Tiffany Serbus-Gustaveson  0:18  

Happy Thursday everyone I am Tiffany Serbus-Gustaveson, a digital strategist for BWG Connect. And we are a network and knowledge sharing group. So we stay on top of latest trends, challenges, whatever it is, that is shaping that digital landscape, we want to talk about it, we will do at least 500 of these virtual webinars this year, due to the increase in demand better understand everything in the digital space. And we will do at least 100 in person small format dinners. So if you happen to be in a tier one city, feel free to shoot us an email. Yeah, you can send it to our team or myself, Tiffany Tiffany@BWGconnect.com. And we'd be happy to send you an invite these these innovatively 15 to 20 people are having a discussion around a specific digital topic. And it's always a fantastic time. It's from these conversations, we generate the topic ideas that we know people want to learn about. And it's also where we gain our resident experts such as Nick elixir, who is with us today. Anybody that we asked to teach the collective team has come highly recommended from multiple brands. So if you have any need to look at any service providers within the digital space, never hesitate to reach out, we have a list of the best of the best. And we will be happy to provide that information for you. A few other things, we have a talent agency. So if you do have any hiring needs, feel free to reach out and we'd be happy to connect you with BWG Talent and housekeeping items. We want this to be fun, educational, we will be having lots of fun actually, today, we will be doing a trivia game throughout the presentation for $25 gift cards for Amazon. So definitely keep your ears open, take some notes, because there's some curveball questions coming your way. And we also want to make sure that we end on time. So we started this about three to four minutes after the hour rest assured we're going to wrap up at least five minutes before the end of the hour to get to your next meeting or destination. So with that, let's rock and roll and talk about retail trends. So the team at NetElixir, there have been long term friends for years with the network. So I'm going to kick it out to you Udayan, if you could give a brief introduction on yourself, that would be fantastic. And we will dive into the information.

Udayan Bose  2:32  

Absolutely. Thank you so much for having me and having the NetElixir team on this one. Really a privilege to kick start, and I think it's still not too late to wish everyone a Happy New Year, and kickstart and I think I'm not very sure as to how good the timing is probably timing is great to discuss all of these trends. So much has been happening in the eCommerce industry or the digital marketing industry definitely just absolutely crazy. So what we will try to do is in today's about 40 odd minutes, 35 40 minutes, I'll be sharing with all of you some of our friends that we have captured from our natively saved retail Intelligence Lab, where we aggregate a lot of information from different different customers that we work with. I'll also be sharing with you some broad trends that our analyst groups have really identified. And then finally leaves you with about five recommendations that you can hopefully be able to utilize almost immediately to really drive a successful, successful 2023. So that's my quick sort of structure an agenda for today. I'll start with a quick introduction. For those of you who may not really be very familiar with intellectual, we we have been in digital marketing space for a very long time. We in fact, recently completed a 19th birthday exactly a week from now. So we'll turn 19 on the 26th of January. Thank you. And we help eCommerce brands find their engage high value shoppers, so we can call it a growth marketing agency or performance marketing agency. But our USP or the unique differentiator essentially is we really focus a lot in terms of the insights part. And as I think all of you know, insights at this point in time is as important as performance if not more. So I'm going to be sharing a lot of these insights with you that we have been able to extract using our AI marketing platform called XR insights. Some of the unique parts about NetElixir, we have been in this space completely 19 years next week. And we really have really been deep down in the retail eCommerce space, but all of this period, so have a lot of aggregated information and knowledge, live data as well as experiential knowledge about the retail eCommerce industry, pretty much each and every vertical within the retail industry. I talked a little bit about the AI marketing platform which works with the Fed As party cookies are still a little exciting sites, we do a fair amount of international search marketing though for today's presentation, all of my, all of the data and insights that I'm sharing entirely pertains to the to the US market. And last but not the least, a little bit of a bragging rights probably, we are one of the 27 agencies for Google, out of a pretty big number of agencies that are there in the US, we happen to be a part of the Google agency leadership circuit. So these are the group of top 27 agencies in the US. We are also very proud to really have a subsidiary which gives back we support the high school and college education for underprivileged girls from slums in India, and really help them find the job. And currently we are support sponsoring about 18. Girls, our aspiration is to grow this number to about 50 by 2025. And if you're interested in sort of knowing more about the foundation and contributing, you can scan this QR code and you can really or go to the site. Udaan-Trust.org. That's wonderful. Thank you a little bit about me. I started the company along with my wife back in 2004. Stephanie, and clearly out of our living room, in India, in fact, it has been a fascinating journey. And I'm truly and deeply thankful to partners such as yourself, the amazing team and intellects. Many of you are joining us today. And obviously, our amazing customers that we are very fortunate that they are sort of trusting and believing us with their hard earned marketing dollars. Also very privileged to be an Innovation Fellow at the lake Lange Center for Entrepreneurship, Columbia Business School, they have a swanky new business school building. And it's just a privilege to be among a pretty unique small group of entrepreneurs who coaches and mentors, the students at Columbia, essentially an entrepreneurship. I also do a fair amount of lecturing at the Johnson School of Management in Cornell, the City University of New York, in Baruch and the Indian School of Business as well. And you can feel free to sort of get in touch with me with my LinkedIn, or you can email me my first name Udayan@NetElixir.com. So I just dive right in with the holiday trends and insights. And

Tiffany Serbus-Gustaveson  7:21  

I mean, do we want to serve the game now? Sure,

Udayan Bose  7:24  

absolutely. I think we can, we can probably. Alright, so

Tiffany Serbus-Gustaveson  7:29  

here is the way we're going to go about this. The question is which retail category? So the biggest growth in online orders this holiday season, apparel, beauty, or gifting? Now whoever puts the answer into the chat, and the first to have the correct answer, but when a $25 gift card?

