Internet consulting firm Acquity Group forecasts that online holiday spending will jump 24% from last year’s $13.7 billion to $17 billion this year, based on online retailing trends, Internet usage growth trends, and feedback from its own customer base, which includes a number of leading retailers.
“We’ve seen a consistent trend of upward growth with online retailing despite the downturn in overall retail sales over the past three years,” says CEO Chris Dalton, who notes a 20% to 30% growth in online sales volume quarter by quarter over the past four consecutive quarters. The past 12 months alone have seen a 29% increase in the number of new users going online, and online users now exceed 50% of the U.S. population, he notes, another factor in the forecast of higher online holiday sales.
This year, Dalton says, convenience will be a major driver for online purchasing decisions as more people go online and more online users are comfortable with placing orders on the web. So much of the work Acquity Group has done to help retailer clients prepare for the holidays has centered on reorganizing sites’ navigational structure to make finding and ordering products easier. Sites are also tightening multi-channel integration – for instance, expanding a customer’s ability to order online and pick up in-store, he adds.
Spam issues aside, permission-based email marketing will be a big factor in online holiday sales, Dalton says, noting that some retail clients are seeing revenue spikes of up to 6% following e-mail promotions. “That means that if they run an e-mail promotion to the customer base, there will be a seven to 10 day spike in sales of about 4% to 6%. These programs are really driving results,” he says.
What will differentiate the e-retailers who shine this holiday from those with results less stellar? One key factor will be whether retailers have continued to invest over the past two years, despite tough times for retail in general, so as to be prepared for consumers who are now shopping online in increasing numbers.
“A number of very large retailers have failed to re-invest in the web channel, and they are plagued with transactions that get dropped and product information that is out of date and out of stock,” Dalton says. “With the lift of additional consumers coming online this season, it’ll be interesting to see if that lack of investment will be exposed.”
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