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Affiliates and merchants can make their holiday season sizzle with the right mix of products, design, promotion and pizzazz.
SIX WEEKS. That's all it takes for many merchants to make or break the retail year. From the day after Thanksgiving – Black Friday – to the Friday after Dec. 31, the holiday rush generates a major part of year-round sales. That translated to $135 billion in gift sales last Christmas, according to the US Department of Labor. An estimated 8 percent of those sales occurred online, leaving affiliates with a superb opportunity to give themselves a nice little holiday bonus.
Take toy and apparel affiliate SchoolPop.com. "The gift buying season has a significant impact on our sales," says Mary Beth Padian, the site's vice president of merchant development. "Toy merchants are in our top 50 merchants throughout the year. Every fourth quarter – especially with Disney and eToys – they are in our top 10."
SchoolPop is a donation site that encourages buyers by promising to return a portion of each commission to a school or nonprofit of the buyer's choice. Yet even it doesn't rely on feel-good power alone when it comes to cashing in on the holidays. This year, it's publishing a holiday edition of its new triannual magazine, distributed to 1 million parents through partner schools. "Our editor is writing an article about the hot toys and gadgets for the holiday season, and she's talking to merchants to get a sense of what is really going to be hot this year," Padian says. "The product impact, especially when it's contextual like that, should show us a significant lift in our sales over last year."
Of course, holiday sales aren't reserved for toys. Electronics, apparel, music, movies, books, airline tickets and collectibles are all huge holiday categories, often offering deep discounts to help promote holiday sales. For example, top affiliates for Ross-Simons, which promotes itself as selling "life's luxuries for less," saw their sales double during last year's holiday season and the company is hoping for a similar experience this year, said affiliate manager Felicia Lesnett. To encourage affiliates, Ross-Simons offers commissions of up to 10 percent for top affiliates during the holiday season – that's double the program's base commission during the rest of the year. Affiliate sales make up about 20 percent of the company's total online revenue.
Just two years ago, the Internet was still viewed as a relatively high risk channel for Christmas shopping. Who can forget the horrors of Christmas past when sites crashed, orders weren't processed and Santa missed the big day? The cybermalls have gained a lot of respect since then, according to Patrick Gates, AOL's senior vice president for e-commerce. "We are finally seeing a true shift from offline to online," he says. "The pie isn't getting bigger; people are shifting share."
ComScore Networks estimated online sales increased 35 percent to $18.6 billion in 2003, up from $13.8 billion in 2002. Sixty-four percent, or $12 billion, of that was made between Nov. 1 and Dec. 23. "November and December are humongous, humongous months for us," said Jennifer Willis at ShopForChange.org, the affiliate sales site for Working Assets. For the past few years, it has promoted its seasonal clothing – things like books through Powells.com and apparel through LandsEnd.com, of which half of the affiliate commissions go to nonprofit causes – through a holiday newsletter. The newsletter is stocked with listings for merchants, descriptions of promotions, free shipping options and a reminder to shop there first. This year, even without a newsletter, its now-established reputation as a site for gifting means that if people need to do holiday shopping "they sort of know to click over to us at ShopForChange," Willis says.
Certainly, Internet shopping is cutting into department store sales thanks to such features as convenience, wrapping and shipping. But the online market itself is also shifting. Home entertainment and travel are heating up while apparel and toys are losing share. Gift cards, offered by nearly every major merchant, are a dominant trend. Now that merchants have seen the strong improvement to their bottom lines as a result of gift cards, the push is on for holiday 2004. But watch out: Some merchants offer little or no commission on gift card sales.
"Gift cards were a $20 billion business last holiday," says Lauren Freedman, president of The E-tailing Group in Chicago. "No one returns a gift card." And when you sell these, chargebacks can become a thing of the past. You can increase dollar amounts on card sales by pushing specific cards for specific uses, such as an entire January back-to-school wardrobe from Old Navy or a complete computer system from Office Depot. You can also promote gift cards as "the perfect gift for the undecided."
The Humbug Factor
Although the 2004 gift buying season looks strong, sales may still be affected by the economic outlook. When times are tight, so are wallets. That's why comparison sites are predicted to be the biggest winners during the 2004 holiday season. Affiliate Ben Chui predicts sales through his comparison shopping site BensBargains.net will be "huge" in November and December because of his reputation as a bargain hunter. "I find the best price on any particular day on numerous products, and that resonates well with people right now," Chui says. "If you go into a store and everything there is the cheapest you've ever seen it, I guarantee you they will be coming back." He doesn't have a newsletter, doesn't send out emails and doesn't pay for search engine placement. His firsttime visitor traffic is driven by natural search, message boards and word of mouth. The rest comes from people that have his site bookmarked. Yet he's still able to pull in an excellent income from the work he does finding promotions and searching for best prices by hand, without the aid of software. Although he holds a master's degree from Berkeley, he's now "doing this full time."
Even with the uncertain economy, the number of first-time shoppers on the Internet continues to grow with the richest households expected to register the largest increases in holiday expenditures. "Here we've got, now more than ever, more people familiar with how to buy online and more ways of doing it than ever," says Carol Baroudi, an analyst at Baroudi Bloor International in Arlington, Mass. "More and more people see less and less reason to go to the mall in a crunch."
The way to a holiday shopper's heart is in the details. Holiday Retail Strategies 2004 from Packaged Facts, a publishing division of MarketResearch.com, concludes the things that will help e-tailers are: unique products, wide variety, a strong reputation, a holiday atmosphere and a consumer confidence in their ability to take orders securely and ship them in time for the holiday.
Shopping For Shoppers
Of course, getting people to your site takes work, but try the five key strategies suggested by Packaged Facts.
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