Unless you live under a rock, you know that we are in a tough economic time right now. And it will clearly have an impact on this upcoming online holiday season. Most "experts" are lowering their holiday predictions to slightly positive growth for all of retail, reaching the lowest growth levels since 1991. On the online side, predictions are in single digits. Comparing this to last year's reported 19% online holiday growth, it is a very pessimist prediction. My prediction? Not as bad as 9%, but we won't see 19% either. My prediction is 14% online holiday growth (and if I am right, I will give full credit to my dart board).
So, what impact will that have on those free shipping offers consumers have come to love (and expect)? Well, there was an interesting article in Advertising Age this Monday by Natalie Zmuda, looking at that exact question. The thinking by many is that those free shipping offers will be a little harder to find and noticeably harder to qualify for. More restrictions to free shipping will become the trend this holiday season.
What do you think retailers will do? And what should retailers do?
Ok, since you asked, I will give you my thoughts.
Retailers will put many more restrictions on free shipping this holiday season. With higher gas prices their costs are going up and they need to recover those increased costs. That's their story and they are sticking to it.
But, are restrictions on free shipping the right strategy? Consumers' costs are going up as well, for credit, for food, for gas, etc., and with higher unemployment, that means less money to spend this holiday season.
What impact will restricted free shipping offers have on consumers? Will they comparison shop even more to find the best deal? Will they be less likely to purchase online because of shipping charges and decide to brave the malls (and the gas pumps) to find the lowest possible price? Will it cause them to buy less? As a retailer, will you be able to convert those intended online shoppers to offline shoppers when they are not willing to pay for the shipping charges? Or, will you lose them to a more aggressive online retailer or to a more convenient (and closer) offline alternative?
It is a very slippery slope for retailers this holiday season. Remember that consumers want consistency across channels. They are willing to trade the delivery time for the convenience of online shopping. But are they willing to accept higher shipping charges?
Those that meet consumers expectations of free shipping offers (with little or no restrictions) will give up a little on margin, but should make it up on market share growth.
Good luck (to both retailers and consumers) this holiday season!
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