Colorado Web Solutions

Will Online Sales Brighten a Bleak Holiday Season?

Posted on November 11th, 2008 by Colorado Web Solutions - Yahoo Store Developers and Designers

We read this article in TIME this week and thought it was worth sharing with our readers. – CWS Staff

As retailers brace for penny-pinching shoppers this holiday season, they’re hoping their websites can deliver some good news. At the very least, the Internet should outdo the sidewalk in delivering sales growth: holiday forecasts predict zero to 2.2% overall sales gains for November and December, according to respective estimates by Bain & Co. and the National Retail Federation (NRF), the world’s largest retail trade association. By comparison, online retail sales are expected to grow 12%, to $44 billion, according to Forrester Research.

Shoppers are migrating to the Web for a variety of reasons. Rising financial anxiety and tight credit availability are making holiday shopping this year an exercise in self-restraint, and the Web offers a quick, clean shot at purchasing 24 hours a day. Moreover, with websites like FatWallet and SlickDeals featuring bargain-basement prices, hunting around for the best value is a convenient mouse click away. That’s an easier proposition for many than slogging to the mall and fighting traffic, crowds and parking problems. “Comparison-shopping online dwarfs what you can do in the real world,” says Nita Rollins, a trends expert for digital marketing agency Resource Interactive. “You just open up six browsers.”

Retailers are also discovering that by making their Web experience hassle-free and user-friendly, they can achieve better sales. That’s why 42.9% of merchants have improved their search function, 42.6% have added or enhanced product videos and 32.7% have included customer reviews to help shoppers make buying decisions, according to Shop.org’s 2008 eHoliday Study, conducted by Shopzilla. Further, 8 in 10 retailers are offering some kind of free shipping option this season, often with a stipulation like a minimum purchase amount. Consumers are increasingly savvy about playing these options for maximum value. “They will bundle their purchases so they can combine shipping costs or go to sites that only offer free shipping,” says Jeffrey Grau, senior analyst at eMarketer, which analyzes digital media.

One new force emerging in this year’s holiday shopping spree is the increasing popularity of social shopping sites like Kaboodle, Etsy, ThisNext and Stylehive. Such online communities make buyers feel more comfortable opening their wallets. “People are reaching out for like-minded souls,” says Wendy Liebman, CEO of WSL Strategic Retail, a New York-based retail consultancy. “Psychologically, it feels better if someone else is buying a product too.” Kaboodle, the largest of the 25 or so social shopping sites in existence, lets community members discuss products, give one another shopping advice and receive feedback, like which item makes a better gift. “It’s MySpace meets Amazon,” says Ken Cassar, analyst at Nielson Online.

Other sites, like the month-old Wishabi, involve members acting as personal shoppers. People post wish lists while deal hunters (anyone can serve as one) search the Net to find the best bargains for those items. The results are then rated by the site’s Deal Rank software. If the person ends up buying an item, the deal hunter who found the price gets a small percentage of the commission. “People are leveraging other people to determine if deals are good,” says Wehuns Tan, CEO of Wishabi. Adds Resource Interactive’s Rollins: “The retailer that accepts that social media can be a revenue driver is the one who is going to win.”

In fact, brands are noticing that online communities have more buying persuasion power than store sales clerks. And they’re forming more partnerships with social sites now that traffic numbers are at an all-time high. In October 2007, Kaboodle had nearly 3 million unique monthly visitors. By October 2008, it tripled that number to 10.8 million and also logged its highest numbers for revenue, traffic and registered users. “We have seen a lot more deals and discounts this year happening across the site,” says founder and CEO Manish Chandra. Likewise, Etsy, a site where community members buy and sell handmade goods, pulled in $8.4 million in gross merchandise sales in October 2008, compared with $2.96 million during the same period in 2007. That’s a gain that can elicit holiday cheer.

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