Aaron Conant  0:18

Happy Tuesday everybody, my name is Aaron Conant, I'm the co founder Managing Director here at BWG Connect a giant networking knowledge sharing group in the digital space, I spend the majority of my time talking with brands on a daily basis, try to hit 20 to 30 a week to stay on top of those trends that start up the fortune 100. And up every vertical, would love to have a conversation with anybody on the line today. Some people we've chatted with before, I'd love to reconnect to it. And if it's new, like, we don't sell anything here at BWG Connect, just love those strategy sessions as a whole. It's how we stay on top and the newest trends and pain points but also do a ton of health in, you know, partner selection. There's over 9000 brands that participate in the network now and they're constantly sending in those top partners who work and those are the ones that we reach out to, for events like this. But we're also more than happy to do a quick rundown and connect you with the best people around that are vetted out by fellow industry members here. So couple things as we get started. Kicking it off three minutes after the hour. And we're gonna wrap this thing up before the end of the hour as well, unless there's a ton of questions and we'll take it right up to the point. Other than that, drop your questions in the chat the q&a or email me aaron@bwgconnect.com, and we'll get all those answered real time. And I don't think there's anything else I think we go ahead and kick it off today. And you and I have been doing these since start of the pandemic almost like even before that, but at least a quarterly update. Udayan's a great friend partner supporter the network NetElixir comes highly recommended. I'm personally biased because it he loves data. And I'm a scientist, I love data. So this stuff really hits home for me. But these holiday readiness is something we've been doing for years now. And so again, if you have any questions, drop them the chat or the q&a, and we'll get them answered. But Udayan, I'll kind of kick it over to you if you want to jump in intro on yourself and NetElixir , thanks for jumping on today and great friend and partner and support.

Udayan Bose  2:24

Thanks so much for having me. On this one. I just quickly sort of just dive in and just have a deck hopefully shouldn't take more than 40 minutes. But Okay, a quick introduction. This is what I was hoping to present is eCommerce trends and insights. And this incidentally, Aaron will be our 16th annual holiday forecast. Believe it or not, our first one was in 2008 in the month of August. And it was like in the midst of recession. There's like 16, and a little bit of a bragging rights seven, I don't know as to whether he shared with you that if you really compare our forecasts since then, and the actual NRF numbers, which normally gets a release in the third week of Jan, I think we have at a higher percentage accuracy rate compared to any other publication or research.

Aaron Conant  3:08

I'm not shocked today. I'm not I'm not shocked at this point. So I'm a bit of a data hungry I love it and you crunch it better than anybody.

Udayan Bose  3:16

vulnerable. But there is what I think the data set that we really have access to seems to be a good representation of the entire US ecommerce market. As such, I wanted to share some strategic growth recommendations as well and then some resources for holiday season. Also, a quick introduction. For those of you who don't really know NetElixir, we have been around for almost 20 years now. I'm very privileged to really partner with Aaron and his team at BWG Connect. We specialize in the retail and the direct to consumer eCommerce site effectively. We have built our own vertical AI marketing platform, which helps us to solve just two problems one we are able to break the marketing silos and let the customer journeys decide as to where you should be investing and when and how much. And the second part is we are able to use predictive analytics to predict as to who's likely to be a higher value customer for your business. And that effectively has led us to a rallying cry around called say no to average because the entire ecommerce world I think can do a lot better. If we really move from this fixation with AOV and average order value to a high value customer ascent. That's the goal. We are very privileged to be a part of the Global Agency Leadership Circle 27 out of about 10,000 agencies in the US are a part of that. And we are also a certified National Minority Supplier Development Council member as well. One of the initiatives we are extremely proud of is our run foundation. So we help girls from underprivileged backgrounds in India. They mostly live in slums with their high school and college education, so about six years or seven years of education, and then really help them with getting getting and job in various companies, and so on. So it's just an initiative. Currently we are supporting about 22 Girls, with this initiative, our aspiration or dream is to scale this to about 5050 lives or 50 Girls, essentially by 2025. So if you are interested at all this course is of any interest, you can scan this QR code and just check out the work that we have done. And as I keep saying even a $5 or $10 contribution from a year side would really go a very long way, very specifically for these girls who literally have, unfortunately, stopped dreaming. So that's I think, our goal is to help these girls pursue their dreams. That's I think, what we are trying to do a bit about the I started NetElixir in 2004. Very fortunate to, I mean, probably one of those companies who have really been independent, privately held since then, have really gone through multiple waves of digital marketing. When we started, there was a small company you may have heard of called Facebook, which started in the same year as well. It has gotten a little bigger than us, but I think we are not complaining. So it's a different space that they are in. Also I am again very privileged to be an Innovation Fellow at the end entrepreneurship center of Columbia Business School called the Lang Center of Entrepreneurship. Do a fair amount of guest lecturing at Johnson School of Management in Cornell, the City University of New York and Baruch and the Indian School of Business and if you are I would love to connect with anyone looking for insights, data, anything on digital marketing eCommerce, you can connect with me on LinkedIn that my LinkedIn handle, and or email me directly as such. So what I will start with Aaron, he just start with sharing the top three eCommerce trends for 2023. Now these first six months of 2023 has been interesting, understandably, coming off a COVID Bump. And 22 was the first year when sort of realization set set in that the eCommerce numbers started flooding in many categories. And we saw the same trend continue in the first half. But it was very interesting to also see that marketplaces continue to really gain the E commerce market share. I mean, again, per our research marketplaces now account for at least 42% of the total, US retail eCommerce sales, if not higher, and the year on year growth in h1, interestingly for marketplaces, sales without 12% versus the total eCommerce sales growth of about 6.3%. So overall, I think marketplaces continue to grab a lot of share a bit of an anecdote, I was sharing with Aaron that when we started doing this, these holiday forecast webinars in 2008. At that point in time, the marketplaces accounted for less than 8% of the overall US eCommerce share, and that 8% Now, it most likely will cross 50%. This holiday season, specifically during holiday season, we have seen a tremendous amount of activity on marketplaces as well. So it's fascinating to see as to how the entire landscape has changed how the consumer behavior has shifted, and how marketplaces have slowly really become a very dominant dominant presence in this entire eCommerce landscape.

