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Cyber Monday Gains Clout Among Bargain Hunters

Sunday, 28 Nov 2010 | 3:16 PM ET

Attention online shoppers: you really can save money on Cyber Monday.

Cyber Monday
Robyn Beck | Getty Images
Cyber Monday

Although some have criticized the shopping-day concept as being completely contrived—after all, the term was coined by Shop.org, the industry’s trade group—Cyber Mondayhas evolved into quite the sales event.

And that's what consumers are looking for this year.

"Part of it is a real need for consumers to stretch their dollars, and part of it is a carrying over the frugal behavior of the past two years," said Marshal Cohen, chief industry analyst at NPD Group. "That behavior doesn't go away quickly."

Never the busiest—or most profitable—day of the e-commerce calendar, the Monday after Thanksgiving has become cloaked in a mythology, complete with tales of office workers rushing to their desks, leftover turkey sandwich in hand, to shop on their employers' computers.

The truth: recession-hardened consumers are unlikely to do their holiday shopping in the office. In a survey conducted by Ipsos Public Affairs, one in three workers said the biggest mistake you can make this holiday season is to shop for gifts at work.

Instead, the second Monday or Tuesday of December will likely wear the crown as the busiest—and most profitable—online shopping day of the holiday season.

“It usually has to do with when free shipping deals cut off,” said David Fry, founder of e-commerce services company Fry Inc.

But Cyber Monday can be the most profitable one for consumers, according to Brad Wilson, editor-in-chief of BlackFriday2010.com, a coupon and price comparison Web site. His research shows the day provided some of the deepest discounts available online last year.

This year, more consumers are expected to shift online, with e-commerce sales expected to rise between 7 percent and 9 percent this holiday season, according to a preliminary forecast from data tracker ComScore.

On Cyber Monday, sales are projected to increase 13.2 percent, according to industry researcher IBISWorld.

"The appeal of e-commerce is that it allows for easier bargain hunting and price comparisons than brick-and-mortar stores," said Nikoleta Panteva, a retail analyst at IBISWorld.

Cyber Monday Every Day

But Cyber Monday won't be the only day to get a good deal.

"Every day can be Cyber Monday online," said Steven Boal, CEO of Coupons.com, a leading coupon Web site. He said savvy shoppers can find deals throughout the holiday season; they only need to know where to look.

In response to competition from private online sale sites such as Groupon, Rue La La, Woot and Haute Look, more retailers are hosting their own limited-time or limited-supply sales throughout the season. These events create buzz and excitement about the retailer, and make shoppers feel as though they are part of an elite group.

Some shoppers are finding out about these deals through alerts they set up on Google , Boal said. He's seen increased Web traffic to his site from these alerts.

But others learn of them on Facebookand Twitter, where fans and followers often get clued in on special deals.

In fact, Fry said, the rise of Facebook as a way to direct shoppers to Web sites is becoming a "diminishment of Google."

"I think we are starting to see a maturation of the online process," he said.

Smartphone applications also are helping some consumers to sort through the deals and compare prices, but shopping via smartphones is unlikely to sway holiday sales significantly this year, analysts said.

Never Pay for Shipping

Expect the shipping to be free. These offers have always been attractive to online shoppers, but a real price war has been sparked by Amazon's Amazon Prime program, and the battle has been a boon for consumers.

Amazon Prime allows shoppers who pay a fee the ability to receive unlimited free two-day shipping without a minimum purchase.

Wal-Mart Stores responded by offering free two-way shippingon select items during the holiday season. (This means it's free to receive the item and to return it, if need be—and there's no fee to join.)

With both of these players setting the tone, other retailers have scrambled to either offer their own free-shipping deals or to band together in groups to provide Amazon Prime-type discounts, such as Shoprunner.com.

Through Shoprunner, members can shop a wide variety of retailers and receive free two-day shipping without a minimum purchase. The retailers involved in this site include Toys ‘R Us, Borders, PetSmart, and Dick’s Sporting Goods, among others.

But for shoppers who don’t wish to join such programs, there will be plenty of other opportunities for free shipping, especially on Dec. 17, which is being marketed as "Free Shipping Day."

There also are other types of discounts that can save you just as much, if not more, than shipping deals.

‘Free Gift with Purchase’

“Free shipping has become very ordinary,” Boal said. He’s seeing more offers for free gifts with a purchase, and dollar figures are being used in offers, such as “$5 off a $50 purchase” or “$10 off a $60 purchase,” in order for retailers to stand out.

According to Boal, 44 percent of those who shop online place items in a Web site’s shopping cart, then look for some sort of coupon code to reduce the cost of that purchase. About 15 percent of shoppers will abandon the shopping cart if they can’t find a deal, he said.

“That three minutes (to hunt for a coupon code) saves you $5 to $10,” he said. “That’s a very worthwhile experience.”

The Race to the Bottom

With shoppers so focused on discounts, it can be a challenge for smaller players who cannot compete on price.

“The bigger players, to some degree, can compete in the race to the bottom,” Wilson said. “Walmart hasn’t really grown [U.S. same-store sales]… To put gasoline on the fire, they have to take share from everyone else, to grab their larger piece of the same-size pie.”

Instead, niche retailers have to own their space, Wilson said. He cited online jewelry store Blue Nile as one example. To stand out, Blue Nile provides educational materials, favorable return policies and free shipping.

They also can connect to a customer's values or provide superior service, all of which will be rewarded by customers, said John Gerzema, president of Young & Rubicam's Brand Asset Consulting unit and author of "Spend Shift."

He cited Zappos.comas a company that has been successful because of its reputation for good customer service.

"Clearly, we're looking for companies that will provide a good value," Gerzema said, adding that great service can be perceived to be of great value.

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