WEBSHOPPERS REPORT 2014 TH 30 EDITION APOIO:
Índice What WebShoppers is... 3 E-bit... 4 E-bit Products... 5 Methodology... 7 Executive Summary... 8 st Chapter 1-1 Semester Results and Expectations for the 2nd Semester... 11 Chapter 2-The World Cup s Impact on e-commerce... 22 Chapter 3-M-Commerce: Buying Behavior... 32 Chapter 4-FIPE/Buscapé Index... 40 Credits and Final Observations... 47 2
What WebShoppers is WebShoppers, an E-bit initiative, aims to disseminate critical information with the purpose of promoting an understanding about e-commerce in Brazil. The report, which is published semi-annually, analyses e-commerce s evolution, points out estimates, behavior changes and e-consumer preferences, as well as market trends, contributing to the development of the sector. 3
E-bit Present in the Brazilian market since January 2000, E-bit has been accompanying the evolution of digital retail in the country since it began, becoming a reference on this topic. Through a sophisticated system, which collects data directly with the online buyer, E-bit generates detailed information about e-commerce on a daily basis. On the website, E-bit (www.ebit.com.br) provides relevant information for consumer purchase decision-making, offering products and services to retailers. For consumers, the E-bit store certification helps to increase online purchase trust. Through classifications with medals (diamond, gold, silver and Bronze), which confirm the quality of the services provided by the retailer, consumers find arguments that help their decision process. For entrepreneur s, E-bit is a source of knowledge regarding e-commerce in Brazil, contributing to the development of the business and industry in general. The WebShoppers report, published semi-annually, analyzes e-commerce s evolution, trends and estimates, behavior changes and e-consumer preferences, as well as suggesting improvement needs, thus, contributing to the development of the sector. Find out more about E-bit and its main products, below. 4
E-bit Products E-bit Certification E-bit has agreements with more than 21,000 stores and consumers from these stores are invited to answer a survey, after confirming their purchase on the internet. There are three steps: one immediately after the effective purchase and another performed a few days later, to evaluate the delivery, and then a third survey regarding the usability of the product. The process is automatic and simple, performed on the internet. Through these evaluations, E-bit calculates a score for each store and classifies them with medals (Diamond, Gold, Silver and Bronze) E-bit Help - An exclusive and free service, which seeks to assist consumers contact with virtual stores. E-bit Help aims to reduce the difficulty and time spent by consumers when trying to communicate with stores, in case they do not receive the purchased product. E-commerce Information The questionnaires answered daily by consumers about the quality of services provided by virtual stores feed the E-bit database. By crossing data, E-bit produces reports that trace the profile of online consumers- with info about gender, age, income, education, habits-and also comparatively evaluate the services provided by virtual stores, such as payment, billing, etc. The major highlighted reports include: e-dashboard - A modern tool that provides daily information with market and online store evolution, featuring data which includes: number of orders, billing, average ticket, number of one-time consumers, geographic region share, category market share (computers, electronics, etc.), purchase motivators, delivery status, payment forms used, among others. E-commerce Overview Report and Forecast: - Presents the market s evolution data since 2000, with projections for 2020. Price Monitor - In addition to the Brazilian e-commerce sales monitoring reports, E-bit offers a price, competitiveness and virtual consumer purchase intention monitoring service. With Price Monitor, it is possible to monitor, in real-time practically, the price of products in virtual stores, as well as evaluate 5
the categories, products and brands that are most sought after by consumers when they use the internet to make a purchase, as well as the transport rates and the purchase intention for a product. Top Hits -Presents the products that are most sought after by Brazilian e-consumers, with detailed information about each category and subcategory s share, with data from the Buscapé network. Behavioral Analysis Report - Displays Executive information about the satisfaction level regarding services provided and the consumer profile of your virtual shop, tracing a comparative with the e-commerce market. In addition, you can choose to receive real-time comments from unsatisfied customers, along with the order number. Thus, it is possible to immediately detect any problem and take on resolution and customer retention actions, transforming unsatisfied customers into loyal customers. Find out more about E-bit products by sending an email to: negocios@ebit.com.br. 6
Methodology The 30th edition of the WebShoppers report uses information from surveys conducted by E-bit with more than 21,000 online stores and its e-consumer Panel, in addition to adhoc researches and external information. E-bit Certification Survey Since January 2000, E-bit has already collected more than 19, 2 million answered questionnaires after online shopping processes, and more than 300,000 new questionnaires are added to this number monthly. E-bit data is also collected with online buyers, after purchases. The E-bit certification service allows consumers to evaluate after-sales services, client services, and the probability they will return to the virtual store, and the %age index that they will refer this store to friends and relatives, known as NPS (Net Promoter Score). This compiled information, generates monthly market intelligence reports that indicate the socio demographic profile of the e-consumers, as well as the best-selling products, most used payment forms, repurchase indicators, among other information. Through another WebShoppers edition, E-bit expects to continue contributing to the development of the internet and e-commerce in Brazil. Enjoy your read! Equipe E-bit 7