Aaron Conant  8:23

Really quick. Do you think that's because brands are becoming more aware? Or having to track more closely the direct to consumer side of the business and how expensive it actually is? And maybe there's a pullback in number of direct consumer sites?

Udayan Bose  8:40

That's absolutely right. So I think that that's one of the reasons I think there are three broad reasons where you're seeing the first is the convenience factor, right. So once you're in the marketplace, you really have a wider access provider choice and you're able to complete the loop quicker. The second part, which somehow I don't think we appreciate as much and honestly speaking, there is no data to really support the statement that I'm going to make, but I somehow feel that during the COVID times, somehow there was a bit of a bit of a shift happened primarily because maybe in many cases, there was some amount of brand dilution also happen as well. So, the people or consumers really focused more on the choices available rather than essentially only focusing on the brand card, it was a sign of the times because I really needed something I needed something right and once I sort of So, that was I think my need for a particular product or a category superseded the overall let us say my love for a brand essentially specifically if the brand was unable to deliver during the supply chain and the the all of these different things during COVID may have led to a bill a slight amount of shift as well. The third component is interesting. Third is I think a combination when I say marketplaces of like every large company, whether it is Best Buy whether it is Lowe's, everyone has their own marketplaces where So I think there is a very clear, clear shift from the larger companies, which are just a few years back, we are very, very clear that we will focus on the direct to consumer just how to sell their products. So it's a combination of multiple things which are in play. In fact, our forecast is by by 2030, we believe that it's highly likely that two thirds of the US online sales happens from marketplaces. And 1/3 happens directly from the website as such, companies are very much aware that there is a higher cost of operation essentially, when you operate in the marketplace, but it is what it is effectively.

Aaron Conant  10:38

A lot of times, it's so less expensive than your direct to consumer site.

Udayan Bose  10:43

Yeah, yeah. Yeah. Awesome, fun, interesting situation. The second trend that we have seen, Aaron is just more of an uneven eCommerce sales by category. We saw in the first half that categories like beauty, grocery and fast fashion grew, at least for our data set with about 14%. While categories like home decor, home furnishings, furniture, consumer electronics, and tools and hardware continue to lag sales, right? It was just a very uneven distribution. Now, if you really look at, again, the consumer psyche, and the impact of the COVID, et cetera, et cetera. And I was really looking at some trends, like what is the household debt effectively in the US, and apparently that has increased in q2 by about 16 billion over $46 billion on a bond about $17.6 trillion, overall, is the household debt. And it's a big shift coming from as to where it is. So effectively, I think people have become a lot more deliberate in terms of deciding as to what they want to purchase. And during the COVID times, I think there was an inordinate spike when it came to segments like the home decor, and home furnishings, electronics, and so on. And we are seeing still a bit of a post COVID lag, which is hitting these industries, like home decor, for example, was down by almost about 15%, year on year in the first half. Right. So I think those are the things which has to be put into consideration into the overall context primarily, because when you talk about the overall eCommerce sales, it is not that the entire eCommerce online sales is booming everywhere, or the entire online sales is flat, it is just a very uneven distribution essentially, on the category wise that we are able to see. The third and the final part is most retailers and this is like, again, kudos to all the retailers for this one. They were able to map the consumer shifts quite well. And they have made some dramatic changes to their product mix just to stay relevant and improve the profitability products. Well, this was interesting Aaron primarily because if I were to really look at from the spectrum of 2018, or 2019, the quantum of change seems to be a lot higher. I'll give you an example of one of our tools and hardware client in 2019, let us say in the first half of 2019, about 30% of their overall site sales came from products which had been launched 12 months prior to that, right, so 12 months prior to the h1 2019. That percentage, if you really compare for h1 2023 has gone up to as much as about 75 to 80%. Right. So effectively the new product and the innovation has become such an essential part of driving this. It's just incredible as to how much when we talk about the post COVID part and the impact which COVID had, all of these things get somehow really sidelined and not really talked about as much. But I think I'm a big hat tip to all the E commerce companies and retail companies which have really, really, really sort of worked extremely hard and hustled extremely hard to ensure that the product mix is relevant overall. So that was another very interesting sort of a learning as such. So in terms of the key channel trends, the retail media advertising continues to boom, I mean, it has obviously garnered a tremendous amount of attention. My good friend Andrew lessman, from E marketer, insider retailer, intelligence just keeps on reporting about this thing. So we are seeing very clearly about 17% plus of total US digital advertising. Spend can actually go into retail media, which is huge and no surprises. 75% of that would go to Amazon ads.

