November 27, 2013 13 min read

This story originally appeared on KISSmetrics



It’s that time of year again. The temperatures are cold, the sun sets at 5, and money will start flying around in a few weeks. The holiday season means consumers open their wallets, and that creates big opportunities for businesses and charities. Indeed, during the holiday season, consumer spending reaches one of the highest points of the year.

Amazon is preparing for the holiday season in a big way, hiring 70,000 temporary workers to help them fill the expected demand. Physical retail stores will be opening earlier on Thanksgiving than in past years, and some will be open all day.

But this blog post will not focus on what other businesses are doing. We’re going to focus on your business. If you run an e-commerce site, you’re probably gearing up for the holiday season and looking to maximize your sales. If you’re looking for what to prioritize and what makes online shoppers tick, you’ve come to the right place.

By the end of this blog post, you will have learned just how crucial the cost of shipping is to an e-commerce site and its customers. You will know that shipping can be a “tipping point” for your business.

You also will understand that you can either repel users from your site or attract them by giving them an incentive to buy. And you will realize there are some tactics you can use to grow your email newsletter base while simultaneously helping to grow your business.

This blog post is divided into three parts. The first part discusses the data around holiday shopping. The second is about how to promote your e-commerce store. And, in the third, we’ll touch on mobile.

By the way, this post isn’t just for the holiday season. You’ll find useful data in here whether you’re in the thick of holiday shopping or just looking to optimize your e-commerce store. Clearly, it’s a good time to be an e-commerce store.

The Data around Holiday E-commerce Shopping

It’s Growing and People are Expecting to Spend More Money with Online Retailers

For the past few years, e-commerce’s share of total holiday spending has grown by about 15%. In 2013, it’s estimated that e-commerce sales will reach about $61.8 billion in holiday spending.

Seventy-one percent of consumers are expecting to spend more (or the same) during the 2013 holiday season. This is the highest it has been in seven years, when it was also 71%. And for the first time, the Internet ranks as #1 on the list of venues where consumers are expected to shop, with 47% saying they’ll shop on e-commerce sites (including auction sites).

Discount/Value department stores are down 7% from last year, with 44% saying they’ll include discount/value department stores on their list. And among those that are shopping online, 38% say they will spend the majority of their budget online:

And if you’re expecting a big Cyber Monday, you’re probably correct. The 2012 Cyber Monday was the biggest one yet, with $1.465 billion in sales. Spending on Black Friday 2012 was high as well, reaching $1.042 billion. According to comScore, this means e-commerce spending for November 1-26, 2012 totaled $16.378 billion:

According to Nielsen, nearly 50% of consumers say they will shop online this Cyber Monday, which is a 16% increase over 2012. Online Black Friday spending is also on the rise, with 51% saying they’ll do their Black Friday shopping online.

The Top Gifts in 2013 – According to Nielsen, these categories are expected to be the biggest sellers in 2013:

Gift Cards Tech Products Toys Food Apparel Video Games Cookware Sporting Goods Jewelry Alcoholic Beverages

The Budget of Americans – Data from Nielsen shows that 30% of consumers across all income ranges will spend between $250 and $500 this season; 20% say they’ll spend between $500 and $1000; and 6% will spend more than $1000.

Consumers Planning on Spending More This Year – We’ve mentioned before that consumers are planning on spending more this holiday season. Data from Deloitte tells us that 71% of consumers are expecting to spend more or the same amount this holiday season.

Nielsen data tells a slightly more modest picture, with 17% saying they’ll increase their spending this season (most of them make over $100k annually). Breaking it down further, 15% of those make $50k or less annually. Additionally, those households that make $50k or less plan to spend more at dollar stores this year.

So here’s what we know: Holiday shopping is on the rise and is expected to reach new heights this year.

