For Retailers, It’s Already Xmas

Though temperatures are routinely breaking triple digits this summer, the nation’s online retailers are thinking about the holiday season. The “2005 Online Retail Holiday Readiness Report” from WebTrends identifies retailers’ strategies to approach the holidays.

There’s good reason for online retailers to think about the holidays now. The report says the season accounts for 50 percent or more of annual revenues for nearly 25 percent of all Internet-only retailers. Forty-three percent of online-only retailers report the holiday season represents 25 to 50 percent of their annual revenues. Among multi-channel retailers, 20 percent say the holidays account for 50 percent or more of annual revenues.

The importance of repeat customers in the upcoming holidays is critical to the companies surveyed. Thirty percent of Internet and catalog retailers say they expect 50 percent or more of their holiday season revenue will come from repeat customers. Among all retailers, nearly a quarter (23.5 percent) expect 50 percent or more of their holiday revenues to come from repeats.

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The browse-to-buy conversion rate is a combined 69 percent higher for repeat buyers as opposed to new ones. Twenty-seven percent of respondents say conversion is significantly higher, 42 percent say it’s slightly better.

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Those loyal customers who both browse and buy will be bombarded with an array of incentives to loosen their purse strings this season. Free shipping tops the list, 63 percent of respondent indicate they’ll offer loyal customers incentives such as value-added promotion (42 percent); online only sale (33 percent); repeat buyer discount (33 percent); bundled offer (29 percent); early shopper discount (28 percent); and rebate (11 percent) are all noted by retailers as incentives that will be offered this year.

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Retailers will also employ a number of different Web features to help loyal users spend holiday cash. More than half of retailers will include suggested items (59 percent); gift idea center (55 percent) and featured sales items (54 percent) pages. Apparently, most retailers don’t think their loyal users want or need to be able to speak with them in real time, at least, not online. Only 8 percent indicate they currently use or will use a live chat system.

The majority of retailers (52 percent) indicate they have no plans to do testing for the 2005 holiday season. Looking deeper, WebTrends found 60 percent of retailers with over $100 million in annual revenues plan on testing. Opinions on segmentation differ among retailers. Thirty-two percent find segmentation somewhat important, 22 see the issue as minimally important, and 22 percent see segmentation as very important.

Brent Hieggelke, VP of marketing for WebTrends, told ClickZ Stats the most surprising finding was while online-only retailers rely on the holidays for a larger portion of their annual revenue, they lag behind multi-channel retailers in adopting initiatives to target loyal repeat customers, such as segmentation and testing and optimization. “This is surprising because with only one channel to be concerned with — the Web site — it should be easier to track prospect-to-customer behavior, test different creative and site content, and measure the resulting impact on customer loyalty,” Hieggelke said.

The survey was based on results from 242 respondents between July 7 to July 12, 2005.

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