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Online retailers apprehensive but resilient about challenging holiday season


Online retailers apprehensive but resilient about challenging holiday season


The National Retail Federation (NRF), the world’s largest retail trade association based in Washington, has conducted an eHoliday Study for 2008 in conjunction with Shopzilla and Shop.org.

The eHoliday Study, now in its seventh year, provides an authoritative snapshot of the holiday activities of both large and small online retailers, many of which have been in business for at least nine years, and also includes the sentiments of online holiday shoppers. The Study, conducted by BizRate Research, a Shopzilla company, for Shop.org, surveyed 2,040 online buyers (defined as anyone who has made an online purchase in the last twelve months) from 29/09-3/10/2008 and 60 online retailers from 1/10-20/10/2008.

The results, available here, showed that more than half of online retailers (56.1%) expect their holiday sales to increase at least 15% over last year. However, the rate of growth is slowing: three-fourths (77.5%) of retailers surveyed last year expected their sales to grow more than 15%.

Scott Silverman, executive director of Shop.org said;

“Online retailers are resilient, but not immune, to the challenges of this holiday season.

“Retailers will be heavily promotional to attract shoppers on a budget, but have also invested in new site features to improve the online buying experience.”

Despite an increase in transportation costs, retailers do not plan to cut back on popular free shipping promotions. This year, the majority of retailers (78%) plan to offer free shipping with conditions at some point during the holiday season, consistent with last year’s levels. Retailers are compensating for increased shipping costs by renegotiating terms with shipping providers (40.4%), closely managing company headcount (33.3%), and reducing other promotions (15.8%). In addition, one-fifth (21.3%) of retailers say they will require a higher purchase amount for customers to be eligible for free shipping and one in ten (10.6%) will cut back on usage of free shipping with no conditions.

In addition to free shipping promotions, many retailers have rolled out new website features to improve the customer experience. Features like improved site search, which 42.9% of retailers added or improved since last holiday season, will help customers navigate sites more easily. Other features like product video (42.6%) and customer reviews (32.7%) can give shoppers more information to make buying decisions. For price-focused shoppers, retailers have added and enhanced both clearance sale pages (27.1%) and featured sale pages (31.3%). In addition, retailers continue to experiment with social networking as nearly one-fourth (25.0%) of online retailers added a Facebook page this year.

As in previous years, consumers acknowledge that 24-hour shopping convenience is one of the main reasons why they choose to buy online (58.6% this year vs. 58.5% last year). Shoppers’ other top reasons for buying online instead of in stores include not wanting to fight crowds (41.1%), easy price comparisons (36.4%), and free shipping (33.3%). Also, nearly one in four shoppers (23.1%) says they are spending more online due to high gas prices, more than double the number which said the same last year (9.0%).

Consumers who plan to spend less online this year seem to be reacting to their economic circumstances, not to previous online experiences. According to the survey, one in five shoppers (20.1%) says they simply have less money to spend this year for the holidays, while 10.6% cited a poor economy as a factor. One in ten (11.0%) plans to spend less online this year due to high shipping charges.

Helen Malani, Shopzilla’s online shopping specialist commented:

“As budget-focused consumers begin holiday shopping, many are starting on the web to look for gift ideas and research products.

“Whether they make those holiday purchases online or in stores, the internet will have a tremendous influence on holiday sales this year.”

With the internet becoming more of a mainstay in the retail landscape, many retailers will be using their storefronts to promote company websites this holiday season. According to the survey, three-fourths (74.3%) of multichannel retailers will offer email registration in stores for customers who don’t yet subscribe. Nearly as many (71.4%) will advertise websites in stores and more than half (51.4%) offer the ability for store associates to place an online order for customers.

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