Are e-commerce websites profitable

E-commerce websites:
Profitability levers
Foreword
Foreword
The share of profitable websites
decreases since 2011..but stabilizes
since 2013.
Evolution of the websites that have reached their
break even point
80%
60%
2011
2012
70%
69%
2013
2014
Evolution of the websites that have increased their
profitability
For 4 years, it is rather the leading
websites that manage to increase
profitability (vs all websites).
Leading websites
All
83%
64%
25%
2011
64%
35%
2012
Sources : étude CCM Benchmark 2012, 2013, 2014 et étude TNS Sofres 2015 pour Webloyalty
50%
59%
2013
49%
2014
3
Study Methodology
Study Methodology
Sample
Type of
collection
105 e-commerce decision-makers
Turnover
Small ( <1 M€)
Medium (between 1 and 10
M€)
Big (between 10 and 50 M€)
18%
37%
Fashion
Tourism
Home equipment
Culture, high tech,
Autre
23%
22%
4%
18%
13%
27%
 Interviews
made by
phone
38%
Etude TNS Sofres pour Webloyalty - 2016
Field time
 From
03/29/2016
to
04/13/2016
5
Key questions of the study
Profitability of ecommerce websites in
France
Are e-commerce websites
profitable ?
What are the key
evolution factors of
profitability ?
What are the levers used
to monetize websites
audience ?
6
E-commerce websites profitability
Are e-commerce websites profitable ?
7 websites out of 10 have reached their break even point in 2015, almost as in
2014.
70%
16%
10%
Of profitables
websites
(69% in 2014 )
14%
71%
Leading websites
89%
Big websites
87%
Medium websites
Small websites
60%
Yes since 2015
Yes for several years
No, it's the objective of the year to come
Not yet
45%
81%
Click & Mortar
Pure Players
Etude TNS Sofres pour Webloyalty - 2016
65%
8
Is the profitability of websites increasing ?
Nearly half of the websites have improved their profitability in 2015, while just
over a quarter saw their profitability decline, a stable trend vs. 2014.
The proportion of websites with profitability in strong decline has still quadrupled.
Profitability Evolution
Decrease
28%
(3%
in 2014)
(24% en 2014)
Increase
48%
(49% in 2014)
12%
4%
Increase strongly
19%
Increase a little
Stay stable
16%
29%
20%
Etude TNS Sofres pour Webloyalty - 2016
Decrease a little
Decline strongly
NSP
Is the profitability of websites increasing ?
The profitability of leading websites tended to stagnate in 2015, while that of large sites
progressed. Medium size websites are struggling to stabilize.
Profitability Evolution according to size and type of websites
Increase
Leading websites
Stay stable
Decrease
21%
50%
Big websites
63%
Medium websites
62%
0%
Small websites
Click & Mortar
Pure Players
44%
11%
18%
51%
Etude TNS Sofres pour Webloyalty - 2016
21% 7%
26% 0%
37% 0%
23%
46%
NSP
27%
6%
32% 3%
21%
25% 3%
10
Factors of profitability evolution
Factors of profitability evolution
Customer loyalty is the most important factor in the evolution of the profitability
of the websites after the turnover.
Factors of increase / Decrease of profitability
Decreased
profitability
Increased
profitability
87%
66%
L'évolution du
L'évolution
chiffre d'affaires,
du chiffre
des
d'affaires,
ventes des ventes
Turnover
evolution
75%
La fidélité desCustomers
clients
70%
La marge commerciale
51%
La fidélité des clients
loyalty
36%
La marge commerciale
Mark up
Les taux de transformation
Les taux
de transformation
Conversion
rate
68%
57%
La part
La part
des
produits
produits
à forte
à forte
marge
marge
dansdans
le chiffre
le chiffre
d'affaires
Share
ofdes
high-margin
products
in d'affaires
turnover
51%
38%
25%
38%
Les coûts d'exploitation
coûts d'exploitation
ExploitationLescosts
28%
26%
10%
Des investissements
récents
investissements
réalisés made
récents réalisés
Recent Des
investments
Les coûts
de recrutements
Les coûts
dedeclients
recrutements
de clients
Customers
recruitment
costs
Les
recettes
des
Les
activités
recettes
des
activités
distribution
