WEBINAR Key Trends That Will Drive Global eCommerce Growth In 2017 Michael O’Grady, Forecast Analyst Satish Meena, Forecast Analyst February 9, 2017. Call in at 10:25 a.m. Eastern Time

Consumer Technographics® GLOBAL SYNDICATED INSIGHTS ON THE INTERSECTION OF CONSUMERS AND TECHNOLOGY — ATTITUDES, BEHAVIORS, AND MOTIVATIONS Longest-running digital consumer study (since 1997) 400,000+ completed surveys 1,500 brands 300 attitudes captured 7 proprietary profiles ______________________ Deep, customizable, and trended consumer insights Coverage area Countries: Argentina France Japan South Korea United States Australia Germany Mexico Spain Brazil India The Netherlands Sweden Canada Indonesia Italy Poland Turkey China Russia United Kingdom

Polling question to start What are your priorities for growth in 2017? Growth in retail markets worldwide Domestic market growth In-store retail sales growth Online retail sales growth Growth in cross-channel touchpoints *Answers at the end of the Webinar

Agenda Understanding eCommerce growth Understanding m-commerce growth Understating cross-border eCommerce growth Consequences and implications of online retail growth

Agenda Understanding eCommerce growth Understanding m-commerce growth Understating cross-border eCommerce growth Consequences and implications of online retail growth

Growth in the two largest economies is driven by consumer expenditure in the US and exports in government investment in China Consumer- driven growth Source: World Bank

$1.5 $248 billion $397 billion $862 billion $19 billion the amount of USD spent online globally* in 2016 trillion Western Europe North America $248 billion $397 billion Asia Pacific $862 billion Latin America $19 billion Source: Forrester Research ForecastView Online Retail Forecasts *Global figure comprises 27 countries: Argentina, Australia, Austria, Belgium, Brazil, Canada, China, Denmark, Finland, France, Germany, Greece, India, Ireland, Italy, Japan, Luxembourg, Mexico, Netherlands, Norway, Portugal, South Korea, Spain, Sweden, Switzerland, United Kingdom, and United States

11.3% 12.3% 10.3% 10.6% 8.3% How fast eCommerce is growing globally* CAGR Western Europe North America 12.3% 10.3% Asia Pacific 10.6% Latin America 8.3% Source: Forrester Research ForecastView Online Retail Forecasts *Global figure comprises 27 countries: Argentina, Australia, Austria, Belgium, Brazil, Canada, China, Denmark, Finland, France, Germany, Greece, India, Ireland, Italy, Japan, Luxembourg, Mexico, Netherlands, Norway, Portugal, South Korea, Spain, Sweden, Switzerland, United Kingdom, and United States. Rate based on CAGR 2015 to 2021.

59% of the world’s population will be online by 2020; Asia drives online population growth Increase in online population 2016-2020 Source: Forrester Research World Online Population Forecast, 2015 To 2020 (Global)

US and China capture 72% of eCommerce trade today; other large eCommerce opportunities are developing Source: Forrester Readiness Index: eCommerce, 2016

Significant online buyer growth potential in Latin America and Asia Pacific Source: Forrester Research Online Retail Forecasts, 2016 To 2021

Online market maturity depends on how much a consumer spends online and online market share Online buyer maturity: spend per online buyer Higher online buyer and online market maturity Lower online buyer and online market maturity Market maturity: share of market online

Agenda Understanding eCommerce growth Understanding m-commerce growth Understating cross-border eCommerce growth Consequences and implications of online retail growth

Online populations in India and China purchase on their mobile phones Source: Forrester’s Global Technographics® Online Benchmark Surveys, 2016

Clothing and media drive mobile buyers in the US Share of smartphone buyers that buy Base: smartphone buyers; Source: Forrester’s Consumer Technographics® North American Retail And Travel Online Benchmark Recontact Survey (US)

Online retail via mobile to cross $1 trillion by 2018 SHARE OF ONLINE RETAIL SALES VIA MOBILE IS EXPECTED TO CROSS 50% IN 2017 Source: Forrester Research Forecast for US, EU-7, China, India, Japan, South Korea, Australia, Brazil, Argentina, and Mexico