Aaron Conant  14:26

But I really wanted to call out really, really quick. I just want to jump back before we jump into this a little bit more because TJ dropped a comment in here. When you're talking about marketplaces, you know, is there which one is this top five or top 10?

Udayan Bose  14:42

Top 10 The top 10 marketplaces a search TJ Yes. Yep. So on the retail media part advertising this one is interesting. Everyone talks about Amazon, but we are seeing Walmart make some significant changes. and significant sort of adaptations as well to really get to a different level. So something really wanted to call out because they have sort of played typically like the Walmart Tiger, very quiet game. But we have seen, they make some tremendous progress in the last 12 months essentially. So just wanted to call that out as such. We've also seen that the primary channels like Google or Microsoft advertising and beta, really applying AI to protect their walled gardens as well. Because I think Chrome has already announced that 1% of the Chrome browsers would start deprecating the the third party cookies in the first quarter of 2024. And they want to finish that entire cookie application by end of 2024. Well, Apple is not really making their life easier, because iOS 17, they are really just taking the entire consumer privacy to a different level altogether. So that is really forcing or compelling the channels to really build their own walled gardens. And that's an important component, which I really wanted to highlight in this entire thing. I mean, we are seeing very clearly campaigns like performance, Max, and so on being a very dominant force within Google, like I mean, at this point in time, if I were to look at our data set, and we want to work with about 150, retail direct to consumer ecommerce companies, we estimate about 70% of the total Google ad budget is being already influenced by AI. And our prediction is by end of next year, this is most likely going to be 100%. So AI, I think is one of the areas where definitely the channels have made a tremendous amount of progress. It literally has transformed marketing forever. And I think that's one of the other trends became extremely, extremely prevalent this year. So we work as I mentioned, with a wide base of customers, and these are the top three questions which our customers are asking us regarding the upcoming holiday season. Right. So I wanted to call them out. The first one is, I mean, we saw that the holiday seasons are getting a lot stretched a lot longer as such, right, the prime had a prime early access day. I'm pretty sure that would be an ordinary car as well, they probably have it again made of October, and so on. So the question is when suddenly you had to earlier content with about a month long holiday season, which became a month and a half, and now it has become a two month long holiday season? How exactly should you really even plan for this? The second question, which our clients are asking us, I mean, how do the SMP businesses even compete with the larger ones? What is likely to be a very brutal holiday season? Because if you really look at each one, the numbers, I mean, even though the overall segment has grown by about 6%, but I think it's pretty fragmented. I mean, essentially, some segments have really grown at a faster pace, others are not nearly as much and so on.

Aaron Conant  17:46

Yeah, I mean, you throw in that really quick, just throw in there, son, that point, I'm combining prom day, and a brutal holiday season. You know, a lot of brands, I would say the majority of brands that I'm talking to on on Prime Day, this year, they had a great sales. Yeah, they moved a lot of product, but they didn't make any more money, because the discounts were so deep. Yeah. And so is that a kind of foreshadowing for you know, q4 holiday season, where you're gonna have to discount quite a bit, and then we get into the balance issue of inventory. And is it worth it or not?

