By STEPHANIE CLIFFORD and CLAIRE CAIN MILLER in New York Times Online
This holiday season, online sales are zooming, even as online retailers offer fewer discounts and turn picky about who shops at their sites.
After two years of relative malaise, online sales grew 12 percent in the first 47 days of the holiday season, according to comScore, to $27.5 billion. That significantly outpaces the growth rate of retail sales over all, which analysts expect to rise 3 to 4 percent this holiday season.
But online retailers are now protecting their margins with careful offers, dispensing with the promotions of the last two holiday seasons that were meant to drive sales and get rid of extra inventory. Gone are the coupons that give shoppers 40 percent off all purchases. Instead, offers go to selected customers, and are specialized: a discount on wool jackets, free hoop earrings when people spend $100, a “mystery” discount amount that is revealed only at checkout.
The promotions try to get customers to behave in a certain way. A coupon may seem straightforward, like Drugstore.com offering $5 off a $30 purchase. In fact, it is encouraging one-time customers to browse through several pages of a site and get to know what a retailer offers as they decide what to buy.
“The reason there’s these different promotions and not just the straight dollar-off or percent-off promotions all the time is there are different incentives,” said David Lonczak, chief marketing officer of Drugstore.com. “You may just need a sale, you may have a product you’re long on and you need to get rid of it, or you may be looking to acquire customers with a higher basket,” he said, referring to the transaction price. “You have to be thoughtful.”
Discounting has declined; in November, retailers’ e-commerce revenue from sales of full-price items rose 52 percent versus November 2009, according to MyBuys, which works on personalization offers for retailers.
But less discounting has not tamped down online sales. On Thanksgiving weekend, more than one-third of purchases were made online, versus about 28.5 percent last year, according to the National Retail Federation.
That is because even staunch in-store shoppers are now comfortable buying online, said Fiona Dias, executive vice president for strategy and marketing for GSI Commerce, which provides e-commerce technology to retailers like Toys “R” Us. And the high demand means that online retailers do not have to slash prices to get customers.
“If anything, we’re running tight on inventory because everyone has sold a lot more than they expected to,” Ms. Dias said of the sites she works with. “That’s why we’re not seeing 50-percent-off promotions.”
Given their strong position, retailers are trying to get customers out of the price-wars mind-set that they adopted during the recession.
