12/29/10

Post-holiday boost

Online sales gain from a snowstorm that kept many East Coast shoppers stuck inside.

Internet Retailer

Give Jon Hoch a choice between the Christmas shopping season and a snowstorm, and he’ll probably side with the blizzard, even if the holidays turn out better than expected.

Hoch, founder and CEO of Power Equipment Direct Inc., never considered the holidays a big deal for the web-only retailer, which operates nine web sites that sell gear ranging from generators to snow blowers. “Who wants a generator for Christmas?” he says. This year, however, the company, No. 302 in the Internet Retailer Top 500 Guide, ran its first ever Cyber Monday sale, when shoppers could snag items at prices 10% to 40% below normal. The company marketed the Monday-after-Thanksgiving promotions via Facebook, Twitter and paid search ads, and then enjoyed sales that were nearly triple over the same Monday last year.

But then came another welcome surprise: the massive snowstorms that moved through the Northeast in the days after Christmas. “Monday was our biggest sales day ever,” Hoch says. “Our warehouse inventory was cut in half in one day and it was our biggest day ever for web traffic as well.” While Power Equipment Direct typically experiences sales spikes after storms, Hoch says Monday’s increase was 50% greater than the previous record, thanks not only to the severity of the storm but also such factors as improved product pages and having enough inventory to meet demand. “Usually after Christmas, we are just dealing with a few returns and closing the books. But this year was a different case entirely.”

As retailers take a look back at the holiday shopping season, one marked largely by success, some are also reporting that the bad fortunes of all those consumers trapped at home behind snowdrifts has turned into good luck for e-commerce. Some retailers also are seeing signs that shoppers are looking for post-holiday discounts, while others hope to end 2010 on a bang with discount offers designed to lure in those consumers who’ve yet to empty out their wallets and purses.

Snow boost

Records abound for e-retail as web merchants take account of their holiday sales. At eBags.com, for instance, sales between Thanksgiving and Christmas increased 35% year over year, says Peter Cobb, co-founder and senior vice president of the online retailer. “Five of the six largest days in history were set this holiday season,” he says.

And the fun for e-retailers continued as consumers slept off their holiday feasts and battled their way home. Web-only footwear retailer Shoebuy.com’s strong holiday sales—running at a double-digit percentage increase over the 2009 holiday season—continued into the week past Christmas, says chief marketing officer James Keller. “Our holiday season was robust with over 10 million visitors in just November alone and our 11th holiday season of double-digit growth,” he says. “Post-holidays have not seen any slowdown, which we attribute possibly a little to the weather.”

The Christmas weekend blizzard that hit the Northeast and Mid-Atlantic states may be helping online retailers clear out inventory. “A bad forecast will keep people at home,” says Scott Bernhardt, chief operating officer at Planalytics Inc., a firm that tracks the weather’s impact on retail transactions and store traffic. “Internet traffic always spikes when people are buried in snow,” he says. As major rainstorms hit the West Coast in mid-December, for example, that region saw web traffic jump 13% year over year. While some of that traffic is likely due to organic growth, web traffic increased less in regions where the weather was milder. That growth was only 3%, for example, in the Central Midwest.  

Shoebuy, No. 89 in the Internet Retailer Top 500 Guide, also attributes its strength in post-holiday sales to an expanding product line and a growing number of shoppers signing up for its private sales at events.shoebuy.com. Shoebuy—which in addition to footwear sells apparel, handbags, accessories and special selections like Cuisinart cutlery, Wedgwood crystal and Mikasa tableware—signed on with more than 100 additional brands just before the beginning of the holiday season. Helping to sell that expanded line of merchandise is a steady influx of more than 5,000 people per day signing up for its private sales at events.shoebuy.com, Keller says.

“We are very well positioned to move lots of inventory for our brands as we move into the new year,” he adds. “If this holiday season is any indication, we expect an amazingly strong 2011.”

At Buy.com, the retailer’s daily deals are moving fast—far outpacing their performance a year ago, says vice president of marketing Jeff Wisot.

“Surprisingly, we’ve been selling out of several of our daily deals post-holiday within just a few hours,” Wisot says. “Last year, similar deals may have taken days to sell through. Even $1,000 HDTVs have sold out in just hours after promoting them. Luckily we receive new inventory and fresh deals in all categories on a daily basis thanks to our Marketplace partners.”

Customer retention

Focusing on customer retention throughout the holiday season proved successful for Zazzle, a web site for designing and selling customizable merchandise, as it grew its one-year retention rate 21% over 2009’s fourth  quarter, says Michael Karns, the retailer’s director of consumer marketing and international development. That repeat business helped the retailer’s fourth quarter sales grow 70% year over year, though Karns declines to provide specific numbers.

The retailer focused on e-mail marketing to drive customer retention.

“We spent a lot of time figuring out how to do a better job of targeting our e-mails to try to get customers who have shopped with us before to come back,” he says. That translated into 92 distinct e-mail messages sent out during the four quarter—each of which was segmented based on user behavior. Those messages ranged from the purely informational to offering discounts up to 75% off.

