ChannelAdvisor Scot Wingo By Scot Wingo

2016 ChannelAdvisor Same Store Sales Backgrounder and Schedule

Since 2009, ChannelAdvisor has been producing a monthly report we refer to as “Same Store Sales” (SSS) as a benchmark for our customers and the industry. These reports are intended to measure the relative performance of various online channels — such as Amazon, eBay, search, comparison shopping engines (CSEs) and more — where our customers sell merchandise. This information helps our customers make educated decisions about their use of various online channels. Unlike survey-based reports or reports based on small sample sets, the ChannelAdvisor SSS data is created using real transactional data captured by ChannelAdvisor’s software across our global customer base of thousands of online retailers, hundreds of e-commerce channels and billions of dollars in gross merchandise value (GMV).

Gross merchandise value (or GMV) is a commonly used metric in the e-commerce world. Because product sales are different than revenue on some channels, GMV was created to represent the overall volume of product sales that go through a channel. For example, eBay’s GMV is a very large number (> $60b), and its revenue is a subset of that based on its take rate (the percent eBay charges retailers for selling on its platform and other associated fees). Search engines like Google recognize their revenue based on advertising spend in the form of cost per click, but again, we’re focused on GMV. We focus on GMV because that’s what matters to our customers. Plus, we believe it’s the best way to measure the impact that a channel is having on the overall industry.

ChannelAdvisor SSS Methodology

The way SSS is compiled is as follows:

  • Each ChannelAdvisor customers’ GMV is recorded on a monthly basis by channel.
  • We think of a “store” metaphorically as one customer selling through a particular channel – in other words, one of our online retailer customers can have multiple “stores” if they use more than one channel to sell their merchandise.
  • Once a “store” has been active with ChannelAdvisor for a year (that is, the customer has been with us for at least a year and has been using the particular channel for at least a year), then we begin to include it in the SSS data.
  • If a customer stops working with ChannelAdvisor or stops selling on a particular channel, then that combination of customer and channel, that “store,” is no longer included (assuming it made it past the year mark in the first place).  Whenever an online retailer stops selling on a channel or stops using ChannelAdvisor, that retailer is immediately taken out of the SSS data.
  • GMV is measured in native currency and compared in native currency.

Here’s an example of how this works:

Customer A first began selling on Amazon in mid-April 2015. This customer’s Amazon GMV is first included in the monthly SSS calculation in May 2016 and will be first reflected in year-over-year Amazon comparisons in the monthly report for May 2016.

The end result is an SSS metric that’s equivalent to that used by offline retailers, such as Walmart and Target, called the same-store sales metric. In other words, it’s designed to take out the skewing effects from new customer additions and give a clear year-over-year growth picture.

Our customers have found this data to be helpful for several use cases:

  • Existing channel benchmarking: You’re an online retailer participating in search and CSE.  You’re growing at 10% y/y in search and 5% y/y in CSE. By using the ChannelAdvisor SSS data, you can benchmark how you’re doing against your peers.
  • New channel expansion: If you’re an online retailer that’s active in search and CSE and want to explore new channels, the SSS data can be a guide to finding those channels that are growing at rates you find attractive.

We also publish data in many of our SSS reports that shows the breakdown of overall traffic by device type (e.g., Computer, Smartphone, Tablet, Total Mobile ). This is simply a calculation of how much of the traffic driven by search and CSE channels across our platform during the relevant period originated from the specified types of devices. (Computer + Smartphone + Tablet = 100%. Total Mobile = Smartphone + Tablet.)

SSS Disclaimers

There are many reasons this data is not a proxy for overall e-commerce activity or individual channel total performance. These reasons include, but are not limited to:

  • Customer variance: ChannelAdvisor’s customers may not be representative of the overall customer mix of any individual channel.  For example, on eBay, our customers are skewed toward a larger eBay customer set, not the average.
  • Category variance: ChannelAdvisor’s customers are overrepresented in some categories (electronics, sporting goods and auto parts) and underrepresented in others (collectibles, BMV/media, etc.). On Amazon, for example, ChannelAdvisor has very few media customers, so we have no visibility into that large chunk of Amazon’s business.
  • Cross-border trade variance: While ChannelAdvisor does have a fair amount of non-domestic GMV, our mix of domestic and international customers is not necessarily equivalent to that of other e-commerce players.
  • Software Impact: At the end of the day, we are a software company. Some of our features cause a short-term bump in sales that may skew results high at the beginning and then lower at the end of a one-year SSS cycle.
  • Channel impact: Certain changes at e-commerce channels may cause disproportionate good or harm to our customer base, category mix, international mix and software. While the data shows these changes, because we are not a material part of every channel, over 90% of that channel’s business may not have the same impact (positive or negative).
  • SSS is a metric unique to ChannelAdvisor: Amazon, eBay, Google and other e-commerce businesses do not measure SSS.  They look at overall growth when they report their financial metrics. We believe SSS is important to our customers from a benchmarking standpoint, which is why we do it this way – it is not intended to be a proxy for the overall performance of any of these e-commerce channels.

How Should Online Retailers Benchmark with the SSS?