How to Promote Your E-commerce Store

There’s an estimated 500,000 e-commerce stores in the United States. Each day they compete for the pockets of consumers. How is your store going to stand out? This is what marketers struggle with every day: the challenge of getting their name out and then crossing their fingers, hoping that some kind person will give their business money.

I hope to provide you with some simple hacks you can use to help increase your chances of earning a customer. But before we get into that, we first need to delve into the data and facts about why it’s so critical for e-commerce sites to offer free shipping.

The Data around Free Shipping – There is a lot of data around this, so I’m going to break down each point into its own section to help you sort it all out.

Data Point #1

A survey from Deloitte asked consumers what factors would lead them to shop online. The factors were ranked on a scale from “More Likely to Lead to Online Shopping” to “No Difference” to “More Likely to Lead to In-Store Shopping.”

The biggest factor, it turns out, was a store having free shipping. Here are the rankings:

Free Shipping (66%) Ease of Shopping (57%) Wide Merchandise Selection (52%) Speed of Shopping or Checkout (51%) Low Prices (51%)

It’s quite telling when people rank “Free Shipping” as being more important (by a wide margin) than “Low Prices.”

Data Point #2

When consumers are asked what area e-commerce sites can improve, the number one answer is shipping:

Data Point #3

In the same study, shoppers were asked what specials or discounts would bring them back to a retailer. Their first and second preferences were both related to reducing shipping costs.

Data Point #4

In another study, Free Shipping Day (December 17, 2012) proved to be a big hit for retailers and consumers. Online shopping reached sales of $1.013 billion on December 17, 2012, which was 76% higher than the previous year.

Data Point #5

Sixty-eight percent of consumers say they would recommend a website that has free shipping. And 65% say they already have recommended a site because of free shipping. That’s pretty powerful.

Data Point #6

A Google survey found that if a site didn’t offer free shipping, 47% would find the item on a site that did, 32.2% would go to a nearby store that offered the product, and 20.2% would buy the product and pay for the shipping.

Data Point #7

Here are the results of another survey done by Google:

You can even run your own test. Ask someone why they don’t buy the majority of their products online, and they’ll usually give a couple of reasons. They’re usually:

“I don’t want to pay for shipping.”

or

“I want my items right away.”

While the latter isn’t fixed yet, you can make up for it by offering lower prices. People will likely have a little patience if it means they save some money.

Clearly, offering free shipping can give you a big advantage, not only over other e-commerce competitors, but also over physical retail stores.

Use Shipping to Your Advantage – We’ve now seen the data that says offering free shipping can give you a big advantage. So we are safe to assume that free shipping is the best option for customers.

But if you sell smaller items, you cannot offer free shipping on every product. If, for example, you sell a magnet for $3.50, your shipping costs will be at least $2, so your profit margins are minimal or even negative. Do this over and over, and you’ll be out of business. This is why many e-commerce businesses require a minimum order of $25 so the free shipping costs are justified.

I can’t tell you if it’s best for your business to offer free shipping on every item or if it’s best to set a minimum order price. What I can do is give you a few ideas to promote your free shipping. Here are a few:

Make it a Selling Point – E-commerce retailers now advertise their free shipping:

It’s become common practice for sites to highlight it on their website:

The bottom line is that consumers need to know what your shipping policy is. I’d recommend placing it as a banner on your website and in your shopping cart. Prospective customers need to know what your shipping costs are before they enter checkout.

To optimize conversions, it may be best to leave a note in the shopping cart saying “Spend $xx more and get free shipping!” Data shows that 70% of shoppers have added items to their carts in order to qualify for free shipping.

But with all of these websites already offering minimal to free shipping, how are you going to compete with them?

Tips for the holiday season:

There will certainly be last minute shoppers, and the data is out there to prove it. Knowing this, it’s important to offer overnight shipping and a guaranteed delivery date. Considering how important discounted or free shipping is to consumers, it’s a good idea to make your shipping pricing (or lack thereof) very clear. In addition, you may want to offer free shipping if you don’t already. Offer to gift wrap items. Perhaps low cost gift wrapping in addition to low cost or free shipping would lead a shopper to pick your store over another.