Udayan Bose  7:52  

It's a tricky one as well, definitely, because I think many of these categories did fairly well. Some of the categories and I'll go into the category wise description as well did not do as well as we had expected. But yeah, there was one category which was clear, a clear, clear outlier in this entire entire holiday season. And should we wait for a few more seconds? Or should we

Tiffany Serbus-Gustaveson  8:16  

I think we have a winner. I mean, be the game show host is no joke here. This is? Honestly, this is Mark, Mark, Mark Schwartz, you have 120 $5 gift cards.

Udayan Bose  8:31  

So Mark, you are absolutely right. The answer is Beauty by a very, very long margin. So this is where I sort of dive into our own aggregated eCommerce data from our data lakes regional Intelligence Lab. We as I think many of you have been a part of the BWG NetElixir webinars that we have done during the holiday season our prediction, webinars, etc, etc. So when we got in, I think September 15, was the holiday predictions webinar, where we share that we were forecasting about a 7% year on year online growth in eCommerce over all the categories included. And some of the categories that we were tracking were apparel, beauty, gifting home improvement, hardware and tools and pet supplies. The number was actually a bit higher than that we ended the end of the holiday season about 8.2%. And specifically, this is November and December, which as one of my subsequent slides would show may not entirely be considered as a holiday season because it has stretched beyond November and December. But in any case, I think November and December I think overall beauty X category grew at least for our customer data set by about 19% year on year, gifting grew by about 3% the apparel was still a fairly healthy like point 3%. Now I must add him differently. A couple of points. Okay. The first one is, this includes same inflation impact as well. So that's the reason We wanted to focus on the orders and not the revenue. So this is this separates out the inflation impact. And hence, I think we really wanted to have a like to like comparison in terms of number of orders as such, if you really add the inflation amount, the percentage revenue increase was harlotry higher than this. But overall, I think 8.2% is what we experienced across the different categories in terms of the year on year growth. Particular surprises as such, I mean, I think one of the categories, which I have not really added, here are two of them. Because we didn't really have adequate amount of customers probably two really included in this set. One was consumer electronics, I mean, that continues to lag, consumer electronics for the holiday season came at about minus 5% For our data set. And if you really look at the entire year 2022, it's sort of black by almost about 13%, right, that was a pretty big drop, when the 22 versus 2021 on the toys category, and I somehow believe that the toys category is really getting hit by one is obviously the the inflationary impact, but also it is getting hit substantially by changing consumer behavior or kids behaviors in this case. And that also actually, we saw year on year online decline of about 8%, for the entire year was close to about 10% as well. But some of the usual suspects, I've specifically taken out the grocery and food was awkward about 2%, apparel was 9.3, beauty 19% 53%, and so on. So overall, it was a pretty, pretty reasonable, I would say better than expectation, holiday season that we sort of got to Tiffany on this one. Happy to answer any questions, feel free to add your questions in the chat box. Happy to happy to answer that.

Tiffany Serbus-Gustaveson  11:51  

Yes. Questions, comments, throw them in there, we will get to it. Supplies being down? I mean, do you think it's because now in a post COVID world, you know, the pets? I mean, the pets were a big part of people being at home and acquiring a pet. And now

Udayan Bose  12:08  

possibly, I think definitely I think so as folks are getting back to work. I think we saw some impact in terms of the year on year online growth added part also is I mean, you must factor in that. In terms of pure retail sales of the offline at the brick and mortar retail sales, pet supplies has been doing fairly well. I think some of the some of the people who are really shopping online, really went back to shopping more, essentially under brick and mortar sources. But it was just more of a COVID lead shift, which again sort of went back, I see some questions coming in.

Tiffany Serbus-Gustaveson  12:48  

One is, is this number of orders or sales revenue,

Udayan Bose  12:53  

this is number of orders. That's what I was trying to classify because revenue would be a little higher, because we would have to have at the inflation impact. And inflation for different categories were different. In fact, some of the categories went through a deflation as well. And I have some some metrics on that as well later. But this is entirely number of orders of product. Okay.

Tiffany Serbus-Gustaveson  13:12  

And then we have somebody on the food side. So do you think it was relatively flat going against increases from COVID purchases,

Udayan Bose  13:21  

it was about plus 2%. For our data set, definitely, for the Food and Grocery is what we sort of combined together is over plus 2%. Which is again, not bad, because if you really look at it versus 2019 was probably plus a plus 36%. Right? So I think it's important for us to use those comps in the right way. Also, yeah,

Tiffany Serbus-Gustaveson  13:41  

definitely. And then when it comes to apparel category, is there a further breakdown of luxury versus non luxury apparel,

Udayan Bose  13:50  

what we have done is we sorted into categories, essentially in different segments like women's apparel, men's apparel, and so on and so forth. That is then subdivided into different the luxury and the non luxury segment as well. So this is an aggregated overall number. If I were to split out the luxury versus the non luxury, I think the the non luxury segment did better than the luxury segment, the luxury segment growth. Most likely, I'm sort of giving you the exact numbers but about 7.6% While the non luxury segment or the or the regular segment, as we sort of call it is close to about 12%.

