UK Online Retail:

Does Christmas come earlier every year?

Robin GoadResearch DirectorHitwise

About Hitwise

Online competitive intelligence service

Collect anonymised internet usage data on over

25 million people globally

8.43 million UK internet users

Report on over 1 million websites

Provide daily delivery of information

Founded in 1997. Profitable operations in the UK, US, Australia, New Zealand, Hong Kong and Singapore

1,200+ clients worldwide, 400+ in the UK

Used for online customer acquisition:

Search marketing

Affiliate marketing

Online advertising

Christmas is not coming earlier each year…• Decline in share is due to

growth in other categories: News and Media, Entertainment, Social Networks

• Christmas peak:

• 2005: w/e 10th Dec

• 2006: w/e 9th Dec

• ‘January’ sales peak:

• 2005: w/e 31st Dec

• 2006: w/e 30th Dec

…Although the January sales are over sooner

Pre- and post-Christmas retail traffic

-102030405060708090

100

Wee

k -7

Wee

k -6

Wee

k -5

Wee

k -4

Wee

k -3

Wee

k -2

Wee

k -1

Wee

k 0

Wee

k 1

Wee

k 2

Wee

k 3

Wee

k 4

Wee

k 5

Wee

k 6

Wee

k 7

Ind

ex 2005

2006

• Pre-Christmas trend is almost identical

• More rapid decline in post-Christmas traffic in 2006

Prediction: More Last-Minute Shopping

• High street retailers gain more traffic than pure-play online retailers

• High street retailers do better out of the January sales

• Strong brands have the most successful sales – e.g. during the summer sale season, there were more searches for ‘next sale’ than ‘houses for sale’, ‘cars for sale’, etc.

High street vs. pure play

Social networks driving traffic to retailers• The top 25 social networks

now account for 1 in 20 UK Internet visits

• Facebook, Bebo and MySpace are all in the top 10 most visited websites in the UK

• ‘Bebo’ is the most searched for term in the UK, ovetaking ‘ebay’

• Proportion of visitors aged 55+ has increased by 63%, while the proportion coming from the 18 –24 age group has decreased by 19%.

How do the social networks differ?Retail category by social network

0% 5% 10% 15% 20% 25% 30% 35% 40%

Sport and Fitness

Appliances and Electronics

Computers

Video and Games

Music

Department Stores

Apparel and Accessories

Auctions

Percentage of downstream retail traffic from social network

Myspace

Bebo

Facebook

• Facebook: strong in Auctions, Department stores - GENERALISTS

• Bebo: strong in Apparel, Music, Video and games - YOUTH

• Myspace: Strong in Computers, Appliances, Sport and Fitness - SPECIALISTS

Uses for Facebook

Almost 100,000 members

International expansion

Market research

Advocacy

Viral activity

The importance of search

• A third of retail traffic comes from search engines

• Branded search terms dominate

• Paid search is important – e.g. eBay UK: 33% Amazon UK: 18%

19% clicked the sponsored result.

Paid search in action

Hot Gadgets this Christmas

Rank GadgetShare of all gadget

searches1 Mobile phones 45.5%2 Computers 17.5%3 Games consoles 15.0%4 MP3 players 9.3%5 Sat Nav 4.7%6 Televisions 3.1%7 Printers 1.0%8 Cameras 1.0%9 Home Cinema / Hi Fi 0.6%10 Digital photo frames 0.4%

Rank BrandShare of all gadget

searches1 Apple 34.2%2 Nintendo 17.9%3 TomTom 7.4%4 HP 6.9%5 Sony 5.8%6 Microsoft 5.3%7 Dell 5.3%8 Nokia 5.0%9 Sony Ericsson 4.8%10 Samsung 4.2%

Rank Phone modelShare of all phone model

searches1 Apple iPhone 11.4%2 Nokia N95 7.7%3 Sony Ericsson w580i 7.6%4 Samsung u600 5.9%5 Nokia 6300 5.6%6 Samsung g600 5.2%7 Nokia 6500 4.2%8 Sony Ericsson k850i 3.3%9 Sony Ericsson w910i 3.0%10 Sony Ericsson k800i 2.9%

Rank BandShare of all phone model

searches1 Nokia 30.7%2 Sony Ericsson 30.6%3 Samsung 22.2%4 Apple 11.4%5 LG 3.8%

Hot entertainment

Rank ConsoleShare of all console

searches1 Nintendo Wii 53.3%2 Microsoft Xbox 360 19.0%3 Sony PS3 12.7%4 Nintendo DS 10.2%5 Sony PSP 4.0%6 Sony Playstation 2 0.9%

Rank MP3 playerShare of all MP3 player

model searches1 Apple iPod 63.0%2 Apple iPod Nano 23.2%3 Apple iPod Touch 8.2%4 Apple iPod Shuffle 2.4%5 Apple iPod Classic 2.3%6 Creative Zen 0.9%

• Xmas doesn’t comes earlier every year – but the sales finish earlier

• High street retailers have a larger share than pure-play online – especially during the sales

• Social networks are driving more and more traffic to retailers

• Different social networks have closer affinities with particular sectors

• A third of retail traffic comes from search – both paid and organic have a role to play

• Hot Christmas products:

• Nintendo Wii

• Apple iPhone

• Bratz

• High School Musical

Summary

Robin GoadE-mail: robin.goad@hitwise.comInternet: www.hitwise.co.ukAnalyst Weblog: www.ilovedata.com