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UPS Pulse of theOnline Shopper™

Tech savvy shoppers transforming retail

U.S. Study | June 8, 2016

© comScore, Inc. Proprietary. 2

State of the U.S. Online Retail Economy Q1 2016

Data sourced from comScore’s global panel of 2 million Internet users

2 Million Person Panel

360°View of Person Behavior

CENSUS

Unified Digital Measurement™ (UDM)

Patent-Pending Methodology

1 Million Domains ParticipatingAdopted by 90% of Top 100 U.S. Media Properties

PANEL

PERSON-Centric Panel with

WEBSITE-Census Measurement

Web Visiting & Search Behavior Online

AdvertisingExposure

AdvertisingEffectiveness

Demographics,Lifestyles& Attitudes

Media & VideoConsumption

Transactions

Online& Offline

Buying

Mobile InternetUsage & Behavior

PANEL

V0411

Plus 40 Million TV Set Top Boxes for 3-Screen Measurement


In terms of discretionary spending, m-Commerce growth is still far outpacing

e-Commerce & bricks-and-mortar

+4%

+11%

+40%

Total Discretionary Retail e-Commerce m-Commerce

Q1 2016 Y/Y Retail Spending Growth by Channel

Source: Dept. of Commerce, comScore e-Commerce & m-Commerce Measurement


0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

11%

12%

13%

14%

15%

16%

17%

Digital Commerce Share (desktop+mobile)

e-Commerce Share (desktop)

*Note: e-Commerce share is shown as a percent of DOC’s Total Retail Sales excluding Food Service & Drinking,

Food & Bev. Stores, Motor Vehicles & Parts, Gasoline Stations and Health & Personal Care Stores.

Desktop & Mobile Digital Commerce Share of Corresponding Consumer Spending*

14.9%(Q1 ‘15)

13.4%Q1 ‘16

16.5%Q1 ‘16

Q1 2016 saw a 16.5% share, the highest ever

12.6%(Q1 ‘15)

Source: comScore e-Commerce / m-Commerce & U.S. Department of Commerce (DOC) for Retail

By Q1 2016, Total Digital Commerce had grown to account for more than

1 in every 6 discretionary dollars spent by consumers


$8.4 $8.4

$7.1

$12.3

$9.9 $10.0

$8.4

$15.0$12.4

$11.8

$10.1

$17.2

$14.0

$9.2 $9.1$9.9

$13.5

$10.2$10.0

$11.3

$15.9

$11.1 $11.0

$11.8

$16.0

$12.5

$0

$2

$4

$6

$8

$10

$12

$14

$16

$18

$20

Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016

Bill

ions (

$)

Overtaking Computer Hardware, Apparel & Accessories has established itself as

the #1 category, driven in part by growing consumer comfort and easier returns

Digital Commerce Sales by Category: Apparel & Accessories vs. Computer Hardware

Apparel & Accessories

Computer Hardware

Source: comScore e-Commerce & m-Commerce Measurement


Price-based incentives attract consumers to digital commerce. Free shipping peaks in the

holiday and back-to-school shopping seasons but throughout the year still accounts for the

majority of online buying.

Q. Among the services/factors listed below which can be provided by online retailers, please rate them on a scale of 1-5,

where 1 is the most important factor to you, and 5 is the least important.

Percentage of e-Commerce Transactions

with Free ShippingSource: comScore e-Commerce Measurement

49% 53% 52%45% 50% 49% 51% 53% 53% 52%

31% 26% 25%28%

28% 28% 28% 22% 22% 24%

13% 14% 13% 14% 13% 12% 11%13% 11% 11%

4% 4% 6% 8% 6% 7% 6% 8% 10% 9%

3% 3% 4% 4% 4% 4% 4% 4% 4% 3%

Q42013

Q12014

Q22014

Q32014

Q42014

Q12015

Q22015

Q32015

Q42015

Q12016

Free shipping Exclusive online dealsNo sales tax Fast shippingIn store pickup

Percent of Respondents Selecting Each Factor as

‘Most Important’ for Online ShoppingSource: comScore Custom Surveys

65%

58%

69% 69%

62%

35%

40%

45%

50%

55%

60%

65%

70%

75%

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016


In Q1 2016, mobile app visits to the retail category finally surpassed mobile web