Udayan Bose  18:22

That's a great point. I don't actually my next slide probably talks on that. So I'll just get into that exactly. The point that you're making probably the next one or maybe a couple of days. And then which categories are likely to emerge as winners. So I think in terms of the holiday forecast, when we talk about it, just to give you a bit of a basis, and I'll get back to your comment later, as well. So we are seeing very clearly, I think there is a certain way that we really choose those customers. And currently at this point in time, I think they aggregate about midsize and large customers with more than $700 billion in online holiday sales revenue. But then our challenge is how do we take the 700 million and really extend it or extrapolate it for the entire US eCommerce, which is huge. So that's I think we have the selection of customers becomes important. We normally have focus on a handful of categories like electronics, apparel, and shoes, home decor, and so on and so forth, which have a strong holiday skew. And last but not the least, I think I mean, since we have been doing it since August 2008. I mean, this is a 16 holiday forecast, we have really been able to build a model. So when you talk about building a model, I mean, we track some actual weak wise website visits, the website sales and channel wise investments and so on. And based on these primary variables, we really build our own what is called the calculated metrics also. We segment is data mobile and desktop. Interestingly, in 2008, as you can imagine, the mobile contribution was zero. Right because I phone was still significantly lagging behind Blackberry, and the mobile shopping wasn't really even a thing at that point in time. But anyway, that's a different story altogether. And we separately analyzed the YTD trends. This time, it was like literally tricky, because when we analyze the last two years 2021 was a COVID bump here, right, and we had to factor that in. And last year, the inflation, if you remember, back in July 2022, it was almost about 8.6%. It sort of fell to eight 7.1% In November, but still, it was pretty high. Right? So we have to factor all of this stuff in. Because otherwise, how do you really even come up with a model which is able to predict. And the last part is, we still continue to place a significant weight in the back to school data as well. So just wanted to give everyone an understanding. And we are coming up with a forecast, which had we done like three months back, it would have been a lot more conservative. So we are cautiously optimistic on a 9% year on year eCommerce growth this holiday season. The reason I'm saying cautiously optimistic, I'll sort of get to those points as well. But I have some macro factors, which I wanted to share with the group, which we believe will really help drive about 9% growth. The first thing is exactly what you mentioned. In my 16 years, or like now 16 years or 15 years of really doing this forecast, I have never seen any year where the shoppers are so much willing to wait for the attractive deals, deep discounts and buy only that time. And I have a certain stat the next couple of slides as well, which will really help sort of to substantiate that part as well. Right? So effectively, if you really look at like June Prime Day sales sort of increased by about 20% Jump in the year on year unit sales, right. But effectively, if you really look at profitability, it was down the dumps and because they just you just selling stuff and selling it for cheap. I believe just given the overall volume as well as the value lag, we will see businesses get into again, a deep discounting mode. The question is, do you really have that level of financial? Let us a string to keep on discounting for two and a half months or two months? Or is there a way for you to be more creative on the discounts? So we are projecting typically for $100 million eCommerce company, their time would be well, what if they can spend on identifying about three to four spikes that they really want to create through creative use of promotional strategies as such. But we believe that it will not be one consistent discounting through the entire season or promotions for the entire season, it will be a combination of three to five spikes within this about roughly a month and a half. Like starting with prime early access day. The dates are not divulged yet. I mean, if last year was to be any reference rally would be around 10th or 11th. of October as such, and then from then till about Christmas, about three to five holiday spikes. The question is, how creatively Are you able to anticipate these spikes and how it creatively are able to plan your product and promotion mix specifically for that as well. So those I think that I think is a one day two things, which I really wanted to share. The second thing is, effectively, this would be a slightly longer holiday season as well. I mean, Thanksgiving isn't the 23rd. And so we really have some extra days also for the core holiday shopping to happen as well. And the last part is the consumer sentiment index. I don't know if anyone has been keeping a track on this. This is the Umesh I mean that on your land, University of Michigan consumer sentiment index, if you really look at the last three months average, there is a dramatic spike. The consumer sentiment, if you track back to almost exactly a year back was at about a 55 percentage point 55 to six percentage point that has spiked almost about 12 percentage points. So it has become 55 to 67 percentage, which I think is a really good expression in terms of how the customer feels or how the consumer is feeling. And we believe that this will go into a long way. So now let's just put all of these stuff together. We have the customer who's feeling good. They are careful because they are researching and they are willing to purchase perfectly willing to wait for those deals. They have been spoiled because of Prime Day the deep discounting which happened during spine day. So if you keep all of these factors, I mean, I don't think it requires a rocket scientist to really predict Aaron, that this holiday season would be stretched. And effectively it would really have again see a tremendous amount of distributive discounting, as long as the consumer sentiment remains favorable, which it seems to be at this point in time with a with a very clear upward lift. I think that should be a very clear positive sign. This is the time for you to be creative on the promotional plan, the holiday promotional mix as such. So a pretty long narrative to the point that he sort of mentioned but there are a couple of other things as well which I wanted to point out and as you know I mean you talked about are the retail intelligence components So we have a retail intelligence unit inside NetElixir. And we use our tool as I mentioned, the AI tool XR-InSights to really gather all of this data. One interesting part that we have observed specifically in the first six months, is the, the number of items per order or units per order has increased a little bit, that to an extent offsets this inflation advantage of last year, I'm just using the word advantage, because obviously, the item was priced higher, that with the inflation subsiding, two or 3% 3.2% level understand whether prices came down. But interestingly, the customer has not really cut back on the average order value or the order value, essentially, they actually had it has just gone, in fact, slightly, the AOV has increased as well. But the items per order has increased. So I think the inflation effect has really got a little bit countered there. The second is, which is probably the most interesting part. And again, I'm just repeating probably the same thing and that I think you mentioned that people are perfectly okay waiting for the, for the deeds, essentially. And as you can see, in this case, we compared for the first let us say about six months, or of this year, what was the spike that we experienced during the sales event versus the non sales part? It was 11.4%, higher this year compared to last year 2022. So people are willing to wait, the wait for the sales events. And if the discounts and the deals are good, then they are willing to spend more. So it's a very interesting offer, I'll give you an example of Mother's Day, we sort of work with a large, very large online, flower shop or flower company, and so on are flowers and gifting. And effectively, that if you really look at 10 days prior to that, before Mother's Day. And they had pretty aggressive sales as well, the overall lift was higher compared to if I were to compare that with age one Mother's Day in 2019. So that really shows as to how much people are willing to wait. It's just it has really become a very, very deal focused approach to ecommerce or online selling.

