DigiMinded

Online Sales are Looking Flat, but the Key to Success Might be Women

The news just keeps getting uglier for online retailers. Today comScore released their e-commerce sales growth numbers for October, and they aren’t pretty. Online spending in October 2008 grew by only 1 percent over October 2007, which is the lowest monthly growth rate seen since comScore began tracking e-commerce in 2001. To put that in perspective, the growth rate in April 2008 was 15%, and the peak was 28% in August 2007. As would be expected, the effect of the economy on online retail sales was particularly apparent among the lowest income earners ($0 to $50K), who saw a 3% decrease in year-over-year online sales. There is good news, however; households with an income over $100K, who make up 35% of total e-commerce dollars spent, increased their year-over-year spending by 14%. This indicates that a marketing strategy geared towards the more affluent members of the population could be quite successful.

Another group of spenders is looking more important than ever this holiday season. They are female and shopping-savvy, and they are taking full advantage of the wealth of discounts and promotions in the marketplace today. In a recent eMarketer survey, 67% of female respondents noted that they were going to try to use more coupons and coupon codes than usual, and another 65% said they would spend more time looking on the Internet for deals. And when you target these shoppers with promotions, you won’t just be reaching them; their friends are likely to see the coupon as well. Nearly 80% of female internet users said they had shared a coupon with a friend during the past three months.

There are two other advantages to the female market:  they begin their holiday shopping earlier (more than 70% begin prior to December 16), and even in the recession they are still susceptible to unplanned purchases (more than three-quarters said they were likely to make impulse buys this season).

Given this information, it is crucial that online retailers continue to generate creative, enticing promotional offers that are likely to appeal to female shoppers throughout the holiday season. Brush up on that messaging, and let’s try to salvage what could otherwise be a very long December.

Holiday Shopping Intentions Say More Research, More Internet

Google and OTX recently released the results of a study on consumer shopping intentions during the upcoming holiday season. These insights came from an online survey with over 10,000 respondents across a number of product verticals. While surveys are never a perfect way to assess consumer behavior, this study provides some interesting insights on how shoppers are likely to purchase this season.

• Consumers are starting their research early this year, with 31% beginning before Halloween. Approximately 40% of shoppers will make the majority of their holiday purchases in early to mid December. Only 4% selected Cyber Monday, which is in line with my experience. The retail clients I’ve managed typically see the Monday before the ground shipping cutoff as their biggest day, not the mostly overrated Cyber Monday.
• 43% of consumers say they plan to spend more time shopping for gifts this year due to the state of the economy.
• Shoppers are seeking value through promotions, with 84% taking advantage of price discounts and 75% seeking free shipping offers. This is unsurprising given the current promotional frenzy in the marketplace. (Have you walked into a mall recently? There are so many sale signs that it’s almost as overwhelming as walking down the Las Vegas Strip at night.)
• The internet plays an important role in holiday shopping, even for offline purchases. 86% of shoppers will use the internet in their product research, and 54% are likely to research online and then go to the store to purchase. (Granted, this survey was conducted online, and therefore its respondents are likely to be more internet-savvy than the general population.)
• More people are shopping online this year – 40%, up from 34% last year.
• Consumers are as likely to pay attention to online ads as they are to TV commercials. This is interesting, but typically people have a hard time accurately assessing the amount of attention they give to things.
• Search is expected to drive 16% of online retail sales, up from 12% last year. Use of comparison shopping sites is also expected to increase significantly. These numbers are likely affected by the fact that other channels are being hit harder by the current economic crisis than search and comp shopping.

Overall, it seems as if the economy is definitely having an effect on the way consumers shop this year (not shocking), and the internet is playing an increasingly important role in the buying process. One thing is certain: it’s bound to be an interesting holiday season for online retailers and marketers.