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Retailers Bet on Social Media, Free Shipping to Entice Shoppers
In response to continued economic pressures and consumers’ increasingly savvy online shopping habits, US retailers this holiday season are stepping up free shipping offers and are more aggressively using social media to encourage internet purchases, according to the latest eHoliday survey conducted by BIGresearch for Shop.org, the digital division of the National Retail Federation (NRF).
Nearly Half of Retailers Step up Social Media
With an understanding that many of today’s web shoppers use Facebook and Twitter regularly, and because these tools are more cost-effective than traditional advertising, 47.1% of retailers surveyed will be increasing their use of social media this holiday season, the research found. More than half of retailers say they have added or improved their Facebook page (60.3%) and Twitter pages (58.7%) this year, while two-thirds (65.6%) have added or enhanced blogs and RSS feeds.
The survey also revealed that many online retailers have revamped their websites to make them easier for people to shop. These upgradses include adding or revamping their sites’ shopping cart (45.2%), search capabilities (44.3%), suggested items (42.9%), customer ratings and reviews (40.6%), and featured sale pages (37.1%).
Free Shipping Abounds
To provide consumers with an extra incentive to start shopping sooner rather than later, one-third of retailers (34.3%) also say they will offer holiday deals earlier this year.
As another sign of the times - and in response to growing pressure from comparison-shopping consumers, free shipping offers also will abound this holiday season. Four out of five online retailers (79.4%) will offer free shipping with conditions at some point during the holiday season, while more than half (57.4%) also plan to offer free shipping without conditions.
Additionally, more than one-third (35.7%) said their budgets for free shipping are higher than last year, and nearly as many (30.0%) said free shipping offers will start earlier than a year ago.
“Retailers know that times are tough so they have created promotions and incentives to help Americans save money this holiday season,” said Scott Silverman, executive director of Shop.org. “From free shipping to Facebook, online retailers are combining new initiatives with tried-and-true tactics to make their companies stand out.”
Online Still Bright Spot in Retail
Online retailers are also compensating for the economy by making operational changes to help them protect their profits. According to the survey, 41.4% of retailers have scaled back on inventory levels and 22.9% have hired fewer people in their stores.
While online growth is expected to slow this holiday season, it remains a bright spot in retail. According to the survey, 45.8% of online retailers expect their holiday sales to increase at least 15% over last year, while one-third (33.9%) expect sales to grow up to 14 percent. As a testament to the economy and the maturity of online retail, just one in five online retailers (20.3%) expects sales to be flat or decline.
Shoppers to Spend More Online
Though a separate NRF study found that the current economy would affect holiday shopping for two-thirds of US families, spending online will still be on the increase. More than one-fourth of online shoppers (26.7%) said they plan to spend a larger portion of their holiday budget online this year, largely because of the convenience of shopping on the web.
Main reasons why people will spend more online:
- The ability to shop at all hours of the day (41.9%)
- Ease of comparing prices among retailers (34.0%)
- feeling it is easier to compare prices (34.0%)
- Free shipping offers (33.1%)
- More convenience (32.4%)
- Don’t want to fight crowds in stores (24.9%)
- It’s easier to find items (16.7%)
The small percentage of people (5.7%) who plan to spend less of their holiday budget online say that they’ll pull back because of expensive shipping charges (22.8%), because they like to see or handle items before they buy (12.5%) or because they prefer a store experience (10.8%).
A fraction of shoppers said they hesitated to shop online due to concerns about security (1.1%), credit card theft (0.6%), privacy (0.1%) or concerns about retailers tracking online activity (0.1%).
Diversified Payment Options
With online retailers diversifying payment options, customers have more ways than ever to pay for holiday gifts, the study found. Some two-thirds of shoppers (67.3%) will use a credit card for some online purchases this holiday season, though one-third will also use a debit card (35.6%) and PayPal (33.9%) for purchases, NRF said. In addition, 11.5% of shoppers plan to use a gift card or gift certificate to pay for holiday items online this year.
About the study: The eHoliday Study, now in its eighth year, provides a snapshot of the holiday activities of both large and small online retailers, many of which have been in business for at least ten years, It also includes the sentiments of online holiday shoppers. The study, conducted by BIGresearch for Shop.org, surveyed 2,623 consumers from September 23 - October 6, 2009 and 70 online retailers from September 14 - October 6, 2009.
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* Free shipping with conditions means that a customer must purchase a certain item or a certain number of or dollar amount of merchandise before receiving
