Online Holiday Sales Are Looking Pretty Bright After All

By Patti Freeman Evans

Overall, Christmas 2009 may be far better for retailers than expected, following a turbulent year for the retail sector. Many retailers have successfully adjusted their tactics to maximize sales and margins such as reworking their assortments around lower price points. According to Kelkoo, sales in the six weeks to Christmas are expected to reach £44.7 billion this year and account for 18.5% of total annual retail spending. And the best bargains are likely yet to come in the final week before Christmas.

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Calling All Online Retailers! We Want To Hear From You!

Patti Freeman Evans [Posted by Patti Freeman Evans]

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Nothing Certain Except Death And (Online) Sales Tax (?) – Or is it?

Freeman Evans, Pattiby Patti Freeman Evans


As we reported back in May, online retailers should prepare to charge sales tax in certain markets, even if they do not plan to do so across the country. Cash-strapped states are looking to tap any potential source of revenue (California, for example, has been working through an onerous $26 billion budget gap) and have in recent months been proposing legislation to require online retailers to submit tax in states in which they deliver.

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Retailers Focus on Multiple Holiday Sales Driving Tactics, in Addition to Search

According to the 2008 JupiterResearch Executive Survey results, online retailers continue to put search engine marketing spending at the top of their holiday sales driving tactics. Nonetheless, this trend is more subdued when compared to previous years. The JupiterResearch US Paid Search Forecast, 2008 to 2013 notes that paid search will grow 26 percent in 2008 (to $11.4 billion) and continue at a compound annual growth rate of 13 percent, however attention is starting to shift from paid search to more aggressive search engine optimization (SEO) campaigns.

15 percent less online retailers cite increasing their search engine marketing spending for the holiday season among the top three sales-driving tactics. According to the 2008 JupiterResearch Retail Executive Survey, 40 percent of online retailers will increase search marketing spending as a holiday sales-driving tactic this year. Though a high overall total percentage, this is still 15 points less retailers than the previous year. Online retailers already spend 40 percent of their budgets on search, thus the slowing of this spending increase signals a wider focus on other tactics.

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Online Sales and the Economic Environment: Q2 Update

News regarding the economic situation continues to be relatively gloomy and has been reflected in the Q2 results that offline retailers have been reporting. For example JC Penny reported Q2 comp store sales declined 4.3% versus last year, Abercrombie and Fitch Q2 comp store sales were also down by 11% versus last year.

Wal-Mart US (+4.6% w/o fuel increase versus Q2 2007, in contrast to a 1.2% increase for Q2 2007 versus Q2 2006) continues to do well on the strength of its overall low price positioning and those product lines that contain necessities rather than discretionary items. This performance shows a continued trend of consumers trading away from mid-market stores down to off-price sellers.

Online sellers like Amazon (US net revenue +35% versus a year ago); Overstock (over 20% growth in gross bookings) and eBay (WW GMV +8%) continue to post healthy increases supporting the notion that online continues to be strong. However, online sellers are beginning to lower expectations for the second half of the year in spite of their success thus far.

In contrast to the strong online performance by some of the top retailers, the census bureau's Q2 ecommerce sales increase is posted at 9.5% versus Q2 2007 - the smallest increase ever and a 22% increase for Q2 2007 versus 2006.

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