More Americans are deciding to shop online during this year-end shopping season instead of heading to crowded stores.
But that alone won’t save what is turning out to be the best season for department stores and clothing chains.
Online sales have surged 9 percent so far this shopping season, as Wal-Mart, Macy’s and other retailers improved their web sites and prices to better compete with their online nemesis Amazon.com. Meanwhile, shopping at physical stores is up just 2 percent.
Still, it’s estimated that for every $9 shoppers spend in physical stores during the two-month season that ends on the last day of 2013, they’ll only spend $1 online, according to research firm comScore.
Why? Retailers haven’t solved many of the challenges that initially turned many shoppers off from buying online. Some web sites still crash fairly frequently. Hot merchandise often sells out quickly online. And retailers haven’t convinced people to use their shopping apps on smartphones and tablets.
These lingering issues come from years of brick-and-mortar retailers mostly ignoring the possibilities of online shopping while online giants like Amazon got shoppers used to the convenience of it. Solving these problems will help determine how retailers fare during the year-end shopping season and beyond, as shoppers increasingly buy online.
“The people that are going to win … are the ones that are there for the customer however they want to shop,” said Joel Anderson, president and CEO of Walmart.com, Wal-Mart’s online business.
The growing interest in online shopping is evident this shopping season. Sales were up 2 percent to $176.7 billion from Nov. 1 through last Sunday compared with the same period last year, according to ShopperTrak, a Chicago store data tracker. Meanwhile, online spending from home and work desktop computers was up 9 percent during the same period, to $37.8 billion, according to research firm comScore.
Still, analysts say online shopping isn’t reaching its full potential because of a number of factors.
Sellouts and Crashes
In the early days of online shopping, frustrated shoppers often found the items they wanted to buy online were out of stock. In recent years, though, retailers have worked to boost their online inventories: For example, Wal-Mart Stores Inc., the world’s largest retailer, has doubled the number of items it carries online this year to 6 million.
Overall, retailers are better prepared than they were a few years ago to fill online orders via their inventory in store or in manufacturers’ distribution centers, said Forrester analyst Sucharita Mulpuru. But they still have inventory problems that cause them to run out of popular merchandise, analysts say. And when that happens, retailers can lose potential sales.
But inventory isn’t the only problem that continues to plague online shopping. Retailers have come a long way toward fixing some of the problems that caused their sites to crash and freeze up in the early days of online shopping.
Crashes and slowdowns occur far less today than they did a few years ago, said Aaron Rudger, senior marketing manager for web performance at Keynote, which monitors retailers online performance. Keynote estimates that 23 percent of retailers had web site problems during the official kickoff of the year-end shopping season, the four-day Thanksgiving weekend, compared with 71 percent 5 years ago.
But crashes still happen far more often than they should, says Rudger, who found that the Motorola web site crashed on the Monday after the four-day Thanksgiving weekend, known as ‘Cyber Monday,’ when it launched its Moto X phone. Urban Outfitters also crashed, he says. “Those are pretty well-known brands, so that, to us, is a bit of a surprise,” Rudger said.
Those types of experiences can turn shoppers off from buying online. For instance, Patrice Grell Yursik, 34, wanted to buy a warm coat for her husband when she started shopping online on Cyber Monday, but changed her mind after she ran into troubles on Macy’s web site.
“Macy’s had really great deals, and I had an awesome Michael Kors coat in mind, but when I went to try to get it in black, it was sold out,” said Yursik, who lives in Chicago. “The site kept freezing and locking up, but by the time I tried it again, the coat was gone.”
That experience ultimately drove her offline.
Macy’s says due to the volume of traffic and shopping on Cyber Monday, there were “rare occasions” when an item sold out almost immediately after a customer put it into their virtual shopping cart.
Getting Shoppers to Use Mobile Apps
There’s evidence that Americans increasingly want to shop on their smartphones and tablets this shopping season. In fact, while mobile shopping accounts for about 10 percent of online sales, it made up half of all online traffic during Black Friday weekend, according to IBM Benchmark, which did not give dollar amounts.
But more often than not, people are shopping on their smartphones and tablets using retailers’ web sites. That’s a problem, because having a specific shopping app is important when it comes to converting window shoppers into buyers.
That’s because apps are more streamlined than websites, which can be clunky and hard to navigate on smaller screens on smartphones and tables. Also, most apps store shoppers’ information so customers don’t have to type in a lot of information each time they buy.
“One of the reasons people don’t convert (to mobile shopping) is that there is a lot of friction in the process,” said Andrew Lipsman, vice president of industry analysis for comScore. “If I have to enter all my information on the phone, I might not convert. But if there’s an easy log in and all I have to do is one-click or a couple of easy clicks to buy, people will convert that way.”
According to comScore data, Amazon and eBay are the only major retailers that have visitors spend more time on their app rather than their web site — by a wide margin. Meanwhile, only about 2 percent of time spent on Macy’s’ and Sears’ online presence is via an app, according to the data.
The problem? Analysts say retailers have not marketed their shopping apps well enough to encourage shoppers to find and download them.
“Retailers should put specific incentives in front of consumers to download and use that app,” Lipsman said. “Doing that now will pay dividends down the road.”