Top 3 Ecommerce Dangers to Avoid During the Holiday Seasony

October 31, 2016

You’d think that the holiday season would be a boon for ecommerce stores.

Not always.
Here are the top three dangers ecommerce businesses face during the holidays.

Boom and bust

The ten biggest days for online shopping are all in November and December, as shoppers buy gifts for friends and family for Christmas and New Year’s day.
Holiday shopping makes up 20% of annual eCommerce turnover.
The most frequently given gifts are clothes, electronics, movies, books, food, cosmetics and jewelry.
The holiday season is a great opportunity to make money…or lose it.
If you don’t watch out for the hidden dangers of gift purchases, you can lose the margin on every transaction and end up in the red.

1. Returns and 11th hour orders kill profits

Free returns are increasingly becoming an industry standard.
Customers will not buy gifts from stores without a free return policy, because they do not want the gift receiver to be stuck with a present that’s the wrong size/color/etc.
For the same reason, gifts are returned much more frequently than run-of-the-mill orders. Returns are awful for ecommerce margins.
If it offers free returns, a business has to pay shipping costs both ways and doesn’t make a profit on the order.
Unless its margins are very high, they won’t cover the unexpected cost of returns.

11th hour orders happen when customers procrastinate until the last moment to buy a gift.
This puts pressure on the store. To get these orders, a store often offers free expedited shipping, meaning that it pays the shipping costs from its margin.
And if it does not predict 11th hour demand accurately, it may have to pay for expedited shipping to its fulfillment center or warehouse as well.
Deadlines on free shipping pre-holidays kill a business’ volume of last minute orders, but the pressure is so high that even the big names succumb.’:

2. You can’t market to gift receivers, and you don’t want to market to gift givers

Normally, when an ecommerce store gets a customer, it can make more money by selling them more stuff.
One way is to upsell, offering items that complement his purchase on checkout.
Another way is to do follow-on marketing, through email and retargeting ads.
Neither of these work well with gift customers, who are buying a product for someone else.
Grandma might buy a video game for her grandson’s present, but she probably won’t add a controller on checkout, and emailing her with more video game offers is usually a waste of time.

On the other hand, until now there’s been no way to market effectively to the gift receiver, who gets a present in the mail.
Stores don’t usually have his contact information, demographic details, or anything else.
This is too bad, because if the gift is a good one, it tells you a lot about the recipient’s preferences.

Winning stores think outside the box to get the gift receiver’s email or phone number, and use smart upselling and remarketing to maximize his lifetime value.

3. Gift Cards are a partial solution-they will never get you this reaction

Gift Cards are nice from an ecommerce merchant’s perspective.
The gift receiver selects his own gift, minimizing exchanges and returns.
He is usually in no rush to get his gift, taking the pressure of the merchant when it comes to fulfillment rush shipping.
And he leaves his contact details, creating potential for upselling and remarketing.

On the other hand, Gift Cards are an impersonal, “meh” present.
A Gift Card says “I have no idea what you want, you figure it out.”
So many gift givers prefer to buy an actual present, with all the problems that entails.

Smart stores use a mix of Gift Card and product options.

What’s next?

Gift Wizard,has created an app that creates a better user experience for both the gift giver and receiver.
The best gifts are those that match the recipient’s preferences.
So we created an app that lets the recipients pick out the size, color and other gift preferences.
This takes the guesswork out of the game for shoppers and reduces returns drastically by giving both the giver and receiver the certainty of complete satisfaction.

So far, our data shows that stores with our app installed see a big lift in conversions and reduced returns and exchanges.
We also present smart data to help the store know what to stock and offer, and to whom.
We think that smart gifting, is the future of the ecommerce gifting economy.
Check us out at our site, and let us know what you think

Happy Holidays from GiftWizard!