With an increasing number of people shopping online, Gemma Goldfingle looks at how retailers are harnessing the web to boost seasonal sales
Freezing temperatures and deep snow up and down the country have given shoppers yet another reason to do their Christmas shopping from the comfort of their own homes.
Not that they needed one. Online sales are set to break all records this festive period, with accountancy firm Deloitte predicting that the internet will account for 23% of total sales in December. Its view is that online spending could increase by 15% this Christmas, with retailers recording £8bn of online sales in December.
A survey of 20,000 consumers conducted by research business Intersperience revealed that 54% would buy some of their festive gifts on the web.
“Every year more sales are taken online, but it is the extent that online is influencing offline that is dramatic. Increasingly, customers use multiple channels in their transactions. Regardless of where the sale is made, people are undoubtedly researching online,” explains Ross.
This Christmas is also the first in which mobile shopping is set to make an impact. Tesco Direct says that one in 10 of us will use their mobile phone to shop this Christmas, and eBay claims one item will be bought on a smartphone per second. John Lewis head of online Jonathon Brown says that the retailer’s app has already produced significant sales in the seven weeks since its launch.
“Already we are getting 5% of web traffic through mobile and not far from 5% of sales,” says Brown.
It’s in integrated multichannel selling where the big wins lie according to retail experts. Ross believes that retailers need to harness information gained online to fully understand their customers.
“Customers are using multiple channels to purchase their items. The benefit of online is that the customer is not anonymous. Retailers can gather information online to understand their customer, like Amazon does so successfully,” he explains.
Ross believes this information can be used for customers who merely browse online to inform their purchase in-store, and it is those retailers that use a fully integrated online and in-store strategy that will be the standout online performers this Christmas.
Retail Week finds out how major retailers are planning to make the most out of online this yuletide.
When will online retail peak this Christmas?
The retail industry’s PR machine has gone into overdrive to capitalise on the early December rush to shop online. Mega Monday, Cyber Monday, Manic Monday - the peak online shopping day goes under many guises.
Monday is traditionally the optimum online day for web shoppers looking for festive bargains after a weekend spent charging down the high street identifying must-have items. But which Monday?
Traditionally, the busiest ecommerce day has fallen on the last Monday in November, after the pre-Christmas pay packet has been banked. However, this year IMRG, the trade body for online retailers, is predicting that next Monday, December 6, will be the real online peak. Between midday and 1pm will be the busiest time as office workers use their lunch hour to click and buy. Last year, payment processing firm Retail Decisions saw 11% more sales on December 7 than the previous Monday as consumers chose to shop after the end of month pay packet had been banked. It’s a pattern that’s expected to be repeated this year.
Stuart Rowe, chief executive of entertainment etailer Play.com, thinks that consumers planning a cautious Christmas are delaying their shopping and while “some merchants are going earlier”, he says “it’s shaping up to be the sixth”. He adds: “Shoppers are holding out a little later for deal this year.”
Etail giant eBay is predicting that Sunday, December 5 will be its biggest day and will be marketing the day as Super Sunday. The online retailer predicts 5.4 million shoppers will log on and 16 gifts will be bought every second - a 15% rise on last year.
Regardless of which date retailers think will be the biggest, expectations are high. IMRG is predicting that sales will be up 16% from the £350m spent during 2009’s Mega Monday.
Dixons is predicting its websites will take one order every two seconds at lunchtime on December 6. Rival electricals specialist Comet is predicting a 15% rise in sales on its peak day, while Play.com is expecting a monster haul of 1,200 orders per minute and a 20% rise in sales.
What promotions are being used to kick-start sales?
Promotions will play an active part in kick-starting sales this festive season as nervous consumers keep a close eye on their spending, while not wanting to compromise on Christmas.
Play.com is embarking on an aggressive sales push, offering up to 70% off lines on Mega Monday. Fellow etailers eBay and Amazon have also launched Sales as Christmas shopping reaches
“We are launching special deals to ensure we are price competitive. In our sector, especially, people gravitate towards value. It’s the way of the web because we don’t have to pay sharp rents,” says Rowe.
It’s not just pure-play etailers that are pushing discounts; H&M has launched an online Sale to coincide with Mega Monday and Argos has issued a discount voucher. Discount sites are also set to clean up, with Comet predicting its auction site www.clearance-comet.co.uk will see record traffic of 20,000 visitors on December 6.
