Leading up to Holiday 2008, firms were predicting double digit growth online — despite the economy. Now we’re on the other side of holiday, and actual results are pointing in all directions. Why the confusion? Which numbers can we trust? Let’s examine the findings.
Shop.org / Forrester 2008 Holiday Recap — Positive
According to an online survey, 53 of 84 anonymous respondents reported year over year growth between Nov 1 and Dec 24. In addition, 34 of 84 respondents reported double-digit growth in this period. Data was self-reported using the online survey tool, Zoomerang. In survey conditions like these, no one is put on the spot. Winners are more apt to reveal; losers, more apt to conceal. This can skew results.
SaaS Vendors Holiday 2008 Results — Spectacular
Demandware reported its clients worldwide saw 30% YOY growth online at holiday; and Venda reported its clients saw 39.7% YOY growth. What accounts for these numbers? Well demand for affordable SaaS options is up sharply; and these two vendors have a strong international presence. Much of the growth may be attributed to good old fashioned site redesigns that accompany any move to a new platform; or expansion into new markets. Another reason for growth may be the consistent availability of sites running SaaS platforms, capturing traffic from bigger retailers like Walmart, Costco, Staples, Sears, Amazon, and Saks that struggled to stay up.
Payment Processors Report 2008 Holiday Season Online is Slightly Off
comScore reports ecommerce spend across the US and UK between Nov 1 and Dec 24 was down 3% from the same period in 2007, still better than macro-economic data from MasterCard that measured across all retail channels. It’s important to note that there were 32 shopping days between Thanksgiving and Christmas 2007 — and only 27 shopping days (or 16% fewer) in 2008. Even Chase Paymentech reported a 4.5% decline in online sales during this period. Had there been more shopping days between Thanksgiving and Christmas, we may have seen a modest bump.
Bottom Line
In looking at the various methods of measurement, each tells us something. Shop.org and SaaS results demonstrate you can’t paint all companies with a broad brush. Some retailers did remarkably well online in spite of the economy. Results from payment processors show that results were relatively flat, but still ahead of retail overall. In summary, all data indicates that ecommerce should remain a top area of focus, promising better returns in the year ahead.
{ 5 comments… read them below or add one }
Two things to add.
First, a lot of the stats involve smaller companies or businesses that just went online in the last year or two. Those merchants will definitely see 30 and 40% annual growth because they come from a much smaller base.
Second, some of the product categories with the largest e-commerce penetration (such as electronics and books, music, and DVDs) had volume drops in general this holiday, both online and in the store. So it means that, in total, all of e-commerce revenue may have dropped (as indicated by Mastercard and Comscore) while most individual retailers still saw growth (as indicated by Shop.org). They’re not necessarily contradictory facts.
What we see is that luxury brands and certain product categories had a tough holiday online, whereas most value players, general merchandise, and especially apparel, did “okay.” But hardly any established online player had a great Christmas.
Agree that there’s a lot of confusion. Couple of points with the article:
- Chase Paymentech reported an increase in sales (not decrease) of 4.5% from Nov 1 to Dec 31. Sales came in much later in the season.
- Comscore uses a consumer panel for their methodology (not Mastercard data as far as I know)
The companies that did well got our early, and hustled through the season.
Darwin’s principle is in action at online retailers – the fittest and wisest will survive and thrive. The others sadly won’t.
Payment solutions are the best metric. You’re dead on about the eCommerce SAAS solutions, increases are due to redesigns and increased SEO.
Hi Fiona.
In the interest of brevity, I can see how my statements may not have been clear. Actually, Chase Paymentech did report, “The peak shopping season (the period between Thanksgiving and Christmas) sales were down 4.5 percent.” http://is.gd/gpNJ
Also, comScore published a press release on January 2 reporting they use MasterCard Advisors’ SpendingPulse data as a macro-economic indicator of overall holiday results. http://is.gd/et0C
Thanks for the clarification.
Demandware and Venda (and MarketLive) can report whatever holiday growth numbers they want… There is just no way to know how to separate good PR from the true numbers. I think we have to take such reports by vendors with a grain of salt : -)
Finally, even if these number are accurate – I completely agree with David Fry post above – smaller companies (that tend to gravitate towards SAAS deliver model) would skew stats towards larger numbers as such small business can go from 300 products sold in a month last year to 400 this year and that would be 33%!!! Whereas larger businesses selling tens thousands or hundreds of thousands of orders per month would have to work very hard to squeeze out such double digit growth numbers in such tough economic downturn…
Let’s all get realistic here – when entire retail industry is in a slump due to deep and extensive recession, everyone will fill it – even the small guys. In fact, latest quarterly reports from Amazon and Walmart demonstrate that people tend to gravitate towards such big box or big box online equivalents as Amazon.com and Walmart.com during tough times seeking deals and promotions. And big guys like Amazon and Walmart are there to offer these deals! These are public companies and I tend to trust numbers that are publicly reported and audited.