With the retail sector’s crucial holiday season just over the hill from Halloween, there’s good news on the horizon for online marketers.
That was the message Lauren Freedman, president of The E-tailing Group in Chicago,
told an afternoon audience at the recent Digital Marketing Conference in Toronto.
Freedman said online sales south of the border will grow by 28 per cent this year, racking up revenue of more than US$92 billion. Also by the end of 2004, said Freedman, online sales will account for 4.8 per cent of all American retail activity.
In Canada, Freedman said, e-commerce growth lags the U.S., but not by much, with the sector showing 20 per cent year over year increases, and travel in particular — which revs up spectacularly at year end — outperforming other traditional sites.
As for what will drive the projected online boom during the holiday season, Freedman said, “Home related products and consumer electronics along with trendy fashion and deluxe (items) should be strong performers. Gifting competition is (also) fierce for consumer wallet share,” she said.
That’s something Pinny Gniwisch, founder and executive vice-president of marketing for Ice.com can relate to. Gniwisch, who sat on a conference panel with Freedman, said 80 per cent of his business is conducted over the Christmas period beginning mid-November.
Montreal-based Gniwisch, who sells diamond jewellry online, agreed with Freedman that luxury items should do well during the holiday selling period. Earrings and bracelets are the popular gifts, he said, replacing the diamond rings that sell throughout the year.
Using data from The E-tailing Group’s 3rd Annual Merchant Survey conducted in the first quarter of this year, Freedman noted that senior management in the U.S. is expressing its satisfaction with the ROI of e-commerce. The survey showed 42 per cent of senior management is “very satisfied” and another 42 per cent is ‘somewhat satisfied.” Nine per cent were neutral and 5 per cent were “somewhat dissatisfied.” Only 1 per cent were “very dissatisfied.”
Despite these encouraging figures, Freedman pointed out that conversion rates in e-commerce remain challenging. If the conversion rate is considered as the number of orders divided by the number of visits to a site, then conversion rates are averaging in the 3 per cent to 4 per cent range. Thirty per cent of the merchants surveyed reported conversion rates of less than 2 per cent, and 20 per cent of respondents didn’t know their conversion rates, Freedman said.
Unlike those online merchants, Gniwisch knows exactly what his conversion rates are. It stands at 1.1 per cent at the moment, he said, up from last year’s figure of 0.75 per cent and more than twice 2002’s 0.5 per cent.
Similarly dismal figures can be found among shopping cart abandonment rates — when online shoppers put goods into a virtual shopping cart but then don’t follow through with a purchase.
Freedman said the average shopping cart abandonment rate was just over 40 per cent but could climb as high as 80 per cent. Also, 47 per cent of the merchants who responded to the survey didn’t know their shopping cart abandonment rates.
Two brighter bits of information the survey turned up concerned offline sales and returns.
Freedman said Sears in the U.S. gets 4.3 million new visitors each month, with more than 80 per cent of Internet users doing research online before making a purchase. One in five Sears appliance sales worth is influenced by research at the Sears site, said Freedman, and 40 per cent of on-line sales are actually picked up in-store. The online/off-line nexus also worked in merchants’ favour. Freedman said of the 8 per cent of orders bought on-line and returned to a store for credit or exchange, 25 per cent of those customers ended up making a separate in-store purchase.
Freedman predicted that e-commerce will become more refined, with fine tuning, further testing of promotional offers and more targeted and personalized segmentation. There will be more metrics and tracking to drive more focused merchandising and targeting efforts, she said, and there will be a reinvigorated emphasis on branding.
Freedman also predicted that there will be more international shipping and language options for the Internet shopper.
That’s something Warren Cable, director of ToysRUs.ca, agreed is likely.
The toy retailer’s site, which has only been up since the summer, is fully bilingual and can handle overseas purchases, said Cable, another panelist at the conference. Although ToysRUs.ca only ships in this country, he said family living abroad can choose and pay for goods at his site and have them delivered to relatives living in Canada. This feature would be particularly useful with the Toys “”R””Us baby registry, suggested Cable.
The Digital Marketing conference was sponsored by the Canadian Marketing Association and Marketing Magazine
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