2008 Us Online Shopping Report

The 2008 U.S. Online Shopping Report What the 2008 Holiday Shopping Season Can Teach Us

Provided by Oneupweb® 877.568.7477 OneUpWeb.com

877.568.7477 • www.oneupweb.com ©2009—All Information in This Document is Copyright Protected and the Property of Oneupweb®

01

Executive Summary It’s a hard truth, but one we have to face. The 2008 holiday shopping season did not go well for most. Some, including the Wall Street Journal, are calling it disastrous. At the very least—it was disappointing for retailers across the board. And it did reveal some important information about consumer behavior in a down economy. When do consumers start shopping for an inevitable purchase? When is the most important time to reach them? And specifically, what can we learn from the 2008 holiday shopping season that will help businesses be successful online in 2009? That’s exactly what we set out to learn, collecting and analyzing traffic, conversion rates and sales data from a wide mix of online retailers during the 2008 holiday buying season.

877.568.7477 • www.oneupweb.com ©2009—All Information in This Document is Copyright Protected and the Property of Oneupweb®

02

OBSERVATIONs Traffic The week of Halloween (October 27-November 2, 2008) marked a significant decrease in unique visits. However, unique visits began rising from there, hitting a peak the week of Thanksgiving (November 24-30, 2008). And the second highest week for unique visits immediately followed, occurring the week of Cyber Monday (December 1-7, 2008). A steady decline occurred from there, with a significant drop-off in unique visits occurring the week of Christmas (December 22-28, 2008). Interesting to Note: The week of Halloween (October 27-November 2, 2008) showed a decrease in unique visits, but experienced the highest conversions and sales numbers. This may be due to consumers visiting a website repeatedly before purchasing. And the rise in unique visits after Halloween shows that there are sales to be had for those who plan early and follow through.

Conversion Rates Conversion rates fluctuated in late September and early October, hitting a peak the week of Halloween (October 27-November 2, 2008). The week of Thanksgiving (November 24-30, 2008) did experience a slight decrease, but conversion rates quickly rose with the week of Cyber Monday (December 1-7, 2008) marking the second highest peak. Numbers fell steadily from there, experiencing a slight increase the week following Christmas (December 28-January 4, 2008).

Total Sales Total sales rose and fell several times throughout our study, experiencing positive numbers the week of November 3-9, 2008 and November 17-23, 2008. While the week of Cyber Monday (December 1-7, 2008) did experience slightly higher numbers than the week of Thanksgiving, sales fell steadily from there, hitting a low the week of Christmas (December 22-28, 2008). A slight increase in sales did occur the week following Christmas (December 28-January 4, 2008). Interesting to Note: A recent survey (conducted through December 23, 2008) by Guidance and Synovate found that 36 percent of online shoppers ran into roadblocks while buying holiday gifts. The roadblocks included slow load times, problems with or inability to check out, system crashes and more.

877.568.7477 • www.oneupweb.com ©2009—All Information in This Document is Copyright Protected and the Property of Oneupweb®

03

1.0

Thanksgiving Peak

0.8

0.4 0.2 0.0 -0.2

Halloween Dip

-0.4

1

2

OCTOBER 3 4

.00

.02

.09

.02

5

6

7

-.01

-.17

-.03

NOVEMBER 8 9 .10

.14

10

11

DECEMBER 12 13

14

15

.87

.22

.10

-.52

-33.93

-.08

Halloween Peak

Cyber Monday Peak

1000 800

Thanksgiving Dip

600

Christmas Lull

400 200 0 Week

Weeks 1-15 Date Ranges

1200

1

2

.00

-2.24

OCTOBER 3 4 4.55

.73

NOVEMBER 8

5

6

7

86.61

1189.27

1034.15

1157.26

9

10

11

1031.27

771.47

1078.32

DECEMBER 12 13 1076.56

755.92

14

15

588.30

866.10

TOTAL CONVERSION CHANGE %

Week

-33.93

Christmas Lull

-0.6

TOTAL TRAFFIC CHANGE %

0.6

1

9/22-9/28

2

9/29-10/5

3 10/6-10/12 4 10/13-10/19 5 10/20-10/26 6 10/27-11/2 7 11/3-11/9 8 11/10-11/16 9 11/17-11/23 10 11/24-11/30 11 12/1-12/7 12 12/8-12/14 13 12/15-12/21 14 12/22-12/28

0.20

Halloween Peak

0.15 0.10 0.05

Pre- Thanksgiving High Cyber Monday High

0.00 -0.05

Thanksgiving Lull

-0.10 -0.15 -0.20

Christmas Drop

-0.25 Week

1

2

.00

-.09

OCTOBER 3 4 -.05

-.15

5

6

7

-.07

.18

.04

NOVEMBER 8 9 -.09

.04

10

11

-.05

-.02

DECEMBER 12 13 -.07

-.07

14

15

-.23

-.12

TOTAL AVERAGE SALES CHANGE %

15 12/29-1/4

877.568.7477 • www.oneupweb.com ©2009—All Information in This Document is Copyright Protected and the Property of Oneupweb®

04

What did we learn? The study revealed some important information:

» » » » »

The week of Thanksgiving experienced the highest traffic volume. The week of Halloween experienced the highest amount of conversions and sales. Halloween marked a dramatic increase in conversions over the previous five weeks. The week of Cyber Monday experienced the second highest amount of traffic and conversions. The week following Christmas marked an increase in conversions and sales.

