Christmas in July: Amping Up Ecommerce Selling
Happy holidays!!! Wait a second….isn’t this the middle of Summer? Well, not if you shop Target, Best Buy, or Walmart online, or if you are a member of Amazon’s $99 per year two day free delivery service, Prime. These companies launched a broadly publicized mid-year digital purchase version of Black Friday post-Thanksgiving sales. Video and ecommerce retailers QVC and Home Shopping Network also jumped into the Christmas in July arena.
Amazon Prime shoppers have done particularly well. In addition to Fire TV sticks, a 32 inch TV for $75 and a Chromebook laptop for $199, Amazon offered Prime members:
– Over 50% off two Nikon Coolpix cameras
– Over 50% off on Drinkwell Platinum Pet Fountains – Up to 70% off kitchen products from brands like Cuisinart, Foodsaver, and Thermos – Husqvarna mower for under $300 – iRobot Roomba Pet Vacuum cleaning robot for under $300 – Kindle for $30 off – Up to 75% off on 40 selected DVDs, including ‘Lord of the Rings’ sets – Up to 50% off any of the Harry Potter books – More than 70% off on the Divergent complete box set of books – Connected Car and Scan Tool products starting at 60% off – Over 30% off selected clothing, shoes, jewelry, and watches
Not to be outdone by this tsunami of deals, and even though only 2% of its global sales come via ecommerce, Walmart has promoted its own online “atomic deal” merchandise items for purchase. These products, principally electronics, toys, and baby merchandise, number over 2,000 online ‘rollbacks’. They are aimed squarely at countering Amazon Prime. Walmart has also lowered) its purchase minimum for free shipping to $35 (from $50).
Some retail analysts have identified this as a sign that online sellers are desensitizing their customers. The mid-year sales, however, are more of a reflection of how consumers’ online purchasing has amped-up over the past year or so.
The Walker Sands Future of Retail Study of 1,400 U.S. consumers found that there is more online shopping – in terms of both frequency and array of goods purchased – than a year ago: 68% of consumers have shopped online at least once a month, compared to 62% the previous year; and over one quarter make online purchases at least once a week. In addition:
– 4 out of 10 customers are open to purchasing any type of product online, from either retailers or third party sites like Amazon (but, compared to companies like Gap and Home Depot, Amazon is trusted more in almost all product categories)
– Over three-quarters are buying more expensive products (over $100), up from 70% a year ago. Further, almost 30% would purchase a product costing $1,000 or more, if free returns were available (up from 10% the previous year)
– Free shipping is the key motivator for shopping more online (83%), followed by free returns (65%) and one-day shipping (62%)
The study also found an increase in mobile payments, with 40% using this method during the past year, compared to 8% in the previous year. Security of mobile payments, however, remains a major consumer concern.
There is one product area of ecommerce purchasing that has been a bit slower to catch up with other consumer goods. It’s grocery products. In a study among adult shoppers who had bought groceries online at least once in the past year (by Door to Door Organics, an online grocer), it was determined that more than half of these shoppers had increased their spending over the past year. The items most frequently purchased through ecommerce continue to be books, home electronics, clothing and apparel, and household goods; so, this represents a very broad range of consumer products.
That said, some ecommerce buyers are still reluctant to purchase fresh foods online. Although three quarters of these shoppers had digitally bought fresh products (meat, fish, dairy, and produce), almost two-thirds of these buyers said they had been disappointed by the quality or freshness of their purchases of these items on at least one occasion. In the Walker Sands study, 36% of consumers said they would never buy groceries or food from an online third party such as Amazon, compared to 34% who said the same thing for online brands and retailers.
Aside from fresh grocery items (and also luxury goods), and as reported by Walker Sands, time-pressed online shoppers are increasingly using the Internet and mobile digital for purchases of all sorts. By all accounts, and despite some order volume issues, Amazon Prime’s Christmas in July initiative was quite successful. As online sellers find it necessary, and advantageous, to offer door-buster deals, and go “mouse to mouse” with each other at multiple times of the year, it will be interesting to see how the dynamics of these Black Friday-type sales tactics play out over time. It’s a shopping showdown, and competition for clicks, which one analyst has called the digital selling version of “Godzilla vs. Mothra”.
