Christmas 2008 Advice for E-tailers

With all signs pointing to dismal Q4 and Christmas sales, it’s time for e-tailers to consider how the economic downturn will hurt them, and how they can minimize the pain.

As someone with over a decade of experience either working in or consulting for a variety of e-commerce firms, here is my advice:

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1. Hope for the best. Plan for the worst.
Prehaps the predictions are wrong. Or perhaps you’ll be the exception and will have a great Christmas. On the other hand, if your prediction powers were truly that good, you’d be playing the market, the lottery, or Vegas. A much wiser course is to have plans to survive a worst case scenario. Perhaps you’ll be pleasantly surprised, but if the worst does come to pass, at least you’ll be prepared.

2. Watch purchasing closely (especially on items you can’t return).
Naturally, you want to run your inventory down as low as possible at the end of the year. In case the shopping season is as bad as (or even worse than) expected, don’t get stuck with product you can neither sell nor return. You may want to be more conservative in purchasing than you might usually be.

3. Get that conversion rate up!
No lever in an e-commerce business can make as much of an impact as your website visitor to sale conversion rate. Imagine you increase your conversion rate from 4% to 6%; without any increase in discrete advertising spend, you’d see a 50% uplift in revenue. Ensuring that your website is effective is of critical importance. (Disclosure: I am a partner in Apogee Search, which provides website effectiveness consulting.)

4. Have your non-Shipping employees help with fulfillment, rather than hiring new staff.
Rather than hiring season workers to help in Shipping, consider temporarily reassigning staff from other departments to help out. Even seasonal employees have real costs. Perhaps have everyone rotate into fulfillment duties one or two days a week. I’ve been with companies who have done this, and I always found it rather invigorating.

5. Coupons and rebates are your friend.
Both of these are techniques that attempt to cause your products to have a perceived price lower than the actual price. Rebates are especially attractive as they have such a low redemption rate. Don’t make redemption difficult or use other deceptive techniques, as it will surely come back to bite you.

6. Now is the time to do cross channel tracking.
In a tough economy, proper tracking and accounting of your multi-channel marketing efforts is critical. Do you really understand your web-to-store and traditional-to-web conversions?

7. Link your paid search buys to the eCRM sort.
You need interconnections between your paid search campaigns and your customer management systems. This will allow you to perform RFM analyses by keyword group.

8. Raise stock awareness and set shipping expectations.
People are not going to purchase from you if they aren’t sure your product is in stock and that they can receive it before Christmas Day. Both the in-stock status and shipping expectations should be designated on your site on a product by product basis.

9. Create bundles with related products.
Get your Average Order Price up by creating bundles of related products. Make sure the price of the bundle is very aggressive compared to purchasing the products separately.

10. Cash is king.
Make sure you’re cash flow positive. If you have some extra cash, keep a reserve instead of investing it immediately. If times turn lean, you’ll be glad you did.

Unfortunately, it’s going to be a difficult two months for those in the e-commerce world. Make sure you take the steps to compete!

Thanks go to Nathan Jones of Academic Superstore and William Leake of Apogee Search for their input on this article.

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