Holiday Planning for Online Retailers: Promotions

Promotions

This is separate from online marketing and a lot of what is mentioned below depends on what your platform can handle. If you have a flexible platform, you can get creative in the promotions you offer and that can open new doors to incremental sales.

When I set out to create promotions, I lay out some goals I want to achieve and look at forecasts to see what I need to push hard. Again, pull year to date data and last year’s data (segregate November and December) to create a baseline. Here’s what you’re looking for:

- Top 10 products by units
- Top 10 products by dollars
- Average order value (total revenue divided by total number of orders)
- Units per transaction (total number of units sold divided by orders)

Break these numbers down by:
- Year to Date (YTD) 2009
- 2008
- November and December 2008 (if you have time, track these data points by week)

Compare your YTD 2009 numbers to your 2008 and November/December 2008 numbers. Is there growth this year over last? What’s the delta between YTD 2009 and holiday 2008? Create some goals that you want your promotions to achieve, such as:

- Promotions should result in 10% AOV increase
- Promotions should result in 10% UPT increase
- Promotions should bump Product X into the top 5 products for a given period

For promotions that involve increasing AOV and UPT, consider these options
- Set a qualifying order amount (based on product sub-total) to get free ground shipping
- Tiered discounts (e.g. Save 10% When You Spend $50, Save 15% When You Spend $75, etc.)
- Gift with purchase when you spend $X
- Buy 2 (or whatever amount) and get the third at 50% off
- Gift with purchase when you buy products A, B, C

If you need to increase sales volume on specific products consider offering a discount on that particular product. Examples include:

- Save X% when you buy Product X
- Get the second unit at X% off

Try creating bundles and promoting it as a separate SKU and offering a discount. You’re enticing customers to buy more than one product and providing an incentive to do so.

Put these promotions on your shared calendar so everyone on your team knows what’s coming. Stage products your promoting so that all the shipping team has to do is slap on a shipping label. If you’re like me, create a spreadsheet and track the promotions on a daily basis to get a sense of what they’re doing. Be sure to share these great results with your team and higher ups so everyone can share in the excitement of what they’re taking part in.

Next up…Online Marketing!

Holiday Planning for Online Retailers: Shipping

One of the worst situations you can find yourself in is not being able to fulfill the orders you’ve worked so hard to generate. Prepare by assessing your previous holiday outbound shipping needs and adjust for this year by taking into account your forecast. Here are some considerations to keep in mind while you’re planning:

Staff
Your shipping team is an important part of the ecommerce department because they’re the ones sending products to the customer. Understand your staffing needs and make sure you have a core group of individuals who understand the products, standards you set in shipping, processes and have experienced the holiday rush in your business. These individuals will be key in making sure shipping goes smoothly and the new guys understand what is required of them

Supplies
One of the most overlooked elements of shipping is supplies. Don’t assume your vendor(s) will have the stock when you need it because they likely have other customers who want supplies when you do. Forecast your supply needs and negotiate cost with your vendor. Because you’re buying in advance, they should be willing to cut you some deals which ultimately helps to lower your per order fulfillment cost. If you’re tight on space ask them if they will store and deliver as needed – but they have to be close enough to your fulfillment center to make this an effective solution.

Shipping Rates
Here’s where you can save extra money. First, pull your shipping invoices from the previous two years and record the dollar amount per shipping method (ground, 2 day, etc.). Second, figure out how many orders you expect to ship this year and break it down by ground, 2 day, etc. Third, determine the zones to which you ship most often. Lastly, call your rep at UPS and FedEx. Tell them you want to negotiate shipping rates for the holiday and be prepared to show them your analysis. Play your UPS and FedEx reps against each other to get the best possible rates and get it in writing.

Shipping Calendar
Ask your shipping rep to give you a calendar of shipping dates for the holiday season. You need to understand your shipping window so you get orders in customers hands in a timely fashion. There’s no better way to lose customers than to deliver gifts on the 26th. Run Guaranteed to Get There promotions based on the shipping windows listed in the calendar.

Processes
Get your shipping team, customer service team and order processing team (or whatever teams you have in the order fulfillment chain) in one room and iron out any hiccups there are in the fulfillment process. Communication is key and designate point people along each step who will be responsible for communicating with others and raising the red flag when necessary.

Next up...Promotions!

Holiday Planning for Online Retailers: Merchandising

Planning is the difference between success and failure. One of the additional benefits of planning is it makes life easier during the hustle and bustle of the holiday rush. Well, it may not make it easier in terms of longer lunch breaks, but, it’ll allow you to do other things that generate incremental revenue. Here are some of the things you should look at for your merchandising plan:

Home Page & Category Plans
Plan your home page and category page refreshes in advance. By ‘refresh’ I mean update imagery and products. Pull together data from last year to see what products did well and what page locations generated the most clicks and dollars. Also pull together the same data for this year. Take a look at your forecasts, market trends and plan your refreshes accordingly. Get your creative assets lined up and present mockups to stakeholders for final blessings.

