E-commerce grew 20% for Costco in fiscal 2015—20 times faster than store sales.
E-commerce is growing at double digits again, and e-retailers that are ready can look forward to a big holiday season. Retailers need to act now to hone marketing and merchandising strategies, reduce exposure to fraud, and develop effective mobile and social campaigns.
When the dog days of summer come, retailers’ thoughts turn to preparing for the upcoming holiday shopping season. That means planning e-mail marketing campaigns, ordering inventory, creating upcoming promotions around the latest and most in-demand merchandise, and most importantly, having holiday marketing and merchandising plans in place for the fall when early bird holiday shoppers begin buying.
The 2010 holiday season will be different from recent years in a couple of ways. First, the recession is over and online retail sales are growing again by more than 10% each quarter. Second, even as the recession dampened their spending, consumers bought millions of web-enabled smartphones and made social networks like Facebook and Twitter integral parts of their lives. Getting their arms around how to interact with consumers through the mobile and social channels in time for the holidays will be crucial for retailers.
At the same time, the very success of online retail makes it an attractive target for criminals. Retailers must take steps to set risk management rules that flag suspect transactions while keeping sale-killing false positives to a minimum, all the while finding ways to improve upon successful marketing strategies from 2009.
It’s a tall order, but one that by no means is out of reach. “Retailers need to be on the top of their game for the holiday season and that means having a plan in place that builds off trends and data from the 2009 holiday season and the first part of 2010,” says Jeff Zisk CEO of Speed FC, provider of e-commerce and transaction management services. “The key is to start taking the steps needed to prepare for the holidays as early as possible so that any new changes to the web site can be thoroughly tested before the early bird shoppers start buying.”
The mobile mix
Understanding the ways in which consumers are starting to shop through mobile phones is a new and important task for web retailers as they prepare for the 2010 holiday season. About 85% of all mobile sales on a retail site come from users of Apple Computer Corp.’s mobile devices, such as the iPhone, iTouch or iPad, according to John Squire, chief strategy officer for Coremetrics, provider of marketing optimization applications. Users of Android smartphones represent about 9% of mobile sales on a retail web site, he adds.
“In mobile commerce it’s especially important for retailers to know how their customers are entering their web site, because they want to make sure their full site is visible to the devices mobile shoppers use,” says Squire. “Apple’s mobile devices do not see content designed in Flash, so a retailer that heavily uses Flash on their site will want to take that into consideration if they want to reach users of Apple mobile products, which represent of the majority of m-commerce shoppers. Retailers cannot risk having their site or a large portion of their site not visible to mobile shoppers.”
Creating marketing campaigns for smartphones and mobile devices will also be critical as users of those devices rely heavily on SMS (short message service), commonly referred to as text messaging, to communicate on the go. “Sending an SMS text to a mobile user, like a sales reminder, is a great time-based follow-up to an e-mail campaign,” says Kristin Kleweno, senior solutions manager for e-mail service provider Yesmail. “Retailers want to make sure to get their e-mail marketing campaigns in front of users of mobile devices in a time-sensitive manner and to take advantage of when they might be out and about.”
Key to any successful SMS text campaign strategy is to build a list of consumers that want to receive text messages from a retailer. The opt-in list can be built through e-mail messages and links on the retailer’s web site that allow consumers multiple points of signing up for mobile information or even a newletter.
“The time to start building these lists is now so that retailers can establish communications with consumers through the mobile channel in advance of the holidays,” advises Kleweno. “It also takes time to build a messaging list, so better to start now rather than wait until the start of the holiday shopping season.”
More ways to pay
Just as communicating with consumers through the mobile channel can help e-retailers reach a larger audience and capture more sales this holiday season, so too can adding new payment options.
Not all online shoppers pay with credit cards, and that’s likely to be more true than ever this holiday season. The recession made many consumers leery of using their credit cards as freely as they did when the economy was booming. In addition, about one-third of consumers in the United States do not carry a credit card, according to payment experts.
To reach these consumers, retailers need to offer alternative payment options, such as Bill Me Later, which offers deferred payment, and the various systems that allow consumers to pay with funds in their bank accounts, using the interbank network known as the automated clearinghouse, or ACH.
“A lot of consumers have shifted their payment behavior away from the use of credit cards during the recession and now that recovery is taking place they are maintaining those payment habits,” says Bill Roese, senior vice president, Fraud Management Solutions, for FIS North America, provider of banking and payments technologies. “A big factor in a consumer’s decision to purchase this holiday season will be if the retailer offers the payment options they want to use.”
Adding new payment options is just the start—retailers also must explain them to consumers and encourage shoppers to use the new payment methods. Creative incentives for using an alternative payment method, such as offering free shipping on online social networks, represent a powerful promotional opportunity for retailers.