You did your due diligence, and created the ultimate holiday season plan for success. But a change happens in your supply chain. Or on Black Friday/Cyber Monday, you noticed a change in consumer shopping behavior. Or a mid-December blizzard causes a disruption of deliveries.
How should you react and respond when your holiday plan veers off course?
Multichannel Merchant reached out to Digital River Global Vice President & General Manager, Branded Manufacturers Alex Becker for his tips on dealing with hoiliday season surprises.
MCM: Last year (2013), all financial reports pointed to consumers starting their holiday shopping before Halloween. Will this become the new norm, or do retailers need to remain focused on a Cyber Weekend start?
AB: “Christmas in July” hasn’t really proven successful over the past few seasons. While retailers may start their activity earlier in the season, there are some interesting conclusions to draw from the last few years about the importance of Cyber Weekend.
Last season, Black Friday sales exceeded $1 billion USD for the first time and Cyber Monday set a record for the most ecommerce revenue in a single day at $1.735 billion USD. It is interesting that even though Black Friday sales were record-breaking, average order values on Black Friday have actually fallen for the past three consecutive years. Why? Consumers want deals on Black Friday.
If etailers can’t offer big deals on Black Friday, then they may want to extend their promotions across a greater number of days during the holiday season. They should start with Thanksgiving Day, which is becoming more relevant every year, and extend their promotions at least through Cyber Monday.
When planning this year’s holiday campaigns, etailers should pay particular attention to their consumer acquisition channels. While U.S. online spending was up 10.3 percent in the fourth quarter last year, conversion rates at etailers’ sites and shopping carts have declined and cart abandonment rates continue to increase. Why is this?
The proliferation of smartphones and tablets are driving more visitors to etailers’ sites where they often browse or conduct research, rather than purchase. And, certain customer acquisition channels also didn’t perform as well as in previous seasons. Search conversion was down while social channels and email increased, indicating that more personalized experiences compel consumers to buy. Etailers should leverage unique messaging, special offers, coupon codes, dynamic display, VIP programs, or individual bundles that can be personalized. Search shouldn’t be ignored – after all it is the largest acquisition channel – but fine-tuning email and social messaging is what will enhance your cart conversions this season.
MCM: Speaking of Cyber Weekend, some analysts said in 2013 that the Cyber Monday phenomenon was coming to an end. Why is Cyber Monday coming to an end, or not coming to an end?
AB: Last year, Cyber Monday was the largest online shopping day in history. While the entire online holiday shopping season was up 10.3%, Cyber Monday was up 18% to a record $1.735 billion in a single 24-hour period. Consumers are certainly planning a portion of their holiday shopping around this event and there have been no indications that this behavior will change. Etailers should plan for an even larger event this year.
MCM: Some of retailers’ best-laid holiday marketing plans can take a 180 because of consumer behavior. When do retailers need to stay the course, and when do they need to consider making adjustments?
AB: First and foremost, marketers should make certain that their online experience supports their offline campaigns not only in messaging, but also with a uniform pricing policy. In some industries, more than 80% of visitors who are interested in making a purchase will first visit a manufacturer’s site. If manufacturer and retail pricing are misaligned, it can negatively impact the consumers’ brand experience.
One manufacturer got ahead of this curve last season by inviting consumers to pre-order items online at Black Friday prices one week in advance. The online store not only provided the same products at the same price as their retail partners, but consumers could actually pre-order the product and have it delivered on Black Friday. This was a particularly successful program. Brands should make sure to provide loyal consumers with the same online brand experience they have at a brick-and-mortar location.
Second, use multiple traffic acquisition programs – search, affiliate, display, email, social, etc. Study the current environment and focus promotional efforts on the channels that are yielding the greatest results. Changing investment strategies to accommodate consumers’ behaviors can be done quickly online.
Finally, have a back-up plan ready to go. Last season, many etailers actually ran out of inventory. Demand simply exceeded supply. Etailers should plan for this by either finding an alternative source of supply, which is easier said than done, or substituting alternative products and offers. Pre-develop the marketing campaigns for the back-up plan so they are ready in case inventory runs out. If possible, pay special attention to the demand early, and attempt to modify the chain of supply.
MCM: With the season around the corner, how do you see holiday 2014 shaping up?
A: While this holiday season should be better than last, there are a few strategies to consider for a successful season.
First, provide last-minute incentives to consumers. In 2013, sales the weekend prior to Christmas were 37% higher than at the same time in 2012. While some of this was driven by weather, consumers did more last-minute online shopping.
Second, to ensure customer satisfaction and loyalty, it’s also important to manage cut-off dates for guaranteed Christmas delivery. While it may appeal to etailers to offer delivery until very late in the season, carriers can become overwhelmed by the demand. Some studies found that up to 32% of etailers had some percentage of packages not arrive in time for the holiday. This negative experience damages the carrier as well as retail brand.
Lastly, plan for the unexpected. Think through the alignment of online and offline campaigns, the personalized messaging, the acquisition channels, and the continuity of supply and delivery of goods to the consumer. There are bound to be some unique surprises again this season. Etailers that can correctly anticipate and also react quickly will be the winners during this holiday season.