Who is Winning in Wearables?
August 18, 2015
Samir Bhavnani, 1010Data
As part of our mission to answer the question, “What are consumers buying online?” we are inspired to keep up to date with the most current category trends in eCommerce. We often study nascent categories, such as Drones or Virtual Reality Glasses or the white-hot category of Wearables.
In the wearables market, there are currently three notable segments. The first is smartwatches, devices such as the Apple Watch or Pebble that are multi-purpose devices. The second is activity trackers, such as the Fitbit or Jawbone, that are dedicated towards fitness. And the third is simply the combination of the first two.
For the Q1 2015, the total dollar spend in the smartwatch segment was split among four major competitors, with Motorola (33 percent), Kickstarter success story Pebble (23 percent), Samsung (16 percent), and LG (12 percent).
Then the Internet blew up with news of Apple’s first new product category since the iPad. The Apple Watch was announced in March and went on sale on April 24.
Since then, Apple has commanded 88 percent of the category, with Motorola, Pebble, LG, and Samsung combined accounting for just over 10 percent of the category.
Prior to Apple entering the market (1Q15), the ASP of a smartwatch was $184. In 2Q15, the ASP rose 138 percent to $438. The best selling smartwatch on the market is the Apple Watch Sport 42mm Space Gray Aluminum Case with Black Sport Band, which is on the more affordable end of the Apple Watch pricing spectrum.
When we analyze share by retailer, we find Apple commands over 80 percent of total dollars spent on smartwatches, followed by 9 percent through Amazon Direct, 5 percent through Amazon Marketplace and 4 percent through Best Buy. To our surprise, mainstream retailers such as Target and Wal-Mart appear largely missing in action from this new segment.
While not quite as dominant as Apple in smartwatches, Fitbit still holds a commanding market share lead in both dollars and units. For the six months ended June 30, 2015, FitBit earned 62 percent of total dollars, followed by Garmin at 7 percent, Jawbone at 5 percent and Polar at 4 percent.
Overall, the ASP of Activity Trackers this year is approximately $350 less than the ASP of smartwatches at $84. The best selling activity tracker online over the first six months of the year is the $149 Fitbit Charge HR Wireless Activity Wristband.
Switching to where these devices are being sold, we find Amazon has 72 percent of the market (55 percent Amazon Direct, 17 percent Amazon Marketplace). The best selling brand is also the next best selling retailer, with Fitbit.com accounting for 9 percent of total spend. Similar to smartwatches, Target and Wal-Mart appear to have a very small presence in this category—the two retailers account for less than 4 percent of total spending.
Activity Trackers + Smartwatches
Category definitions are never easy. The Apple Watch is a Smart Watch but it also tracks things like heart rate and distance traveled just like the Activity Trackers. The Fitbit is an Activity Tracker but it also tells time like a watch. So which products are in which category? Can a product be both?
We thought it would be fun to combine the two segments to see how the total wearable market looks (or at least the combination of Activity Trackers and smartwatches.)
In just three months of availability, Apple now has 42 percent of total dollars sold in the first half of the year followed by FitBit at 31 percent. Motorola, Garmin, Jawbone, Polar, Pebble and Samsung combined make up just 15 percent.
Some folks like to look at dollars and some like to look at units. When we change over to units, the script flips with Fitbit in the driver’s seat at 35 percent and Apple placing second at 11 percent.
Apple.com sells the most “Wearables”, accounting for 41 percent of total dollars, followed by Amazon at 43 percent, and Best Buy and Fitbit with 5 percent each.
Lastly, we examined how retailers converted product views into sales. Amazon Direct was able to convert at a rate six times higher than Apple.com and seven times higher than Fitbit.com. We can’t be sure, but we have a couple ideas. For Apple, the product came with a lot of fanfare. It’s likely there were many lookie-loos. Also, its watch is a lot more expensive than the products being purchased on Amazon and Fitbit.com, which might result in Apple’s lower conversion rates. As for Fitbit, it has a lot of traffic from Fitbit owners that utilize the site to track their health and fitness; most of these folks are already owners so will be browsing the site with no intention of buying today.
1010data’s Ecom Insights panel consists of millions of online shoppers in the U.S. who allow 1010data to anonymously track their online behavior for market research purposes, including e-commerce activity.
1010data applies advanced, proprietary statistical modeling, machine learning, and data science techniques to ensure that its panel is representative of the Internet Browsing Population in the U.S. and suitable to extrapolate observations to the broader population.
Retailers measured include the top 100 online mass retailers in the United States that – according to 1010data’s estimates – make up over 95 percent of hard line goods ordered online Total Spent.
Image by MedGizmo