Aaron Conant  27:20

Yeah, I'm gonna make it. I'm just saying how it's worked for the past few years, which is why Prime Day kept getting moved up. Right. And then the launch of you know, the holiday season will say in the sales season there. There was kind of the opposite. Yeah, right. Like they were pushing it up to grab the dollars out of the wallet early. Yeah. And what you're kind of saying is, like, hey, people are going to be out there watching and waiting. And they're going to strike wherever the deals are.

Udayan Bose  27:48

Yeah, yep. And another good example was, if you really look at the prime early access day, last October, I think it was 13, 12, 13, 13, 14. After that, the weeks that followed, that, actually, the sales were lower compared to the previous I mean, the comparable period, I think 21 is not really a fair comparison. But it's very interesting as to how the, the online shopping has really become very concentrated during these promotional periods. So that's, I think, one part, which I really wanted to emphasize.

Aaron Conant  28:17

But I think one more quick thing, just so we've had a bunch more people joining if you're joining, or if you didn't hear it at the beginning, if you have questions along the way, drop it in the chat or drop in the q&a. And we'll get those answered in real time as they come in. Awesome.

Udayan Bose  28:31

There are a couple of things that will be potential headwinds, let us say I mean, which can somehow really dampen the spirit of holidays. The first one is, if you really look at the pool of pandemic era savings, that has really sort of come down or decreased quite a bit. So that's, I think, one of the things which will definitely be in play this year. The second one is more concerning, which is high credit balances. I don't know if anyone is sort of tracking this. But if you really look at the Feds recent report, effectively in q2 This year, the outstanding credit balances hadn't crossed $1 trillion mark. First time ever, it is at $1.011 trillion, was what it is. And that was a jump of almost about $45 billion. Right, that's where I think the credit balances are people are really maxing out on their credit cards. And that's something which is also to be kept in mind. The household debt also has really gone to about I think, $17.6 trillion, and so on and so forth. And that has increased I mean, it used to be 16 trillion to about 17.6 is a pretty big shift or increase. So all of these things I think, have to be considered as well. The question though, is will it really hamper the holiday season? This holidays, not very sure about it, but something to be kept in mind as well. On the same note, another thing which we are seeing is the number of BNPL the percentage of parts as is happening in the the Buy Now pay later option, right? So that has really gone up. But what is concerning in that if you really look at the the, the lending tier three report effectively from last month, you would see that the percentage of delayed payments or payment defaults have increased also by quite a few percentage points. So effectively, I think that concept of immediate gratification buying now and just sort of a credit report, I think, at some point in time, something to be really careful about. The second is more of a macro factor. I don't know if those of you who have been sort of keeping a track of the inflation numbers, they had fallen to a 3% level, again, in July and August, they have increased from three to 3.2 and 3.7. Now, now, if this trend continues, we may enter the holiday season with a 4% plus inflation rate. Now I'll be it I think that inflation is not really distributed equally in terms of the increase per category, but something to really kept in mind. Because understandability I mean, the customer works with a finite amount that they have really a lot of reserve to really spend. And specifically if the the items really cost more, then it becomes a bigger challenge for them as well. The third part, I'm not really mentioned it here, but something I really wanted to also bring up there was a recent I mean, that the Goldman Sachs the retail summit that they had 12 1314, I think they haven't really mentioned, I think it's I think one of Wayfarer, or one of the groups, or was it isolate thread up, I think what the the group, and they have mentioned that they've seen a drop in the percentage of shoppers coming from the less than $60,000 a year, household income level. So I think the the 60k and lower household income category, there was a decrease in the overall purchases made by that group as well. So something to be careful of, I think, again, would be very category specific, cannot be extrapolated, but really wanted to throw it out there that all of these potentially can be essential headwinds, which can deter this thing.

Aaron Conant  32:15

Really quick on that. So do you think then, as you're walking through there, so then when it seemed like when there's a little bit of a softening around January, when people were thinking, something's going to hit, but it didn't quite hit, right. It's like savings were running out. And then credit was ramping up. And now we're at a point where people have maxed out credit, at some point in time it has to slow down, which would then coincide with why people, they still need or want things, but they're going to wait for it to be deeply discounted because the credit is running short. Which would then tie into exactly what you're talking about with overall income level. Naturally, they're going to have a lawyer a lower max.

