Search and the art of high online sales

December 30, 2005
by Latitude

Did your company have a bumper holiday sales season? If so, join the club. The statistics are from the US, but they reflect what has also happened in the UK: Online shopping has officially gone mainstream.

Consumer spending online reached $18.1 billion in November and December, a 25 percent increase over 2004, according to the research firm ComScore Networks.

Nielsen/NetRatings, another research firm, said Web purchases totaled $30.1 billion in the period, an increase of 30 percent. Unlike ComScore, Nielsen includes spending at online auction sites like eBay, accounting for its higher figure.

And it’s not just the stalwarts of internet retail who have been raking in the cash this holiday season.

The two sites that popularized online retailing in the late 1990’s, eBay and Amazon, firmly dominated it again this holiday season, but the fastest-growing sites were traditional merchants that have become more serious about the Internet.

Wal-Mart was the third most popular site this season, trailing Amazon and eBay, with Target, Best Buy and Circuit City close behind. For the first time, Neiman Marcus and L. L. Bean said they received more orders from their Web sites than telephone orders through their catalogs.

Brick-and-mortar chains “are increasingly a force to be reckoned with online” said Gian Fulgoni, chairman of ComScore.

That said, don’t make the mistake of thinking that the increased, widespread embrace of online shopping by the masses means that it’s easy to sell successfully on the web.

[A]nalysts warned that profits might not keep pace with rising sales. Growing competition has driven up the cost of advertising, particularly so-called pay-per-click marketing sold through search engines like Google and Yahoo.

“It is getting harder to make money online,” said Safa Rashtchy, an Internet analyst with the investment firm Piper Jaffray.

Indeed. Now, more than ever, it is crucial to have a tight, expertise-based approach to drawing potential customers to your retail website – and turning them into actual customers once they get there. As people grow more web-savvy and information-rich, the competition for custom will get even more fierce. That’s good news for shoppers, and for those retailers who have the right strategy driving their online sales efforts.

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