Marketers Will Reduce Promotions, Boost Online Spending, During Holiday Season: Study
E-commerce is set to top $200 billion in 2006, and a significant chunk of Web retailers told Forrester Research that 20% of their annual revenue will be generated during the holiday season.
What are the retailers surveyed by Forrester and Shop.org on behalf of WebTrends doing to ensure a green Christmas? Less than ever, it would seem. The number planning to offer the most popular promotion, free shipping, has dropped from 62% last year to 45%, according to a new report. And those offering a value-added promotion, such as a free gift with shipping, slipped from 42% to 40%. Even steady customers are being squeezed: Only 28% are offering special repeat buyer discounts, down from 33% last year.
So what category showed growth? Those retailers… planning to do absolutely nothing for their loyal customers, a field that more than doubled from 11% last year to 23%.
Shop.org attributes this in part to higher confidence in the channel among online merchants, which is partly the results of solid margins and indications of sustainable growth. But it may also be the result of a yearning for simplicity: Discount offers, such as mail-in rebates or other convoluted promotions, breed confusion — and confusion rarely results in sales.
This is reflected in site visitors’ online experiences. Web sites are pulling back on offering suggested items, featured sales items pages, and “idea centers,” according to the survey. The features online retailers will offer at the same level this year as last include personalized promotions and customized product offerings.
Even plans for testing have dropped. Fifty-four percent said they had no plans to optimize their customer loyalty campaigns during the holiday season, up from 51% a year ago. Another 30% will do either an A/B split or multivariable test conducted through a home-grown solution, while the rest will employ third-party technology to test variables. As WebTrends notes, the reduction in testing reflects retailers’ desires to lock down their sites during the holiday season, reflecting a cautious “if it ain’t broke, don’t fix it” mentality.
What retailers are using, and using in a big way, is e-mail marketing. This ranked as the most important demand-generation activity they could undertake, and is a channel retailers are relying on to build customer relationships. But they’re also spending more on search engine marketing and optimizing their Web sites for search. By contrast, marketers are cutting back on traditional forms of advertising, such as couponing, broadcast and print advertising, and in-store promotions.
WebTrends based these results, which are contained in its 2006 Online Retail Holiday Readiness Report, on more than 300 online surveys conducted among retail professionals during late June and early July.
