Shoppers Scaling Back Online Shopping in 2009?

The headline for this article is exactly the type of headline all eRetailers and click and mortar companies are seeking to avoid this time of year. With Black Friday and the increasingly important Cyber Monday creeping closer, the thought of holiday shoppers uses the online channel less this season is worrisome.

With less than a week to Black Friday MarketingProfs, citing an annual holiday retail survey from Nielsen, has forecasted weaker online holiday spending from consumers. A gradually improving economy (or at least improving optimism) has given some analysts reason to predict flat or increased online sales in 2009. According to the survey results, 42 percent of consumers plan to spend less this year on holiday gifts than they spent last year. Consumers willing to spend $300 or more online during the holidays is down to 31 percent from 42 percent last year.

As with any survey, understanding the methodology and asking hard questions like “what type of consumers comprised the survey sample” is important to understanding exactly what this survey portends. Also, while the “lead” statistic for the survey is the 42 percent figure, it is important to remember that the consumers included in that statistic were not asked a question specific to online shopping – just holiday shopping in general. To extrapolate that to online spending is unwise and a misnomer. However, the survey also reports that 63 percent of respondents intend to do some holiday shopping online, down ten percent from the exact same survey conducted in 2007. The ten percent drop off is not entirely shocking given the current economic conditions.

While the survey results can be questioned, the raw data should alert online retailers to some important opportunities this holiday shopping season. First, free shipping alone will no longer cut it. While deep discounts are unwise, incentives designed to up-sell with smart rules-based or algorithmic content targeting holds great promise. Rules-based targeting, though not as “sexy” as predictive modeling, is extremely effective and simple. Second, consumers still shop online primarily for the sake of convenience. Therefore, shoppers need a reason other than convenience to spend their dollars online. For click and mortar stores, using the opportunity of a completed online sale for fresh incentives and discounts either in-store or online is a safe way to create new opportunities and keep customers engaged.

Smart offers and proper use of technology like onsite targeting is an effective way to create enough incentive for shoppers to spend more money online this holiday season.

The Lunch Pail