Executive Summary Brazilian e-commerce registered R$ 16.06 billion in the first half of 2014, higher than the same period in 2014 (with R$ 12, 74 registered) which represents a 26% nominal growth for the sector. The number of orders during this period reached 48.17 million, 36% higher than the first half of 2013. The average ticket was registered at R$ 333, 40, which in this case was lower since the previous period registered a R$ 359, 48 average ticket. For the second half of 2014, the forecast is to have a growth approximately 15% growth in the e-commerce sector. According to E-bit, revenue in 2014 is expected to reach R$ 35 billion. This value represents a 21% nominal growth rate compared to 2013 reaching 104 million Brazilian e-commerce orders. The Fashion and Accessories category continues leading e-commerce sales (18% of the total volume of orders), followed by Cosmetics and Perfumery (16%) and Appliances (11%), just to name the top three. E-commerce gained 5.06 million new customers in these first six months of the year. They made their first purchases online, marking a 27% increase compared to the first half of 2013. The number also affected the sum of 25.050 million e-consumers who performed purchases during this time. By the end of 2013, 51.3 million e-customers were quantified. With a forecast of having 11.6 million new e-consumers until the end of 2014, Brazilian e-commerce is expected to reach 63 million one-time e-consumers, those who have already performed at least one purchase in a Brazilian site. In m-commerce, sales had a significant increase in the total e-commerce share in the first six months of this year, going from 3.8% (June/2013) to 7% (June/2014), which represented an 84% growth rate in one year. E-bit s forecast is to get close to 10% in December /2014. 8
Revenue from transactions conducted through mobile devices in Brazil more than doubled compared to the same period in 2013, with R$ 1.13 billion in salescompared to the R$ 560 million last year, a 102% variation. From January to June 2013, 1.278 million orders, which during this same period in 2014 reached 2,890 million. The average ticket, however, was reduced by 11% registered as R$ 391, in this same comparison. From these purchases made on mobile devices, 60% were performed on tablets, while the remaining 40% are smartphones (through sites without using APPs). The three categories most sold are Fashion and Accessories (17.5%), Cosmetics, Perfumery and Health (17.4%) and Appliances (11.1%). In regards to the profile, the survey showed that 57% of m-consumers are women, in the 35 to 49 year old age group (39%). Men represent the remaining 43%, following the average female age. Socio-economic Class A and B account for 64% of the m-commerce participants, while C and D classes represent 25%. The other 11% did not want to report their income. Products with a World Cup "appeal" that were more concentrated on the online sales channel were: smartphone, GPS with a TV, digital camera, mobile phone, tablet and games / football games. In addition, in the offline channel: soccer balls, t-shirts and barbecue grills and coolers. TV sets had increased sales in the first half of the year due to the World Cup. In January 2014, the product represented a 39% share in sales within the Electronics category. In June 2014, this reached 48%. Only 11% of the respondents mentioned the World Cup as motivation for the purchase of any of the related products. The majority, 88% of the consumers performed purchases with other objectives and 1% could not answer. In the first six months in 2014, the NPS index has shown improvements on a monthly level, starting at 49.45% (January /2014) and reaching 60.46% (June/2014), except for a small reduction compared to 60.82% on the previous month (may /2014). In the 12 calendar months, the NPS ranged between 58.96% (June/2013) and 60.46% (June /2014), with the greatest reduction in 9
December 2013, with 46.93%, when the number of orders rises considerably with the search for items on Black Friday and the end of the year festivities. In June 2014, 49.59% of e-consumers took advantage of free shipping, a much smaller group than in June 2013, when 62.34% were used this resource. When comparing the first half of 2014 to the same period in 2013, the FIFE / Buscapé price index had a -1.46% reduction. From the 142 categories compared in the period, 84 had an average price increase of 3.77% and 58 categories had an average price reduction of -4.83%. During the period, there was a price reduction in six of the ten researched groups and increases in four of them. The group with the largest reduction was Fashion and Accessories (-8.61%), followed by Telephony (-7.10%), and Electronics (-5.64%). 10
Chapter 1 1 st Semester Results and Expectations for the 2 nd Semester
Even with the economy s low growth rate in Brazil and the recent inflation historic close to the goal s limit, the e-commerce sector remains growing at a quick pace. As was expected for 2014, the nominal growth in sales in the first half of the year was registered at 26%, way above traditional retail, which only had around 4% growth. The main arguments that contributed to this growth are: Increase of TV sales in the first half of the year due to the World Cup. In January 2014, the product represented 39% of the sales share within the Electronics category. In June 2014, it reached 48%. Smartphone sales also continued heated, which contributed to the entry of new e-consumers and the growth of m-commerce. Improvements in the Net Promoter Score (NPS) indicator, which measures customer satisfaction. Even with a reduction in the free shipping participation in purchases, from 62% (June/2013) to 50% (June/2014), the index had a small increase in consumers from 58.96% (June/2013) to 60.46% (June/2014). In the first half of 2014, the sector gained 5.06 million new consumers. They inaugurated their online purchases, representing a 27% growth rate compared to the first half of 2013. There was an extraordinary increase in sales participation through mobile devices in the first six months of this year, going from 3.8% (June/2013) to 7% (June/2014), which represented an 84% increase in one year. All of this shows that not only the use of mobile devices has grown, but that the stores are taking advantage of this movement and offering a better navigation experience for consumers. 12
