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. Differentiating your site can be done through links or landing pages specifically for your audience. "We help people find science fiction and fantasy books that are hidden in plain sight on the merchant’s site because they don’t know how to get there," says Olivier Travers, owner of Portugal-based SciFan.com. December is SciFan.com’s peak selling month. "We spend a lot of time hunting for books in a series, and finding the reading order. That’s information you hardly find anywhere. It’s very important for us not to just be another price and comparison tool, because we think you can find that in other places. What we want to do is provide some context on the books that you can’t find in other places." This brings up another differentiation strategy: offering products not readily found elsewhere. Your site could either be the only one with a hot toy, for instance, or the only one that still has it. "A lot of times what happens is shoppers buy the hot product early, and it starts to sell out," Freedman says. "When it gets down to Christmas, you could be the little guy that has it."
Try to develop a decidedly holiday atmosphere. Change site background colors or selected text to red and green, or apply other holiday color themes like white and silver or gold. Create a catchy gift-oriented phrase to use on the home page and all email/newsletter promotions for the holidays. Add themed art such as wrapped gifts, big red bows or evergreen foliage. Place decidedly holiday merchandise on the home page, and replace year-round merchant banners with new ones that focus on the holiday theme. World-Luxury.com is one affiliate that has seen better sales after adding holiday products and services to its home page, ranging from ornaments to Christmas teddy bears. "I start to feature newly released, especially limited edition [holiday] items on my home page as soon as they become available," says Marilyn Olsen, publisher of World- Luxury.com, American-Luxury.com and French-Luxury.com. "Last year I started in September and had good sell-through immediately, particularly in the smalledition, hand-crafted items." Olsen uses product photos provided as affiliate creatives at Gumps.com and Macys.com, which also takes the holiday theme one step further for its affiliates. "Our whole site will have a holiday theme, with gifts being the main focus," says Alison Zemny, Macys.com’s director of marketing. "We’re known for our in-store Holiday Lane, hundreds of different trees decorated in different themes. This year, we’re taking that online, with holiday dinnerware and servingware, ornaments, decorations and home décor – even more selection than we have in the stores."
Increase selection beyond one product category. In books, add upsell items like bookmarks and reading lights. In apparel, offer ideas for ensembles down to jewelry and shoes. In home, offer complete holiday table settings from napkin rings to centerpieces. In electronics, cater to every age group on the gift list. Macys.com took this suggestion. This holiday season it has added several new merchandise categories, many not found in its stores, including MP3 players, TiVos, DVD players, a wide selection of children’s apparel, toys and gourmet food gift baskets. "What we will be working on with affiliates is some sort of special holiday gift promotion for them that focuses on our holiday gift assortment," Zemny said.
Lesnett, the AM for Ross-Simons, says her top affiliates smartly position her links in multiple categories, which makes sense because the company sells a wide range of gift ideas ranging from tableware to jewelry. "A lot of times, opportunity is missed because affiliates think you’re only in one particular category. So we’re looking at where we’re placed on their sites and we’re trying to optimize their sales, and our sales," she says.
Build consumer confidence. How do you get it? The merchants you work with will obviously need to use a secure server for the credit card process. They’ll also want to have a posted shipping policy and a reputation for shipping on time. You can check out how consumers have rated shopping sites at Shopping.com’s Epinions section or BizRate.com’s "Store Ratings" search drop-down option. "Merchant ratings can really be a factor," Freedman says, noting that if there’s "a product that’s $50 cheaper, but from a site that’s rated only one star, then consumers don’t want to chance it."
Consumer confidence also comes from having a site that’s easily navigated and quick to respond, with merchants who offer the same. "We have to pay more attention to the behavior of a site at peak; if people get frustrated, they leave," said retail analyst Baroudi. "Seconds count in terms of transactional fortitude." Make sure the site is optimized and graphics are at the lowest DPI or the most effective resolution. Mitigate extremely heavy traffic by bringing functions closer to the user with intelligent routing software such as Akamai’s EdgePlatform, or by allowing seasonal capacity with on demand infrastructure from providers like IBM or DEA. "This is the season that makes or breaks," Baroudi says. "If you can’t handle the peak load in season, you may as well not bother."
Another factor to consumer confidence is guaranteed pre-Christmas delivery. Macys.com, for instance, guarantees Christmas delivery if ordered by midnight Dec. 21. "We’ve worked very hard with our fulfillment centers so that the customers can order up to the last minute," Zemny says. Consider posting holiday shipping cutoff points by your merchant links, then capitalize on late buyers by posting which sites offer express shipping. Consumers will be looking for that.