Agenda Understanding eCommerce growth Understanding m-commerce growth Understating cross-border eCommerce growth Consequences and implications of online retail growth

Drivers for cross-border trade Inhibitors Consumer confidence in buying online Geoblocking Growth in online cross-border buyers Delivery times/cost of delivery/ease of returns Growth in marketplaces and marketplace investment Larger competitive domestic online markets inhibit the need to shop cross-border. Shoppers need for better price, choice, and authenticity Exchange rates Retailer’s ability to trade online and cross-border

China is driving cross-border buyer growth in Asia Pacific Source: Global Cross-Border eCommerce Sales Will More Than Double In The Next Five Years Forrester report

Product authenticity drives Chinese consumers to shop cross-border Base: Chinese online adults 18+ (online weekly or more); Source: Forrester’s Consumer Technographics® Asia Pacific Survey, 2016 (China), total sample size: N = 4,501

Cross-border sales B2C will triple in the next five years to reach $423 billion in 2021 Source: Forrester Research Online Cross-Border Retail Forecast, 2016 To 2021 (Global)

Europe is the largest exporter region for luxury goods Source: Forrester Data: Luxury Retail Forecast, 2016 To 2021 (Global)

Choice, price, and quality drive online cross-border sales “In general, why don’t you purchase products/services from a website outside of your country?” “In general, why do you purchase products/services from a website outside of your country?” Satisfied with quality from foreign websites The website offers products that I can’t find here. The total product cost is lower than what it would cost here. Source: Forrester’s Consumer Technographics® European Retail And Travel Survey, H1 2016

Agenda Understanding eCommerce growth Understanding m-commerce growth Understating cross-border eCommerce growth Consequences and implications of online retail growth

Web-influence for offline purchases will continue to dominate buyer behaviour Reverse-showrooming: “I have researched products/services online, then purchased those products/services offline in the past three months.” Showrooming: “I have researched products/services offline, then purchased those products/services online in the past three months.” Base: online adults 16+, N = 17,500; Source: Forrester’s Consumer Technographics® European Retail And Travel Survey, H1 2016

Multichannel shopper behaviour becomes dominant Clothes Toys Source: Forrester Data Web-Influenced Retail Sales Forecast, 2016 To 2021 (EU-7) and Forrester Data: Showrooming Forecast, 2016 To 2021 (EU-7)

The role of the physical store will change to accommodate digital influence EU-7 share of total retail sales Source: Forrester Data Web-Influenced Retail Sales Forecast, 2016 To 2021 (EU-7) and Forrester Data: Showrooming Forecast, 2016 To 2021 (EU-7)

Web influence varies by category Source: Forrester’s Global Consumer Technographics® Online Benchmark Survey, 2016

Many luxury retailers are increasing their retail share of sales to better manage the customer in-store experience Share of sales or outlets Source: “2015 Annual Report Overview Of The Group Review Of Operations,” Hermes Financial Information, May 27, 2016 (http://finance.hermes.com/var/finances/storage/original/application/630394b9a95603bf81b399744dbbf044.pdf); “Translation Of The French Financial Documents,” LVMH, January 23, 2017 (https://r.lvmh-static.com/uploads/2017/01/lvmh_financial-documents-_va.pdf); and “Half-Year Financial Report as of June 30, 2016,” Monclergroup (http://www.monclergroup.com/wp-content/uploads/dw.php?f=2016/08/Moncler_Half-Year-Financial-Report-as-of-June-30-2016_WEB.pdf) *Half year for Monclergoup

Sales on Singles Day in China is more than 10 times larger than a typical online day Source: Forrester Research Online Retail Forecast, 2015 To 2020 (Asia Pacific); Forrester Research Online Retail Forecast, 2015 To 2020 (Western Europe); and Forrester Research Online Retail Forecast, 2015 To 2020 (US)

Polling results What are your priorities for growth in 2016? Growth in retail markets worldwide Domestic market growth In-store retail sales growth Online retail sales growth Growth in cross-channel touchpoints *Answers at the end of the Webinar

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Michael O’Grady mogrady@forrester.com Satish Meena smeena@forrester.com