With the holidays fast approaching, merchants are gearing up for the upcoming selling season with both high hopes and serious concerns. Lower consumer spending and a shortened selling season this year could negatively impact merchants, unless they plan accordingly.
Peak Shopping Period
The Atlas Institute, the research arm of Atlas DMT, the advertising technology division of Avenue A, Inc. has compiled some interesting findings about past online holiday shopping behavior that merchants can use to gauge future trends.
Based on shopping behavior of anonymous online shoppers across 18 leading e-commerce companies, from the time period of November 15, 2001 to January 31, 2022, the following information was revealed:
- Weekdays are the most active online shopping days, with Wednesday being the most active, compared to offline, where weekends are the most active shopping days. This reflects of the trend of shoppers at work, who continue to drive the majority of online sales during the holiday season.
- Peak online shopping occurs from noon to 3 p.m. EST, with 1pm EST being the highest.
- In 2001, online shopping tapered off seven days before Christmas, unlike offline, which is steady right up until the holiday. This "wait for shipping" lull shrank from 10 days in 2000, indicating that consumers believe that the difficulties in the shipping processes are being eliminated. The lowest daily online shopping volume occurred two days before Christmas.
- The two days after Christmas are extremely active online, and nearly as strong as the pre-Christmas peak.
- Online shopping remains very active all the way through February. The month of January is equal to the strongest pre-Christmas week in terms of activity.
Jupiter Research (a unit of this site's corporate parent) analyst Ken Cassar pointed out that one reason why online sales are strong through January, compared to December, is because the holiday online shopping season lasts only until the middle of the December, whereas for brick-and-mortar shops, the season lasts virtually the entire month. Another factor for strong sales in January, according to Cassar, is due to "first time online shoppers that have a good, positive experience with online shopping during November and December, and come back for more."
This year, however, online retailers are faced with a shortened holiday selling season. Because Thanksgiving is later this year, there are only 19 shopping days between Black Friday (November 29) and December 17, the last day many retailers can guarantee orders sent via their lowest cost shipping options will arrive before Christmas. Last year, there were 25 days in the traditional holiday selling season.
In the Jupiter Research report, "Holiday Sales: Short Selling Season Mandates Early Purchase Incentives," Cassar states that the short holiday season is dangerous for retailers for several reasons: call centers will need to deal with concentrated levels of order volume, sites must be able to handle increased levels of usage volume, and warehouses will experience concentrated levels of order volume.
Cassar doesn't anticipate the supply disruptions caused by the recent West Coast Port Strike will compound during the holiday season. "The strike does come at a bad time for retailers, as they are trying to fill their warehouses," Cassar stated. "But most e-tailers have a good idea of what's already in their warehouses."
In order to minimize the above risks, merchants need to find a way to jump start holiday spending by convincing consumers to start shopping early, and consequently, optimizing their sites to handle a more concentrated volume of users.
Both Jupiter Research and Atlas offered recommendations on what merchants should do to optimize their sites to counter the effect of the shortened season.
Use Advertising and Marketing to Shift Demand
According to Jupiter, in order to compensate for the pressure due to the six fewer sales days, online retailers should start holiday online advertising in early November to push online sales. This should be followed by a push after December 6 to drive purchases to brick-and-mortar stores. According to Cassar, "The goal of the marketers should be to move as much volume as possible in the first two weeks of November. Even if it means giving up margin."
In the Atlas report, "2001 Holiday Shopping Patterns Revealed," Atlas senior research analyst John Chandler-Pepelnjak recommends that merchants and marketers tailor holiday online advertising messages to people who are at work in order to target the high number of online consumers who shop during the middle of the workday. Merchants should also continue to emphasize in messaging that shoppers still have time beyond the middle of December to order gifts and have them arrive in time for Christmas. The report also suggests that marketers should broaden campaigns to target the heavy post-Christmas shopping market with appropriate messages (e.g., conducting post-holiday sales promotions, encouraging shoppers that now is the time to treat themselves, etc.).
Competitive Pricing and Shipping Strategies Key to Sales
The Jupiter Research report, "Holiday Sales: Short Selling Season Mandates Early Purchase Incentives," examines what incentives will effectively drive sales this holiday season. According to the recent Jupiter Consumer Survey, the top reasons consumers said they would shop online this holiday season are low price, low-cost shipping and convenience. Price was the determining factor in selecting which merchants to patronize. Therefore, offering competitive pricing should be at the top of a merchant's list.
The report also states that shipping and handling promotions were atop the consumer wish list, along with discounts for buying online. Merchants should use shipping and handling promotions to encourage early purchasing. Jupiter recommends that retailers insist on minimum order sizes that leave enough gross margin to cover postage and handling expenses. Also, expiration dates on no-fee shipping should be prominent, serving as a powerful call to action.
Optimize Customer Service
According to the Jupiter report "Customizing Service Optimization: Mitigating Risk During the Holidays," 96 percent of consumers revealed that the quality of customer service impacts their purchasing decisions. While the research firm found that the majority of retail executives are planning on using resource-intensive service channels such as email and toll-free phone service this holiday season, far fewer retailers are focused on deflecting or reducing the volume calls by using searchable self-service tools such as knowledge bases.
Merchants should consider using this type of tool as a supplement to phone and email support. These self-service tools will ultimately lower contact volume, which in turn may help reduce the amount of temporary customer service staff online retailers may need to employ through the holiday season.
Jupiter predicts that the number of email contacts will grow significantly in the fourth quarter. Overall, online retailers can expect approximately 230 million customer-service related emails, which could make email management quite the painful experience for some. The report goes on to offer a handful of useful tips on operational opportunities retailers can use to avoid an email crunch, and ensure holiday selling success.
Site Optimization
Even though the selling season is almost a week shorter this year than last year, less than half of site operators surveyed by Jupiter have done nothing to reinforce their infrastructure to prepare for the holiday season. In its report, "Site Technologies and Operations: Mitigating Risk During the Holiday Season," Jupiter suggests several pre-season steps online retailers should take. Included are coordinating marketing efforts and initiatives with technology, reviewing escalation procedures so everyone knows where to turn to for help if necessary, and a backup of technology with people, should automated procedures fail. Cassar emphasized that online retailers should really focus on making backup plans, especially if they find volume to be too much to handle. "Online retailers should consider outsourcing [CRM] to call centers and using hosting companies," Cassar said. "Companies such as Pivia can help online retailers quickly add capacity to handle overflow."
With only five weeks left until Black Friday, online merchants' thoughts should be turned toward implementing the most effective strategies possible for maximizing opportunities and minimizing risks this holiday season.
More information on the Atlas report mentioned above, can be obtained on Atlas DMT's Web site. More information on the Jupiter reports mentioned above can be obtained directly on the JupiterDirect Web site.
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