With more mobile sales, e-retailers dealt with more competition from stores.
Stefany Zaroban , Associate Director of Research
While some faced tougher price competition, Santa was good to most e-retailers this past holiday shopping season. Many of the Top 100 online merchants report strong year-over-year revenue gains and major growth in mobile traffic and sales.
CVS Caremark Corp., for example, experienced a 30% growth in traffic compared to the 2011 holiday season, with a 300% growth in mobile app usage. Online-only discounts and an increased desire among customers to avoid crowds around Black Friday, the day after Thanksgiving, contributed to that growth and drove strong sales earlier in the shopping season than last year, says a spokeswoman for the pharmacy retail chain. “More shoppers this season were looking to get a head start on checking off their gift lists, and that coupled with the attractive deals on CVS.com lured in shoppers earlier than usual,” she says.
The same is true for other major retail chains including American Apparel Inc., which experienced a 125% growth in sales on Cyber Monday, or the Monday after Thanksgiving, and the following Tuesday, says Stacey Shulman, chief information officer and head of e-commerce. “We had anticipated four times the traffic from Cyber Monday 2011, but we ended up with 20 times the traffic,” she says. She attributes American Apparel's ability to handle the increased traffic and sales to the retailer's migration, just prior to the holiday season, to a new ATG Web Commerce e-commerce platform from Oracle Corp.
The increased traffic and sales occurred without a major increase in advertising, though the retailer did double its e-mail marketing list and promoted a 20%-off site-wide sale with free shipping for orders of $50 or more. That promotion, plus the retailer’s ongoing loyalty program and brand recognition, all contributed to the increased traffic and sales in the 2012 holiday season, Shulman says.
Online-only merchants also report strong results, especially when it comes to mobile commerce. Custom products e-retailer Zazzle Inc. experienced record traffic from smartphones and tablets this holiday season, 180% higher than 2011.
For Shoebuy.com Inc., site improvements and better consumer confidence in overall economic conditions drove double-digit sales gains sales in the holiday shopping season, says James Keller, executive vice president and chief marketing officer. “Black Friday and Cyber Monday were up hugely over last year. We saw good growth in average order value, up 4.9% for the quarter, and a good lift in conversion relative to last year, up a solid 5% for the holidays relative to 2011.”
Smartphones brought in 10% of total traffic on Shoebuy.com, and tablets brought in another 10%. “Tablets also were driving a little shift in behavior in terms of when people shop,” he adds. “It was dramatic in terms of a shift to more people shopping in the evening. We saw super-active shopping in the evening, particularly in the 8 p.m. to 11 p.m. time period.”
Web-only flash sales retailer Gilt Groupe Inc., No. 49 in the Internet Retailer Top 500 Guide, experienced a 29% year-over-year sales increase for its business that includes such areas as men’s, women’s, kids, home and food products, says president Andy Page. He gives much of the credit for the increase to cross promotions across the flash sale retailer’s product categories, repeat holiday buyers and what he calls “creative sales.”
On Thanksgiving Day, for instance, Gilt offered a 9 p.m. Eastern Time sale available only to mobile consumers. The next day, Black Friday, it offered mobile-only “door buster” sales at 6 a.m. and 9 a.m. Starting at noon that day, Gilt placed “mispriced mystery products” throughout the site—such as designer goods for $20 or $40—designed to make shoppers feel they were on a treasure hunt. Gilt continued to place more of those items through its site at 3 p.m., 6 p.m. and 9 p.m.
Then on Cyber Monday Gilt launched a new type of sale called “FreeFall.” For certain products in the women’s, men’s, home and taste categories, Gilt gave consumers about five to 10 minutes to buy products; the price of the products dropped until consumers bought them. During the holidays Gilt also offered a referral program that enabled Gilt members to receive $25 Gilt credits if they persuaded non-members to register with and purchase from the e-retailer.
Flash-sale newcomer and Gilt.com competitor Fab.com registered major growth in its second holiday shopping season. (Fab launched in June 2011.) Fourth quarter sales were up 400%, with 30% of sales originating from outside the U.S., according to a slide show presentation on CEO Jason Goldberg’s blog. Nearly 17 products were sold per minute during the holidays, he says, compared with 5.4 products per day during non-holiday times.
Other retailers faced some new challenges this year. Web-only electronics e-retailer Newegg Inc., for instance, experienced tougher competition during the holiday season than ever before, and especially from retail chains, says Soren Mills, chief marketing officer.
“We saw brick-and-mortar stores offering to price match online competitor prices for the first time,” he says. “These retailers recognized that consumers are clearly moving towards preferring to purchase products online, and this was an effort to combat the showrooming effect.” Showrooming is a term used to refer to consumers that enter stores to research products, then buy them online if they can find a lower price.
Newegg would not disclose its sales results for the holiday season except to say that mobile revenue was up double digits and that the merchant is pleased overall with year-over-year performance. “This year we launched our holiday promotions pretty aggressively on November 1 and we remained very promotional throughout the holiday season,” Mills says.
For gadget-friendly apparel retailer ScotteVest Inc., tablet sales were up 40% compared with the 2011 holiday shopping season, but overall revenue was flat. The stagnation was due to the e-retailer focusing on updating its e-commerce software programs during November and December, as opposed to pushing holiday promotions, says CEO Scott Jordan.
Sales of toys rose more sharply in the 2012 holiday season than in recent years both online and offline for Kazoo & Company, which operates Kazootoys.com and a single store near Denver, says president Diana Nelson. Without mentioning specific sales figures, she notes that her staff worked extra hard with Kazoo’s suppliers to remain stocked with the season’s hottest toys, including Magna Tile and Magformer building sets, Lego building blocks and Playmobil sets of action figures. “We were calling reps directly up through the week before Christmas to make sure our toys were always in stock,” Nelson says. “That’s what made a difference in sales.”
Sales were also helped by Kazoo’s free shipping of online orders of $49 or more, a promotion it offered throughout the year, Nelson says. Nelson adds that online toy sales remained strong through Dec. 20, followed by robust sales of gift cards through Dec. 24.
Amazon.com is No. 1 in the Top 500 Guide. CVS is No. 88, American Apparel is No. 287, Zazzle is No. 126, ShoeBuy is No. 90 and Fab.com is No. 449. ScotteVest is No. 621 and Kazootoys.com No. 495 in the Second 500 Guide.