Udayan Bose  33:02

Yeah. Interesting. So multiple factors are in play, Aaron, and this one, I mean, to talk that I mean, the interest rates continue to be extremely high. I mean, at this point in time, the cost of capital is almost about 10%. For the businesses, effectively, it used to be about 3%. Right? So all of this effectively, how much can you discount is the question, I think, but at the same time very clearly, our data shows that discounting, unfortunately, is when effectively we're seeing those sales spikes. So how do you really creatively balanced this part can really define how successful you are during the holiday season. Moving on, we wanted to present the category level holiday forecast also, this is more of a year on year growth in eCommerce sales, sales revenue as such, now certain categories apparel and beauty at least for our data set, they did well in h1, right 12% growth for apparel and beauty 19%. And they will continue in this. But what we are effectively betting on is there would be there would be potential turning point for categories like consumer electronics and gifting. I don't think there is a surprise because it's very h2 skewed. So I don't think that's a challenge. But I think consumer electronics we are actually predicting a bit of a turnaround and the reason being and it is a complex one and this is just an analysis of the last few years that we have been doing this holiday holiday forecast webinar and that entire research, we have seen that the shoppers who are purchasing electronics, they are significantly influenced by two or three broad factors. The first one is very generic, right. It's almost like is Aaron in the does he even in his almost like a mind space is consumer electronics they are somewhere right? There is an intention or an inclination to sort of create or buy something in the consumer electronics segment now that we have seen is driven significantly through innovative products. And again, I, again, no affiliation, so no special love. But Apple has really been a big driver of that innovative product sport. And they have really have created and sort of fitted that consumer electronics in this holiday list, let us say, right, your perceptual list. So we believe with the launch of the iPhone 15, that would be a big step, it will be interesting, because it's new, right? It's something new, it can be very expensive. But I'm guessing that at least consumer electronics will come back into your the perceptual map are so versatile the mind space, that I think one the second part is we believe there is a bit of an inventory challenge, which many of the custom companies are really dealing with. And they would engage in deep discounting, just because if the innovative products are coming out, they can't really be cutting the old inventory. So expect consumer electronics segment to be really impacted by heavy discounting. So these are, I think, the two broad factors, which we believe will play a role. But net net, it will, obviously lead to an increase in E commerce sales. That's what we are at least anticipating. The question is in terms of profitability, it may be a very different picture altogether. But just wanted to present it out there. I'm happy to answer any very specific questions on any category. I mean, as much as data that we have, and what we can share. But more than more than happy to share this. And if you are interested in copy of this, I mean, I can probably share it with you, or I'll be more than happy to share this deck with you as well.

Aaron Conant  36:39

Yeah, sure. Anybody wants copy, just ping us, we'll make sure to connect you. Fantastic. So that was actually what you're saying there? That's top line too, right? That's overall, yes. But again, it's playing into the fact of, hey, well, how much does I have to discount to get?

Udayan Bose  36:54

How much? And what point in time? And when on board as well? Like, for example, will category level discounts be more important compared to a site wide discount? Right? So things like that, what are those categories? When should we do and so on and so forth? So it's, it's a very interesting landscape in terms of the promotional partner set. So those are questions. Yeah. A couple questions come in on this. Do you have any data or forecast insights for luxury consumer goods?

Udayan Bose  37:26

If not segregated it separately. I wouldn't. Sorry.

Aaron Conant  37:32

Oh, okay. It's cool. Do you have any examples of brands that have not discounted much during those promo periods? are they losing out? Or is participating even at a sharp discount margin heads still worth it?

