In its second-largest acquisition, Amazon buys the company for $970 million.
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E-retailers can hardly stand on the sidelines when competitors, both online and off, are flogging sales so aggressively on big sales days. But they should be aware of operational issues that can arise on peak shopping days, says Nikki Baird, managing partner at research and advisory firm Retail Systems Research LLC. "That concentration around a few days, from supply chain, web capacity and staffing standpoints—you are creating huge problems for yourself if you are forcing shoppers into purchases in a very short time frame," Baird says.
Several web retailers know exactly what Baird means. The amount of traffic and orders over Thanksgiving weekend overwhelmed some e-commerce sites. Several had their sites go offline for periods of time because of high traffic levels or other glitches, including Victoria's Secret and American Eagle Outfitters Inc.
Especially hard hit was apparel e-retailer Bonobos Inc., which went offline on Cyber Monday and stayed down for four days as the e-retailer made repairs. Richard Mumby, Bonobos' vice president of marketing, says the e-retail site, despite having been load tested for two to three times the traffic the retailer expected on Cyber Monday, still could not handle the heavy volume. "We encountered challenges that we couldn't simulate," he says. "We saw spikes in traffic that were totally unexpected, and that volume revealed other problems we had between our site and servers. We were not able to meet the service expectations that we set for ourselves, so we decided to take the site down until we could get it running in a way that delivered on our brand promise."
Once the site was back up, Bonobos reran its advertised Cyber Monday offers, which included men's wool suits at half off, then followed through on its pre-planned December promotions. Bonobos declined to reveal how it performed year over year, but says it did meet its sales goals for December and that before the Cyber Monday break Bonobos was having its best sales month to date.
Bonobos is making improvements so that it doesn't get caught with its pants down again—the imagery the e-retailer used on the error page consumers saw on the days the site was offline. "We are aggressively building out our tech and engineering teams, product teams and marketing teams," Mumby says. "We're in full sprint mode."
Southern Fulfillment Services LLC, which operates gift-oriented e-commerce sites including HaleGroves.com and PittmanDavis.com that sell citrus fruit gifts and subscriptions, completed web and service improvements and fine-tuned its advertising ahead of the holiday season, which helped grow sales 40% in November and in lower double-digits in December, says Daryl Logullo, e-commerce manager.
He, like PlanetShoes.com's Thomas, attributes a portion of the holiday sales success to retargeting, and site improvements made it easier for customers to place orders for multiple recipients at once. Existing customers, for example, could see the names of people they previously sent gifts to and the exact gifts they sent and, with just a few clicks, reorder for them all. It also added live chat in the fourth quarter, which Logullo says converted consumers in the double-digit range. "We're going to keep rolling out improvements to help us grow and get ready for the next season," he says.
Free, late shipping
More than half, 52%, of online sales in the fourth quarter included free shipping, up from 49% a year earlier, according to comScore, and more than 75% of the top 100 e-retailers listed in the Top 500 Guide offered some form of free shipping during the holiday shopping season, according to an Internet Retailer analysis.
E-retailers also pushed shipping deadlines later into the season. Christmas Eve fell on a Saturday, which meant retailers could, and did, offer expedited shipping for last-minute shoppers. LuckyBrand.com, for example, accepted orders for Christmas delivery as late as Dec. 23, with a free upgrade to overnight shipping for orders of $200 or more, an order threshold more than $50 greater than its average order value during the season, Cole says. That prompted customers to buy more, helping cover the retailer's extra shipping costs, Cole says. "We were able to use the urgency of shipping to drive sales and larger baskets," he says. PlanetShoes.com also upgraded orders placed through Dec. 22 to overnight shipping.
E-retailers say holiday 2011 showed them how important it is to carefully plan for the season's full cycle, and to also be prepared for the unexpected. They say they'll take what they learned in 2011 and use it in their preparation for next holiday. "We're setting a pretty high bar for next year," Logullo says.