Customers also use a slew of other factors to judge whether they’ll shop your site or your merchants’ sites for gifts. These factors are product availability, gift wrapping, good return policies, Web research, informational pieces, whether or not they get help with gifting ideas and shipping options. One e-tailing study found only 30 percent of gifting merchants offer gift wrap or boxing.
"Make your suggestions, merchandise by price point and recipient type and have an aggregated gift center on the site, so there is one specific location for gifting," Freedman says. "Then it gets down to things like gift cards and gift wrap, but that really depends on the merchant."
Establish your site as a destination for gifting. Gap.com did that with its 2003 theme: "Get it. Give it. Gap." Barring a snappy slogan, there are a number of ways that affiliates can effectively lure gift buyers. The biggest producers use "gift idea" newsletters, gift suggestion pages on the site and the purchase of gift-oriented keywords in major search engines. Eighty percent of the gifting merchants in a recent E-tailing Group study already had gift centers and provide gift suggestions. This year, even sites like SciFan.com may take advantage of this feature.
It’s considering the addition of an online "gift list" of science fiction books site regulars could buy to introduce their children to the genre. It also helps to affiliate yourself with sites already known for their gifts. Affiliates for The Sharper Image, a quintessential gift buying destination, "tend to give us premium placement during the holiday because it pays off," says Roger Benton, its senior vice president of marketing. "And because we have an eclectic assortment that covers many shopping categories, we often get multiple placements."
You can also build your reputation as a gifting site, and your email list, with automated or personalized messages – similar to standard refer-a-friend features – that let buyers send notes to recipients alerting them that their gift is on the way. Seventy percent of the gifting merchants reviewed by E-tailing Group already offer this service, but affiliates have been slow to take advantage of this opportunity.
Another idea is to change the text on your search bar to "Gift Search" during the holidays. An E-tailing Group survey of 10 well-known gift-oriented Web sites found that all 10 had a keyword search, six offered advanced search and six also specifically offered gift search. If you don’t already have a search bar, consider adding one. Many merchants now offer them as part of their creatives. Search bars that will look for related text on the site can be downloaded for free or at minimal cost online. If you are building your site in FrontPage, Microsoft also includes a search option as part of the program.
Your sales don’t have to conclude when you reach Dec. 23. Thanks to gift cards, January is a huge month for continued sales. Packaged Facts reports that price points aren’t as big of an issue during this time, because gift cards are often treated as "found money." Drive traffic with "Use your gift cards here" promotions, and make it easy for your visitors to redeem their cards by grouping products by standard gift card price points: $10, $25, $50, $100. Hunt your merchant sites for markdowns and any after-Christmas shipping or discount promotions. Some merchants are even getting ahead of the game by feeding discount codes for after-Christmas sales to you. The Sharper Image just instituted a program called "Hot Deals," which feeds its coupon affiliate sites with closeout offers on specific "end-of-life" products. It also offers closeout deals in its outlet store at SharperImage.com.
The weeks after Christmas aren’t just a time for closeout sales. It’s also a time for fresh merchandise. Found money, after all, often goes toward trendy items – and trendy translates to hot merchandise not offered pre-Dec. 25. For instance, AmericanEagle.com rolls out its spring merchandise on the day after Christmas – a savvy and intentional move to capture gift card sales from the trend-conscious set. "The most important thing is constantly updating, usually daily, and featuring the best that I find on my home pages," says Olsen, who maintains three luxury apparel and gift sites. That also means removing any out-of-stock items.
Whatever type of site or categories of product you have, the same rules for successful 2004 holiday sales still apply. Those sites that want to improve holiday sales will have: different products from their normal year-round assortment and their competition; a gift destination identity; a decidedly holiday atmosphere; multidepartment gift participation; and customer confidence in an affiliate’s site and their merchants.
SchoolPop, meanwhile, is already taking these lessons to heart. It launched its first gift-themed section for Mother’s Day, followed by back-to-school. It’s the same tab at the top of the page, but with the title and content changed for each promotional period. "So far this promotional page has worked really well, so I’m excited to have it for the holidays," says Mary Beth Padian from SchoolPop. "For anyone running around shopping for the holidays, it’s always good to have some place to go to get ideas."
JENNIFER MEACHAM is a freelance writer who has worked for The Seattle Times, The Columbian, Vancouver Business Journal and Emerging Business magazine.