Tiffany Serbus-Gustaveson  14:24  

And for the beauty category, expect it to keep growing.

Udayan Bose  14:30  

I think a lot was driven also by religious people sort of getting out and meeting with the family and friends because this was the first if I can call it but because I really wanted to be sensitive to that as well if I can really call it the first truly post pandemic holiday season, even last year when he went last year last year when he 21 people if you remember there was an Omicron surge. We started around. I think that cyber fight right and then it became pretty bad in December. So I think But it was also driven by the fact that a lot of folks really wanted to meet. So there were a lot of newbies in this as well. Plus in terms of gifting as well, I think we saw a bit of a lift on the within the beauty, we would expect it to continue at a fairly fairly brisk pace. And I am not very sure whether we can expect 19%, which is pretty robust. But I would definitely say that somewhere in the double digit percentage growth is something which is absolutely possible through 2023 as well.

Tiffany Serbus-Gustaveson  15:32  

Yes. specific app to all the questions that keep them coming, you

Udayan Bose  15:37  

guys. Okay, perfect. So let me sort of keep moving on. One interesting analysis that we have tried to do is I mean, we saw that the holiday season this year even extend to almost the entire fourth quarter. And a lot was driven by let us say October 1 and October 31, the prime early access day, really got the holidays off to a pretty strong start, right? I mean, so what we have tried to do is we have taken the entire holiday sales, let us say $100, a holiday sales, and try to break it down into all of these different segments. Right. So you have the October 1 to October 31. Were last year, but really I'm sorry, I keep on saying last year 2021 was about 26% was the percentage of total holiday sales, which happened between first of October and 31st. October, that percentage increased 27.4%. See last year, also 26% was a leap forward. Because in previous prior to the pandemic, that number used to be close to about 20 or 21%. So that was a big shift. And a big part of the shift in 2021 was many of you will remember those fear of stock outs right there was a massive inventory issue, which I think all of the categories were experiencing it 21. So that got a lot of lot of buyers to buy early. And that also sort of drove that 21% in 2019 to 26% of the overall holiday contribution in in 2021. That sort of evens sort of got to the next level 27.4% of the total holiday sales happened in October last year 2022. And we very clearly saw a spike during the prime early access date. And all of the all of the different shopping events or sales events, which happened during that time. November the first 19 days about 23.5% versus 27%. Last year. And we had we had a pretty strong cyber five, at least for our data set with about 14.1% of the total holiday sales. And whenever three months of holiday sales 14% happened just on those five days versus 12%. Last year, December at least for our data set was very comparable, it was not really majorly lesser compared to in terms of contribution compared to last year. But it was not very strong as well. So it was a very regular December, we saw heavy discounting come down quite dramatically in the first seven days of December. And then we saw a bit of a last minute shoppers lead to a small surge in the last about three, four days, effectively in December prior to Christmas. And then the Middle East, which is a big trend. Now, that was an important part as well, because that that drove a fair amount of sales also in the last five, six days, one week after Christmas. So some of the trends are interesting revelations will dive deep and just try to make sense. The first one is assuming that this the the second Prime Day or what Prime Amazon is calling the prime early access day is to be a norm moving forward. We may be looking at a at a future where the holiday season suddenly has become stretched to three months. Now this understandably has a massive implication for any marketer. Any any merchant does that primarily because you really have to plan a lot more in advance a lot differently in advance as well write out the what we call the classic four Ps of marketing really has to be re evaluated and re thought of as you really go in because how do you really compete, it becomes a wider time frame. And at the same time, you really have to protect your margins as well. The second trend, which I feel was unique and novelty probably last couple of years were the Black Friday promotions. They have gotten stretched to the entire week. So it became more of a Black Friday or a Thanksgiving week. Promotion as such, right. So that I think is more of a 2020 or 2019 is when it started off that particular trend and that has become a norm now. So it's very interesting. I mean, the reason I'm saying there is because all of this heavy discounting But what is the impact on the margins? And how do businesses really compete effectively? Whereby and how do very specifically direct to consumer companies compete versus a retailer who may have a much bigger assortment, and they probably have a slightly greater flexibility and running very specific customized promotions for different categories as well. But I think the the entire promotional mix of the promotional plan has to be very carefully thought of and planned well in advance. That's, that's what we what we see all the time.

Tiffany Serbus-Gustaveson  20:36  

Do you think the consumer is more educated and aware of supply chain Lowe's, so they were scared, essentially, they weren't going to get their items again. And so they were buying earlier?