st Sales in the 1 half of 2014 Brazilian e-commerce finished the first half of 2014 with R$ 16.06 billion in sales, overcoming the same period in 2013 (with R$ 12, 74 billion in sales), and registering a 26% nominal growth index in the sector. In the first half of 2013, compared to the first half of 2012, there was a 25% increase in sales, while the number of transactions increased by 20%. This year, the increase in the number of transactions represented a 36% growth. The increase in sales was most significant in the first quarter of the year, being 29% higher than the same period in 2013. However, in the second quarter the average ticket value growth sustained the sales growth, as the volume of orders was practically stable compared to the same period last year. In the month of June this year, there was a reduction in the volume of orders compared to June 2013. Sales in the 1st semester of 2014 Sales (billions) 1S13 1S14 R$ 12,74 R$ 16,06 Source: E-bit information (www.ebitempresa.com.br) Nominal growth over the same period of the previous year 1S13 Growth (Transactions) Growth (Sales) 1S14 Growth (Transactions) Growth (Sales) 20% 25% 36% 26% Source: E-bit information (www.ebitempresa.com.br) 13
Number of orders and average ticket The number of orders made was 48.17 million during this period and the average ticket went was registered as R$ 333, 40. In 2013, the numbers presented were 35.54 million purchases and an average ticket value of R$ 359, 48 (as shown below in the image). Orders (millions) Average Ticket 1S13 35,54 R$ 359,48 1S14 48,17 R$ 333,40 Fonte : E-bit Informação (www.ebitempresa.com.br) Number of new e-consumers The growing movement of the e-commerce sector in Brazil is the result of the increase in the number of stores, and therefore, the amount of products and offers and the conveniences and services customers have access to. In this way, the community of new consumers should only grow, resulting in 5.06 million new consumers from January 1 to June 30, 2014. This number is greater than the same period in 2013, when 3.98 million people become customers of virtual stores a 27% increase compared to the previous year, which helped reach the 25.05 million e-consumers who made purchases in that time period. 14
Evolution of the numbers of new e-consumers 1st Sem 2014 1st Sem 2013 1st Sem 2012 1st Sem 2011 1st Sem 2010 1st Sem 2009 5,06 milion 3,98 milion 4,64 milion 3,97 milion 2,32 milion 2,5 milion 27% Growth Source: E-bit information (www.ebitempresa.com.br) The increase of new e-consumers helped increase a group that was registered as 51.3 million by the end of 2013- the year when 9.2 million new online consumers were registered. By the end of the year, the forecast is to have 11.6 million new e-consumers, and at this rate reach 63 million one-time e-consumers, those who have already made at least one online purchase on a Brazilian site. Evolution of the number of new e-consumers In millions 1º Sem 2014 e-consumers until 1º 2012 Sem 2013 1º Sem 2012 New e-consumers 2013 Total e-consumers until 2013 Forecast for new e-consumers until 2014 Total forecast for e-consumers 2014 42.2 9.2 51.3 11.6 63 Souce : E-bit Information (www.ebitempresa.com.br) 15
Evolution of the number of e-consumers- in millions (already made at least one online purchase) 63 50 40 30 20 17,6 23,4 32 42,2 51,3 10 2009 2010 2011 2012 2013 2014 Source: E-bit information (www.ebitempresa.com.br) Net Promoter Score * monthly in 2014 The Net Promoter Score (NPS), a research method used worldwide for large organizations to indicate customer satisfaction by measuring the consumer s intention of referring the store to a friend, is also another performance evaluation index for Brazilian e-commerce. In the first six months of 2014, the indicator has shown monthly improvements, starting at 49.45% (January/2014) satisfaction and reaching 60.46% (June/2014), except for a small reduction compared to the 60.82 % in the previous month (may/2014). In the 12 months, the NPS was between 58.96% (June/2013) and 60.46% (June/2014), with larger reduction in December 2013, with 46.93%, when the number of orders goes up considerably with the demand for items during the Black Friday and end of the year festivities. * Net Promoter, Net Promoter system and NPS are trademarks from Bain & Company, Inc., Satmetrix Systems, Inc. and Fred Reichheld 16
Monthly NPS (13 month evolution -Jun/13 to Jun/14) 58,96% 58,48% 58,83% 58,68% 59,29% 56,91% 46,93% 49,45% 52,64% 57,39% 59,57% 60,82% 60,46% 6/13 7/13 8/13 9/13 10/13 11/13 12/13 1/14 2/14 3/14 4/14 5/14 6/14 Source: E-bit information (www.ebitempresa.com.br) Top 10 categories By volume of orders Once again, the Fashion and Accessories category is leading e-commerce sales in Brazil. For exactly one year (from the first half of 2013), this category appears in first place and seems to prove it will keep its position for years to come. With 18% of the total volume of orders, it is followed by Cosmetics and Perfumery / Personal Care and Health Care (16%), Appliances (11 %), Books / subscriptions and Magazines (8%) and Telephony/Mobile phones (7 %), next to Computers (7 %), to name the "Top Five" (or Top Six, since these last two categories are equivalent). By placing numbers next to the WebShoppers 28th Edition, for the first half of 2013, we noticed changes in some categories positioning. Cosmetics and Perfumery/Personal care and Health, which was in third place, went up a level and swapped places with Appliances. Computers, which was fourth, dropped two positions now. The other existing categories can be observed in the following image. The leader, Fashion and Accessories, rose considerably, since a year ago it represented a 13.7% share in sales. 17
