How will this holiday season pan out for online retailers? That depends on whom you ask.
An NPD Group survey of consumer holiday buying intentions reveals that the 2004 holiday shopping season could be challenging for retailers.
Nearly nine out of 10 consumers say they are planning to spend the same amount or less than last year. On average, consumers tell NPD they plan to spend US$655 over the holidays.
“Year over year, it appears from our surveys that consumers are slowly but surely losing their passion for holiday shopping,” Marshal Cohen, chief industry analyst for The NPD Group, said. “But that doesn’t mean merchants should lose heart — we are seeing some important growth opportunities.
“It’s up to the retailers to be vigilant and proactive. Those merchants who will ignite the consumers’ interest will thrive and those who repeat what they’ve done in the past will simply survive.”
Analysts said Web analytics tools are a key to surviving and thriving this holiday season and beyond. That’s because Web analytics help e-tailers understand shopping patterns, which is vital in any season. Knowing whom to target and with that could be the difference between boom or bust holiday sales, according to analysts.
“There is value in understanding what’s going on with the customer,” Gartner principal analyst Adam Sarner told the E-Commerce Times. “When you find out what’s going on, then you can make changes to maximize the relationship.”
Understanding the Customer
Unlike first-generation Web analytics that focused on boring operational patterns, 21st century analytics can get into the mind of the customer. Hence the rebirth of Web analytics.
Consider the statistics. Consumers age 55 to 64 plan to spend the most this holiday season ($693) and young adults plan to spend the least, according to NPD. However, the young adults could be the ones to stuff retailers’ stockings this year.
On average, consumers 18 to 24 years old expect to increase their holiday spending dramatically from an average of $366 last year to $537 this year. By comparison, adults age 25 to 34 plan to cut their spending by 21 percent over last year.
Men tell NPD they plan to spend more than women this year, with an emphasis on electronics. Of all the respondents, on average men will spend $666 this holiday versus $624 for women, and they say they’ll spend twice as much as their female counterparts on electronics.
“That’s why marketing can make a big difference,” NPD’s Cohen said. “It pays to look for marketing opportunities within particular demographic segments and implement targeted strategies to entice them to buy.”
Wine.com Wins with Analytics
Wine.com used analytics to gather information on consumer behavior and recently rolled out a brand new Web site in order to cash in holiday sales. Specifically, Wine.com has changed its positioning from a wine bottle shop to a full-service provider.
“It’s kind of like a mystery, a puzzle game, and it’s fascinating to watchhuman behavior and try to anticipate and then adjust accordingly when you get the results from the Web analytics,” Wine.com general manager Jay Shaffer told the E-Commerce Times.
Shaffer predicts Wine.com will post five to 10 times more traffic, product movement and revenue thanks to what it has learned from Web analytics.
For example, Shaffer found that customers were logging on to the site to run internal searches, but Wine.com did not have what the customer was looking for. That’s why the new site rolled out with a greater emphasis on gifts.
“The name of the game here is to match people up with the products they are looking for,” Schaffer said. “That’s how you close the sale. There’s too much at stake to be flying in the dark these days.”
Avon started using a third-party provider for Web analytics to find out at what point it was losing customers in the online path.
The two-fold goal of the investment was to reduce the abandoned shopping cart rates and to track partner ads. The result of the analytical information has led to changes in the merchandising strategy, according to Pattiann McAdams, director of e-commerce for Avon.
McAdams said Avon is now implementing quick changes to capitalize on the buying power of people online. The company has added new product lines and bundled products to position it to sell more products as gift items.
“Avon knew nothing about its customers as a result of the direct sellingbusiness, but now we can really understand the customer by maximizing data using Web analytics,” McAdams said. “It’s not about analytic companies getting you data, it’s about companies building business practices and ROIs against the data you get.”
The largest online seller of bags is betting Web analytics will help it keep up with the latest consumer buying trends and help it choose the right advertising schemes over the holiday season. Using Web analytics, eBags has identified the colors that consumers are looking for, as well as determined other baggage-related trends.
For example, Chris Seahorn, director of business development for eBags told the E-Commerce Times that Web analytics clued the vendor that iPod cases would be a hot item this shopping season. Based on that information, eBags quickly built out a “digital lifestyle” page that features cases for all types of electronics. That’s not the only way analytics have helped.
“The search terms help us scale,” Seahorn said. “By knowing what the trends are ahead of time and by adding new key categories, we’ve literally generated thousands of new dollars per week. I think those would have been lost sales otherwise. I think going into the holiday season, it will be tens of thousands of dollars.”
John Mellor, vice president of marketing for Omniture, the software vendor that provides Web analytics tools to these and other top Internet brands, told the E-Commerce Times that Web analytics is becoming mainstream in the online retailing community.
“Some of our sophisticated customers are using Web analytics to optimize their sites all the way through the final days of the buying cycle,” Mellor said. “Web analytics is becoming more of a have-to-have technology because you can’t improve what you can’t measure.”
Click Here To Read Part 1 of this Special Report: “Searching for Holiday Profits.”
Click Here To Read Part 2 of this Special Report: “Safe, Secure Holiday Shopping.”.