Udayan Bose  20:49  

I'm not sure about this year, though, but it went unsold. When I said this year, I'm talking about 2020 to 2021, definitely, they were very aware of that. 2022. Also, if you remember, a lot of companies went into the holiday season, or I would say q4, with a fair amount of inventory as well. So inventory was a big challenge also for many of them. And as a result of which, in fact, we saw the prime early access day, there was a lot of past inventory liquidation, which was happening almost right. But personally, I'm quite intrigued as to how it seamlessly blended into a regular discounting pattern, right. So it's just that sometimes we tend to think of discounts or promotions almost like as batched in different time periods. Right. And different promotions may have different purposes, let us say the primarily acts as the I would probably argue had the purpose of liquidating the past inventory. But the consumer does not really see it that way. It really set the expectation that I can get stuff for a discount, right. And then there were some, some retailers or many retailers who continued the discounts, right, even on the regular regular items, and so on. And as a result of that October suddenly, should have been typically a three to five day, heavy discounting, three to five day heavy discounting month, it became almost like a 15 day heavy discounting month. And then that led into almost like a November. So it's I don't know if some research probably needs to be done in terms of the stretching of this entire promotional period, from the consumer perception perspective, which is very intriguing and interesting, but it understandably, can play havoc, it probably hasn't been you would have seen today, let us a PNG come up with its overall results and all this stuff. I mean, we will get to see some pretty solid, in fact, of all of these discounting on the margins, as the quarterly results start coming out now. And that's what I obviously, were thinking me over things will be on these things. So I get a little paranoid about that.

Tiffany Serbus-Gustaveson  22:57  

It's fascinating. And we have some good questions, too. So one is, did you take into account the weather differences, particularly the East Coast, the incremental weather that may have impacted our physical retail sales during that time period?

Udayan Bose  23:15  

That's, that's a beautiful point. So I mean, we can separate it out, not as much. But since we have taken the time period, specifically letting the East Coast got start started getting hit about 21st or 22nd. of December, there was this deep freeze which started right when t I think 21st of December is one was when we started getting either, but I was surprised at that percentage still remains almost consistent. Right? So percentage contribution of the overall sales. So I think it sort of got factored in there. We we may have thought that this 6.8%, maybe a little higher, but it was very comparable to what we had seen in 2021 as well. But I think 21st to 25th was a deep freeze or 26, I think was a deep freeze, which so it would have been factored in in this period. Yeah.

Tiffany Serbus-Gustaveson  24:01  

Yeah, definitely. It's something I consider live in Minnesota. It's gearboxes now, because you might not get it by the 25th. To clarify, amoebae equates a self purchased, sell purchase. Yeah. Beautiful.

Udayan Bose  24:15  

I mean, this this started becoming a trend. I think it is a trace back again, I'll give it a history of the me by us. I mean, it started in 2014 or 15, I think. And now it has become something quite substantial. As you have seen that we are even claiming that the holiday season sales may not literally stop with Christmas, it is almost like extending effectively to the end of the year. Right. So that's the reason we would have asked the question, is it like one holiday season or six holiday seasons purely from the shopping perspective? The shopping season as such? Yeah.

Tiffany Serbus-Gustaveson  24:47  

So me buyers were technically invented in 2014.

Udayan Bose  24:51  

I mean, we saw the trend starting I mean, they always been there

Tiffany Serbus-Gustaveson  24:56  

for myself over the holidays. I think since

Udayan Bose  24:59  

start becoming something and I think the me by term, the first time I noticed was probably around that time 2014 or 15? I mean, I hadn't really seen that term. So I mean, I'm pretty sure it would have existed before that.

Tiffany Serbus-Gustaveson  25:10  

Yeah, it's like one for me, one for you, one for me. Has marketing spent increased? So as marketing spend increase to cover the three months spread? Or is it just peanut butter spreaded? Out thinner?

Udayan Bose  25:26  

That's a fantastic question. I mean, we sort of did the calculations on the marketing spend increased about 17%. I mean, again, I'm talking about our data set of about 85 customers is a midsize and large retail eCommerce companies about about 17% was overall increase. The difference though this year was it was very detached. So the concept of having those batch spends, let them kind of invest this much, and really have a buffer amount in terms of additional marketing spend, if the returns really or the sales really meet up to the expectations, that was the concept. So if you are taken without any change, that number would probably have been close to about maybe seven to 10%. But then about 10 to 77. I mean, seven to 10% was additional buffer. If the numbers were strong, then the merchants were not not reluctant to really invest more.

Tiffany Serbus-Gustaveson  26:22  

Excellent. Think they are cut up? Just real quick. What about Prime Day in July? Because I found myself shopping for Christmas in July. And it has been Yeah,

Udayan Bose  26:31  

I mean, that's a fantastic question. Prime Day in July was bigger than the prime early access to at least for our data set. We in this research have not included that I can probably get back to you very specifically, but Prime Day in July was bigger than definitely by far. The the primarily access date. Yeah. Okay.

Tiffany Serbus-Gustaveson  26:55  

super interesting.

