August 20, 2009, 12:00 AM

Retailers face decreasing holiday conversion and AOV, Coremetrics reports

In December 2008, the conversion rate for e-retailers dropped 4% compared with December 2007; average order value dropped 3.4%, the web analytics and marketing optimization provider says. One key for a boost this year: product recommendations.

Increasing conversion and average order value are critical to web retailing. And boosting the two will be more important than ever this holiday season, which many industry observers say could be dismal.

If the past is any indication, it looks like e-retailers have quite a challenge ahead of them. In December 2008, the conversion rate for e-retailers dropped 4% compared with December 2007; average order value dropped 3.4% for the same period, according to research from web analytics and marketing optimization provider Coremetrics.

Retail categories that fought the trend were apparel, with a 3.6% jump in conversion and a 1.6% increase in average order value, and office supplies/electronics, with an 11.2% leap in conversion and a 1.8% increase in average order value. Conversely, categories that sunk included health and beauty, with a 6.6% drop in conversion and a 168% freefall in average order value, and jewelry, with a 41% drop in conversion and a 145.1% nose-dive in average order value.

“The competition for holiday wallet-share has increased over the last two years, causing average order value to drop based on heavy discounting. Unfortunately, conversion has also dropped, indicating consumers are likely comparison shopping more than ever before,” the company says in its new report, “Coremetrics Second Annual Online Retail Holiday Optimization Guide.” “The good news is that there are many best practices and solutions available to help online retailers counter these negative trends.”

One solution Coremetrics emphasizes to boost conversion and average order value is product recommendations technology.

“When done right, product recommendations are a powerful way to improve conversion, increase average order value and maximize the incremental revenue for each retail transaction,” the report advises. “A flexible product recommendation solution also enables you to display hidden or lower performing products, thereby reducing inventory levels and lowering costs.”

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