DEATH OF PUREPLAY RETAIL

INTELLIGENCE REPORT DEATH OF PUREPLAY RETAIL CUSTOMER ACQUISITION

Casting A Wide Net Via Search Pureplay e-tailers tracked in the study purchase an average of over 53,000 keywords per month. Paying on-average $1.14 per monthly visitor via the paid search channel, this strategy can be characterized as “spray and pray.” Pureplay giants Zulily, Overstock.com, Etsy, and ASOS exemplify the tactic, with each e-tailer bidding on more than 74,000 keywords. While these e-tailers maintain a relatively low cost per visitor, they also play at the top of the funnel, bidding on generic terms (e.g. “shopping,” “maternity clothes,” “jewelry,” “wedding dresses”) that are intended to drive traffic but not necessarily conversion. Furthermore, the pureplay e-tailer strategy mimics that of leading omnichannel retailers— including Target, Walmart, JCPenney, and Macy’s—but at a fraction of the scale of these deep-pocketed stalwarts. Omnichannel retailers bid on an average of 431,998 keywords each month and pay just $0.85 per monthly paid search visitor, suggestive of search budgets that are orders of magnitude larger than what the majority of pureplay e-tailers are able to allocate.

Death of Pureplay Retail: Monthly Paid Keywords vs. Cost Per Site Visitor Via Paid Search October 2015, n=23 Pureplay Retailers*

$5

$4

$3

Via Paid Search

Cost Per Webite Visitor

$2

Monthly Keywords Purchased

0K

200K

400K

Overstock

$1

Zulily

Etsy

Asos

$0

Source: L2 Intelligence Report: Death of Pureplay Retail, January 2016. * Excluding The Clymb (no paid keywords).

Death of Pureplay Retail: Monthly Paid Keywords vs. Cost Per Site Visitor Via Paid Search October 2015, n=23 Pureplay Retailers, n=20 Omnichannel Leaders ■ Pureplay Retailer ■ Omnichannel Leader

$5

$4

$3

Via Paid Search

Sears Cost Per Webite Visitor

$2

Monthly Keywords Purchased

0M

2M

3M

JCPenney

Walmart

Target

Macy’s

$0

Source: L2 Intelligence Report: Death of Pureplay Retail, January 2016.

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January 12, 2016