MOST SOLD CATEGORIES (BY VOLUME OF ORDERS) Fashion and Accessories Cosmetics and Perfumery Personal Care / Health Appliances 11% 16% 18% Books / Signatures and Magazines 8% Mobile phone and Smartphone Computers Home and Decor Electronics 7% 7% 6% 6% Sports and Leisure 5% Toys and Games 2% Source: E-bit information (www.ebitempresa.com.br) period: 1st Semester 2014 Free shipping The free shipping policy proves to be a great motivator to attract online consumers. One more factor to help the store have the client s preference and so that consumers can save when purchasing a product over the Internet to be delivered at home. This marketing strategy still demonstrates strength and appeal for the national players, and most of them have adopted the practice (as suggested by the chart). In June 2013, 62% used this resource and 38% paid for shipping, but this year in the same month the scenario changed, with a 50% free shipping adoption rate. 18
Free shipping percentage (13 month evolution -Jun/13 to Jun/14) Free shipping vs Paid Shipping jun/14 may/14 apr/14 mar/14 feb/14 jan/14 dec/13 nov/13 oct/13 sept/13 aug/13 jul/13 jun/13 49,59% 48,51% 52,17% 50,73% 50,88% 49,38% 50,25% 50,59% 52,25% 53,05% 56,40% 60,72% 62,34% 50,41% 51,49% 47,83% 49,27% 49,12% 50,62% 49,75% 49,41% 47,75% 46,95% 43,60% 39,28% 37,66% Free Paid Source: E-bit information (www.ebitempresa.com.br) Period: Jun/13 a Jun/14 M-Commerce in Brazil For a while, Mobile Commerce (or commerce performed through mobile devices such as smartphones or tablets) has demonstrated strong and growing participation among Brazilian users. In 2011, it was still very new, and since 2013, the transaction volume percentage in e-commerce practically doubled: from 3.6 % registered in June 2013 to 7% in June 2014. This increase was due to the increase in the demand for this type of appliance, as we can notice through this study, along with the technological development and preparation of online commerce companies, which are paying more and more attention to the mobile sales opportunity format for their platforms. 19
M-Commerce in Brazil M-commerce share in total E-commerce volume in Brazil (transactional Volume) 7,0% 0,3% 1,3% 3,6% 0,0% jun/10 jun/11 jun/12 jun/13 jun/14 Source: E-bit information (www.ebitempresa.com.br) Estimate for 2014 s results The second half of 2014 presents a different scenario for the Brazilian economy, because of the facts and events that are planned for our calendar until the end of the year. Such events may affect e-commerce s performance. Some reasons for this fact: Post-World Cup "Hangover" which reduces the sales intention for some products, purchased previously. The TV purchase anticipation will not allow for a higher number of sales of that product in the second half. The election factor affecting the market behavior and consumer trust negatively, as they become retracted before the scenario. Adverse economic indicators (low GDP growth, increase in unemployment, pressure to raise the dollar, inflationary pressure, among others). Although e-commerce presents a different and favorable growth dynamic, we foresee a growth in the second half of the year for the sector near 15%. 20
Sales in 2014 Finally, sales in 2014 are expected to reach R$ 35 billion, according to E-bit. The value represents a 21% nominal growth rate compared to 2013, reaching 104 million Brazilian e-commerce orders. Forecast for 2014 is kept Sales (billions of reais) R$ 35 Sales nominal growth 21% New e-consumers (millions) 12 Total e-consumers that have already performed al least one purchase (end of 2014) (millions) 63 Orders (millions) 104 Souce : E-bit Information (www.ebitempresa.com.br) 21
Chapter 2 The World Cup s impact on e-commerce
In recent editions of the FIFA World Cup (2002, 2006 and 2010), E-bit monitored electronic commerce sales in Brazil to find out how it would influence the industry s results. During these evaluations, a significant increase in sales of TV sets and products related to the event, such as t-shirts and sporting goods, was noticed. In 2014, and with the World Cup being hosted in Brazil, E-bit once again performed a market analysis during the period prior to the competition with the objective of discovering how it would affect online retail. The survey was conducted in April 2014 and presents sales results from the six months preceding the study. Methodology The quantitative research was carried out through a structured questionnaire filled out online. The target audience was virtual consumers who shopped on the Internet during the last 12 months (E-bit Panel). Data collection was made from April 11th, 2014 to April 28th, 2014 with 1,487 responses. The study sought to identify the categories of products related to the worldwide competition purchased within six months prior to April 2014 through the online channels (e-commerce sites) and offline (physical stores), and understand if the purchases were motivated by the football event or not. The intention was to present the impact on online sales. Based on a list of categories of products presented to the consumers, the question regarding which product (s) had already been purchased and which would be purchased in the months of April, May and June 2014. 23
Purchases through the offline and online channels, during the six months prior to the survey The five products most purchased among those with a higher sales propensity with the arrival of the World Cup were T-shirts and smartphones (for 40% of those who responded), mobile phones (35%) and TVs (28%) and tablets (26 %). Sales were carried out both in physical stores and on the Internet, between November 2013 and April 2014 (six months preceding the survey), and are shown in the following image. Purchased in the last 6 months (online and offline Channels) 60% 60% 65% 72% 74% 83% 83% 87% 89% 40% 40% 35% 28% 26% 17% 17% 13% 11% T-shirts Smartphone Mobile TV Tablets Digital Games/ Football phones camera Football team Games T-shirts Football boots 90% 90% 91% 91% 92% 94% 94% 94% 95% 98% 10% 10% 9% 9% 8% 6% 6% 6% 5% 2% Console game Grill Partable Sound System GPS with TV Football Barbecue Grill Home theater Micro system Cooler Projector Source: E-bit Information Base: 1,487 respondents Didn t purchase Purchased 24
