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Study: E-tailers up perks to lure holiday shoppers

November 05, 2008

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Washington—More than half of online retailers expect their holiday sales to increase at least 15 percent over last year, according to the 2008 eHoliday Study, conducted by Shopzilla for Shop.org.

The rate of growth, however, is slowing. In 2007, 77.5 percent of retailers surveyed said they expected their sales to grow by more than 15 percent.

"Online retailers are resilient, but not immune, to the challenges of this holiday season," Shop.org Executive Director Scott Silverman said in a media release. "Retailers will be heavily promotional to attract shoppers on a budget, but have also invested in new site features to improve the online buying experience."

Among the promotions will be free shipping offers. The majority of retailers surveyed (78 percent) said that at some point during the holiday season they plan to offer free shipping with conditions, meaning the customer must purchase a certain item or a certain number of or dollar amount of merchandise before receiving the promotion.

Retailers are compensated for increased shipping costs by renegotiating terms with shipping providers (40.4 percent), closely managing company headcount (33.3 percent) and reducing other promotions (15.8 percent). In addition, 21.3 percent of retailers said they will require a higher purchase amount, and 10.6 will cut back on usage of free shipping with no conditions.

Turning to the Web, 58.6 percent of consumers surveyed said that convenience is one of the main reasons they choose to make purchases online. Additional reasons for shopping online as opposed to visiting a brick-and-mortar store include: not wanting to fight crowds (41.1 percent), easy price comparisons (36.4 percent) and free shipping (33.3 percent). In addition, nearly one in four shoppers said they are spending more online due to high gas prices.

According to the study, consumers who plan to spend less online this year seem to be doing so in reaction to their economic circumstances, not to previous online experiences. One in five shoppers surveyed said they have less to spend this year for the holidays, and 10.6 percent cited the poor economy as a factor. For 11 percent of consumers surveyed, high shipping charges are leading them to spend less online.

To keep consumers returning, 42.9 percent of retailers surveyed said they have added improved site search to their Web sites. Additional new features include product video (added by 42.6 percent of retailers surveyed), customer reviews (32.7 percent), featured-sale pages (31.3 percent) and clearance-sale pages (27.1 percent). Nearly one-fourth of retailers surveyed said they added a Facebook page this year.

To promote the sites, in-store e-mail registration will be employed by 74.3 percent of multichannel retailers, 71.4 percent will advertise Web sites in-store and 51.4 percent will offer the ability for sales associates to place an online order for customers.

"As budget-focused consumers begin holiday shopping, many are starting on the Web to look for gift ideas and research products," Helen Malani, Shopzilla's online shopping expert, said in the media release. "Whether they make those holiday purchases online or in stores, the Internet will have a tremendous influence on holiday sales this year.

The eHoliday Study included a survey of 2,040 online buyers (defined as anyone who has made an online purchase in the last 12 months) from Sept. 29-Oct. 3, 2008, and 60 online retailers from Oct. 1-20, 2008.
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