Rather than focus heavily on a specific day, such as the Monday after Thanksgiving, Zazzle, No. 211 in the Internet Retailer Top 500 Guide, sought to spread out its sales throughout the holiday season. Even so its highest order volumes were on the Friday after Thanksgiving, Cyber Monday and the two following Mondays.

ThinkGeek sought to keep sales going throughout the entire season by spreading out the release of its exclusive products, such as canned unicorn meat and a Star Trek Enterprise pizza cutter. Product releases started in early October and ended on Dec. 14, says Jamie Grove, the company’s marketing chief whose official title is director of evil schemes and nefarious plans.

“The trend has been over the last few years that people buy later and later in the season, closer to their actual need,” he says. “But I’m not sure that was the case this year.”

By focusing on lower-priced items, the retailer also cut back on the need to discount throughout the season, says Grove. “We kept tighter reins on things this year by getting smarter in terms of our marketing and offering products at lower price points,” he says.

That led to a slight decrease in average order value, but a jump in the number of items per order, says Grove. And, since many of the products that ThinkGeek sold were its custom products that have higher margins, the retailer “came out in a positive way.” He declines to disclose actual figures.

Thinning down inventory

Niche Retail, No. 401 in the Internet Retailer Top 500 Guide, operates multiple e-commerce sites, including TipToeTurtle.com, SuuntoWatches.com and JoggingStroller.com. Niche Retail president Jeff Grice says holiday sales at some properties were about equal as last year, while others were up in the range of 5-10%. Overall web traffic was up 10% from 2009 and the average cart size was up about 20%, he says.

That is respectable, but what really stood out this holiday season was that Niche Retail’s  inventory estimates were right on the spot. The company reduced its post-holiday inventory levels by approximately 40% from last year, but still had enough stock to satisfy orders during the season. “For 2010, a major push was to have the right amounts of inventory. We planned this SKU by SKU for major products. We did not have single situation where we had orders but no inventory,” Grice says.

Not every retailer hit such high marks this holiday season, though, offering reminders that for many consumers, times remain tough. At One Way Furniture, No. 406, holiday sales and traffic were slightly weaker compared with 2009, says CEO and founder Mitchell Lieberman. He says the company’s sales were strong from January to May this year, but fell back in the second half. Lieberman attributes the swing to the nation’s economic uncertainty and the weak housing market. He’s hoping for a stronger recovery in 2011. “We expect to see single-digit growth for 2011. However, most growth is expected in Q3 and Q4,” he says.

Lieberman also says One Way Furniture’s holiday sales period seemed shorter this year. “Most years our typical holiday rush lasts between four and six weeks. In 2010 it was only three to four weeks,” he says. Christmas Day falling on a Saturday also influenced post-holiday sales, he says, because more people were traveling home rather than shopping over the weekend. He says sales on Christmas Day were at one of the lowest points in seven years, but that sales later rebounded as shoppers looked for discounts.

Late season discounts

Consumers seem to be well trained to look for online discounts very late in the year. Experian Hitwise, an Internet traffic monitoring service, notes that visits to the 500 largest U.S. retail web sites by traffic volume rose 3% year over year on the day after Christmas, continuing the same increase that occurred on Christmas Day. Hitwise analyst Heather Dougherty noted in a Dec. 28 blog post that apparel and accessories retail sites accounted for the largest share of visits on the day after Christmas, at about 25%.

Dougherty also notes that department store and home-and-garden retail sites attracted more than 5% higher traffic on the day after Christmas than last year. Videos and games retail sites showed a drop in visits of some 5% on Dec. 26.

Lieberman isn’t the only retailer hoping to boost profits in the days between Christmas and New Year’s. Pet supplies retailer DrsFosterandSmith.com, No. 105 in the Top 500 Guide, had a decent enough holiday season to enter the new year with a very optimistic outlook, says Gordon Magee, the company’s Internet marketing and media manager. But for the next few days the retailer will focus on clearance sales and its new promotions, free shipping for orders of at least $49, along with free shipping on all flea and tick products regardless of order size.

Back at eBags, the retailer is heading into 2011 on the back of a 43% year-over-year increase in post-holiday sales, Cobb says. He can’t pinpoint the reason, but says the storm could have something to do with it.

Topics:

Black Friday, blizzard, Christmas, Customer retention, Cyber Monday, DrsFosterandSmith.com, e-mail marketing, East Coast, Ebags.com, events.shoebuy.com, Experian Hitwise, Facebook, Gordon Magee, Heather Dougherty, holiday 2010, holiday promotions, holiday shopping season, inventory, James Keller, Jamie Grove, Jeff Grice, Jon Hoch, michael karns, Midwest, Mitchell Lieberman, Niche Retail, One Way Furniture, online discounts, paid search, Peter Cobb, Planalytics, Power Equipment Direct, Scott Bernhardt, Shoebuy.com, site traffic, snowstorm, Thanksgiving, ThinkGeek, Twitter, weather, web traffic, West Coast, Zazzle

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