Purchases per channels Products with a World Cup "appeal" that had sales most concentrated in the online channel were smartphones, GPS with TV, digital cameras, mobile phones, tablets and games/ football games. On the other hand, the products that had a higher sales concentration in both channels were football, t-shirts, Grills, and coolers. Channel purchased through in the last 6 months online vs. offline 12% 6% 8% 6% 5% 8% 16% 9% 9% 28% 72% 66% 55% 65% 66% 62% 48% 52% 60% 22% 26% 39% 30% 26% 23% 43% 38% T-shirts Smartphone Mobile TV Tablets Digital Games/ Football phones camera Football team Games T-shirts Football boots 14% 8% 11% 9% 7% 11% 10% 13% 11% 16% 52% 53% 40% 69% 26% 35% 54% 43% 36% 43% 34% 39% 49% 22% 68% 53% 36% 43% 53% 41% Console game Grill Portable Sound System GPS with TV Football Barbecue Grill Home theater Micro system Cooler Projector Purchased in the physical store Purchased on the Internet Purchased at a physical store and on the Internet Source: E-bit Information (only one answer per product-stimulated) 25
World Cup Motivation From the respondents in this study, few responded to the World Cup as a purchase motivation for any of the related products. These represent only 11%; with 88% of the consumers, purchasing for other reasons and 1% could not answer. Purchases in the last 6 months motivated by The World Cup 11% YES 88% NO 1% I CANNOT ANSWER If we relate the purchases based on the motivation of the World Cup, whether through an offline or online channel, the products that had an increased demand were TVs, t-shirts, football team shirts and footballs. It is worth stating, however, that the percentage of all of the products is too small, since only 11% (as mentioned previously) of the respondents claimed to have bought a product motivated by the World Cup. For example, from the 28% that purchased a TV set in the past six months, only 3.6% did so due to the sports event; and from the 40% who bought a t-shirt, only 3.1% mentioned that this was due to the World Cup. 26
Purchases in the past 6 months x purchases motivated by the World Cup in the past 6 months 40% 40% 35% 28% 26% 17% 17% 13% 11% 3,1% 3,6% 0,5% 0,5% 0,6% 1,2% 1,5% 2,8% 0,5% T-shirts Smartphone Mobile TV Tablets Digital Games/ Football phones camera Football team Games T-shirts Football boots 10% 10% 9% 9% 8% 6% 6% 6% 5% 0,4% 0,3% 0,3% 0,3% 2,6% 0,2% 0,4% 0,3% 0,3% 2% 0,2% Console game Grill Portable Sound System GPS with TV Football Barbecue Grill Home theater Micro system Cooler Projector Purchased in the last 6 months Purchase motivated by the World Cup Source: E-bit Information Base: 1,487 respondents To evaluate the purchase intention one month before the World Cup and during the event (May, June and July 2014, three months after the survey period); E-bit also asked which products the consumer would be interested in. The highlights were smartphones (28%) and TVs (27%), tablets (20%) and t-shirt (15 %)-repeating some of the most mentioned categories in the previous six months. 27
Purchase intention over the next 3 months 72% 73% 80% 85% 86% 88% 90% 90% 90% 28% 27% 20% 15% 14% 12% 10% 10% 10% Smartphone Tvs Tablets T-shirts Mobile Digital phones camera Home theater Football team T-shirt Games/Football Games 93% 93% 95% 96% 96% 97% 97% 98% 98% 98% 7% 7% 5% 4% 4% 3% 3% 2% 2% 2% Console game GPS with Tv Micro system Barbecue Grill Grill Soccer Portable Boots Sound Projector Football Cooler Source: E-bit Information Base: 1,487 respondents Intends to purchase Does not intend to purchase TV Sales Even with the purchase intention encouraged by the World Cup for only 27% of the respondents, the TV sets had increased sales participation in the months leading up to the tournament, within the Electronics category. The volume of orders increased from 36% in February 2014, in an upline reaching 48% in June 2014, a 12% increase. 28
Among the best-selling brands, the South Korean Samsung and LG brands have had greater prominence, preferred by buyers and dominating the list of ten models that were most sold in the stores. TV share in the electronics category 68% 76% 78% 78% 79% 36% 39% 44% 47% 48% Feb 14 Mar 14 April 14 May 14 Jun 14 Source: E-bit Information Share - Volume of orders Financial Share Share% TV Subcategory (Volume of orders) Samsung LG Sony Philips AOC Others 5 8 8 13 38 28 38 Source: E-bit information (www.ebitempresa.com.br) period: 1st Semester 2014 29
Most sold TV brands Share% TV Subcategory (Volume of orders) Samsung UN32F5500 LED Plana 32 Samsung Smart TV 3D UN46F6400AF LED Plana 46 polegadas LG Smart TV 32LN570B LED Plana 32 Polegadas LG 39LN5700 LED Plana 39 Polegadas LG 32LN549C LED Plana 32 Polegadas Samsung UN32F4200AG LED Plana 32 Polegadas Samsung UN46F5500 LED Plana 46 Polegadas Samsung UN40F6400AF LED Plana 40 Polegadas LG 22MA33N LED Plana 22 Polegadas Samsung UN40F5500 LED Plana 40 Polegadas Others 4 5 3 3 3 3 2 2 2 2 71 Source: E-bit information Final observations E-bit concluded, through this study, that the greatest demands included the following products: t-shirts, smartphones, mobile phones, TVs and tablets (survey with suggested answers). These products were the most purchased and had the highest purchase intention, since October 2013 From the World Cup "appeal" products, the products with the greater concentration of sales through the online channel were smartphones, GPS with TV, digital cameras, mobile phones, tablets and games/ football games. On the other hand, the greatest concentration of sales through the offline channel were footballs, shirts, Barbecue Grills, and coolers. Only 11% claimed to have bought the products motivated by the World Cup and the products with the highest percentage of purchases motivated by the World Cup were: TVs, t-shirts, football team t-shirts and footballs. 30
Even with a small of purchase intention motivated by the football event, according to E-bit, the participation (number of orders and financial volume) of TV sets in the Electronics category grew, in the months leading up to the World Cup, through the online channel. The brands that stood out were Samsung and LG, dominating the list of the ten best-selling models during that period. Once again, the increase in TV sales boosted e-commerce sales, as occurred in the last three World Cups (2002, 2006 and 2010). 31
Chapter 3 The World Cup s impact Buying Behavior
