Online retailers are optimistic about the holidays, consumers cautious
If consumers stick to their resolve to keep holiday spending in check—always a big if—a lot of online retailers could be disappointed in their holiday results.
Consumers say their holiday budgets are not much bigger than last year, although 34.7% say they will shift more of their spending online. That might not be enough to fulfill the hopes of online retailers, as more than half of them expect their sales to grow by at least 30% this holiday season, according to a BizRate Research survey for online retailer trade group Shop.org and comparison shopping site Shopzilla. BizRate surveyed 2,695 online buyers and 116 online retailers between Sept. 26 and Oct. 8 for its 2007 eHoliday Study released today.
The survey also found that free shipping offers will abound and that consumers like them, and that many e-retailers have enhanced their sites in the past year with improved search, more cross-sell promotions, redesigned shopping carts and new payment options.
Many of the retailers are hopeful those improvements will contribute to a lot more sales. 18.7% of the retailers say they expect sales to grow by at least 75%, another 32.7% expect sales growth of at least 30% and 26.2% more at least 15%. Only 5.6% foresee flat or negative growth. Overall, 75.9% of the retailers say they are optimistic about the holiday season.
The online shoppers, each of whom has made at least one purchase online in the past 12 months, said they shop via the web because they can shop at any time of day (58.5%), to avoid the crowds in stores (43.8%), because of the general convenience of the Internet (36.7%), because they can compare prices online (36.2%) and because items are often easier to find online than in stores (29.9%).
“As consumers become more comfortable with the web as a shopping resource and sales channel, they are naturally spending more of their holiday budget online,” says Helen Malani, Shopzilla’s chief shopping expert. “If consumers continue to have a satisfying experience online, the channel will continue to grow for many holiday seasons to come.”
Shipping offers will abound online, the survey suggests. 78.6% of the retailers say they will offer free shipping if a customer buys a certain item or spends a specified amount, 60.4% will offer a free shipping upgrade, 53.5% discounted shipping and 41.4% free shipping with no conditions. 61.2% of the consumers listed free shipping without conditions as one of the promotions they would most like to see during the holidays.
“Free shipping offers drive online sales more than any other promotion, which is why they remain popular with retailers,” says Scott Silverman executive director of Shop.org, part of the National Retail Federation. “Unfortunately, free shipping is not free for retailers. Merchants can minimize the financial impact of these promotions by carefully analyzing the conditions required for their customers to receive free shipping.
Here are some other findings of the survey:
Providing good value remains the most important attribute of an e-commerce site in consumers’ eyes, receiving an average rating of 4.52 out of 5.0. Shoppers also rated clear product descriptions (4.37), merchant reputation (4.31) and guaranteed on-time delivery (4.28) as important criteria in deciding where to shop.
Asked how they had improved their sites in the past year, 10.2% of merchants said they had added cross-selling from the product page this year and another 28.7% said they improved it; for cross-selling from the cart page the comparable figures were 9.3% and 19.4%. 24.8% said they had added product reviews for the first time and 14.8% faceted search that lets visitors narrow a search by attribute.
10.3% of the online retailers surveyed said they had added Google Checkout as a payment option this year, 9.4% PayPal, 8.4% Bill Me Later and 8.2% gift card or certificate redemption. 96.4% say they accept credit cards and 63.6% debit cards.
Nearly half the merchants (48.5%) planned to start their online promotions by this week. Many of those who have not (28.2%) are targeting the week of Nov. 5 to begin. 21.8% said they plan to start their online marketing campaigns earlier this year, and only 2.6% later.
E.W. Scripps Company owns Shopzilla Inc. and its BizRate Research subsidiary.
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