visits. Desktop visits, however, saw a slight decline in growth

MULTI-PLATFORM

40.0B

+28% Y/YDESKTOP

13.5B-3% Y/Y

MOBILE

26.6B+54% Y/Y

MOBILE WEB

13.2B+40% Y/Y

Source: comScore Custom Solutions, U.S., Q1 2016

MOBILE APP

13.4B+70% Y/Y

*Due to the 2016 leap year, Q1 2016 had one more calendar day than Q1

2015.


KEY TAKEAWAYS

Total Digital Commerce achieved its highest % share of consumer discretionary spending ever at 16.5%, while mobile continues to grow its share of digital at 18.6%

Desktop sales were back in double digit growth territory (+11%) for the first time since 2014, but mobile still drove much of the growth at +40%

1 Improving consumer

sentiment leads to

strong Q1 2016, with

Total Digital

Commerce growing

+16% Y/YLower price points and basket

complexity are key drivers to

buying on mobile

Apparel maintains its lead on

Computers as the largest online

retail category, while CPG has

eyes on massive digital growth

opportunity

2 Mobile commerce

growth is driving gains

in the top growing

product categories

Mobile visits grew upwards of

+50% Y/Y, while desktop had a

slight decline in total retail visits

Amazon has a massive leadership

position, and limited app real

estate tends to favor the biggest

retailers

3 Mobile apps are

playing an

increasingly important

role in online retail,

surpassing mobile

browser visits in Q1

Proprietary and Confidential: This presentation may not be used or disclosed to any person other than employees or Customer, unless expressly authorized by UPS.

© 2016 United Parcel Service of America, Inc. UPS, the UPS brandmark, the color brown and photos are trademarks of United Parcel Service of America, Inc. All rights reserved. 9

UPS Pulse of the Online Shopper Study Methodology

For the fifth year, UPS developed this study with comScore

Chicago-based consultancy, the e-tailing group, inc., also

contributed to development and recommendations

Input was collected from 5,330 qualified comScore

panelists in January and February, 2016

Shoppers had to have made at least 2 online purchases in

a typical 3-month period

Shopping frequency dictated classifications:



Digital fuels future growth



Smartphones are the driving force in shopping



Cross-channel purchases growing



Millennial Marvels more likely to leverage technology

to shop smart



Wearable interest strong



Product searches usually don’t start with search engines



“Showrooms” without inventory visited by one in six shoppers



Apps popular for gathering information



Stores continue to play a major role even among avid

online shoppers



Ship to store in favor



Smartphones in-store payments still low but seeing traction



Social media influence on shopping grows



Product selection is important



Shoppers are looking for choice, control and convenience



Offer choices to shoppers as two-day delivery

expectations go mainstream



Preference for alternate delivery locations continues to grow



Store returns drive repurchase


© 2016 United Parcel Service of America, Inc. UPS, the UPS brandmark, the color brown and photos are trademarks of United Parcel Service of America, Inc. All rights reserved.

Five things to remember…

27

3 Key Takeaways




28

Do you need a mobile app?

Shoppers are there already…

www.longitudes.ups.com

https://longitudes.ups.com/the-smartphone-is-changing-retailing-for-good

http://www.longitudes.ups.com/

https://longitudes.ups.com/the-smartphone-is-changing-retailing-for-good




29

Keep an eye on social media/ messaging

apps.

Its day is coming.




30

Watch the fundamentals.

Delivery, communication and returns

should be flawless.




31

Gian Fulgoni, Co-Founder & Chairman, comScore

Bala Ganesh, Senior Director, UPS Strategy

Get the study at

ups.com/insideretail

Documents

UPS Pulse of the Online Shopper - icvdm.vo.llnwd.neticvdm.vo.llnwd.net/o10/internetretailer/irce2016/pdf/Fulgoni... · UPS Pulse of the Online Shopper™ Tech savvy shoppers transforming