As we see the sale and use of mobile devices with Internet access grow in Brazil, mobile e-commerce (or m-commerce) also becomes a strong trend receiving special attention in this WebShoppers 30th Edition. Check out some reasons for this and why this movement is just beginning: The growth in the use of mobile phones in the world is impressive. Currently, there are more than 6.5 billion active lines across the planet, an average of almost one line per inhabitant. In Brazil, there are almost 1.4 active lines per inhabitant (source: Anatel). The increase in sales of smartphones and broadband connections in Brazil justifies the intense growth of m-commerce. In 2013, 35.6 million smartphones were sold (source: IDC) and the forecast for 2014 is that this number exceeds 50 million. In 2013, 12 million households in the country had tablets that were used by those residing in the house. (Source: Cetic.br). With this rapid growth, we see the adoption of the use of mobile phones and tablets to verify product information, perform price comparisons and shop using these mobile devices. Consumers are more and more mobile, buying at home, at street stores and in shopping malls and they expect stores to understand this behavior. On the 29th edition of the WebShoppers report, we explored this Omnichannel behavior. Retailers who still do not understand this change in consumer behavior will lose approximately R$ 2.5 billion in sales in 2014 (estimate of the total amount spent on purchases through mobile devices). Results in the 1 st Semester of 2014 In the first half of 2014, m-commerce sales in Brazil more than doubled, compared to the same period in 2013, with R$ 1,13 billion compared to R$ 560 million in the previous year, a 102% increase. If in 2013, 1.28 million orders were performed; in 2014, it reached 2.89 million. The average ticket, however, was reduced by 11% to R$ 391, in this same comparison. 33
As we can see, also, the transactional volume of m-commerce reached 7% in June 2014. In January 2014, it was 4.8%; E-bit s forecast is that it will reach 10% in December 2014. 1 st Sem. 2014 1 st Sem. 2013 Variation Sales (billion) R$ 1,131 R$ 0,560 102% Orders (million) 2,890 1,278 126% Average ticket R$ 391 R$ 438-11% Source: E-bit information (www.ebitempresa.com.br) M-commerce share in Brazil (transactional Volume) Jan 10 Jun 10 Jan 11 Jun 11 Jan 12 Jun 12 Jan 13 Jun 13 Jan 14 Jun 14 0,0% 0,0% 0,1% 0,3% 0,8% 1,3% 2,5% 3,6% 4,8% 7,0% Source: E-bit information (www.ebitempresa.com.br) 34
Mobile device share in M-commerce From these purchases through mobile devices on the Internet directly from websites without the use of APPs, 60% are originated on tablets, while the remaining 40% are smartphones. This data suggests that smartphones can still have a high share, with a better browsing experience, since the sales of new smartphones are growing more than tablets. Transactional share by type of device (through websites without using APPs) 40% 60% Smartphone Tablet Source: E-bit information (www.ebitempresa.com.br) period: 1st semester 2014 Ranking of best-selling categories in M-commerce E-bit also raised the most sold categories in m-commerce in Brazil, to monitor the e-consumer behavior in this platform format. Reaching the conclusion, that even on mobile devices, the preference remains close to what is reflected in overall e-commerce purchases. Thus, the Fashion and Accessories category also leads sales (17.5%), followed by Cosmetics, Perfumery and Health (17.4%) and Appliances (11.1 %), Books and Subscriptions to Magazines and Newspapers (8.8%) and Home and Decor (7.5 %), to name the top five. 35
M-commerce categories Ranking 1 st Sem/2014 1º 17,5% Fashion and Accessories 2º 17,4% Cosmetics and Perfumery / Health 3º 11,1% Appliances 4º 8,8% Books / Signatures and Magazines 5º 7,5% Home and Decor 6º 5,4% Electronics 7º 5,3% Sports and Leisure 8º 4,8% Mobile phone and Smartphone 9º 4,4% Computers 10º 3,5% Food and Beverages Mobile category participation in e-commerce In this context, we verified the categories that have, through their volume of orders, greater shares in the purchases made through smartphones and tablets. Which brings us curious results, since the most popular products are among categories with lower sales volumes in general. For example: food and beverages are in first place, with 8.9% of order performed through mobile resources. Following, in order: Collectibles (6.4 %), Pet Shop (6.4%) Sex Shop (6.3%) and Babies and Company (6.2%), which complete the Top 5. 36
The categories are those that generate greatest interest from the female public, which is more responsible for mobile purchases than the male public. All of this information still indicates that m-commerce has not reached double percentage digits for purchase share by category-not even in general e-commerce, and the forecast would be near this by the end of this year. Ranking of 5 categories with greater shares in mobile sales 1 st Sem/2014 M-commerce share in volume of orders 1º 8,9% Food and Beverages 2º 6,4% Collectibles 3º 6,4% Pet Shop 4º 6,3% Sex Shop 5º 6,2% Babies and Company Source: E-bit information (www.ebitempresa.com.br) period: 1st Semester 2014 M-commerce Consumer Profile The e-consumer profile has become diversified, and the mobile entrance contributes to this, including a behavior that is a little more recent. Within this public, we identify who is the consumer that accesses the virtual stores through smartphones or tablets. As in general, e-commerce, the female public s participation as a majority group is also evident with m-commerce purchases. In the first half of 2014, the survey showed that 57% of m-consumers are women, with most buyers within the 35 and 49-year age group (39 %). The men, who correspond to the remaining 43%, have an age participation that is similar to the female average (as shown below). 37
st Comparative profile of m-consumers in the 1 Sem. 2014 43% 1% 7% 28% 40% 20% 3% 57% 0% 7% 29% 39% 22% 3% Age (years old) Up to 17 Between 18 and 24 Between 25 and 34 Between 35 and 49 Between 50 and 64 Over 64 Source: E-bit information (www.ebitempresa.com.br) period: 1st Semester 2014 Socio economic profile of consumers in m-commerce x e-commerce By considering the family income *of the socioeconomic classes, the consumer profile for classes A and B is responsible for 64% of m-commerce in this first half of 2014. Classes C and D correspond to 25% and 11% did not want to report their income. What is possible to observe is that even with the growing sales of smartphones to classes with lower purchasing power, mainly the families that have higher incomes use these mobile devices to perform virtual purchases. The trend, however, is to reach a balance, as already occurs with general e-commerce. In this comparison, the largest purchase share is also concentrated among classes A and B, with 48%, but it is close to classes C and D, with 45%. 38
