As consumers plan their BBQs and beach vacations, winter holidays for them are a distant season. After the ‘Dads and Grads’ gift rush ends, the next period of high-demand online gift shopping won’t come until Cyber Monday. This year’s holiday season should be promising. The NRF projects an increase of 3.4 percent in retail revenues with online sales expected to grow as much as 12 percent fuelled by the economic recovery. As retailers, you know the importance of having your holiday strategy in place by July. You’re aggressively thinking about new and innovative tools to drive maximum customer engagement and gifting revenues this year. Here are four questions you should ask yourself that could make a big difference to your bottom line this holiday season.
1. How can I reduce shopping cart abandonment?
Shopping cart abandonment is a giant asteroid that hits online retailers every year. Estimates put it at rates more than 65 percent. Shoppers exit their carts before purchasing for reasons including high shipping cost and lengthy checkout processes.
In the happy world of holiday gifting, carts are mostly abandoned because of a lack of vital information about the gift recipient such as size, color and style preferences as well as shipping details. This is where your gift checkout process needs a new way of thinking, a high powered technology injection. All these personal choices should be transferred to the recipient. The gift sender should not have to make them on behalf of the recipient. Would more people check out if all they had to enter were the recipient’s email address?
2. How can I better up-sell and cross-sell gift recipients?
By letting the gift sender purchase gifts with minimal required information about the recipient, you increase your gifting revenue. All those orders that would have gone missing in the e-black-hole are now yours. How can you drive even higher growth in gifting sales?
Traditionally, when a gift recipient received a gift that was not to her liking, she may have taken it to the store and exchanged it. In the process, the retailer recommends other items of popular or similar styles and up-sells her. Cross-selling and up-selling the recipient during online gift exchange before the actual item is shipped, merges the online and traditional in-store experience. It creates active and happy customers who receive the gift they want.
3. How will gift returns affect my bottom line?
Gift returns take a chunk out of retail profits every holiday season. In a 2012 WSJ article, Randy Allen, associate dean at Cornell University’s Johnson School of Management estimated that almost 15 percent of holiday sales are returned or exchanged and other statistics place it at roughly 30 percent. She estimates that the exchanged merchandise is mostly for a different size or color. Repackaging and reshipping items creates monetary and time costs. What if the recipient could be surprised with a holiday gift and choose their color and size preference, swap or buy something bigger before the item ships?
4. How can I plan effective holiday promotions?
Big data has become an established factor of production. According to a McKinsey study on retail in the US, a retailer using data effectively could increase its operating margin by more than 60 percent. You probably have access to sales analytics as part of your e-commerce software. However, does it tell you which part of your sales are gifts, which are your most popular gifts during various holiday seasons, what is the optimal price point for your gift specials and what is the demographic make-up of the gift recipients? Comprehensive gifting data helps you build solid holiday campaigns, manage seasonal and peak gifting inventory and understand your peers.
The Bottom Line
As holiday competition for consumer dollars increases among retailers, efficiency matters now more than ever. Online gifting has stayed the same for too long. It’s time to rethink your gifting solution and provide options that grow your gifting revenues as well as enhance the gifting experience for your customers. Over the next couple of months while consumers work on their tans, you should work on how to reduce gifting inefficiencies like cart abandonment and returns. Explore new technologies and tactics that sync your online and offline strategies and maximize your full sales potential for the upcoming holiday season. It will be here before we know it.
By Monika Kochhar, CEO