STATE OF ECOMMERCE IN THE US – October 2015

WHAT IS INTELLIGENCE NODE’S INDEX SERIES?

 

Intelligence Node’s INdex series tracks the retail price change of a basket of products spread across online retailers using our real-time retail analytics software. 

The INdex covers the top 1000+ leading e-commerce retailers and is continuously monitored by proprietary market-monitoring algorithms. Intelligence Node’s INdex algorithm processes approximately 750mm products daily and are taken from real-time, live data. All benchmark indexes are tracked real time, however, updates will be published in our monthly newsletter. The goal of our INdex series is to put online retail price movements in the context of macroeconomic factors thus enabling retailers to understand how these macroeconomic factors influence their day-to-day retail pricing strategies.

 

Overview for October 2015

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October saw a gradual emergence from the global market instability felt in September as evidenced by an overall net increase of 1.1% in the number of new products added to stock, which was lead by the Food & Grocery sector. October is the gateway month to the holiday shopping season; therefore, it’s no surprise that we see the Beauty & Care category increasing as the fall lines and new collections begin their rollout.

 When compared to the numbers presented last month, Electronics and Home & Decor have experienced a contraction, likely due to new introductions that have already occurred in a previous time period.

Average Pricing and Discount

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October appears to be a typical pre-holiday month, with evidence of the usual ramp up in pricing undertaken to legitimize deep Black Friday discounts, and the ensuing shopping season. At this point, and as seen in the overview section, Fashion is leading the way as new collections are rolled out and retailers are preparing for year end and the holiday season.

 Also predictable is the early price-cutting in the Electronics sector, as the collective strategy of generating urgency in shoppers is fairly universal across this group.

 This time of year, retailers are required to adopt a hyper-sensitive touch on the pricing control dial through vigilant monitoring of what competitors are doing in response to buyer behavior. In this regard, it is critical for retailers to know when to push the discount button and just how hard to push it when the time comes.

 The ability to capture market and price activity in real-time is key since margins are razor thin and the winter holiday season is typically ‘make it or break it’ for retailers. The fact is, every day matters.

Trending in the Market

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Although Fashion and Electronics are trending stronger, it is interesting to note that the Food & Grocery category is becoming a hotbed of competition. Notable in this is the move by Walmart to expand its online grocery shopping service, further turning up the heat on its competitors as it launches services in eight additional markets.

Insights by Player

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The data in this chart is indicative of how aggressive Walmart has become in providing additional products for sale in its stores. While Walmart is ramping up its product offerings, Amazon is creating the sense of urgency that products are going out of stock early, specifically in the electronics category, which is classically the main battleground of the holiday season.

 (Note: Send us a note via social media if you are interested in seeing comparisons between other companies and we’ll include them in future analysis)

Conclusion

As we leave October behind and enter the core buying season of the holiday period, the timing and applications of discounts will to define the winners and losers in retail. We anticipate seeing the usual pre-season price inflation followed by the obligatory deep discounts given over the buying period.

 As we mentioned last month, careful product selection and well timed discounting strategies are going to make the difference between the winners and the losers because as usual, margins will be razor thin. Companies that invest in retail analytics software will position themselves well to conduct real-time market analysis through the creation of graphs and charts such as the ones in this article to highlight elements that they view as critical.

 Intelligence Node can provide highly targeted insights – including SKU based analytics – to help you monitor your competition in real time. Request a free demo and learn how to harness the true power of analytics to drive business success.