An atypical but strong holiday season

January 9, 2014 09:46 AM

Streetwear retailer Karmaloop had to hustle this holiday season, says CEO Greg Selkoe.

“Every department from styling to photo to merchandising to marketing worked around the clock to make sure we were hitting our goals,” he says. The extra effort was needed because there were only 25 days between the peak holiday season—from the day after Thanksgiving, also known as Black Friday, and Christmas—compared to 31 days in 2012.

With the shorter season many retailers like Karmaloop offered deep discounts to drive shoppers to click and buy. Karmaloop, for example, offered multi-tier discounts that increased the percentage off shoppers received as their order values increased. The retailer, No. 118 in the Internet Retailer Top 500 Guide, offered shoppers discounts like 40% off and free overnight shipping three days before Christmas for orders of $150 or more and 30% off and free overnight shipping for smaller orders.

Those types of deals helped boost U.S. e-commerce sales 12% year over year in November and December, according to the Custora Pulse Index, which tracks online sales for 100 U.S. e-retailers. That compares to 2.7% growth for bricks-and-mortar retailers in November and December, according to ShopperTrak, which monitors traffic and sales at major malls and retail chains.

Bricks-and-mortar stores were hurt by foot traffic dropping 14.6% compared to the same two months last year thanks, in part, to severe weather conditions in many parts of the country during the first two weekends in December, ShopperTrak says. However, ShopperTrak also took note of the shift to online shopping, saying “foot traffic will continue to slow due to changing consumer patterns—with more shoppers purchasing online or researching products online before heading to stores.”

Meanwhile, many online shoppers were looking for bargains. 74% of shoppers used promotions such as free shipping and coupons when making holiday purchases, according to a survey conducted by e-commerce consultancy The E-tailing Group Inc. and personalization firm Baynote Inc.

The survey of 1,000 online holiday shoppers found that 60% said free shipping without any conditions or minimum purchase threshold was “extremely important” when making a purchase.

But some retailers bucked that trend. For instance, CanvasPop, which produces and sells via its e-commerce site photos printed onto canvas, this year dropped its offer of free shipping with a purchase of at least $150. Instead, it offered a $14 flat fee.

The change didn’t affect conversions, says Adrian Salamunovic, the retailer’s co-founder. In fact, while the $150 free shipping threshold aimed to drive up the site’s average order value, the retailer found that its average order value rose after eliminating the offer, he says. Salamunovic declined to share the specific amount.

Because of the shorter season the retailer launched its holiday promotions earlier than usual, offering “10 days of deals” before Black Friday. That approach helped propel the retailer to a record quarter, Salamunovic says. He declined to share the percentage growth rate or specific sales figures.

A big trend in the recent holiday season was the growth in purchases made on tablet computers and smartphones. Mobile commerce sales grew 50% in November and December over 2012, Custora says, as roughly one in three purchases was made on a mobile device during the two months, up from about one in five in 2012.

34% of shoppers made a purchase on a retailer’s mobile app, Baynote’s survey finds. And shoppers also used their mobile devices in stores; 62% of shoppers used a smartphone to compare prices while shopping in a store and 61% redeemed a mobile coupon at a store during checkout.

That means retailers have to be armed to serve shoppers who expect good experiences however they’re shopping, says Lauren Freedman, president of The E-tailing Group. “Shopper expectations are at an all-time high,” she says. “This puts incredible pressure on retailers to not only keep pace with rapidly evolving technologies but to ensure these technologies are available in an easy-to-access, simple-to-use format.”





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