DMN3 Blog

If you’ve been paying attention, you know that 2010 holiday retail sales easily beat analysts’ predictions. Leading the charge was online sales, with e-commerce sites seeing a 15 percent increase in sales over the 2009 holiday season, according to Spending Pulse. Other insights for you to consider as well…

While retail sales increased 5.5 percent, the real story was both the release of consumer pent up demand and the trend toward the increasing use of the Internet as part of the purchasing process. Online sales are still relatively small compared to overall holiday retail sales; $36 billion versus $584 billion. But that doesn’t change the trend of increasing use of online shopping by U.S. consumers.

The online train has left the station and is gathering speed. This trend toward Internet sales has important ramifications. It’s vitally important that retailers with lots of brick and mortar stores get out in front of the gathering e-commerce wave.

Of particular interest to me beyond the overall numbers were the following:

• Internet as Influencer of Both Online and Offline Holiday Sales
• Smart Phones, Mobile Marketing and Sales
• Flash Sales as a Promotional Tool
• Free Shipping Is Now an Expectation
• Inclement Weather Helps Online Sales

Internet as Influencer of Both Online and Offline Holiday Sales: If you have followed this blog, you know that high web traffic does not necessarily correlate to high sales. The traffic must be persuaded to buy (conversion) as part of the website experience. Website conversion is a topic for another post.

What we saw this holiday season is that there were differences between peak traffic volume days and peak sales days for e-retailers. While Cyber Monday (Monday after Thanksgiving) was the peak sales day, it ranked third in volume of traffic for the holiday season. Black Friday (day after Thanksgiving) was the peak traffic day and was also the peak sales day for physical retail stores.

Experian Hitwise data shows that consumers are using the web to research products, read reviews and check availability regardless of where they plan to buy them.

A Forrester Research report released last year estimated that the Internet would influence 46% of total retail sales in 2010.

Smart Phones, Mobile Marketing and Sales: While this is actually a sub-category of the previous topic it is worthy of its own discussion. Smart phones are changing the way consumers buy. More and more smart phones are being actively used as part of both the offline and online buying process. That impact has taken a number of forms. They include:

• Comparison Shopping: Consumers have access to a number of apps that allow them to scan product barcodes while in the store to look for pricing and availability at competitor online and retail store locations. These include apps such as Red Laser, Scandit, Shop Savvy, etc. The consumer has real time information that directly impacts their purchase decision.
• Mobile marketing strategies to increase sales, including use of apps, geo-targeting, coupons, etc. The most notable example of turning smart phones into mobile sales is eBay. eBay’s U.S. mobile sales from November 25 to December 25 expanded to almost $100 million, an increase of 134 percent over the same period in 2009. eBay has been proactive and is leading the mobile sales trend with over 30 million downloads of its mobile apps worldwide. While clothing and accessories was a consistently popular category for purchases, cars and trucks led U.S. mobile sales in terms of dollars in 2010.

Flash Sales as a Promotional Tool: Instead of drastic across-the-board mark downs, retailers changed marketing strategies this holiday season. Many started using flash sales (offer of a drastic discount for a limited time for a particular product) as well as online deal-of-the-day coupons such as those offered by Groupon.

Free Shipping Is Now an Expectation: While free shipping was once used to differentiate e-commerce marketers from their competition, consumers have changed their expectation. They now have come to expect free shipping in some form from all e-retailers. If “free shipping” is not readily recognized by visitors on a site, today’s consumer will simply move on to another website.

A variation of free shipping by retailers with lots of physical stores is to offer in-store pick up for items purchased online. This approach also has the advantage of driving store traffic, although it may not be perceived as well as free shipping to the door.

Inclement Weather Helps Online Sales: Storms impact online sales. Storms on the West Coast in mid December and the after Christmas blizzard on the East Coast resulted in an increase in online sales during the storms. Web traffic increased less in regions with milder weather. Many e-retailers saw strong sales continuing after Christmas, while physical store sales were negatively impacted by these same storms.

Integrate Online and Offline Marketing: Retailers must be aggressive in integrating their online and offline marketing and sales efforts. The trend of online shopping is only going to grow and grow in the years ahead. Smart retailers will plan to devote more and more of their efforts at ways to take advantage of this trend. The world has changed. Brick and mortar stores are at risk and they need online sales to survive in the long run.