Summary
Even with the number of online customers leveling off, and expected sales the weakest since 2002. Retailers are offering discounts and incentives to lure online shoppers. Sales at major online retailers remain strong, and customers seem to be gaining confidence with the average price of items purchased increasing, and customers looking for "best value", rather than "cheapest price".
Analysis
Retailers are offering a greater number of discounts and incentives to online shoppers to keep online shoppers buying. Cyber Monday kicked off this week with the sales and discounts offered by major retailers boosting online sales. Web retailers are giving more incentives as the number of online shoppers levels off, and holiday sales expectations weaken due to the economy and other factors.
Online retailers, especially major retailers, are doing well compared to brick-and-mortar stores. The quality of online retailers, and the quality of the products offered is increasing. This is creating confidence in those who are shopping online, and increasing sales. Credit card and software companies have developed security to protect credit card numbers, which increases confidence in shopping online.
Today, over half of American homes have high-speed web access. This is increasing the convenience and speed of shopping online. Costs of food, fuel, and transportation are increasing. Being able to shop online is not only convenient, it is a savings in transportation costs and time. There are also the safety factors of not having to drive. Considering the safety software available to protect credit or debit card numbers, it is not only less expensive, but safer to shop from home, then risk a suburban drive, or urban taxi to the store.
The number of online shoppers who shop from the office is increasing. 54.5% of office workers with online access are expected to shop online from the office. This is convenient, a savings of time, and adds privacy to holiday shopping. Perhaps most important, if a worker has high speed access at work, they will not need to have it at home, thus it is an additional savings.
Helen Malani of shopzilla.com believes that shoppers will shift their purchases online because of the hidden costs of shopping at brick-and-mortar stores. It is obvious that if the online retailer offers the same product for a better price, without the additional costs of shopping in a retail outlet, the customer will shop online.
The most important change occurring in online shopping is increased product quality, resulting in consumer confidence in shopping online. Ice.com reports that orders have risen in value to $233 from $200. Walmart.com is selling $1,198 40 inch LCD HDTV's and $448 1-carat diamond rings. eBags.com is reporting the average purchase up to $87 from $75 last year. The increase in the quality of merchandise being sold is improving the confidence of the consumer, resulting in consumers being willing to shop for higher quality products online. The consumer is no longer looking for the "cheapest item" but is now looking for "best value" when they shop online.
The incentives seem to be working. Ice.com, the online jeweler, reported that on offering a 20-percent off coupon traffic soured more than 70%, and sales were up 82%, as of Monday. Walmart.com expected 7 million visitors to their website on Monday. By mid-afternoon they had sold out of many items.
As the quality of online retailers improves, and product offerings improve, consumer confidence will also improve, and sales of merchandise at all levels will increase. The ability of online retailers to offer discounts and incentives, as free shipping, will also help to increase online traffic and sales. Most important, the present and worsening economic downturn, and increasing costs of shopping at traditional retail stores makes it cheaper, more efficient, and safer to shop online. The development of online safety software will increase confidence.