Udayan Bose  26:56  

Perfect. So let me keep moving on. I think this is more of a daily order streamed, I still can't believe Definitive, I'm talking about a three month holiday season. So it takes a little bit of time for me to absorb this fact. But if you really look at it, I think these are I mean, obviously the the cyber Pfeiffer data set has a big spike, right if it goes up, but there are some interesting and you see some minor sort of spikes out here if it starts going up and then going up as well. So no massive differences from that perspective, just because the cyber fight spikes are pretty huge. But I think the previous slide can communicate it as to it's almost like a stretching of the holiday season. early May. We also track the Mobile Share as well, which we always do, it has been a norm. Pretty much since we, for the last about 10 years now. It has been fascinating to see as to how the mobile devices have become the primary device. In many cases, for some generations, maybe the Gen Z is really the only device in several cases, right. So a couple of interesting facts out here. The first part is Home Improvement have never crossed 35%. In terms of mobile audits, let us say counting for the singles are definitely a surprise. And the second The same applies for the tools and hardware as well. So that have never crossed 50%. So it's very interesting, as the consumer has become more habituated or used to using mobile devices to purchase online, it's now starting to very clearly diffuse into every category. And again, a lot of credit goes to the businesses as well, who are trying to continuously innovate and really make their mobile sites a lot more easy to navigate and really easy to buy from as well. But it's it's fascinating, because if I really were to look back, I tracked my presentation with the BWG group, Tiffany in 2018 2019, I think the three holiday seasons back, and the percentage was high, always in apparel in the cosmetic side. But the other categories have really caught up really, really quickly. For example, the tools back in 2019 was 32%. That has become 62%. Now, so it really shows that how how much mobile has become the primary device and by a very, very wide margin as well. So yeah, so this is I think one one thing which I wanted to share with you. Yeah,

Tiffany Serbus-Gustaveson  29:22  

very interesting. It's like and it's that second screen or third screen whether you're on Yeah,

Udayan Bose  29:26  

so moving the first

Tiffany Serbus-Gustaveson  29:28  

now yeah, just so convenient to be able to scroll through and do your research and design. Alright, are we ready for trivia question number two. Oh, yeah. All right. Let's do this. So what was the single largest contributing factor to year over year online sales increase? And remember whoever can put it in first and it's right you are the winner of a $25 gift card. Happy discounting. Buy now pay later. Free immediate shipping. Let's take a look. Look, take a look.

Udayan Bose  30:03  

Oh, you guys are fast. Yeah, let me see well

Tiffany Serbus-Gustaveson  30:10  

I think we have somebody John tans min says a heavy discounting. John Tansen. You have 120 $5 gift card.

Udayan Bose  30:22  

Yeah, heavy discount, they actually beat, buy now pay later. Interestingly, buy now pay later. And we have done some analysis again, for our customer data set, we saw that number really go up in the last chunk prior before to business right 18 to 24, we saw a lot of tnpl purchases go up. But heavy discounting really was the the big driver this year. Now we are talking about in this this case, the entire three month holiday season as well. From that perspective, we have really factored in that many merchants really offered one discount, and then the next discount and the third discount and all the stones were so heavy discounting was a big, big player in terms of writing up driving up the overall sales. And let me let me share with you some of the other stuff into what heavy discounting does. I have taken from the Adobe they have done a fantastic job in terms of recording all of those discounts. And as you can see, the the electronics toys and apparel is just a sample to show as to how much discounting was oranges toys. As you can see, during the cyber fire, we had gone down to like minus 35% discount, which is absolutely insane. And it almost like throughout trended for the price category to anywhere between 25 to 35%, which is a substantial discount right now the impact of this, I think I'll share with you a Goldman Sachs graph as well, which will show you as to how much the impact has been. And it is quite fascinating to fascinating to see that. And this is the this is the the overall parts. We talked about inflation throughout. Right, we talked about the inflation as to how the inflation for creating a number. So Goldman had done this, I'm sorry, and done this very interesting study, where they have tried to say as to where exactly what are the categories which were impacted by inflation, and which were the categories where we they stopped price deflation as such, right where the price is actually declined compared to last year. And you will see some of the usual suspects grocery I mean, last year versus this year 22 versus December 22. month on month, I think December was a little lower, but still it was still inflation by a fairly wide raunchy number I would say about 13.6% They have taken it from the US commercial data products again, the inflation was really high. That's what I was talking about differently that the the the inflation plus the back to store for pet supplies was pretty high tools and home improvement non description drugs and so on. But look at the categories which has a deflation and despite that, some of these categories did not register a year on year online increase. So let us say electronics, let us discuss that for for a bit. Now electronics, I mean minus 13%, or whatever the price is actually were lower compared to the previous year. But this chart effectively for the electronics category. And this is a very clear impact of the COVID 19 or the pandemic on how much people had really purchased or bought during that time. And also I think the which directly impacted the frequency of purchase or the frequency of substitution as well. And all of these categories, as you can see where the deflation part is there. Except for obviously the flowers and related gifts. Computers, they're very clearly I think people were not really replacing or substituting the computers at this point in time. electronics, toys, I feel is more of a habit change or a buying behavior shift sporting goods was a rather interesting because we're comparing the 2021 A lot more people were fighting outdoors as well as I wonder as to why sporting goods still saw deflation, jewelry books, appliances, and so on. So this was a very interesting chart. Interesting chart. And let me let me just sort of put in a little bit of a thinking hat on. So how would this chart play out in the first quarter of 2023? And how would this chart play out in the rest of the year? Right. And that is something which I think would be a very important question. I'm pretty sure all of you will be asking effectively, how and what is your pricing strategy and how will really do that because if such a heavy deflationary impact was not able to lift the holiday sales, what is going on? I mean, is it are we talking about a big shift and the consumer behavior and sort of some thoughts on that as well? Or what exactly are we thinking about? So, the consumer behavior component is what I really wanted to define emphasize because There may be a lot more, which may have changed than meets the eye. So that's I think one of the things which I really wanted to bring up out here using this chart as well. But anyway, moving on, I think we just want to just quickly wrap up some of the three holiday shopping trends. The first is holiday shopping season is now three months long, we have discussed this, I think, an advance we expect this trend to continue, we have not seen whether it is me by ease or whether it is the entire Thanksgiving week, etc. I don't think this is going anywhere. So now the question is that for the retailers really have to plan a lot a lot more differently compared to how they are planned earlier.

