THE STUDY OF ONLINE SALES STRATEGIES
The three secrets to improving cyber sales: Testing, planning and experimenting.
A day after Black Friday — and its best Thanksgiving sales day ever — Deny Designs decided to do something radical: Stop discounts for two days. The theory was that a sale wasn’t necessary, especially after offering a 50 percent discount for four hours on Thanksgiving.
“Is it more beneficial to do a sale from a profitability standpoint or have full price for those two days? Maybe our top-line revenue won’t be overwhelming, but our profitability will outperform,” said Dustin Nyhus, CEO and co-founder with his wife Kim of the Denver home-decor site that puts artists’ designs on shower curtains, duvet covers and even backyard bean bag toss sets. “That was our bet this year.” Lesson learned, Nyhus said. With three times more traffic than a normal weekend, the rate of purchases “underperformed,” he said, “because every single retailer was offering the same discount through the entire weekend. In hindsight, it probably wasn’t the best idea.”
Deny Design did see growth on other days. Its Black Friday sales did better than expected, which mimics what happened with U.S. online retailers everywhere. Nationwide, Black Friday online sales surprised analysts because it’s typically a lowkey day as shoppers head to brickand-mortar stores for the deals. Heavy discounts attracted bargain hunters. And more people shopped with mobile devices, though most purchases were completed on a computer.
But growth, local retailers say, wasn’t just because consumers are more comfortable shopping on mobile phones, tablets and computers. Nor was it due only to the pent-up demand following the Nov. 8 election, which really interrupted the retail world. (Adobe Digital Insights recorded a 17 percent drop in online sales the day after the election.) Like others, Deny Design’s sales and traffic growth improved thanks to testing, planning and experimenting.
“We found that in the past, the daily average goes up (with an extended sale) but it’s almost better to do a one-day sale. It puts that urgency into our customers,” Nyhus said. “We’re really gun shy with doing sale after sale after sale, and holding sales for too long. Our customers need to know it’s the end of the sale. For example, (on Cyber Monday), half of our revenue came in during the last two hours of the sale. They need a deadline.”
Billions spent again
Cyber Monday, invented by the National Retail Federation’s Shop.org in 2005, still ranked as the biggest online sales day this year, according to Adobe Digital Insights. Adobe, which gathered actual data from consumer visits and purchases to its network of 4,500 online retailers, said shoppers spent $3.45 billion on Cyber Monday, up 12.1 percent from last year. That was just a sniff more than the record $3.34 billion consumers spent online on Black Friday, which was up 21.6 percent.
“Historically, the number one reason (people shop online) is free shipping, great prices and discounts,” said Becky Tasker, Adobe’s managing analyst. “But there was an interesting surge with the convenience factor.
More customers said they shopped online for product variety and availability and not having to stand in line with crowds. As more become comfortable online, they’re also willing to pay a premium for that experience.”
An Adobe holiday survey of 1,000 consumers found that 25 percent were willing to pay more online, she added.
According to RetailNext, which works with more than 300 off-line retailers, traffic at brick-and-mortar stores declined 4.4 percent on Black Friday. Sales took a hit too, partly because of huge discounts to lure shoppers.
“Black Friday long ago morphed from just a singleday event. A few years ago, it became a weekend, then last year, it became a weeklong event,” RetailNext spokesman Ray Hartjen said. “This year, we saw Black Friday ads, particularly from automakers, as soon as the Halloween decorations got put away. Shoppers are shopping earlier in the season.”
Best day at eBags
Longtime local online retailer eBags said Cyber Monday was its best sales day since it launched 18 years ago. But it believes growth came from spending months testing promotions, tweaking its mobile site and figuring out how to make it easier for mobile shoppers to complete a purchase, said Peter Cobb, cofounder of the Greenwood Village online store that sells nearly every bag imaginable.
“The old days of mobile was you take your PC version and scrunch it down to mobile size. That just doesn’t work now,” Cobb said. “It’s a whole different site. If you were on the product detail page (before), you couldn’t see the entire product. Some of it stretched below the smartphone screen. ‘Um, guys, you need to push that up. You can’t have people scrolling up or down. And where’s the price?’ ”
Like other online stores, traffic to eBags’ website was up 40 percent from last year.
A growing number — 46 percent of all visits — used mobile devices.
This year, eBags put its five most popular items right in front of customers to make them easier — especially for mobile shoppers — to see and purchase. Sales for those five items, including nifty packing cubes, grew 65 percent from last year.
“We have this saying here, playing the hits. Focus on the products that sell. Amazon has the Echo and Dash. In your face power SKUs,” Cobb said. “That came from Mike (Edwards, eBags’ CEO) saying, ‘Why make people search for products they’re going to end up buying anyway?’ ”
Brand awareness
Boulder-based Sphero — which created last year’s “it” toy, the Star Wars BB-8 toy robot — did a similar strategy at Sphero.com, spokeswoman Claire Tindall said.
“There was a new promotion each day, Black Friday through Cyber Monday,” she said. “This year we also switched up the merchandising strategy on our site to drive people directly to the deals. In 2015, our home page remained the same; we refreshed it each day this year to match the promotional content.”
And shoppers are getting accustomed to who the retailers are and where they plan to shop. The majority of shoppers picked their stores either by online search (38.5 percent, according to Adobe) or by going directly to the store’s site (25.3 percent.) The latter is important because that means customers knew about those stores either from friends, newspaper flyers or e-mail, Adobe’s Tasker said.
“Direct traffic is because of brand awareness,” she said.
Obviously, deals attract shoppers, which is why eBags added a team this year focused on deals. Throughout the year, the team met with its 900 brands to say, “There must be something in the corner of your warehouse that you want to move. We have a rewards program with over 4 million people and some of them want bargains,” Cobb said. Sales of its “Steals of the Day” were up 104 percent for the long weekend.
“You kind of pull back and say, shoot, isn’t that basic retail. … I have to admit, we had sales in our e-mails and on our site that we probably won’t run again,” Cobb said.
“Our customers need to know it’s the end of the sale. For example, (on Cyber Monday), half of our revenue came in during the last two hours of the sale. They need a deadline.” Dustin Nyhus, CEO and co-founder of Deny Designs