Cross sells & Up sells
Cross-sells/Up-sells: This is an oft-overlooked merchandising area either because retailers don’t have the capability in their ecommerce platform or simply don’t know how to do this. Pull reports to determine most profitable product correlations. Basically, when product X is bought how often is product A, B, C, etc bought? This data will help you determine how to merchandise your cross-sells and up-sells. Of course, there are other factors you may consider for this: new products, forecasts, recent trends, etc.

Buyers guide
This is an excellent way to guide people’s buying decisions and get SEO benefit. Keep it simple by targeting price points, demographics and themes.

Category updates
Update your navigation to include categories like Gifts for Him, Gifts for Her Gifts Under $50, etc. Your specific business might require different categories, but, the goal here is to help people make purchases as efficiently as possible.

Next up...Shipping!

Holiday Planning for Online Retailers

The end of summer is near (where did it go already?!?) and the holiday is quickly approaching. Many online retailers are starting to think about what they’re doing for this all important retail season while others haven’t even given it a moment’s thought. Either way, what I want to do is provide you with some basic things to consider in your holiday planning sessions (if you’re already planning) or to get your wheels spinning (if you’re busy sipping frozen drinks on the beach…which isn’t a bad thing!!).

In the next few posts I'm going to discuss Merchandising, Shipping, Promotions, Online Marketing and Technology. To kick off this series, I'm going to suggest you have three things lined up:

Online Calendar
- Use this for scheduling and enter important dates
- Share this with people in your department
- Check out: Google Calendar, Apple’s Mobile Me (great for Mac and PC users) or Yahoo Calendar

Online file storage
- Eventually you have to leave the office, but, you or someone on your team will need access to a file. If your company doesn’t have VPN setup, consider signing up for online file storage
- Check out: Apple’s Mobile Me, SharePoint (look at hosted versions) or Box.net

Excel Spreadsheets
- You gotta love spreadsheets. When you have your plan set, create spreadsheets to track promotions, home page refreshes, etc.
- It helps you understand what’s working and not in relation to the other parts

The next post is on Merchandising.

- Julian

Online Investment

In the most recent issue of Internet Retailer (July 2008), the Publisher’s Letter (written by Kurt Peters) talks about Moody’s Investor Services recent move to more heavily weigh a retailer’s online revenues when rating their debt. “A Strong online presence is considered a ratings positive more frequently than in the past because it represents such an important channel of distribution and can mitigate declining comparable-store sales trends,” according to Moody’s.

There were a couple points driven home in this article that new and existing multi-channel retailers should keep in mind as they assess their own online investments. But first, take these numbers into account:

Moody’s has a 40% share of the worldwide credit ratings market

First quarter 2008 online sales grew 13.6% year over year versus retail sales growth of 2.8% for the same period

Online sales growth has been very strong for several years as the shift of consumer spending from bricks and mortar to online continues. As this growth continues the percentage increase will decline because the revenue base continues to grow. Taking the news from Moody’s, you can bet companies are taking this seriously and looking very hard at how they invest resources into their online business.

For smaller retailers this is an opportunity to carve out niches and leverage growth to compete effectively and take market share over time. If you don’t have a large budget, carefully spend your money in those areas that will grow your business and areas that will support that growth. There are a lot of great tools out there that generate incremental revenue, but, that increase may not be worth the investment of your limited resources.

Focus on areas that grow your build your brand, generate sustainable revenue and increase market share. Look at your customer service. Are you taking care of customers to the fullest and increasing the profitability of the relationship? Look at your fulfillment…are you cutting unnecessary costs and finding ways to encourage sales conversions? Look at your site…is it efficiently converting visitors into customers?

As mobile commerce becomes more of a reality with devices such as the iPhone and Blackberry its up to the retailer to step up and take their piece of the pie. As a consumer, I have a web app loaded on my iPhone to compare prices when I go shopping at stores. On several occasions, I have gone into a store (i.e. Target, Barnes and Noble) and used this app to find better prices online and even completed the transaction before leaving the store. This is going to happen more and more as people have better mobile devices and want more convenience in their hectic lives.

Mobile commerce is going to quickly become a reality for some of our retailers in the coming weeks and we’re excited to see the growth. For these partners, they will be the first in their respective industries to have a mobile optimized site. These sites will be mentioned after going live.

I suggest you take a few moments to assess your online investments and determine where you’re headed. If you’re in a rut, you need to quickly rejuvenate as the holiday season approaches. Speaking of holiday, you should be acquiring more new customers than at any other time of the year and you need to groom that relationship. Every order that leaves your door is an opportunity to create or nurture a relationship. Do simple things over the holiday to make your customers feel appreciated. Include a simple holiday card in a box thanking the customer and wishing them a great holiday season. If the order is a gift for someone else, make sure that package contains everything it needs to and everything looks perfect because it’s about to go to a potential new customer. Start early and you’ll be thankful later.