type of e-book $10 7%

Ringtones $7 9%

Wallpapers/graphics $7 6%

37© comScore, Inc. Proprietary and Confidential.

Wallpapers/graphics $7 6%

Other digital content $5 5%

In the past 3 months, approximately how much money have you spent on each of the following via a mobile device or Smartphone?

Average dollars spent (among

those who purchased)

% of Smartphone users who purchased

Physical items purchased from a retail site $121 10%

Physical items purchased from an auction site $52 7%

‘Deal of the day’ sites $48 8%

Renewing or recurring website expenses $23 9%

Renewing subscriptions to online services $22 9%

Other physical/subscription purchase $2 2%

22%

78%

Yes No

Page 38: State of the U.S. Online Retail Economy in Q2 2010

Twitter experienced explosive growth in early 2009, which has since leveled off at about 20+ million monthly UVs. API usage likely means that actual monthly users are somewhat higher

Total Unique Visitors (000) to Twitter.comSource: comScore Media Metrix Media

Uni

que

Vis

itors

(00

0)

20,000

25,000

30,00024.8 million UVs

+17% vs. July ‘09 & +3066% vs. July ‘08

38© comScore, Inc. Proprietary and Confidential.

Uni

que

Vis

itors

(00

0)

0

5,000

10,000

15,000

Page 39: State of the U.S. Online Retail Economy in Q2 2010

44%33%

24%22%

Reading tweets from users I follow

Posting my own tweets

Conversations with other users

Following businesses to find sales/deals/special pr ices/promotions

Consumer Usage of Twitter

22% of Twitter users follow businesses to find spec ial deals, promotions or sales

Q. For which have you used Twitter?Source: comScore Survey July 2010

39© comScore, Inc. Proprietary and Confidential.

22%21%20%

17%15%

14%11%

9%4%

16%

Following businesses to find sales/deals/special pr ices/promotions

Finding breaking news

‘Retweeting’ other users’ tweets

Following celebrities

Finding political news

Finding product reviews/opinions

Following my favorite sports teams

Asking for help/advice from other users

Other

None of the above

% of Twitter users

29% of Twitter users in total use the

service for retail-related purposes

Page 40: State of the U.S. Online Retail Economy in Q2 2010

The Use of Video in Retail

40© comScore, Inc. Proprietary and Confidential.

Page 41: State of the U.S. Online Retail Economy in Q2 2010

Retail video – a quick overview

July 2009

July 2010

% Chg vs. YA

Number of people who watch video on retail sites each month

41MM 58MM +40%

% of retail site visitors who also viewed video 28% 34% +18%

YOY growth in retail video viewers (40%) significantlyoutpaced growth

41© comScore, Inc. Proprietary and Confidential.

who also viewed video onsite

28% 34% +18%

Total # of viewed videos

174MM 311MM +79%

Viewing time per person

11mins 20mins +82%

% reach total US population

14% 20% +43%

outpaced growth in total video viewers (17%)

Source: comScore Video Metrix

Page 42: State of the U.S. Online Retail Economy in Q2 2010

Adding video to retail sites is extremely powerful

150

200

250

137

201

Retail site visitors who also view video are 64% more likely to purchase

Retail site visitors who also

Buying Power IndexSource: comScore Video Metrix 2.0, June 2010

42© comScore, Inc. Proprietary and Confidential.

TotalInternet

Total Internet w/ Video

Retail Site Visitors

Retail Site Visitors w/

Video Viewing

0

50

100 100115

137view video spend 2 minutes longer onsite per visit

Page 43: State of the U.S. Online Retail Economy in Q2 2010

Nearly 100% of online spenders are video viewers

Non-Video Viewers

4%

43© comScore, Inc. Proprietary and Confidential.

Video Viewers96%

Source: comScore Video Metrix 2.0, June 2010

Page 44: State of the U.S. Online Retail Economy in Q2 2010

Video advertising is significant in terms of online audience reach

63% of the online audience is currently reached by video advertising each month

83% of all online

44© comScore, Inc. Proprietary and Confidential. Source: comScore Video Metrix 2.0, June 2010

83% of all online spending comes from them

Page 45: State of the U.S. Online Retail Economy in Q2 2010

Video advertising is increasingly important in term s of impact

83% of all online spending comes from these video viewers who have seen a video ad

45© comScore, Inc. Proprietary and Confidential. Source: comScore Video Metrix 2.0, June 2010

Page 46: State of the U.S. Online Retail Economy in Q2 2010

Not all video audiences are created equal when it c omes to video advertising and retail spending at a category level

100120140160180

170

145136115

Buying Power IndexSource: comScore Video Metrix 2.0, June 2010

46© comScore, Inc. Proprietary and Confidential.

Total Video Sites Video Ad Network Category

Earned Media & Social Video

Long Format TV0

20406080

100

Page 47: State of the U.S. Online Retail Economy in Q2 2010

Tips for Retailers Considering Video

� For key products with important and detailed benefi ts, adding video to your site can encourage people to spend more time on you r site and ultimately to make a purchase

– Remember, almost all online spenders are video viewers and retail site visitors who view video are 64% more likely to make a purchase

� When adding video to your site or on sites like You Tube, ensure your videos are easy to find and have detailed metadata tags for search visibility

47© comScore, Inc. Proprietary and Confidential.

– this will help your video cut through the clutter to reach your target audience

� Video advertising on premium and social video sites like Hulu and YouTube can help you reach people who are much more likely than typical Web visitors

– It’s definitely worth considering for high value products, branding or important launches

Page 48: State of the U.S. Online Retail Economy in Q2 2010

comScore Holiday Season Retailer Report

Track the performance of your site versus your comp etitors’ during the holiday season and get answers to important questio ns such as:

� How does my audience size and that of my competitors’ vary day to day throughout the holiday season?

� What are my peak traffic days? What retailers are leading in terms of audience size?

� To what extent are retailers leveraging free shipping?

� How effective is my site compared to the competition at converting visits into

48© comScore, Inc. Proprietary and Confidential.

� How effective is my site compared to the competition at converting visits into transactions and how does that compare with site averages across the Internet?

� How qualified is the traffic at each of the competitive domains as well as my own?

� To what extent is my site and my competitors’ sites penetrating the online buyers and how does that compare to last holiday season?

For more information:Jenn Vlahavas

[email protected]

For more information:Jenn Vlahavas

[email protected]

Page 49: State of the U.S. Online Retail Economy in Q2 2010

QUESTIONS?

49© comScore, Inc. Proprietary and Confidential.

Please contact us at [email protected] if you have anyadditional questions or comments.

Page 50: State of the U.S. Online Retail Economy in Q2 2010

Thank You!Note: A copy of this presentation will be sent to a ll attendees within 24 hours of today’s webinar.

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