Udayan Bose  37:44

Yeah, there are some brands who are the right fit specifically. I mean, I mean, we, I mean, out of the customers that we sort of work with, I think we have seen everyone discount. I mean, this year has been a very interesting or unique year. But some brands have really had this policy of not discounting. And this year, even they have really been forced to discount, but discount in a limited manner as well. Like, for example, one of the brands let us say, Monica, he goes, and they're in the jewelry segment. I mean, they don't really come up with discount, always. They're very specific events around which the discounts are there. But I think just discounting has become really a part of the strategy almost. So the number of options that I can think of a front are very far and few. Let me move on to the next part of this. And this is more of the recommendations of what should you do? I mean, this is a situation, this is what it is. I mean, having said that, I mean, the 9% overall growth forecast that we have is quite optimistic, I mean, effectively from that perspective, but how does the small business market or midsize businesses really even compete. So we had a list of growth marketing recommendations, the first one, which I really wanted to classify is, effectively we have for a very long time, and still many businesses continue to do that. They consider the marketplaces and the direct to consumer from two different sides of the business. And often those sides of the business don't even talk to each other. Unfortunately, I think that is really impacting your efficiency as well as profitability. So it may be worthwhile to really look at the business holistically, at the same time, really ask a question as to what exactly is my expectation from each side of the business? If direct to consumer is 50% and 50% is the marketplaces business? What is the strategy that you have holistically at the same time, what what is the strategy you have for individual? This is a simple product metrics. For example, if you map all of your skews based on the profit margin, and the velocity, the number of units you're selling in a certain time, that can probably help purely the profitability part. But then there are different things like which of those marketplace products can act as a gateway product for your brand and things like that. But the point that I'm trying to make is you really need to have a holistic marketing plan. Rather than really separating or treating the marketplace as separate from the direct to consumer business as well, purely from the overall business strategy perspective, that's the first recommendation I would have. The second recommendation is, I think it's important for you to shift the narrative, from an average customer to high value customers, I mean, effectively, this holiday season is going to be a massive land grab, I mean, it's almost like going to be a market share, grab, and that's going to be huge. And there are going to be companies who are going to come after your most high valued or most valued customer, essentially. And they are just trying, they will try to essentially layer them off. The question is, how well do you really know your high value customers? And how well are you really equipped to protect these high value customers? And the third question is, once you really have this list, how exactly are you utilizing this to deliver even more high value customers as well? Right, so this is a very clear database modeling and so on. There are certain real time tools, for example, our Alexa insights, the vertical AI platform, it will have analyzes the live data stream, and so on. And we are able to classify using predictive analytics that these are the folks who are likely to spend more etc. But this is the time when you already know that deal making is the discounting and the promotions are going to really be the key driving factor. Do not lose your high value customers, and do whatever you can to deliver even more high value customers that will be a key component of whatever recommendations are the recommended strategies. Or the third one is something which I've sort of shared in I think all of our previous 15 presentations or webinars on the holiday forecast as well have a plan be ready. We have seen so many times, actually, for every holiday season. Whatever we are able to predict or any analyst is able to predict and so on and so forth, there is something which does not really go per the expectations, I mean, it's bound to happen right now. And there are just so many variables at play macro micro and different level, the competitor level, and so on and so forth. So having a plan B Ready is not really a good to have thing, it's just a must, I mean, you don't really have an option, but to have a plan B Ready in terms of marketing. And the fourth and the last one is more of the execution, the operational efficiency part, these holiday season is going to be intense, right? So and effectively there are going to be a lot of competition. So can you really look at time as a, as a spectrum on which you are competing with other companies. When I say time effective, I'll give you an example. I mean, this is what we did for companies like soccer, lighting and some of some of the customers that we are working with. It's almost like what we call a holiday operating model where you have really a way of having digital marketing experts working around the clock, around the clock technical support, you really are able to read or respond back and make those changes, there is a tremendous value. I'll give you an example of those four days, there's the cyber, the cyber, the Thanksgiving to Cyber Monday or Tuesday, those four or five days effectively, I think that is the time, just through active management or proactive management, you can't really get a lot of customers, or a lot of share away from your competition back to your business, if you're aggressive enough if you're smart enough in terms of implementing this thing. But you really need to have an operating model, because without an operating model, understandably, you'll not be able to do that. I'll just give you a very clear example from NetElixir. I mean, for example, in when we really track specifically that time, right, basically between the Thanksgiving to Cyber Monday, our overall numbers are three times as much as the industry average. And we are able to do that just because of operational, our very high degree of operational efficiency, constantly working through just making those changes and taking advantage of those opportunities which appear right I mean, there were just multiple proofs I talked about circa lighting circulating was a great example. In this case, I mean, the Thanksgiving Cyber Monday revenue was up 35% The cost is minus five 50%. Right. So there are a there is a tremendous value in terms of going ahead and identifying those opportunities on a real time basis and capitalize on. And honestly speaking in a in a year, which is as competitive as this one and holiday season, which is extremely expected to be brutally competitive, those things really go a very long way, very, very long way. So those are the pieces and in which I had I just sort of end with our holiday calendar. Now. This is our 10th year of publishing the holiday calendar. So what we have done is we have taken our forecast and we have really tried to break down the the competitive intensity on a day by day basis. Right? How competitive would it be? Because competitive intensity understandably, purely from a search marketing perspective, where we specialize in search marketing, your cost per click goes up and your online sales is if there's a lot of competition there. Right so anything Green, the competitive intensity we are projecting is low. When you say low, the year on year increase in online sales actually would be less than 76% in that thing. So it's a little sort of a typo out there, but, and anything with the high competitive intensity is greater than 70%. So this has to be reversed almost effectively in this case. But there are certain other trends also, we expect that BNPL usage is likely to surge during the holiday season. And that is likely to range from 20 to 25%. Higher than each one. We believe that many omni channel retailers will really go ahead and engage in utilizing bopis. And that would really drive to a massive, massive percentage contribution of the last minute shoppers between December 17 and 23rd. And as I mentioned earlier, marketplaces, actually may, for the holiday season account for these two months account for about 55% of all the online sales. And last but not the least, while you focus on those, the holiday period till Christmas, we have seen that me buys have really become extremely important as well. So specifically, I think a lot of sales starts on Boxing Day or the day after Christmas. And then it continues till about 38. And there is there is a significant volume of purchasing, which happens at that point in time as well. So don't really don't really sort of lose sight of that as well. You can download the calendar, I think the there is some typos in that the calendar calendar should help you in terms of planning this holiday holiday promotions effectively. And as I mentioned, I mean, if you really use this to plan out your holiday promos, I think the outcome that you can have is quite different. I mean, I can vouch firsthand in the first nine years that we have really released it, it really has been downloaded by over I mean, we were sort of counting it close to about 7000 businesses in the first nine years. And effectively it has really helped them to be a little more planned, have a plan be ready for the holiday season. Now this is the this is the URL, you can really go to netelixir.com/events/holiday readiness, and they download from there. But that's what I had Aaron.