E-commerce (General) 48% 45% 7% M-Commerce 64% 25% 11% Classes treport* A B C D Prefer not to report income * A and B Classes (families with incomes over R$ 3,001/month) Classes C and D (families with income up to R$ 3,000/month) Source: E-bit information (www.ebitempresa.com.br) period: 1st Semester 2014 39
Chapter 4 FIPE/Buscapé Index
The FIPE/Buscapé Index was created to monitor prices in Brazilian e-commerce and has been published for 41 months. In 78% of these months, there were price reductions, reflecting the dynamism and competitiveness of the sector and the nature of the products that are predominantly sold, as shown in Figure 1. The last four months-march to June 2014 confirmed this trend, with a monthly average reduction of -0.34% in prices. In the nine months where there was an increase in prices, four are concentrated in the second half of 2013 due to the impact of the real s approx.16% devaluation impact in the short term (June, July and August) on prices of imported products that very significant in e-commerce, such as electronics, computers, telephony, and photography. Figure 1-Monthly Variations of the FIPE/Buscapé Price Index (%) 2,50% 2,00% 1,50% 1,00% 0,50% 0,00% -0,50% -1,00% -1,50% -2,00% -2,50% -3,00% -0,64% -1,18% -2,41% -0,79% -1,19% -0.03% 0,59% -0,05% -1,42% -1,06-2,85% 0,90% -0,73% Feb/11 Mar/11 Apr/11 May/11 Jun/11 Jul/11 Aug/11 Set/11 Oct/11 Nov/11 Dec/11 Jan/12 Feb/12 Mar/12 Apr/12 May/12 Jun/12 Jul/12 Aug/12 Spt/12 Oct/12 Nov/12 Dec/12 Jan/13 Feb/13 Mar/13 Apr/13 May/13 Jun/13 Jul/13 Aug/13 Sep/13 Oct/13 Nov/13 Dec/13 Jan/14 Feb/14 May/14 Apr/14 May/14 Jun/14-1,22% -0,73% -0,36% -0,25% -0,74% -1,21% -0,40% -0,64% -1,42% -1,28% 2,39-0,42% -0,26% -0,44% -0,28% 0,04% -0,37% 0,24% -0,34% 0,17% 1,00% 1,35% -2,44% 0,14% -0,52% -0,32% -0,19% -0,34% Source: E-bit information (www.ebitempresa.com.br) Annual variations Considering the 30 annual variations (t/t-12) in the FIPE /Buscapé Index series, there was a price reduction in 29 periods and increases only when compared to the previous year in November 2013, according to figure 2. From November 2012 on, there is a tendency to reduce the negative annual variations of the FIPE /Buscapé Index also as a partial reflection of the Exchange rates 41
which were stabilized around -1.5% in the first half of 2014 and which tend to remain at this level in the second half, if a new round of dollar appreciation does not occur. Figure 2-Annual Variations of the FIPE /Buscapé Index (month t/month t-12) -9,73% -9,81% -9,85% -8,29% -7,89% -7,02% -7,67% -9,32% -9,64% -8,92% -9,25% -7,79% -6,42% -6,13% -5,22% -4,94% -4,87% -4,59% -4,24% -2,83% -2,78% -1,99% -0,42% -0,77% -1,78% -1,22% -1,48% -1,36% -1,27% -1,66% Jan/12 Feb/12 Mar/12 Apr/12 May/12 Jun/12 Jul/12 Aug/12 Sep/12 Oct/12 Nov/12 Dec/12 Jan/13 Feb/13 Mar/13 Apr/13 May/13 Jun/13 Jul/13 Aug/13 Sep/13 Oct/13 Nov/13 Dec/13 Jan/14 Feb/14 Mar/14 Apr/14 May/14 Jun/14 Source: E-bit information (www.ebitempresa.com.br) The 1 st Semester in 2014 When comparing the first half of 2014 and the same period in 2013, the FIPE/Buscapé Price Index had a -1.46% reduction, as shown in Figure 3. From the 142 categories compared in the period, 84 had an average price increase of 3.77% and 58 categories had an average price reduction of -4.83%. During the period, there was a price reduction in six of the ten groups surveyed and an increase in four, with significant differences between the price variations of the groups. The group with the greatest reduction was Fashion and Accessories (-8.61), greatly influenced by "Tennis" (-15.49). The second group with the largest reduction was Telephony (-7.10), influenced by the -8.84% reduction in prices of "mobile phone and smartphones"; followed by Electronics (-5.64%) mainly due to "TV" (-6.43), "micro system/mini system" (-5.09), "blue-ray player" (-4.52%) and "home theater" (-3.63) price reductions. The fourth group was photography (-4.39), influenced by the -5.71% reduction in "digital cameras". 42
The Appliance group which represents the second highest share in Brazilian e-commerce registered a 3.81% price increase, which was the largest among the groups surveyed. The following categories of this group stood out with significant price increases in the first half of 2014/first half of 2013: "food grinder" (21.95%), "air climatizer" (11.07 %), "freezer" (6.54%) "Fan/air circulator" (5.41%) "Air conditioning" (4.70%) "Clothes dryer" (4.60%) and "fridge" (4.07 %). Among all of the categories that are part of the FIPE/Buscapé Index, the following items had an annual price reduction highlighted in the first half of 2014, besides those already mentioned: "football boot" ( -17.01), "dock station" ( -10.17), "football team shirt" ( -9.40), "e-book reader" ( -5.36%) and "tablet" ( -5.30). The following were highlighted due to price increases: "memory for PC" (27.67%) "automotive DVD monitor" (8.44%) "processor" (8.32 %), "mini vehicle" (7.73%) "cooler for drinks" (6.48%) and "PC" (6.01 %). Figure 3-Annual Variations in the FIPE/Buscapé Index (1 st Sem 14/1 st Sem 13) Appliances Cosmetics and Perfumery Toys and Games Home and Decor Computers Sports and leisure Photography Eletronic Telephony -8,61% Fashion and accessories 84 Categories with Increases 58 Categories with reductions General total (142 categories) 3,81% 2,15% 0,98% 0,60% -0,30% -0,39% -4,39% -5,64% -7,10% 3,77% -4,83% -1,46% -10,00% -8,00% -6,00% -4,00% -2,00% -0,00% 2,00% 4,00% 6,00% Source: E-bit information (www.ebitempresa.com.br) Prices of products associated with the World Cup Due to the World Cup, 13 categories were selected with products directly related to the event, and a price index specific for each set was calculated considering the e-commerce environment. 43
