Consumers registered pessimism toward online holiday shopping this year in Forrester Research’s “U.S. eCommerce Outlook for Q4 2006.” But the research firm itself is forecasting a 23% increase in online spending this season over last year, driven in part by opportunities that exist in that consumer mindset to drive margin, for retailers smart enough to seize on them.
Forrester notes that past poor experiences with online fulfillment may be one key factor in a sentiment of consumer pessimism toward online shopping that came through in their October survey of nearly 4,000 consumers. More than one in 10 consumers received a package late last holiday season, and consumers don’t look favorably on the performance of major shippers. With UPS’s performance rated favorably by only 75% of those surveyed the percentage of consumers satisfied with the performance the four major e-commerce shippers trailed to only 26% with DHL.
Despite consumers' stated concerns regarding online shopping this holiday, however, Forrester predicts a strong holiday online. “Economic factors, a past history with disappointing online retail experiences and a general reluctance to admit to unbridled consumerism may drive consumers to understate their spending expectations for the upcoming retail season,” notes the report’s primary author, Forrester analyst Sucharita Mulpuru. “While consumers may downplay how much they plan to spend, historical trends point to a different story.”
Specifically, Forrester cites the fact that online sales have been 15% higher than last year, year to date, and that growth is not likely to slow down during the peak spending season. Catalogs are expected to drive online sales as multi-channel retailers boost catalog mailings in Q4, given that 41% of consumers say catalogs drive them to shop online.
And given that about one-quarter of consumers say they expect to shop online at the last minute, the convenience of the online channel will attract shoppers for retailers who can assuage concerns about on-time fulfillment. Forrester notes those same time-crunched shoppers will likely help boost margins in their willingness to pay extra for time-saving services: 45% said they’d pay more for rush shipping, 30% said they’d pay for overnight delivery, and 33% said they’d pay extra for gift wrapping.
Forrester also found that consumers do expect to increase spending in some core categories. 13% said they’d spend more this year online for toys and 10% will spend more on DVDs and videos. Overall Forrester determined that the number of consumers who expect to spend less online this holiday–26%–is exactly the same as the number who expect to spend more online this holiday.
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