1. ForecastView Webinar Understand The Importance Of Mobile And Tablet Commerce And Web Influence Over The Next Five Years In EU7 Michael O’Grady, Forecast Analyst February 10, 2014. Call in at 10:55 a.m. Eastern time

2. © 2014 Forrester Research, Inc. Reproduction Prohibited2 Agenda › EU7 mobile and tablet commerce: Definitions/methodology Drivers and inhibitors Results › EU7 online influence: Definitions Drivers and inhibitors Results › Implications and impact: Key factors of web influence Key factors of mobile and tablet commerce

3. © 2014 Forrester Research, Inc. Reproduction Prohibited3 Agenda › EU7 mobile and tablet commerce › EU7 online influence › Implications and impact

4. © 2014 Forrester Research, Inc. Reproduction Prohibited4 Optimizing online commerce for the consumer requires an understanding of device adoption and use Which device do you prefer? Do you prefer to use it on-the-go or at home?

5. © 2014 Forrester Research, Inc. Reproduction Prohibited5 Definitions › Inclusions: Mobile commerce includes all online purchases on a tablet or smartphone by EU7 citizens for retail goods and travel services (air, hotel, rail, and car-hire for leisure and unmanaged business travel). It includes daily deals which are coupons bought on social shopping sites such as Groupon. › Exclusions: Retail categories such as cars, prescription drugs, food and drink sales at a restaurant or fast food chain, consumer-to-consumer commerce, and gasoline sales are excluded. Travel outside of air, hotel, rail, and car-hire is excluded. Excludes digital downloads from books and ringtones. This does not include purchases made at the retail POS through an NFC-enabled device or purchases made at a vending machine. Excludes mobile-influenced commerce, stock trades and investments, and money remittances. Excludes gambling.

6. © 2013 Forrester Research, Inc. Reproduction Prohibited6 Methodology OutputsAssumptions Forrester online retail forecast Technographics survey data Retail references: Politecnico di Milano (Italy), Fevad (France), Thuiswinkel.org (Netherlands), IMRG Capgemini (UK), and BVH (Germany) Travel references: PhoCusWright Daily deal reference: vente-privee.com Forecast elements The ratio of mobile buyers to mobile Internet users will grow at twice the rate seen from the evolution of online buyers to online users. The percentage of tablet users that buy online will converge toward the percentage of online users that buy online. Tablet users also own other devices; by 2018, tablets will become their preferred device for online shopping. Drivers Total online retail spend Tablet and smartphone adoption Tablet and smartphone online buyers Demographics income/online spend by device Multidevice usage (which will be category dependent) Tablet And Smartphone Commerce Forecast EU7 Tablet and smartphone buyers Tablet spend on retail, travel and daily deals Tablet and smartphone online spend per buyer Relative cross-country comparisons

7. © 2014 Forrester Research, Inc. Reproduction Prohibited7 One in seven online consumers own a tablet today; by 2017, nearly one in three will own one Source: Forrester Research World Tablet Adoption Forecast, 2012 To 2017 (Global) Tablet adoption

8. © 2014 Forrester Research, Inc. Reproduction Prohibited8 Tablet owners are laptop owners Base: 1,834 tablet owners EU7 online population 12+; Source: European Technographics ® Online Benchmark Survey, Q3 2012 Multidevice usage

9. © 2014 Forrester Research, Inc. Reproduction Prohibited9 Annual income of a tablet user is 20% more than that of a non-tablet user “What is the gross annual income of your household (before tax)?” Base: 19,027 online adults 16+ (online weekly or more); Source: European Technographics ® Online Benchmark Survey, 2013 Income and online spend tablet users Average annual salary of a tablet owner compared to a non-tablet owner

10. © 2014 Forrester Research, Inc. Reproduction Prohibited10 Online purchase behaviors on a laptop/desktop inform online purchase behaviors on a tablet Base: 18,024 online adults 16+ (online weekly or more) who personally use a device to purchase physical goods (desktop/laptop, tablet, smartphone); Source: European Technographics ® Online Benchmark Survey, 2013 Tablet online buyers