Figure 4 shows that the "FIPE /Buscapé Copa Index" had a -6.65% variation during first half of 2014/first half of 2013, which was lower than the -1.46% general variation announced by the FIPE/Buscapé Index. When compared to the IPCA variation, which had a 6.02% variation (considering the period from January to May), it is concluded that commercialized products that are more directly related to the World Cup had a price variation, on average, 12% lower than the prices in General. The electronic products maintained the above-average price reduction compared to the verified before the World Cup, but two products directly related to the event stood out with significant price reductions: "football boot" ( -17.01%) and "football team shirt" ( -9.40). Figure 4-Annual Variations of the FIPE/Buscapé Copa Index" (1 st Sem 14/1 st Sem 13) Cooler for beverages Multimidia Projector Electric Grill / Sandwich maker Portable Sound System Football Home Theater Micro System / Mini System Tablet Digital Camera TV Mobile Phone and Smartphone Football Team T-shirt Football boots FIPE / Buscapé Copa Index FIPE / Buscapé General Index IPCA (*) -17,01% 6,48% 3,93% 1,46% 0,75% -0,88% -3,63% -5,09% -5,30% -5,66% -6,43% -8,84% -9,40% -6,65% -1,46% 6,02% -18% -15% -12% -9% -6% -3% 0% 3% 6% 9% (*) Annual variation for the period from january to may. Source: E-bit information (www.ebitempresa.com.br) 44
E-commerce prices in relation to general prices Figure 4 illustrates that e-commerce pricing has an annual 7.2% variation lower than the average IPCA price variations in the first half of 2014, and that over the course of 2012 before the impact of exchange rate depreciation for imported product prices which are very significant in e-commerce- the FIPE/Buscapé Index was around 12% lower than the average price variations in the economy. Anyway, the numbers represent a significant gain in price competitiveness for products commercialized on e-commerce in relation to average prices that make up the family budget, partially explaining the significant growth of the sector, which in 2013 was 28% nominal growth rate. A significant portion of these differences can be attributed to the following factors: a) the FIPE /Buscapé price index monitors a set of products that are different than those evaluated by general price indexes, i.e. only the products commercialized in a more significant manner through the Internet; b) the weights of the products that are part of the FIPE/Buscapé Index are quite different than the weights for the same products in the generic indexes; c) the distribution channel monitored by the FIPE /Buscapé Index is exclusively e-commerce, while other indexes monitor various other traditional and physical channels. Figure 5- Annual Variations of the Buscapé Index, IPCA Index and the Difference (month t/month t-12) 7,50 5,00 2,50 0,00-2,50-5,00-7,50-10,00-12,50-15,00 1/12 2/12 3/12 4/12 5/12 6/12 7/12 8/12 9/12 10/12 11/12 12/12 1/13 2/13 3/13 4/13 5/13 6/13 7/13 8/13 9/13 10/13 11/13 12/13 1/14 2/14 3/14 4/14 5/14 6/14 Annual IPCA Variation Annual Fipe/Buscapé Variation Difference Fipe/Buscapé/IPCA. Source: E-bit Information ( www.ebitempresa.com.br) 45
The Foundation Institute for Economic Research (FIPE), represented by Prof. Sergio Crispim is responsible for the price calculation methodology for the FIPE/Buscapé Index. Contact: (+55 11) 3767-1700/3767-1701/3813-1444 46
Credits and Final Considerations
Credits / About Fecomercio SP The Commerce Federation for Goods, Services and Tourism of the State of São Paulo (FecomercioSP) is the main trade union entity in São Paulo for the Commerce and Service sectors. The Entity which is Responsible for administering, within the State, the Social Service for Commerce (Sesc) and the National Commercial Education Service (Senac), represents a segment of the economy that generates more than 1.8 million various size business activities, and unites 154 employers associations which account for 11% of the GDP in São Paulo about 4% of the Brazilian GDP generating nearly five million jobs. 48
Credits / About Câmara-e.net The Brazilian Chamber of Electronic Commerce (Camara-e.net), founded in May 7th, 2001, is the leading multi-sector entity for Digital economy in Brazil and Latin America, focused on electronic business as a strategic factor of sustainable economic development in the 21st century. Câmara-e.net has the mission of training individuals and organizations for the safe practice of electronic business, through the generation and dissemination of leading knowledge, as well as defending consensus positions between the main national and international public and private agents, that promote information and communication technologies. One of Camara-e.net s main priorities is preparing and proposing public, regulatory and market policies, that encourage the production and universalization of the benefits of information and communication technologies. The entity's partners represent leading companies from the main sectors of the Brazilian and worldwide economy. Access www.camara-e.net. 49
Credits / About the Brazilian E-commerce Association (ABComm) The Brazilian Electronic Commerce Association (ABComm) emerged with the purpose of boosting the e-commerce sector with relevant information, as well as contributing with its growth in the country. The Association brings together representatives of virtual stores and service providers in the information technology, media and payment form areas, performing with Government institutions, in order to support the sector s evolution. With over 3.500 associates, the nonprofit organization has specific boards created to boost the entire sector, including: New Business, Logistics and Operations, Government relations, Research, International Relations, Payment Forms, Training, Technological Development, Entrepreneurship and Startups, Legal, Metrics and Market intelligence, Electronic Crimes and Marketing. 50
Press Information Disclosure of E-bit Data E-bit requests to be referred to as a source of information in any academic study, press release, article, editorial or news article stating data that was collected in studies about the Brazilian e-commerce market, and especially the WebShoppers report. We reinforce that the data is E-bit s propriety, and therefore, those who use it must always inform the source, in order to enhance the credibility of the information and avoid that data disclosed by the company is attributed to other sources. 51