Consumers prefer holiday shopping on marketplaces
November 1, 2016 12:28 PM
Holiday shoppers prefer to buy gifts from online marketplaces rather than retailers’ own websites.
42% of shoppers say they are most likely to buy a holiday gift on an online marketplace, such as those operated by Amazon.com Inc. and eBay Inc., according to a survey by search marketing firm NetElixir Inc. 43% of consumers surveyed say they will purchase holiday gifts in stores, and 15% say they are likely to buy a holiday gift on a retailer’s website. NetElixir conducted a Google Consumer Survey of more than 1,000 U.S. consumers 18 and older in September.
Consumers ages 35-44 are most keen on holiday shopping on marketplaces, according to the survey, as nearly half of the respondents in that age group say they are most likely to buy gifts on marketplaces—more than shopping in stores or on retail websites. The 45-54 age group is the only other group to prefer marketplaces over stores and retail sites, according to the survey. Other age groups—18-24, 25-34, 55-64, and 65 and over—prefer to shop in stores above all else.
Among online marketplaces, which allow merchants to sell products on their sites, NetElixir highlights e-commerce giant Amazon’s impact on holiday shopping. NetElixir projects Amazon’s share of total online holiday sales will grow to 28% this year, compared with 26% in 2015. That means $21.5 billion will be spent on Amazon between Nov. 1 and Dec. 25, 2016, up from $18.0 billion in holiday sales a year ago, according to NetElixir’s data. Amazon is No. 1 in the Internet Retailer 2016 Top 500 Guide.
The search marketing firm projects that total U.S. online sales during the holiday season of November and December will grow 11% year over year to about $77.0 billion this year, up from $69.1 billion in 2015. This is slower than the 13% growth year over year in 2015 and 2014. More merchants selling products on Amazon’s marketplace may contribute to slower overall holiday e-commerce growth, NetElixir says.
“When retailers sell through marketplaces, they often do so to offset the direct website sales that they have lost,” says Udayan Bose, founder and CEO of NetElixir. The shift of online sales from retailers’ websites to marketplaces may therefore not lead to overall e-commerce growth, he says.
“Marketplaces have become exceptionally competitive where there are often 8-10 companies selling the same product. As a result, the margin, as well as incremental sales volume, is negatively impacted in the long run,” Bose says.
Additionally, NetElixir found that consumers began holiday shopping early. One out of four respondents had started and completed some holiday shopping in September, and 11% were completely done, according to the survey. Advanced holiday shopping may contribute to slower online sales growth during the holidays, in part with “Christmas in July” sales and the impact of Amazon Prime Day and other large retailers following suit with their own promotions during the summer, the report says.
Amazon Prime Day, held July 12 this year, is 24-hour sales event that features discounts of at least 20% and more than 100,000 deals for customers who belong to Prime, Amazon’s loyalty program that includes expedited shipping on millions of eligible products, as well as streaming video and music, for a $99 annual fee. Amazon does not release Prime Day sales numbers but has said orders from U.S. shoppers were up more than 50% year over year on Prime Day, and the number of orders placed on Amazon’s mobile app more than doubled compared with Prime Day 2015, the first year the e-retailer held the promotion.