Tiffany Serbus-Gustaveson  35:42  

We're not fighting over toaster ovens anymore. Yes.

Udayan Bose  35:47  

So that's the that's a positive. Second is heavy discounting is driving up the demand. But the question is, I mean, the quarterly earnings report will show as to the impact, which is at hand, essentially on the on the bottom line. And despite heavy discounting in categories like toys and electronics, we saw the the online sales to be softer compared to the previous year. And I think by all means, I mean, I know I'm very conservative on this. But given the trends, we I really checked out the first 15 days of data, I think the first 15 days have been moderately soft, I would think, beginning of the year, right. So I mean, q1 2023 would be an interesting, interesting quarter, because I somehow feel that some of the discounting may have led to an advancement in purchases. So what could have been purchased in q1, we have really gotten advanced to the prior quarter essentially, because of the heavy discounts which are going on. So that would have an impact in the sales this year, or this quarter. And the me bytes lead to an online sales spike after Christmas, I think this, this heavy discounting again, is is a big reason for that. So these are I think the three other trends that I really wanted to call out a point out, happy to answer any additional questions. But other than that, I'll move on to the next part. And just give you a little bit of a framework to start with, then we will dive into the trends. And I know I'm just constantly checking my time as well, because they keep on speaking.

Tiffany Serbus-Gustaveson  37:24  

We could talk for hours, really, but yeah, you guys. Definitely get them in the chat.

Udayan Bose  37:28  

Thank you. So this one is an interesting study, which was done by two Columbia professors in 2017. So what it does is, I think it really helps me to make a segue into my first trend, which I believe will become extremely prominent, which is the concept of a hyper personalized future and exceptional amount of personalization. And a lot of this, a lot of this essentially will happen, because I think we are really looking at Amazon eat a lot of integration of big data that consumers traits and states to improve the consumer outcomes. And as the world moves to, I know, I have spoken about it rather extensively in any of the BWG forums earlier. In my opinion, I think the the move towards a cookie less world or a first party cookie URL, which is now almost imminent, about a year from now, will usher in a massive change. But at the same time, the quality of data that you would really have at your disposal, the first party data will be substantially superior, which would really help you to really build your own ecosystem as well and actually leading to that, and one of the trends as well. And as a result of which I am very, very, very bullish that it will improve the consumer outcomes as well when it comes to the purchasing part. So this is I think, one format, I mean, I'm happy to share with you this actual, that research paper. And I probably could have shared it in the link as well. But worthwhile for it, we'll take a look at primarily because as it really applies to your business and your consumer behavior, this model can be really, really powerful. And we are seeing we have already already seen that last year, we ended with a massive, massive highlight on the chat GPT two and the generative AI the combination of generative AI a combination of the big data which we have been accessing for a long time, and at the same time moving to a first party cookie world all would lead to a really strong integrative ecosystem effectively, which can be extremely powerful for those of you who really have set up that infrastructure to really harness that, that power. So that's what I wanted to essentially share share with you.

Tiffany Serbus-Gustaveson  39:50  

And this is a great visual. And it's something that yeah,

Udayan Bose  39:53  

I shared with all of the all of the attendees the link as well for this

Tiffany Serbus-Gustaveson  39:59  

everybody We can get a link to the presentation. Yeah, yeah. All right. Well, this is our final trivia question. What percentage of shoppers expect personalized interactions from the companies they shop from?

Udayan Bose  40:16  

And we don't have a multiple choice in this one. Yes, definitely. This is a tough one. All right. But we're anywhere from goes close to that. I think it's fair. Yeah. All right. And Hannah will absolutely send you the copy. So yeah.

Tiffany Serbus-Gustaveson  40:35  

We'll let it roll in. Come on, guys. Few more. Take some guesses. We're like lukewarm right now.

Udayan Bose  40:48  

Thanks, John. Yeah, absolutely. I'll share this with all of you. Yeah.

Tiffany Serbus-Gustaveson  40:52  

Well, that's pretty close. Yeah. I think we got word who I think we got what? Yeah, yeah. When the king when they came, can you get $25 gift card? Congrats. You could put your email into the chat. That'd be beautiful. The answer is 71%.