The Start of the Long-Tail Shopping Season Conversions and sales hit a peak the week of Halloween. Given the state of the economy, consumers may be shopping and budgeting for holiday gifts much earlier than in previous years. This means that the first week of October marks the start of the long-tail shopping season. Last year, we cited Halloween as the start. But for the 2008 season, trends show that in a down economy, people start comparing and shopping even earlier than usual.

“I’m Just Browsing” Develops New Importance Sales were down across the board during the 2008 holiday shopping season. However, traffic and conversions did increase as expected, with the highest amount of traffic recorded the week of Thanksgiving, and the second highest amount of traffic and conversions occurring the week after. This means that consumers are still shopping, and they’re doing it online. Think of it in terms of a brick-and-mortar store–consumers will go into a store to view the merchandise, perhaps several times before making a purchase. This means retailers need to have all merchandise ready and available for them to browse. And retailers need to stay top of mind with these browsers, offering them incentives to keep coming back–and ultimately, making a purchase. Strengthen your brand and gain top of mind awareness with your target audience through the combined use of search engine marketing, paid search ads, re-targeted banner ads, social initiatives and more. Your message is strengthened every time a consumer sees it, making them more likely to buy.

The Season Doesn’t End on December 25th The week after Christmas experienced an increase in conversions and sales. This means that the holiday shopping season does not abruptly end on December 25th. Returns, gift cards and after-Christmas sales may explain the continued holiday shopping season. However, according to The Tower Group, store gift cards generated about $61 billion in sales in the fourth quarter 2008, down from $70 billion in 2007.

877.568.7477 • www.oneupweb.com ©2009—All Information in This Document is Copyright Protected and the Property of Oneupweb®

05

How to Apply/Best Practices Based on these findings, Oneupweb offers the following best practices to help retailers maximize the earnings of e-commerce campaigns throughout 2009.

1— Plan Ahead and Follow Through. It’s imperative for retailers to have online holiday campaigns and discounts in place the first week of October. Schedule goals well ahead of the shopping season. And don’t let up. The week after Christmas experienced an increase in conversions and sales. Those retailers that are ready with campaigns early, and follow them completely through, will be the most successful in 2009.

2 — Compel Shoppers to Make Immediate Purchases. With the state of the economy, many consumers are becoming more budget-conscious, taking several days or weeks to make a decision on a purchase. Yet the trend to buy is moving earlier in the season. Don’t risk losing potential customers to your competition. Offer special incentives to compel them to buy now–early in the season. And to capture those last-minute browsers, take advantage of the power of “free”–offer free shipping to help lock in that sale.

3— Stay Connected. With more consumers engaging in “window-shopping” and price comparisons, it’s important to keep the conversation going–and to make it easy. Stay top of mind through the strategic use of initiatives like email, search and social media.

4 — Integrate. Greater awareness of a website created by a paid ad can lead to more natural search engine traffic. In similar fashion, people are logically more likely to click on a paid promotional ad of marketers they recognize, such as those they’ve encountered during a natural search. And so it goes with social media marketing, direct mail, collateral, video, podcasts, etc. Integration can help you strengthen your brand, increase ROI and turn those “I’m just browsing” visitors into cold hard cash.

877.568.7477 • www.oneupweb.com ©2009—All Information in This Document is Copyright Protected and the Property of Oneupweb®

06

Methodology Oneupweb collected aggregate data using ROI trax®–our leading proprietary conversion tracking technology. The study shows weekly traffic, conversions and sales data beginning with the week of September 22-28, 2008, and continuing through the week of December 29, 2008-January 4, 2009. Data are from e-commerce companies covering apparel, jewelry, sporting goods, home décor, gifts and more. The analysis covers the final 15 weeks of 2008 and encompasses the actions of more than 1.5 million unique consumers. The data gathered is from paid campaigns on Google, Yahoo! and MSN. Oneupweb then compiled the data into three main categories: traffic, conversions and total sales. We measured the average weekly percentage change in all three categories relative to the base week of the study, September 22, 2008-September 28, 2008.

Definition of Key Terms Traffic: The number of unique visitors using a PPC ad link and coming to the site for the first time. Repeat visitors were not counted and, therefore, did not affect the traffic data of this study. Conversion Rates: The percentage of unique visitors who made a purchase or converted. (Also see “Conversion”) Total Sales: The combined dollar amount of sales from all e-commerce clients. Conversion: A unique visitor who made a purchase or other transaction based on each client’s respective definition of conversion criteria.

Formulas The rate of change for each week is calculated by comparing weekly data to data from the base week of the study. The formula is (Week 2 - week 1) / Week 1. Subsequent weeks, then, were measured (Week 3 - week1) / Week 1 and (Week 4 - week1) / Week 1 and so on. This formula was used in calculating changes in traffic, conversion rates and total sales.

877.568.7477 • www.oneupweb.com ©2009—All Information in This Document is Copyright Protected and the Property of Oneupweb®

07

ABOUT ONEUPWEB | Oneupweb has been an innovator in digital marketing for more than a decade, creating integrated online marketing plans that include natural search engine optimization (SEO), paid search marketing (PPC), conversion improvement and analytics, podcast production, social media marketing, online media placement and search marketing consultation for in-house marketing teams. Oneupweb has twice been named a Top 20 Search Marketing Agency by Advertiing Age, and CEO Lisa Wehr is recognized as an Ernst & Young Entrepreneur of the Year. The company publishes an award-winning blog and podcast entitled StraightUpSearch. Oneupweb is a privately held company located in Traverse City, Michigan. For more information on Oneupweb, please call 231.922.9977 or visit OneUpWeb.com.

877.568.7477 • www.oneupweb.com ©2009—All Information in This Document is Copyright Protected and the Property of Oneupweb®