Many online retailers had great success this holiday season. Early results point to a 25% growth year over year for online retail. In an industry (retail) where we see low to mid single digit growth, we continue to see superb growth in the online retail space.
It begs a couple of questions.
Can it continue ?
Yes! No doubt about it. We continually see that consumers are more satisfied with online retail experience then with traditional brick and mortar experience. Consumers will go where they are satisfied…and more and more, that is the internet. And they are going there for a few different reasons that we like to call the 3 Cs.
- Convenience: the anytime, anywhere value of the web. From the comfort of your own home, while you sit in your pajamas, watching a game on TV, you can go shopping. No crowds and no parking hassles. Sign me up!
- Consistency: we always get the same answer online. How many times do we get different answers from sales associates or from call centers. Consistency leads to higher quality. Have you ever called a call center, not gotten the answer you want, hang up, call again, and get a different answer? I have. No such thing on the web.
- Clear view: or transparency, the ability to know what products are available, the detail specs of those products and the price. As transparency happens, the consumer is now in charge. The web provides us a level of transparency that we cannot get elsewhere.
What drove the success this past holiday season ?
- Free shipping with no restrictions had a significant positive impact on consumers satisfaction and their likelihood to purchase. When restrictions exist in those free shipping offers we see no positive impact on satisfaction or purchase. Those free shipping with restrictions offers might have a positive impact on average order size, but it is having no positive impact on improving satisfaction, improving retention and improving loyalty. 63% of online holiday shoppers surveyed in the ForeSee Results Holiday top 40 online retail satisfaction index recall seeing free shipping offers.
- Customer product reviews had a significant impact on improving customer satisfaction, customer retention and customer loyalty. Customer product reviews was a powerful influencer of the purchase decisions for consumers that were first time buyers from the retailer.
- Promotional emails were a very successful strategy for the top 40 online retailers. More visitors to the top 40 websites listed promotional emails rather than search engines and shopping comparison engines as the primary reason they visited the retailer’s site. The email driven consumers are more likely to purchase and more likely to be loyal than the search engine driven consumers.
What are the take aways:
- Offer free shipping, with no restrictions
- Offer customer reviews
- Continue to use promotional emails to drive traffic and sales
Check out out our research on the subject here.
[…] Ron (commenting on Larry’s post) identifies loyalty program as a key reason for the holiday season success of online channel of retailers. Apart from driving sales, loyalty programs generate valuable data which can be analyzed to determine tactical strategies like cross-promotional programs, estimating discounts on bundles etc. Here is a four step actionable process to exploit the loyalty card data, and use it to broadly target customers with effective offers, even those who are not members of the loyalty program. […]
Interesting…
A question -
The free shippign with o restrictions- was this idea tested on a smaller sample or smaller range of products before being launched.
‘Coz, it might have worked here but might have backfired in the case that the cost of shipping is more tahn the margin on the items sold.
Was it?
The free shipping analysis was done across the top 40 online retailers based on their various offers of free shipping that existed during the holiday season.
Keep in mind, that the cost of carrying and selling a product in a brick and mortar environment is significantly greater then in an online environment. And in most cases will far exceed the cost of shipping.
The one question about the free shipping research, was free shipping with restrictions did not increase satisfaction or loyalty, but did it increase average order size. This study did not focus on that aspect.
-Larry
Ok.
Regarding “did it increase average order size”, I guess you’ll need some loyalty data on the customer to realize how his current basket compares to his regular purchase.
Just one caveat, given the holiday-effect, we would have to “deseasonalize” the data for a meaningful comparison.
I work on testing promotions and products for CPG industry.
This sounds like a good idea to test. But alas, it is for my clients to see the idea here
.