Udayan Bose  41:13  

Yeah. So this is the next big thing. I really wanted to spend a couple of minutes on the that's the reason I was rushing in and just this body, this is really important, I really want to add the risk of sounding too emphatic, I really wanted to emphasize still is extremely important, right? So I think how you utilize your first party data, plus, the combination of generative ai plus, crumbling of the boundaries between online and offline, will really lead to more engaging, effective and responsible personalization of interactions. Right. And McKinsey research, I think, as Tiffany already mentioned, I mean, 71% of the consumers expect personalized interactions. So it's almost like think of the, the visitor to your website as more of a friend right, that you really want to engage in a conversation with and really have a meaningful, meaningful engagement effectively, right. So that's the direction that the world is moving to. And we believe that all of these three forces coming together will be really disruptive for the industry. We will see that hyper personalization everywhere that even the loyalty programs will be become extremely personalized. Let me give you an example right. So let us say Tiffany and I we support our respective charities I talked about the Udaan foundations I support neuron foundation Definity supports our own charity etc, yet when we can let us say both of us shock with XYZ companies or retailers right. So as a part of the loyalty program member, unfortunately, so far, we are still forced to really stay within as to the limited number of options which are available as a loyalty program member and you get different levels you get only this. But why should we accept that? And why should we not expect that the loyalty program is customizable, let us say to Tiffany's interest, right, she's supporting this charitable organization, she really wants to donate a loyalty point to their organization or whatever, sort of do something for them. So I think there will be a lot more meaningful, hyper personalized, almost like a one on one loyalty programs that I would definitely definitely think will happen in the future. The second part, which I think also I really want to emphasize is the smarter advertising spend. And there will be a lot of Smarter advertising spent through almost a hyper personalization and targeting, one of the things that I think I have spoken literally too extensively, again, in some of these DWG events, is it, I really cringe to still see that we are chasing that average order value and the average customer, right. But there is AI available, which can help you pre identify those higher value customers. And these customers are more loyal, they are engaging more regularly with your business, they sort of buy frequently more for you, yet they get treated exactly the same. When I say same in terms of same treatment, when they come to the site and same treatment in terms of loyalty program, et cetera, that has to change. And specifically, I would very clearly urge all of you to really sort of focus on that part. Because a higher value customer needs to be treated like a higher value customer, right, and needs to give them special attention. And that's where we believe all of these three forces coming together would really create that an ecosystem. I mean, we have we have talked about sort of building our own AI marketing platform, but elixir Insights where we talk about these high value customers, et cetera, et cetera. And we are seeing some massive and immediate impact that our customers are able to get right just by using this marketing platform, which is able to pre identify the high value customers, what do they do they sort of come up with different discounts promotions, which are important because as the as the the real world becomes greater, deeper and deeper in terms of discounting. I mean, understandably, it has an impact on your profit margin. So why should we offer the same discount to everyone? Right? No point. So if we can really identify those high value customers using AI, why not? So those are the things which we'll get into. So we'll see a much smarter future in terms of retention programs, loyalty programs, advertising, spends personalization interactions. And I would say, also very clearly out here and out loud, the winner of seeing the blending of the online and offline as well. I think we have to stop talking about online and offline separately and just talk about one shopping experience and the shopping journey. And that would really be facilitated. And the part which is really my second, I don't think it's a prediction, I'm pretty sure all of you are, hopefully would agree with me on this thing. Retail media is a third big wave of digital marketing. And it really has gone to a different level. And this is again, a McKinsey study. As some of you may see, I'm a big McKinsey fan. So you already have two stats coming out from McKinsey in those last two slides. But they are not as interesting enterprise value mapping from the entire retail media essentially. So if you really focus on I'm sorry, only focus on the retailers the purchase driven, right, they're talking about $820 billion of incremental value getting created in the letters in the next three to five years, right. That is how big retail media will sort of get to, they're basically transforming the entire advertising value chain. And when I talk about retail media, we don't, we don't let us a Macy's has sort of its own retail media network, they don't have to be, they don't really have to be constrained to just their online properties and so on. It can be extended to stores as well, which gives a massive advantage. Because finally, we are able to integrate that online and offline and call it one shopping experience and journey. And we can really go ahead and I wouldn't say advertise, I would also say engage the shopper in a lot more responsible, creative and precise manner a personalized manner, across their entire journey, whether it be in store or online. And that's what I'm really excited about this, I think is definitely going to be big. So overall, if you really look at it another trend, which I wanted to call out, a little bit of an intriguing trend as well. We all know that retail media networks are probably grabbing a large share of ad dollars in the bottom of the funnel, right. So everyone is sort of fighting from the bottom of the funnel. Initially, Amazon Marketplace came in today sort of nudged Google, to the side. Now the other Wikimedia networks have come in. But the struggle is continuing to build a flywheel. So I mean, just because of the monetization challenges, the top of the funnel still really needs to be filled. So what is happening, and we have seen it firsthand, and I shared it in 2019, at the BWG conference 2025, I think in the BWI conference, where I said that Amazon is investing even more on Google advertising, driving the traffic to Amazon, where they are selling ads. And as a result of it, they're cross subsidizing each click effectively, they're sort of paying probably about 60 to 70%, lower compared to anyone else. Because the dollar that you are paying on Google, you're getting 70 cents back to your own ads as well. And all the arguments or the retail media networks are doing exactly the same thing. Because, um, it's still the top of the funnel, and even the middle of the funnel has not been built out as much. So it's a very unique situation, which has really led to a 25% year on year Google ad, CPC inflation. Last year, we saw about 25.7% increase in Google App CPCs. This year, I believe, just because of this retail media, investing a lot of money to really build their the overall traffic to the the entire property, we would see them spending extensively on Google ads, which will lead again to a rule of CPC inflation of about 95%. The second one, I already touched upon a little bit taking advantage of the first party data available, they are likely to expand into stores. And that's going to going to happen. I mean, that's obviously so the question is finally this may actually the first party ecosystem may be able to solve for a dress. That longer and long term conundrum right, which is essentially the attribution conundrum as to how much online offline, I think it can be solved by retail media networks. So very, very powerful, extremely, extremely powerful. Trend. I know I'm sort of keep going on because I don't know how much we probably have two or three minutes. I have three more predictions. I just quickly kind of blast through all of these