11. © 2014 Forrester Research, Inc. Reproduction Prohibited11 Clothes, event tickets, music, and video are the most popular categories purchased on a mobile phone Base: 2,093 online adults 16+ (online weekly or more) mobile phone users who purchased a product in the past three months; Source: European Technographics ® Online Benchmark Survey, 2013 “Specifically what type of product did you buy using your mobile phone in the past three months?” Mobile online buyers Number of countries

12. © 2014 Forrester Research, Inc. Reproduction Prohibited12 By 2018, almost half of online retail commerce will come through tablets and smartphones Source: Forrester Research Mobile And Tablet Commerce Forecast, 2013 To 2018 (EU-7) Results

13. © 2014 Forrester Research, Inc. Reproduction Prohibited13 Agenda › EU7 mobile and tablet commerce › EU7 online influence › Implications and impact

14. © 2014 Forrester Research, Inc. Reproduction Prohibited14 Although web influence has fuzzy boundaries, it helps quantify the importance and scope of an online presence Online influenceOffline influence

15. © 2014 Forrester Research, Inc. Reproduction Prohibited15 Definitions › Web-influenced sales: Defined as online sales or sales where a consumer researches their purchases online but buys the product in store. The term “research” is very broad and can vary from looking up a store location to making brand or purchase decisions online. › Online sales. Purchases made over the Internet — a customer needs to give financial commitment (give a credit card) online. In-store pickup, where a purchase and payment are made online, is still considered an online sale. › Web impact. Web-influenced sales plus online sales. This is the total impact of the Internet: sales that happen on the online channel and sales that happen across other channels but have been influenced by research done online. › Note: Model uses same definitions as web-influenced forecast US and US Cross-Channel Retail Forecast, 2012 To 2017 (http://www.forrester.com/US+CrossChannel+Retail+Forecast+2012+To+201 7/quickscan/-/E- RES105461?highlightTerm=Sucharita&isTurnHighlighting=false).

16. © 2014 Forrester Research, Inc. Reproduction Prohibited16 Definitions (cont.) › Holdouts. Shoppers who don’t regularly research or buy online through any devices › Researchers. These are shoppers who regularly research online but do not yet regularly buy online through any devices. › Web buyers. Those shoppers who regularly buy online › Traditional buyers. Those who shop but are not online

17. © 2014 Forrester Research, Inc. Reproduction Prohibited17 Model drivers 3. Evolution total buyers, online buyers, researchers, and holdouts 1. Evolution total retail market size Online share of advertising budget Drivers categories requiring little intensive research regular purchase categories (corner shop items like food, drink) impulse-buy categories with high immediacy (flowers, cards) must-see-before-buy categories (DIY, home improvements) Inhibitors 2. Evolution total online retail market size Third-party web influence data Other reference data Maximum category level web-impact limited for 4. Consumer’s buying preferences and information sources used for product research Increased online sales lead to increased online influence. Assumptions

18. © 2014 Forrester Research, Inc. Reproduction Prohibited18 Food, drink, and clothing make up 50% of EU7 retail spend Source: Forrester Research Online Retail Forecast, 2012 To 2017 (Western Europe)

19. © 2014 Forrester Research, Inc. Reproduction Prohibited19 Three profiles of online users: buyers, researchers, and holdouts 15% to 20% of online population do not buy or research online (called holdouts). 7% to 26% of online population research online but do not buy (called researchers). Online population 16+ Base: 12,688 online adults EU7 16+ (online weekly or more); Source: European Technographics ® Retail Survey, 2013 Online population 16+

20. © 2014 Forrester Research, Inc. Reproduction Prohibited20 More people research online than buy online Base: 12,688 online adults EU7 16+ (online weekly or more); Source: European Technographics ® Retail Survey, 2013 % online population

