The Top 7 E-commerce Trends from Meeker’s 2017 Internet Report

Zach Brooke
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Key Takeaways

​What? Mary Meeker's latest internet trends reports highlights several exciting innovations in the world of e-commerce.

So what? Meeker is one the world's leading internet experts and many of her past trends have evolved to become standard operating procedure for leading companies worldwide.

Now what? Familiarize yourself with the trends in your online space to ensure you stay ahead of the curve.

June 22, 2017

Surging mobile, enhanced retail experience and online brand engagement suggest an internet-everywhere approach to shopping and an advertising-everywhere approach to the internet

Kleiner, Perkins Caufield & Byers’s partner Mary Meeker’s latest internet trends report was delivered earlier this month at the Code Conference in California. The annual report provides insights on everything from online shopping to gaming, health care, media and internet usage in East Asia.

We break down some of this year’s most insightful information on digital advertising below. See Meeker's full report at the bottom:

1. Internet Access and Usage

Smartphone growth remains in decline, continuing a trend from the previous year. The change in total volume of global smartphone shipments slowed to a 3% increase in the past year. In the previous report, Meeker noted shipments grew 10% from 2014 to 2015 and 28% the year before that.

Year-over-year growth in global smartphone installed base—a measure of the total number of smartphones in use by consumers—dropped to 12% from 2015 to 2016 after posting 25% growth the year before. Smartphones powered by Google’s Android comprised roughly four times more shipments than those using Apple’s iOS.

Overall, the total number of internet users worldwide grew by 10% in 2016—the same as the year prior—totaling just short of 3.5 billion people. India made up 2% of that growth, underscoring how much of a boom is now taking place on the subcontinent. Internet usage within the U.S. posted 4% growth year over year. U.S. adults engaged with digital media for 5.6 hours every day, 3.1 hours of that engagement taking place on their mobile device.  

2. Advertising and Commerce

“Ads are becoming storefronts. It’s increasingly measurable and actionable,” Meeker said.

Year-over-year growth in online advertising jumped from 20% in the previous report to 22% in the 2017 edition. That growth is being driven entirely by mobile advertising, which accounted for $37 billion in U.S. internet advertising in 2016, surpassing desktop web ads for the first time ever.

Americans now spend 28% of their media time engaged with their mobile devices, yet advertisers as a whole only spend 21% of their budget on mobile ads. This has created an approximate $16 billion opportunity in the U.S. for digital ad suppliers.

Globally, internet ad spend is projected to surpass TV advertising for the first time ever within the next six months. Google and Facebook account for a combined 85% share of the ad growth in the U.S. Google measured 20% year-over-year growth, capping at $35 billion, while Facebook grew much faster (62% year over year) to a much smaller overall figure (less than $14 billion). Year-over-year growth of other web ad platforms increased by 9% to approximately $23 billion.

“Ad measurability can be triple-edged,” Meeker said. “When things are measured, people don’t always like what they see and users don’t always like their data collected. Advertisers like measurable engagement metrics, but some find measuring ROI challenging as they do offline.”

3. Ad Blocking

Roughly 600 million users worldwide are now employing ad blockers when combining mobile and desktop blocking. The countries with the greatest penetration of desktop ad blockers are Germany (28%) and Canada (24%), while those with the greatest mobile ad blocking penetration are India (28%) and Indonesia (58%).

4. Ad Innovation

Leading ad platforms are rapidly improving their backend data collecting and front-end measurement tools. Product listing ads from Google are doing particularly well at driving clicks to pages, and now make up more than half of all retail paid clicks on Google. Geo-targeted local ads are driving foot traffic to stores, with 5 billion cumulative tracked store visits in the past year, a fivefold increase year over year.

Targeted pins from Pinterest are also increasingly driving product discovery and purchase, while contextual ads from Facebook are driving direct product purchase. Goal-based bidding ads on Snap are driving user action. Users spend an average of 196 seconds playing a mobile game they access by swiping an ad.

Incentive-based and skippable video ads are viewed positively by most consumers compared to other types of web ads. In-app ads paired with dynamic creative are driving higher in-app installation performance.

“Advertising inefficiency is increasingly exposed by data,” Meeker said.

5. Non-typed Search Functions

Whereas in the past user-typed input was the basis on which targeted ads were generating, the data is increasingly shifting to user-uploaded input (aka real-time images and video). Effective user-generated content can generate 6.9 times higher engagement than brand-generated content on Facebook. The brand that uses the most user-generated content on Instagram is Qatar Airways, whose presence on Instagram is composed of nearly 80% user-generated content.

“Emerging retailers and craft big brands are finding ways to make images, video, data, algorithms and voice work for them,” Meeker said, noting that images, tapping and augmentation are poised to replace typing. A forthcoming Google product, called Google lens, promises to provide more context to user-generated images, such as Wikipedia entries or Yelp reviews. Other algorithms can infer context from images to project augmented objects into scenes.

Voice commands are also taking a chunk out of typed input. Voice-based mobile queries now account for 20% of all mobile search. Amazon’s Echo has reached an installed base of more than 10 million homes nationwide, and it now performs 12,000 different skills. Google’s voice recognition software is now 95% accurate.

6. Online Brand Engagement

“The content is becoming the store,” Meeker said. Facebook feeds now act as browsable storefronts while e-mails act as curated storefront collections, similar to a farmers market booth. Similarly, “the ad is becoming the transaction.”

Social media is responsible for improved product quality, customer support and increased transparency. When asked what improvements they wish to see in customer service, the top responses by consumers are: easier access to online channels and faster agent response times.

In 2014, 76% of customers reported they stopped doing business with a company after a bad experience. That figure is now 82%. The number of real-time, online customer conversations started using Intercom is skyrocketing, and is now hovering near 400 million.

Customers are also increasingly expecting to understand how businesses operate. Personal finance company SoFi’s “How It Works” page is its most-viewed content after the home page. 

7. E-commerce Ahas

E-commerce growth is accelerating in the U.S. 15% year-over-year.

Package and parcel growth is accelerating. It’s now up 9% year-over-year. “Apartment building lobbies are becoming warehouses. Doormen are becoming foremen,” Meeker says. Unwrapping boxes is becoming entertainment. The top five YouTube channels dedicated to unpackaging items have a combined subscriber base greater than 33 million.  

Eating out is increasingly eating in. Delivery as a percentage of revenue for the top 10 Bay Area restaurants on DoorDash increased to 7% versus 2% in 2015. Their revenue growth is currently 45% year over year versus 10% in 2015.

Grocery shopping is getting personal, fast and easy. Instacart shoppers are eight times more likely to re-purchase an item when prompted with a “Buy it again” option.

Lowe’s has implemented augmented reality to help customers locate products in-store. Retail store closings are threatening to break a 20-year record.

Digitally native brands such as Amazon are going offline. Walmart’s aggressive push into e-commerce is showing good results. Amazon has become a leading private label supplier of baby wipes and batteries. Now we have a new kind of store just for subscription services offered by Amazon.

To check out the rest of the insights Meeker highlights, view her entire slide deck below:

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Author Bio:
Zach Brooke
Zach Brooke is a staff writer for the AMA’s magazines and e-newsletters. He can be reached at or on Twitter at @Zach_Brooke.
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