hors
distribution
Revenues
excluding
distribution
activities
Etude
TNS
Sofres
pourhors
Webloyalty
- 2016
Etude TNS Sofres pour Webloyalty - 2016
(29% in 2014 )
21%
32%
28%
12
Growth drivers
To achieve their growth objectives, the sites will rely first on social networks,
much more than in 2014, as well as diversifying and customizing their offer.
Future growth drivers
81%
Social networks
(69% in 2014)
74%
Diversification
72%
Customization
69%
Multi channels
65%
M-commerce
52%
Internationalization
Marketplace creation or development
25%
Etude TNS Sofres pour Webloyalty - 2016
Audience monetization
Using audience monetization
More than half of the websites monetize its audience in 2015 (+ 8 points vs. 2014).
A lever mostly adopted by leading sites and Click & Mortar.
Using audience monetization
53%
Small and
Big
medium websites websites
43%
63%
Of websites have
monetized their audience
in 2015
(45% in 2014)
Leading
websites
Pure
player
Click &
Mortar
79%
49%
63%
(32% in 2014 )
Etude TNS Sofres pour Webloyalty - 2016
15
Using audience monetization
Shopping websites are becoming more likely to increase the monetization levers
(35% in 2015 vs. 13% in 2014). A trend driven by leading sites.
Using audience monetization
53%
At least one lever
58%
35%
Several levers
Several levers
(13% en 2014 )
(38% en 2014 )
21%
18%
Leading websites
One lever
One lever
47%
72%
No lever
Etude TNS Sofres pour Webloyalty - 2016
Small websites
Levers used to monetize the audience
The sale of advertising space and other services are the most used levers in 2015.
A confirmed trend among leading and large websites.
Focus leading
and big websites
Monetization levers
All websites
Vente Sale
d’espaces
of publicitaires
advertising
58%
space
67%
(36% en 2014)
(26% en 2014)
Vente deSale
services
oftiers
other
55%
services
67%
(30% en 2014)
(45% en 2014)
29%
Asile
colis
Advertising
insert in mail-order
parcels
44%
Revente
de bases
données clients
Resale
ofdeclients
database
33%
24%
Marketplace
Marketplace
Etude TNS Sofres pour Webloyalty - 2016
33%
15%
17
Contribution of these levers in the turnover
Resale of customer database (23%), marketplace (20%) and advertising space
(13%) contribute to over 10% in the turnover of e-commerce websites.
Effectiveness of monetization levers
Contribution to turnover
< 3%
between 3 and 5%
Resale of clients
database
Marketplace
Sales of advertising
spaces
between 5 and 10%
70%
10% and +
23%
7%
52%
NSP
20%
28%
2%
79%
13%
6%
3% 2%
Sales of services
80%
11%
Advertising insert in
mail-order parcels
80%
12%
Etude TNS Sofres pour Webloyalty - 2016
4%
8%
18
Contribution of these levers in the operating result
And those same levers sometimes contribute to over 20% of the websites
operating income.
Effectiveness of monetization levers
Contribution to operating income
< 10%
Marketplace
Resale of clients database
Sale of advertising spaces
Sale of services
advertising insert in mailorder parcels
10 to 20%
20% and +
28%
NSP
44%
74%
28%
3%
72%
8%
93%
88%
23%
11%
9%
4% 3%
12%
19
How is reinvested the additional income?
The development of the site features is the first area that takes advantage of
revenues from audience monetization.
Reinvestment of additional income
Development of site features
25%
Increase of marketing and media
development
20%
Profitability improvement
20%
Investment in logistics
13%
Recruitement of new clients
8%
Hiring new co-workers
Creation of new mobile site / apps
7%
5%
Etude TNS Sofres pour Webloyalty - 2016
20
Key figures

7 of 10 sites are profitable in France.

Customer loyalty is the second most important factor in the
evolution of profitability.

81% of sites will rely on social networks to accelerate their
growth.

Selling advertising space is the main lever of monetization
used

Revenues generated by monetization are reinvested in
priority to develop the site's features.
21