Holiday e-commerce outlook: Rosy online, not so offline

With Black Friday, Cyber Monday, and the crucial holiday shopping season fast approaching, retailers are already beginning to promote sale items and start to drive traffic to their stores and websites.

Many online retailers are in lock-down mode with final store updates and load and scalability testing. These preparations are with good reason. The most recent statistics about holiday e-commerce spending expectations are actually quite good, and Black Friday and Cyber Monday are just over a week away.

Let's take a look at the forecast for the holiday shopping season overall. The U.S. Department of Commerce reported that GDP grew 2 percent in Q3 2010. This follows the 1.7 percent quarterly increase experienced in Q2. This moderate increase is what most are expecting for overall retail growth this holiday shopping season as well.

The National Retail Federation has forecast this year's holiday sales growth at 2.3 percent. Deloitte predicts a 2 percent increase in holiday sales. And according to Shoppertrack's National Retail Sales Estimate (NRSE), holiday sales will grow 2.9 percent over last year.

While overall growth in holiday sales is expected to be moderate, e-commerce will likely be much rosier. ComScore is forecasting a 7 to 9 percent increase. eMarketer is expecting sales growth of 13.7 percent. And Forrester is predicting e-commerce sales will jump 16 percent over last year.

After a negative 2008, and modest growth of around 3 percent in 2009, these estimates represent a very welcome outcome for online retailers. Assuming e-commerce represents approximately 10 percent of total holiday shopping, this would also mean a meager sales increase of about 1 percent for traditional retailers. It looks like online retailers will be coming out ahead of their brick and mortar counterparts this year. And across the board, retailers are ramping up and relying on their Web and mobile sites to drive sales.

The Thomson Reuters/University of Michigan preliminary reading on consumer sentiment rose in November to 69.3 -- the highest since June. It still reflects a far lower consumer confidence picture than the 88.9 in December 2007, but perhaps the Fed's second round of quantitative easing has helped lift the November numbers a little, and will lead to slightly better than expected overall retail results.

If average estimates for e-commerce growth this holiday season are around 12.5 percent, online retailers that do everything right are likely to experience proportionately higher results. Of course, the usual merchandising like product, price and promotion will play a big role. Organizations that have mastered leveraging social media like Twitter and Facebook to connect with consumers might also benefit big time.

Delivering a great user experience to shoppers and buyers this holiday season will be the game changer that ensures customers come back for repeat business. Proper planning and load testing to ensure your Web store will be available and serving users well during peak shopping periods will be paramount to ensuring your business takes advantage of every site visitor. And monitoring all the moving parts of the store (both the traditional and mobile versions) like homepage, search function, product catalog, product detail, add-to-cart, and checkout can give you a real-time view of how your store is performing (or isn't performing) for end users.


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