Discounts – I’m typically not in favor of discounts. I believe they act as a distraction from the product. And overkill on discounting can lead people to tune you out.

But every holiday season many consumers come to expect it by the time Black Friday and Cyber Monday roll around. So let’s get into how you can optimize the promotion of your discounts.

Vitamin Shoppe has a proposal: sign up for their email newsletter and they’ll give you 10% off.

This appears to be a good idea because there is data showing that a lot (83.5% to be exact) of consumers have signed up for an email newsletter so they could get discounts.

And as for email, 45.4% of consumers report that they are more likely to open and read an email if the subject line mentions a discount or special offer.

During the holidays, people may be more selective and shop with stores offering discounts. Feel free to use this as a small part of your marketing strategy. I would use discounts sparingly and keep them few and far between.

People should know when you are running discounts and view it as a “special occasion.” When seldom used and correctly executed, discounts can have good results. And now you know that you can pair your email marketing and discounts together for a more synergistic force.

Tips for the holiday season:

Try giving away a few freebies and measure the reaction. Studies showconsumers value freebies more than discounts. During the holidays, consumers are looking for discounts, with most looking for 40-50% off. Factor this into your decision on whether you discount or don’t. 81% of consumers report that they rely on discounts during the holiday season. Since consumers are shopping early, it’s best to get these discounts out soon.

Mobile

eMarketer is forecasting that mobile commerce will reach 16% this year. You can bet many shoppers will find and browse your e-commerce store on their phones or another mobile device. We all know that his fraction will only grow, so it’s important to get your e-commerce site ready for mobile holiday shoppers. Let’s run through a few scenarios where consumers will check your store while on the go:

While in a physical retail store, a consumer could load up their phone and check your price to compare. When they want to check to see if you offer a product. When they want to check to see how quickly you can ship a product.

Of course, these are just generalities. Each use case is different. What’s important is to build your mobile app or mobile site around the needs of visitors.

If we go with the three use cases mentioned above, we can probably figure these factors are important in our mobile site:

Make the search box prominent so people can easily find the product they are looking for. Ensure visitors know what their shipping options are, including any specials, discounts, carriers offered, and the range of speed offered. This cannot be ignored. If a visitor doesn’t know, they’ll quickly give up and go with someone else.

This is a lot easier said than done. And if your visitors have a great mobile experience, the payoff can be big. A report from Skava shows that 88% of those that shop on mobile phones have a negative experience. The top complaints of mobile shoppers were as follows:

For the visitors that were frustrated with a mobile shopping experience, 29% will wait a year before returning, 30% plan to never return again, and 43% immediately defect to a competitor.

Tips for the holiday season:

Optimize for mobile. ProFlowers boosted their conversions on mobile by cleaning their design, removing checkout steps, and making adjustments to ensure faster loading. 48% of consumers use a search engine as a starting point in their mobile research. Tailor your ads to the consumers and some keywords they may use when shopping on mobile. 84% of consumers use their mobile devices while shopping in a store. Of those, 53% use their mobile devices to make price comparisons. The most common categories are appliances (74%), electronics (70%), baby care (62%), household care (58%), pet care (51%), health and beauty (46%), apparel (44%), and grocery (36%). In addition, 82% of shoppers use search engines when browsing product info in a store. Finally, 65% of in-store mobile shoppers prefer mobile sites over the 35% who prefer apps. Knowing this, it’s important to make priorities for your mobile site. Every product page should have a brief product synopsis, pricing, images, and shipping options. Keep it simple and stick to the basics.

Final Words…..

What would you, as a consumer, like to see from e-commerce stores? What makes you buy from one e-commerce site and not another?

Also check out a recent webinar we did where KISSmetrics’ Director of Marketing Dan McGaw presents 5 Ways to Increase Revenue For The Holidays.