For online retailers, we recommend looking at your year-over-year performance on each of the channels and comparing it with what we’re reporting here to see how you’re doing compared with your peers. For example, you may feel that your 25% January 2016 vs. January 2015 growth on Amazon is very strong, but when you compare that to the 34.3% share we’re reporting across our customer base, you’re effectively behind the average and may need to re-evaluate what looked like a great result to see why you’re lagging and/or losing share in this channel. There are a lot of “dials to turn” to increase your performance on any channel, and we can work with you to formulate a strategy to get back to above-market sales growth.

Conversely, maybe you’re growing at 15% on CSEs and feel that wasn’t strong enough, but you look at the ChannelAdvisor SSS and realize you may be being too tough on yourself because you’re actually growing close to double what we’re seeing out there as the average. You’re effectively gaining share in this channel when compared with your peers.

Finally, maybe you’re selling on only one channel and want to pick a channel that’s going to supercharge some growth. Hopefully, you can use this data as one input into that decision. For online retailers that want a category view or deeper dive into any of these, we do this on an on-demand basis. Contact your ChannelAdvisor sales rep/account manager to learn more.

2016 SSS Schedule

Here is the schedule for 2016’s SSS releases:

  • February 9: January SSS
  • March 8: February SSS
  • April 5: March SSS
  • May 10: April SSS
  • June 2: May SSS
  • July 12: June SSS
  • August 9: July SSS
  • September 8: August SSS
  • October 6: September SSS
  • November 8: October SSS
  • Holiday 2016: TBD – We will have our usual regular updates through the 2016 holiday season and will post a Holiday SSS schedule in early November.

SSS Frequently Asked Questions (FAQs)

Q: You said eBay (or Amazon, Google) did X, and when they reported their earnings, it was Y. Why were you so wrong?

A: The ChannelAdvisor SSS data is in no way a prediction of any e-commerce channel’s results. Instead, the SSS reports are designed to be a benchmark for ChannelAdvisor’s customers to give them an idea of how they’re doing vs. their peers. We have over 2,900 online retailers as customers and process over $5 billion in GMV through our system, which we believe makes this data a meaningful benchmark. However, there are many reasons (outlined earlier in this post) our data does not correlate at all with the performance of companies.

Not only do we have a different international, seller and category mix, but those companies are not reporting SSS; they are reporting all-in sales. As a result, it’s quite apples and oranges on all levels.

Q: What do all these acronyms you use mean? (SSS, AOV, ASP, CR, GMV, CPC)

A:  Here’s a quick dictionary of common acronyms we use:

SSS: Same store sales. See above for details.

CSE: Comparison shopping engines. We track over 100 global CSEs, including PriceGrabber, Shopzilla, Kelkoo and more.

AOV: Average order value. The average value of an order. In other words, when we look across our vast network at all the carts going through checkout, what is the average cart value?

ASP: Average selling price, for a specific product (e.g., an iPad) over time. Before eBay had a cart, we used ASP in the industry because there was only one product being purchased at a time. Now, we generally use AOV.

PLA/GS: A Google program with two names: Product Listing Ads and Google Shopping. This is Google’s paid comparison shopping engine that shows up embedded in search results.

CR: Conversion rate. Retailers spend a lot of time and effort acquiring traffic, but only a small percentage turns into an order. That percentage is the conversion rate. (Traffic * CR * AOV = GMV)

GMV: Gross merchandise value. The value of items being sold through any given e-commerce channel.  We use GMV instead of revenue because the two are actually different in the world of marketplaces. For example, eBay and Amazon may facilitate $1,000,000 in GMV – but their revenue/sales are 10%, or $100,000. Therefore, in the industry we use GMV to make that clear.

CPC: Cost per click. This is the typical way retailers pay for traffic from search engines (Google, Yahoo, Bing) and CSEs.

FBA: Fulfillment by Amazon. Amazon’s program that allows retailers to use Amazon’s large fulfillment center network.

FC: Fulfillment center. A warehouse that’s oriented toward individual package fulfillment for e-commerce.

DC: Data center. A nice, cool, dry house for a bunch of servers.

Q: You said the results would be out on X day, and they haven’t come out yet – why?

A: We make every effort to adhere to the schedule, but our top priority is our customers. Sometimes that can create delays in getting the data out. We reserve the right to issue the data after the scheduled date.

Q: How can I be notified by email or SMS when new SSS data is out?

A: Since this is a blog with RSS, you can use a service like feedburner or blogtrottr to automate the creation of emails. You can also subscribe to the blog via the “subscribe” page.  Also, within minutes of a new blog post, we will tweet via:

ChannelAdvisor’s main Twitter account: www.twitter.com/channeladvisor

Scot Wingo’s main Twitter account: www.twitter.com/scotwingo

Twitter gives you flexibility to receive SMS messages and emails when new tweets arrive.

Questions?

If you have any questions about ChannelAdvisor’s SSS data, our methodology, the disclaimers or the schedule, feel free to ask in comments.

Updates to This Post:

This placeholder will note any changes we make to the SSS 2016 blog post in the future.

 

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