However, Ross warns against promoting so hard that Sales become unprofitable. “Retailers must use Sales with caution, if you constantly give discounts to your existing customers they start to expect it.
“It’s very compelling to see top line sales increase and they are good to acquire new customers. But you run the risk of acquiring customers who won’t make you a penny,” he says.
What are the must-have items?
The big question on retailers’ lips is what will be the must-have item this Christmas? John Lewis is seeing phenomenal interest in big-ticket electrical goods such as 3D televisions and digital SLR cameras so far this festive season. The big-chill has also sent sales of Ugg Boots soaring. Comet is also backing 3D TVs along with the Apple iPad and Xbox Kinect.
Argos predicts that Christmas stockings will be packed with gadgets galore, with the iPod Touch and Nano heading the list along with the latest video games Call of Duty: Black Ops and Gran Turismo 5.
In terms of toys, Argos has put Lego’s Ultimate Vehicle Building sets at the top of its must-have toys list along with VTech’s Kidizoom cameras. Firebox.com has seen a resurgence in retro toys from the 1980s from both kids and adults, such as the electric tank Bigtrak.
What delivery initiatives are being launched?
To encourage surfers to click and buy, a raft of retailers including John Lewis, House of Fraser and Oasis are launching a free delivery day for Christmas shopping.
More than 80 retailers are participating on December 10, all part of the LinkShare’s marketing network, with the aim of driving online sales. Other retailers taking part in the scheme include Dorothy Perkins, Karen Millen, Lombok and Warehouse.
Warehouse ecommerce manager Fiona Harrison says: “Successful marketing is all about promoting the right offer at the right time to make sure our brand gets the most exposure. Christmas is one of the biggest events of the year in the retail calendar and we are doing all we can to give our seasonal sales a boost.”
The UK launch of the free delivery day follows from the success of similar schemes in the US where retailers such as Walmart, Target, Amazon and Sears join forces annually on December 17 to offer free shipping with a guaranteed delivery day.
Online fashion giant Asos will provide free delivery to customers worldwide throughout the Christmas shopping season up until December 14.
The last day to book festive treats for guaranteed delivery before Christmas is December 21 for most retailers, although Tesco Direct is extending its date until December 22. Royal Mail has offered a helping hand by installing extra delivery rounds the week before Christmas and extending opening hours of its delivery offices from December 13.
Royal Mail has also paired with House of Fraser to launch a trial of evening deliveries for addresses within the M25, where shoppers can request home deliveries in a four-hour time slot. Other retailers are in talks with the delivery service about taking part in the trial.
The success of click-and-collect schemes looks set to continue. Last Christmas Argos saw a peak of 355,000 items being reserved per day using the company’s Check & Reserve system. Brown says that one in five of John Lewis’s online customers is using the scheme, which he says is great for store footfall.
Is online cannibalising in-store sales?
The huge increase in online sales is undoubtedly great for those retailers with strong internet operations, but is it doing so at the expense of the high street?
The IMRG Capgemini Etail Sales Index showed that online sales grew 16% year-on-year between January and September 2010 compared with a 4% growth in the Office of National Statistics Retail Sales Index.
It is multichannel retailers that are seeing the biggest jump with sales up 25% in the year to date, compared with just an 8% increase in pure-play online and catalogue retailers.
“The internet has fuelled a shift in shopping behaviour, with many consumers now shopping across multiple channels and researching products both online and in-store before making a purchase,” explains IMRG director of information Tina Spooner.
So while in the early days of the web it was the pure-play etailers that made the running, those with genuine multichannel offers are now catching up. In what is going to be a highly competitive Christmas, every sale online is going to be aggressively fought for.
Argos’s microsite Sales to infinity…
Web sales are so important during this period that high street giant Argos has launched a special site for customers (www.bigplay.co.uk) to keep up to date with Christmas toy and video game promotions. The retailer has special deals, wishlists, top boys and girls toys lists, as well as video content of toys and video games.
So far the website, which is accessible from the main Argos site or as a standalone microsite, has had more than 111,000 visits and more than 10,000 wishlists detailing what children want for Christmas have been set up on the site.
To drive traffic, the website has launched campaigns such as the silent auction to win a 5ft Lego Buzz Lightyear, which created a spike in hits.