Tiffany Serbus-Gustaveson  49:37  

minutes and three predictions. Let's do it.

Udayan Bose  49:38  

I know Yeah. But more, but there's just a lot of content essentially thrown but hopefully some of this is useful. And if anyone wants to have any questions, you can email me directly with a Anaplan clicksor.com. So TikTok needs a social media industrial social media commerce and I think we are seeing it very clearly. I mean, they have been, it's called doing I know I'm probably pronouncing it wrong in China, which has been able to combine that live streaming with the social media ads. But social media commerce, I think is is going to be a thing a big thing effectively. The second one is Metaverse, I think we had last year, this time differently. Everyone was on board with what's the big the next big thing. And this year, the boss has died down. And I've seen that something which is as powerful when the boss is dies down. That is the time when the smartest companies really are able to make maximum progress. So I would request that please keep a tab on Metaverse, because there has been continuous innovation happening. And also the headset prices, we sort of keep coming up, right. I mean, the Oculus quest three, which sort of gets released, essentially next year, I'm sorry, this year, sometimes we'll see a lower price a lot more budget model, and slowly it will keep coming down as well. So this is going to be an important playground for any any business any marketer. And the last part I have already emphasized earlier sharp increase in the impact of AI on advertising 90% of Google advertising by will be driven by AI by the end of this year, that shows how important it is. And now with Microsoft's announcement, the chat GPT two will be integrated in all the Microsoft assets. I mean, it really shows as to how big AI is going to play a role. So it's a it's a fascinating time and some of the moves that I'll sort of end with that five, just five points. I think so as a brand owner, this is a lot, right, I mean, just too much change, which is happening. So it's extremely important for you to understand as to how to really address this. So we have tried to identify about five moves. The first part is you really need to be Omni, excellent. So you really have to take a more of a bird's eye view and take us to try to connect all of these dots across the customer journey. But to do that, you have to understand the customer very well. And really identify very specifically map out the ways to engage the customer through the journey. The second part is you really need to be more of an experimentation house, your marketing team needs to be entirely an experimentation and insights lab. So continuously doing those experiments, current coding drives in implementing just a nonstop literally hundreds and 1000s of experiments constantly. But the important part, you're willing to work with a partner who can ask the right questions for you. Because if you're not asking the right question, the experiments obviously are of no value. So that's another key component, which I really want to emphasize. The third one is building an integrated advertising strategy. I mean, in the first party cookie world, I have talked about it again extensively earlier, we're looking at walled gardens of your choice, right. So let us say the TikTok walled garden, Google walled garden, Mehta walled garden, and so on. So you really have to be forced to really choose what are the walled gardens, but within that, you really have to own the entire funnel within that walled garden essentially. Fourth one is the hyper personalized future of retail we have talked about a little bit about the high value customers and I talked about elixir insights, AI marketing platforms, which can help you target the right customer and spend smarter and smarter promotions as such. And last, but not the least, social commerce, we firmly believe is likely to experience a sharp spike, led by the monetization opportunities around the short video format, some TikTok, Instagram and YouTube. So please, please do keep a tab on that. Because that's going to be quite substantially big. I know I literally have sort of gone through, boom, boom, boom, I'll share this data with all of you. And I invite all of you to download our trends prediction book is more of a shopping transportation book. What are some of the shoppers doing? And I'm pretty sure you would find this lovely ebook, different user content team, Dana, Danielle and Shelby, I really wanted to give you guys a shout out Mr. Gates, they have really put this together, I'm pretty sure you would find this to be very fascinating view to the future. So that's what I had. I know, we have sort of run out of time. But really, thanks for the opportunity. And thanks for having me on this one too many thanks.

Tiffany Serbus-Gustaveson  53:52  

Hey, good. Yeah. And you never disappoint such a great concept and wonderful information. And like you said, we will make sure that the presentation gets shared out with everybody because this was beautiful content. Thank you so much for sharing huge things to NetElixir. They've been great friends of the network. We always appreciate everything you do. Thank you all for attending today. We definitely encourage follow up conversations with the NetElixir team, and we'd love to talk to you as well. I'll be reaching out Tiffany Tiffany@BWGconnect.com. Hope to connect with you. So with that, I believe it's a wrap. Happy Thursday. Everybody. Have a good press the week. Good weekend. Take care, stay safe, and we will see you on another events.

Udayan Bose  54:35  

Awesome. Thank you very much. Thanks.