How e-merchants can prepare for a profitable holiday season

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As we move towards the last quarter of the calendar year, or the “monetary quarter” as I like to call it, online retailers should prepare for another record breaking season. I would not like dare to mention the slice of the consumer spending pie that online retailing now has in Australia (okay, it’s 16% at the last count by ABS in February – and up).

Speaking of pie, here are a few things to think about: Google Trends data shows Australians are starting to gby researching the “Christmas gifts” team in August. Yes, August! Don’t worry if you are at the last minute kind of person – it seems a lot of us are, with search volume peaking between December 6 and 12. What it does tell us though, is that the holiday season is actually already on. we, and as online retailers, need to make sure we’re ready for the onslaught.

So what does the last calendar quarter look like for online retailers? It is likely that October continues to be a strong month across the board, but November will once again be the peak selling month of the year, continuing to drift away from December. Refer to Google Data trends, purists among us will be disappointed to know that the term “Black Friday” reaches peak search volume which is approximately twenty-five times greater than the term “Christmas gift”.

As we wind down the year, Boxing Day sales seem to be slowing down a bit, as consumers’ wallets are emptying more than ever at this time of year, and even the greediest the online shopper may start to tire. We can expect one last burst on Boxing Day, and then it’s time to take your well-deserved leave as the rest of the country ends in January and early from February.

So what is the strategy of an online retailer trying to keep or acquire a share of this very large, and highly sought after, mainstream wallet this Christmas?

There is no doubt that consumers love shopping online for their ability to compare prices and find a better deal, with a survey by Lonergan Research concluding that 81% of Australians aged 18-25 think they can do better online price than in-store, although the retailer that sells “because everyone else is” is a lazy retailer.

Tactical promotions can work, but sometimes discounts can void an online sale. retailer because the market can get crazy; one retailer undermines the next, forcing that dreaded race down. Some of my best e-commerce clients don’t go up for sale more than twice a year, for only 48 hours at a time.

A good online business has unique value propositions, or other differentiators besides just the price, like great user experience, great customer service, super fast or one-time delivery product whose price cannot be easily matched.

Typically, an online business that makes gross profit anywhere in the The 30-40% range should be very careful, and my advice would be: if you don’t know your gross profit margin, so don’t discount.

It’s all too common for a business to give big discounts while spending money paid media channels, only to find that with the high variable costs that accompany the increase sales (such as the cost of fulfilling and shipping increased orders). Add to that the lower stock margin thanks to the discount and there is very little left in the tills.

As online retailers, if we can make profitable and moderate discounts, it is possible to have a very good end of the year.

But as we head to the money quarter, let’s try to keep the fight clean, and be progressive and innovative (we’re in technology after all, aren’t we?). And above all, focus on profits over sales!

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