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e-Tailer Expectations Lower: Survey

11/05/2008 12:30:00 PM Eastern

Washington, D.C. — Only about half of online merchants expect their sales to increase by 15 percent or more this holiday season, down from the more than three-quarters of e-tailers who anticipated that level of growth last year, a new survey shows.

The conservative outlook comes courtesy of the 2008 eHoliday Study, conducted by shopping search engine Shopzilla for Shop.org, the online arm of the National Retail Federation (NRF) trade association. The study, now in its seventh year, queried 60 large and small e-tailers from Oct. 1-20, many of which have been in business for at least nine years.

“Online retailers are resilient, but not immune, to the challenges of this holiday season,” said Scott Silverman, executive director of Shop.org. “Retailers will be heavily promotional to attract shoppers on a budget, but have also invested in new site features to improve the online buying experience.”

New or improved features include:

·         social networking, with nearly 25 percent of e-tailers adding a Facebook page this year;

·         improved site search, cited by 42.9 percent of e-tailers, to help customers navigate sites more easily;

·         product videos (42.6 percent) and customer reviews (32.7 percent) to give shoppers more information to make buying decisions; and

·         clearance sale pages (27.1 percent) and featured sale pages (31.3 percent) for price-focused shoppers.

What’s more, the majority of retailers (78 percent) plan to offer conditional free shipping at some point during the holiday season, which is in line with last year’s levels despite an increase in transportation costs. E-tailers are compensating for increased shipping costs by renegotiating terms with shipping providers (40.4 percent), closely managing company headcount (33.3 percent) and reducing other promotions (15.8 percent).

In addition, one-fifth (21.3 percent) of retailers say they will require a higher purchase amount for customers to be eligible for free shipping, and one in 10 (10.6 percent) will cut back on usage of free shipping with no conditions.

Shopzilla also surveyed 2,040 online shoppers from Sept. 29 through Oct. 3. As in previous years, about 59 percent cited 24-hour shopping convenience as a major reason they buy online rather than in stores. Other top reasons include:

·         avoiding crowds (41.1 percent);

·         easy price comparisons (36.4 percent); and

·         free shipping (33.3 percent).

Nearly a quarter of consumers said they plan to spend more online this year due to high gas prices, compared to 9 percent that said the same last year.

Consumers who plan to spend less online seem to be reacting to their economic circumstances rather than previous online experiences. According to the survey, one in five shoppers (20.1 percent) said they simply have less money to spend this year for the holidays, while 10.6 percent cited the poor economy as a factor.

“As budget-focused consumers begin holiday shopping, many are starting on the Web to look for gift ideas and research products,” said Shopzilla spokesperson Helen Malani. “Whether they make those holiday purchases online or in stores, the Internet will have a tremendous influence on holiday sales this year.”

To that end, many multichannel retailers will be using their brick-and-mortar stores to promote their e-commerce sites this holiday season. According to the survey, three-fourths will offer in-store email registration, 71.4 percent will advertise their e-commerce sites in-store, and more than half will let store associates place online orders for cust