Study: Free Shipping Pulls Most Holiday Customers

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Free shipping with conditions, a tactic popularized by Amazon and now copied by many e-commerce sites, is the most successful tactic by far this holiday season in driving traffic to online retail sites.


A new study by the National Retail Federation's Shop.org and comparison-shopping site BizRate.com claimed 44 percent of the surveyed retailers said it was their most effective promotion in the Nov. 16-29 period. This was up from 37 percent in the Nov. 2-15 period.


The next most successful online promotion was free shipping with no conditions, followed by early shopper discounts, online-only sales and offline-online sales.


Other tactics that have worked in November include purchase with purchase, rebates and tax-free promotions.


What have not worked are buy 'x' to 'y' free, and repeat buyer and first-time buyer discounts. Also, the free-gift-with-purchase tactic did not work.


In another trend signaling channel cooperation, 50 percent of the surveyed consumers said they research gift purchases online before buying them through store or catalog.


In particular, 30 percent of these shoppers buy in-store at the same retailer's whose Web site they used for research. Another 22 percent buy at a different retailer. Eight percent said they buy via a catalog belonging to the same retailer. Four percent said they buy through a catalog of a different retailer.


Conversely, the number of consumers researching gift purchases in a store or catalog and then buying online has also risen.


According to the study, 45 percent of the surveyed consumers have researched offline and then bought online.


Of that universe, 24 percent said they research in-store and buy online at the same retailer. Fourteen percent buy online at a different retailer. Twenty percent research in catalogs and buy online at the same retailer and 8 percent go to Web sites of different retailers.


"Retailers have done a nice shop of weaving together shopping experiences that include online, catalog and stores," said Scott Silverman, executive director of Shop.org, Washington. "Consumers are catching on."


Not surprisingly, many online retailers are as cheerful as their customers.


The Shop.org/BizRate study found 71 percent of the surveyed online retailers feeling optimistic about the holiday season during the Nov. 16-29 period. Their ranks increased from 67 percent in the Nov. 2-15 period.


In that same study, 22 percent retailers claimed neutral feelings for the Nov. 16-29 period, down from 30 percent during Nov. 2-15.


"The backdrop of an overall better economy is certainly playing a role in this optimism," Silverman said.


However, the number of those claiming pessimistic views rose to 7 percent for the Nov. 16-29 period, up from 2 percent Nov. 2-15.


Still, the overall mood is positive. Results for the Dec. 7-8 weekend are not in. But snowstorms in the Northeast may have encouraged a larger number of shoppers to buy online.


Online retailers should not get carried away, though. Inventory management issues, always a challenge in the holidays, may yet crop up.


"Online retailers need to watch their inventories closely and be prepared to adjust their marketing and merchandising to offer and promote alternative choices in the event that an item or items have sold out," Silverman said.


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