12/16/11

E-retailers go deep on discounts

As the holidays near, retailers offer good deals now, with better ones possible next week.

Kevin Woodward , Senior Editor

With seven shopping days left until Christmas, retailers are poised to offer some big discounts to entice last-minute shoppers. Some retailers increased their discounts this week or promoted more heavily over last week, an Internet Retailer survey of top e-retail sites shows.

Mass merchandise e-retailer Overstock.com, No. 27 in the Internet Retailer Top 500 Guide, for instance, prominently called out discounts of up to 45% for certain deals, a rate not as visibly promoted in the prior week. Footwear e-retailer Shoebuy.com, No. 87, also made a big change this week, introducing a 20% discount holiday sale that requires the consumer to enter a code upon checkout.

Retailer Kohl’s Corp., No. 31, increased the maximum discount to 30% this week from 20% last week on all merchandise when a consumer pays with a Kohl’s-branded credit card. At least one retailer modified its discounting plan during the week. In a promotional e-mail sent Tuesday, and valid through Wednesday, clothing retailer J. Crew Group Inc., No. 50, offered staggered discounts of 20% for purchases of $100 or more; 25% on $150 in purchases; and 30% on $250 or more. Then, Thursday morning it sent the e-mail again, extending the promotion for one more day.

“Retailers are becoming much more aggressive about what they’re willing to offers folks this holiday season,” says Rudy Pataro, president of Fry Inc., a division of web development and e-commerce  services vendor Micros-Retail. “On a couple of our accounts their most aggressive discounting will happen next week.” One retailer, which Pataro declined to name, plans to offer a 75% discount on its best sellers next week, but with a catch: The consumer has to Like the retailer’s Facebook page to get the discount. As a less-established retailer, this company is willing to push more discounts in exchange for broader recognition, Pataro says.

In these final days before Christmas, two factors influence retailers’ discounting strategies, says Eric Best, CEO of Mercent Corp., which helps retailers sell online through marketplaces and comparison shopping engines. Which products retailers have the most inventory of and how competitors are pricing those same items are huge considerations, he says.

“The retailer challenge this time of year is to capitalize on the last critical shopping days,” Best says.

If some products are not selling as well as a retailer would like, the retailer has to ask if it can set a price that will empty out that inventory, yet let the retailer retain a profit margin on those goods.

What is different about this holiday season from last year is that more smartphone-toting consumers are using the devices to do their own price checking, he says. “Consumers are leveraging real-time pricing information to make buying decisions, not only online, but in bricks-and-mortar stores,” Best says. “Retailers can ignore this trend and continue to source and price products the ways they always have. Or they can take a more aggressive approach and use this real-time market information to be more competitive.”

Best expects many retailers that adopted the latter approach will offer very aggressive deals next week, especially because a consumer could still buy a product online as late as Friday for delivery Saturday, Christmas Eve, depending on the retailer. In addition to price discounts, many e-retailers likely will offer shipping deals to take advantage of the five business days prior to Christmas, he says.

Sears Holding Corp., No. 7 in the Top 500 Guide, already lowered its free shipping threshold this week to $49 from $99 the week prior, while Northern Tool + Equipment Co., No. 85, promoted that consumers still have six days left for Christmas delivery with standard paid shipping fees.

Topics:

2011 holiday sales, discounts, Eric Best, Fry Inc., holiday 2011, J. Crew, Mercent Corp., MICROS Retail, Rudy Pataro, Sears Holding Corp.

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