The newly released annual look at the digital world from online and mobile measurement firm comScore makes it quite clear that retailers better be ...
The extra-early start to the 2011 holiday season is leading e-retailers to adjust their strategies for 2012.
Holiday 2011 was a strong season for e-retailers, and also a long one. Sales spikes came earlier and lasted later into the season, helped by Christmas falling on a Sunday, making it possible to deliver gifts through Christmas Eve.
When the dust settled, consumers had spent $37.2 billion online in November and December, up 15% from $32.4 billion in 2010, comScore Inc. says. Aggressive discounting juiced online sales ahead of Thanksgiving, culminating in the largest e-retailing day ever on the Monday after Thanksgiving, often called Cyber Monday, when online shoppers snapped up $1.25 billion worth of merchandise.
"Cyber Monday is becoming the Super Bowl of the Internet," says Charlie Cole, vice president of online marketing for LuckyBrand.com, a division of Liz Claiborne Inc. "I'm going to be buying my ads for that day in June or July because I want to be able to get my ad into impactful branding spaces." He'd consider buying ad space on the Yahoo Mail login page, for example. "You want to get your offer in front of people in a big way, and I expect people to charge a premium for it," he says.
Like Cole, many e-retailers are drawing lessons from the 2011 season as they make plans for holiday 2012. As e-retailers look to the fourth quarter, they're reviewing the sales patterns of the season just past to see how they can squeeze even more growth out of key sales days, refine promotions and more effectively invest their marketing and advertising budgets. And some that were not prepared for dramatic spikes in site traffic are making sure they're ready to handle even higher volume in Q4.
Christmas in November
The spikes started early in the 2011 season, as aggressive offers drew consumers to complete more of their shopping online earlier than ever. 54% of consumers had at least a quarter of their holiday shopping complete ahead of Black Friday, the day following Thanksgiving and widely regarded as the traditional kickoff for holiday shopping, according to a Compete Inc. survey, up from 49% who said the same in 2010.
E-retailers began pumping deals early in November, and in some cases never let up. Amazon.com Inc., for example, drew traffic throughout November by offering special "Black Friday Deals" all month long. Computer and electronics retailer Newegg Inc. offered daily discounts and promotions throughout what it called Black November.
LuckyBrand.com made big sales gains both before and after Thanksgiving with a strategy of offering discounts a week ahead of the holiday—20% off selected jeans—while keeping under wraps its even bigger Cyber Monday offer—30% off site-wide plus free shipping—so consumers in buying mode ahead of Thanksgiving wouldn't hold back. Cole says that strategy helped contribute to LuckyBrand.com posting November sales that proved stronger than December's by almost 20%. Consumers also responded in droves to the Cyber Monday offer; sales that day more than doubled year over year, Cole says.
November also generated more sales than December for environmentally friendly shoe e-retailer PlanetShoes.com. "The most significant increases that occurred were in the month of November," says Erik Thomas, marketing director for Planet Inc. "Last year, November and December was more evenly spaced out." The retailer also saw significant sales increases starting the Sunday before Thanksgiving, when sales grew more than 160% year over year. Monday sales were up almost 200%, Thomas says.
"It was just non-stop through Cyber Monday," he says. PlanetShoes.com's Cyber Monday sales grew approximately 400% from a year earlier.
Thomas attributes the success in part to the site offering discounts on about two dozen shoe brands that don't often go on sale. He also made greater use of ad retargeting, showing consumers who visit other sites display ads for shoes they had previously viewed on PlanetShoes.com. The e-retailer also raised its pay-per-click budget on Cyber Monday, and about 30% of sales that day came from clicks on those paid search ads.
The 2011 holiday season revealed a new opportunity that PlanetShoes may try out next holiday to capture sales more cost-effectively. The cost per click for retargeted ads was almost 40% less during the holiday period, likely because demand for this form of advertising dropped as many e-retailers focused on paid search, Thomas says. "The conversion rate was slightly better for retargeting during the holidays, and it made the cost per lead significantly less versus other paid channels," he says. "Now we're thinking about targeting them through paid search in early October and November, when paid search ads cost less, and then use retargeting to bring them back to the site later, and do that at a much lower cost."
With retailers aggressively hyping deals, there were big jumps in web sales on key shopping days in November. Black Friday online sales grew 24.3% and Cyber Monday sales grew 33.0% from last year, according to IBM Benchmark. Thanksgiving Day through Cyber Monday accounted for 9.6% of total online holiday sales online in 2011, up from 9.2% in 2010, comScore says.
November now accounts for about half of online holiday sales, and is steadily taking sales dollars from December, although estimates vary as to how fast that's occurring. ComScore numbers suggest little change in 2011, as Nov. 1 to Dec. 2 accounted for 50.3% of online sales for November and December, up just slightly from 50.2% a year earlier. But the U.S. Commerce Department says November 2011 accounted for 50.1% of non-store sales (which mainly take place online) for November and December, versus 49.5% a year earlier. And IBM says November 2011 sales were up 15.6% year over year for the larger retailers it tracks, while December sales advanced only 7.5%.
There was also a noticeable shift to key promotional days. Taking the Thanksgiving through Cyber Monday period and adding in two major promotional days in December—Green Monday (Dec. 12) and Free Shipping Day (Dec. 16)—those seven days accounted for 15.5% of e-retail holiday sales in 2011, versus 15.0% in 2010, comScore says.