Preparing for the Holiday Season

By — 09.29.11

Image Ad for Amazon displaying the number of days left for their Super Saver Shipping promotion.

Over the past two years, we’ve observed an important trend during the holiday seasons: a bimodal distribution in shopping patterns. Some customers are shopping earlier while others are holding out longer to complete their shopping. In both cases, the root cause is the same: the challenging economy is motivating consumers to look for the best deals. Retailers can capitalize on this if they act now.

The Early Shoppers

Consumers are shopping earlier to find deep discounts before or on Black Friday and Cyber Monday. I expect this trend to continue this year given the current economic climate. To capitalize on this, the key is to give customers the perception that buying early provides value to them—and to do so in a way that does not penalize your business financially. A few ideas to consider:

  • Run promotions that increase your conversion rate (CVR) but maintain or increase your typical average order value (AOV). For instance, promoting two-for-one deals or reduced (or free) shipping offers can be effective at increasing CVRs, but you should not lower your free shipping thresholds beyond a financially profitable level, as this would reduce your AOV. For example, Target offers free shipping, but only on items that are priced above $50.
  • Extend Black Friday and Cyber Monday from single-day events to week-long events.
  • Instill urgency and scarcity in your website copy. Make it clear that these promotions have a limited window of opportunity.
  • Allow customers to return products into January. This removes a key objection to buying early.
  • Offer some loss leaders to pull in more traffic.

The Late Shoppers

Another group of customers are increasingly delaying their purchases. According to a study released by Google just before Christmas 2009, by December 22nd, 38 percent of consumers had not completed their shopping and 17 percent had not purchased a single gift. This group of shoppers may be holding out for late sales or clearance sales after the season winds down. The obvious problem: once the shipping deadlines have passed, these customers can no longer shop online. Some suggestions:

Countdown displaying the number of days left for Amazon's Super Saver Shipping promotion.

Countdown timer created by Adlucent for Amazon.com

  • Continuously remind shoppers about shipping deadlines. A countdown clock can be an effective visual tool to convey this.
  • After the ground shipping deadlines have passed, price the 2-day and overnight options as low as possible. The rule of shipping costing less than 10 percent of the price of the cart goes out the window when urgency is critically important.
  • Use expedited free shipping promotions over a high AOV threshold once free ground shipping deadlines are reached. We have seen the revenue from days between the ground shipping deadline and the 2-day shipping deadline be some of the best for retailers.
  • If you’re an online retailer, once all shipping deadlines have passed, promote electronic gift cards that can be emailed. These should be promoted on your homepage, in emails to customers, and during the checkout process. You can also run paid search campaigns on gift card terms.

    This graph from Google Insights shows searches for the term 'gift cards' in December, 2010. Notice that it builds until December 24th, after which it drops off dramatically.

    This graph from Google Insights shows searches for the term “gift cards” in December, 2010. Notice that it builds until December 24th, after which it drops off dramatically.

  • If you’re a multichannel retailer, make it easy for customers to pick up the product at your store. While you might want customers to come into your store in the hopes of an up- or cross-sell, many customers loathe having to park and come into a store when it’s packed with last-minute shoppers. This may result in you losing the sale altogether. You instead might want to consider offering curbside pickup of items purchased online, and use your website to up- or cross-sell the customer.

Finally, keep in mind that shopping doesn’t end on Christmas day. In fact, it starts right back up Christmas afternoon as people search for accessories or gifts they didn’t receive. According to a survey by Google, 64 percent of consumers planned to shop post-holiday sales. Run promotions after the holidays, too.


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