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Mary Meeker's Internet Trends 2019 report: a retail perspective

Venture capitalist Mary Meeker revealed the 2019 version of her annual Internet Trends report last week (11 June) and – as is the case every year – it contains much food for thought for retailers.

Since 1995, when she was an analyst at Morgan Stanley, Meeker has led a comprehensive annual review of the internet. As a result, she has built up a timeline of key events, trends, and pertinent issues on a range of issues, spanning eCommerce, digital marketing, cybersecurity, technology accessibility, and much more.

In those 24 years since the first report, Meeker has assumed various roles in the finance and business world – including, until last year, general partner at Kleiner Perkins – and she is now founder of independent market adviser Bond Capital.

Meeker and Bond Capital use various sources to compile the report, all of which are cited throughout the presentation. The 2019 version – all 333 slides of which were unveiled at Vox/Recode’s Code Conference in Arizona – presents intriguing findings for retailers. Essential Retail has picked out the key ones.

Slowing growth in eCommerce

Meeker goes into granular detail on eCommerce from a US perspective, saying the market continued to expand and take a larger percentage of overall retail sales in 2018. But that growth has slowed – it was up by 12.1% in the final quarter of 2018, compared to circa 17% 12 months before.

IMRG and Capgemini research paints a similar picture in the UK, but Aaron Chatterley, founder of beauty etailer Feelunique, is not ringing the alarm bell just yet.

“There is only so much growth – you cannot continue to grow at 50%+ year on year in a single market forever – but there is still some way to go for eCommerce,” explains Chatterley.

“If you look at online penetration for online beauty, for example, there’s still more to be done. If you look at the online pure-plays and how they can extend awareness of their own brands, there’s opportunity there.”

Online advertising evolution

AO.com CEO John Roberts announced at this year’s Retail Week Live conference that his consumer electronics e-tail business was pulling out of TV advertising because he viewed digital platform ads as a better return on investment.

That is indicative of what has been a growing shift from traditional to digital advertising sector in recent years, but Meeker’s report says today’s “advertising share gain drivers” are, specifically: better targeting, new types of creative, a direct commerce link, and more relevance.

She lists Facebook, YouTube, Pinterest, and Twitter, respectively, as examples of companies supporting ways for brands to reach customers in these ways.

"Keeping Google happy is arguably more important than keeping my customers happy"David Kohn, customer and eCommerce director at furniture retailer Heal’s

Meeker details how Google and Facebook lead the ad platform market but others – such as Amazon, Twitter, Snap and Pinterest – are gaining share. Global ad revenue in 2018 grew at a greater rate at those latter four companies combined than it did for both Google and Facebook.

Getting ads and brand exposure right on Google, however, remains a key target for the majority of retailers this publication talks to.

David Kohn, customer and eCommerce director at furniture retailer Heal’s, says that "Google centricity" is on a par with customer centricity in terms of his company’s strategy.

“Whether it’s organic or paid, Google generates 70-75% of traffic, so keeping Google happy is arguably more important than keeping my customers happy,” he explained at this year's FUTR Summit in London.

“It’s incredibly important. For us Google is God, if you’re not keeping Google happy, you’re not keeping your shareholders happy.”

Asia Pacific penetration potential

For UK retailers looking outside their home territory for growth, the report’s data on internet user penetration may make for interesting reading.

Asia Pacific represents 53% of all global internet users, but there is still only a 48% internet user penetration in the region. This suggests many more target customers will emerge as access to and education about the web rises in this part of the world.

It is a similar story for Africa and the Middle East, where 13% of global internet users reside but where internet penetration sits at 32%. Internet penetration is highest in North America (89%) and Europe (78%), and at 62% in Latin America/Caribbean.

A focus on China

US president Donald Trump may be waging a trade war on China, but international businesses – including plenty from the European retail world including FarfetchWhittard of Chelsea and Adidas – continue to look there for new sales and growth opportunities.

Hillhouse Capital contributes to this year’s Meeker report with a section on China, where innovations from the likes of Alibaba and JD.com are highlighted. The report talks up the ability of an array of China’s technology companies to gamify apps and local services that subsequently help reshape payments, retail, eCommerce and education platforms in the country.

WeChat’s evolution from messaging app to wider social media and payment platform is a case in point. As Meeker says, China – with 800 million web users and a 189% hike in mobile internet usage in 2018 – “is the largest market of internet users and a leader in innovation/scale”.

The bottom line

In her presentation at the Code conference, Meeker summarised the key internet themes impacting businesses right now. She said, at 3.8 billion, the number of global internet users now comprises over half the world’s population, and neatly framed the challenges and opportunities brought about by the evolving digital space.

“When markets reach mainstream, new growth is harder to find as evinced by declining new smartphone shipments in 2018,” her presentation stated.

“While eCommerce continues to gain share vs. physical retail, growth rates are slowing. While internet advertising growth is solid and innovation is healthy, there are areas where customer acquisition costs may be rising to unsustainable levels.”

But she added that global innovation and competition continue to drive product improvements, fresh types of internet usage and new monetisation methods “especially in areas of digital video, voice, wearables, on-demand and local services”.