21. © 2014 Forrester Research, Inc. Reproduction Prohibited21 Holdouts and researchers earn less than online buyers Holdouts earn between 10% to 30% less than online buyers. Researchers earn 0% to 20% less than online buyers. % income relative to online buyer Base: 12,688 online adults EU7 16+ (online weekly or more); Source: European Technographics ® Retail Survey, 2013

22. © 2014 Forrester Research, Inc. Reproduction Prohibited22 Consumer buying preferences, example UK “Still thinking of the product you bought recently, which of the following influenced you when making the purchase?” Sum of responses Index score UK 53% offline Index score UK 47% online Base: 1,492 British online adults 16+ (online weekly or more) who recently purchased products/services in the past three months; Source: European Technographics ® Retail Survey, 2013

23. © 2014 Forrester Research, Inc. Reproduction Prohibited23 Consumer information sources, example UK “Which of the following sources did you use to research the most recent item that you have bought?”* Sum of responses Index score UK 60% online Index score UK 40% offline Base: 1,492 British online adults 16+ (online weekly or more) who recently purchased products/services in the past three months; Source: European Technographics ® Retail Survey, 2013

24. © 2014 Forrester Research, Inc. Reproduction Prohibited24 Web influence varies by country Source: Forrester Research Web-Influenced Retail Sales Forecast, 2013 To 2018 (EU-7)

25. © 2014 Forrester Research, Inc. Reproduction Prohibited25 By 2018, web-influenced sales will represent 44% of EU7 retail spending which will be five times greater than online sales % of total retail sales Sources: Forrester Research Web-Influenced Retail Sales Forecast, 2013 To 2018 (EU-7)

26. © 2014 Forrester Research, Inc. Reproduction Prohibited26 Agenda › EU7 mobile and tablet commerce › EU7 online influence › Implications and impact

27. © 2014 Forrester Research, Inc. Reproduction Prohibited27 Immediate purchase Research preference Purchase constraints Age/background Attitudes Social status/image Loyalty schemes Coupons Targeted messaging Online and offline behaviors Customer understanding (e.g., convenience) Product knowledge Increasing web influence depends on the customer, their background, their buying intent, and their habits Action-oriented Influence Encultured InfluenceCustomer Influence Embedded Influence

28. © 2014 Forrester Research, Inc. Reproduction Prohibited28 Examples of customer influence Comparison shopping sites Consumer ratings and reviews Favorite/trusted retail websites Search engines Social networking sites Family and friends Preferred purchase channel Shopping apps Loyalty schemes/promotions Brand reputation Media advertising Consumer/expert ratings and review Forums and message boards Usefulness of in-store display Product understanding Action-oriented Influence Encultured InfluenceCustomer Influence Embedded Influence Understand what motivates your customer Know the customer purchase journey Understand what influences a customer Understand your customer demographics

29. © 2014 Forrester Research, Inc. Reproduction Prohibited29 High-value/complex purchases (e.g., furniture) Small simple purchase (e.g., digital downloads, event tickets) Touch-before-buy sales (e.g., beauty, household goods, jewellery, health) Branded goods (e.g., computers, household appliances, consumer electronics) Online sales Online influence L H LH Different product categories have differing levels of web influence Cornershop sales (e.g., grocery)

30. © 2014 Forrester Research, Inc. Reproduction Prohibited30 What it means › Retailers that allow online buyers to use multiple devices on their purchase journey will be best suited to the challenge of mobile commerce. › Don’t forget the continued importance of the laptop/desktop user. › It is easier to purchase products online with a desktop, laptop, or tablets than on a mobile; screen size would often be a factor when choosing which device to use to make an online transaction. › Retailers that optimize their web influence are more likely to thrive, specifically for mobile. › Optimizing web influence should take a systemic view of consumer behaviors that consider influence that is action-orientated, encultured, and embedded which includes an understanding of what the customer is looking for.

31. Questions ??

32. Thank you Michael O’Grady mogrady@forrester.com