Aaron Conant  47:04

I drop that in the chat for everybody as well.

Udayan Bose  47:06

Awesome. Perfect. I never want to end with I mean, some concluding remarks Aaron, we have sort of shared a lot of data and so on. We are forecasting a 9% year on year holiday growth this this season. We have factored in the inflation rates in 2022 was about 7.1% in November and so on 2023, we expect about 4%. I hope I'm wrong there. I hope it comes back to 3%. But I think sort of trending towards 4%. Season for deal seekers, they expect this holiday season to have a higher percentage of deliberate deal seekers than any prior season researched, deliberate deal seeking, there would be a long holiday season. So you really have to plan for a significantly longer than usual holiday season by being creative with your marketing mix. AI would be a significant differentiator when it comes to e commerce marketing this holiday season. And we believe that the AI marketing supported businesses will substantially outpace the companies which are yet to embrace AI. And last but not least have a plan B in place. And our holiday eCommerce marketing calendar can definitely help. So that's what I had added. I mean, we are, as you would probably know by now we have our annual event where we bring together the the Academy and the industry leaders. We have it next week next weekend. And yeah, I mean, fascinating. It's just a different world altogether, we sort of do it in the sculpture garden. And where we have Sheena anger, she just came up, both of them actually came up with their book. So they are going to be presenting doing the book signing and sort of doing the innovation workshop essentially for our attendees. So if you're interested, we have a couple of slots still left, feel free to scan the QR code and fill in the form. And let me know as well. But that's what I had happy to really take any questions at all. You can email me as well there and NetElixir happy to share with you a copy of the deck.

Aaron Conant  49:05

Yeah, I think so we just had a few people request a copy. And if you can go ahead and email who Udayan NetElixir If not, Mark, TJ others I got you written down here. So we'll make sure that you get a copy of it for sure. And others if you have questions as we get the last just few minutes here, drop them to the chat or drop them the q&a and we'll we'll get them tackled. And if not, again, this has been fantastic. Good in it's been Thank you. It's nice to see. I mean, you know, I'm talking to brands all day every day. And what you're seeing and the data you're reporting is lining up what I'm hearing, you know, conjecture really from brands as a whole, but it's nice to see the hard data being crunched on the back end and having it all line. I totally agree it's going to be a deep discounting season. The question will be well, it drives top line, overall profit suitability, you know, what is? What does that look like at the end of the day for these brands as a whole? And maybe it's a balance of, hey, I've got a ton of inventory, I want to move it, versus I don't, and I can dial back. But just know, if you do, they're probably going to be lower movement. Any, like last minute things as we get here to a bunch of people saying thank you. But any last minute things here as we wrap up?

Udayan Bose  50:25

Um, I think I mean, it's going to be a unique holiday season, right? I mean, we have never really seen this level of deep discounting, ever. And it is not really these deep discounting without a reason. And it's basically deep discounting, leading to actually a spike in sales, which we have calibrated this time as well. So it's interesting, I think, what would really differentiate the winners from losers, this time in the holiday season is, how creative are you with your holiday promotional strategy. I hope that I never had to really say this, because that really eats into the margins. And I'm very sensitive to that, as such, but this year, unfortunately, with the overall trends, and plus all the different macro factors in play as well, I don't think businesses have too much of an option. But to engage in a very creative promotional mix through this entire let us say two months or a little over two months, holiday shopping period as such, one of the things that I would really be careful of I mean, Amazon's idea, or Walmart's idea, and target would sort of follow as well, with early access day, they are sort of grabbing a fair share of the wallet effectively consumers Wallet. So you really have to look at your overall direct to consumer as well as the marketplace strategy holistically as well. So that's my only other recommendation other than being creative with your promotional plans.

Aaron Conant  51:50

Awesome. Well, again, thanks, everybody, for shooting in all the great comments, all the great questions, look for a follow up email from us. encourage everybody have a follow up conversation with the day and the team over at NetElixir. They're fantastic supporters, the network, they're just doing some amazing things across the board for a lot of brands in the digital space. Look for if I'll be male for me on the side, I'd love to have a conversation with you. Just kind of network strategy session. We can kind of inform you of upcoming in person events that we're doing. We're gonna do close to 100 dinners this year. We're going to be back in New York the second week of December. I believe it's December 13. For our full day event in the city. They're in Midtown. So look for a follow up email. I'd love to have a conversation with you. And with that, I think we're gonna wrap up this webinar as a whole who's and thanks again, great friend, great work

Udayan Bose  52:39

Happy holidays in advance to everyone. Thanks.

Aaron Conant  52:42

Thanks, Udayan. For that we're gonna wrap up. Hope everybody stay safe. Take care and look forward to having you at a future event. Thanks again, Udayan.