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[22 comments]

Cyber Monday Sales Record Shattered

November 27, 2012

Consumers showed no indication that they were letting up on online purchases on Cyber Monday despite having already spent a record $59.1 billion over the four-day Thanksgiving Day weekend.

Online shopping activity was up 28.4 percent yesterday compared to Cyber Monday in 2011, according to IBM Smarter Commerce. Sales made via smartphones and tablets collectively rose just over 10 percent.

Heading into the sales day, comScore predicted sales would reach $1.5 billion, a 20 percent increase over last year. Separately, a survey conducted for Shop.org by BIGinsight, predicted over 129 million Americans planned to shop on Cyber Monday, up from 122.8 million last year and 106.9 in 2010.

"Online's piece of the holiday pie is growing every day, and all the key dates are growing with it," Forrester Research analyst Sucharita Mulpuru told The Associated Press. "The web is becoming a more significant part of the traditional brick-and-mortar holiday shopping season."

One interesting aspect of the increase in online sales this holiday season is that the jump is taking place despite many consumers having to pay sales tax on purchases for the first time.

"It doesn't look like they're having a lot of negative impact," said Dale Achabal, executive director of Santa Clara University's Retail Management Institute, told the San Jose Mercury News. "What we're seeing is a shift in the way consumers are shopping, with a greater use of online for a significant percentage of their holiday purchases."

While consumers may be shopping online, a significant number are spending their money on brick & mortar chain sites. Experian Marketing Services announced that while Amazon.com was the most visited website on Black Friday, it was followed by Walmart, Best Buy, Target and J.C. Penney.

Discussion Questions:

What are your takeaways from the performance of online retail so far this holiday season? What will this year's developments mean for the future?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

Are online sales above, below or in line with where you expected them to be so far this holiday season?

Comments:

My takeaways are that the economy continues to explode and has been greatly improving year over year for the past four years. Also consumers are smarter than ever and will no longer tolerate being gouged.

David Livingston, Principal, DJL Research

Lost in the hype about online sales growing was the very real impact of Small Business Saturday for local merchants around the US who anecdotally report double-digit increases.

Maybe we're all just feeling more confident that we'll have a better future -- wherever we spend our cash.

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Bob Phibbs, President/CEO, The Retail Doctor

Several factors appear to be driving the increase in online sales in general, but certainly on Cyber Monday and other special sales events.

For starters, retailers are making the online purchase experience increasingly easier and in fact, many of the e-commerce sites that I use provide a follow up survey to solicit feedback about the ease of the transaction to foster improvement.

Secondly, the deals are getting better online. Now that online purchases have reached a significant number of shoppers, retailers are now motivated to "compete" online for the business. Offering better deals is the best way to do that.

Thirdly, shopping bricks and mortar stores during any of these event sales is now becoming something tantamount to an athletic event, requiring training, stamina and often times, sleep deprivation. Many of us more sedentary-types would much prefer using a keyboard for great deals rather than engaging in the mortal combat that often comes with in-store shopping during special events.

The future is bright for online commerce and thankfully it provides many of us a welcomed alternative to competitive shopping, even if we do miss out occasionally on a great deal on Yoga Pants!

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Mark Heckman, Principal, Mark Heckman Consulting

This is still extremely early in the evolution of online commerce. E-commerce isn't even 20 years old while department stores have been around for about 150 years. There's still a huge growth curve ahead for e-commerce and it will cannibalize a lot more of retail sales before a true equilibrium is reached between bricks and clicks. I'm not sure where the numbers will fall, but m/e-commerce will be well into double digits and the b&m landscape will be vastly different and smaller than today.

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Ken Lonyai, Digital Innovation Strategist, co-founder, ScreenPlay InterActive

No surprise in terms of the share of the online pie growing. This trend continues throughout the year with it impacting real estate strategies, inventory strategies, pricing strategies, etc etc.

You could argue that the total holiday sales increase year over year is a bit surprising in an economic environment that still appears tenuous. This might be very good for retailers that bet big with inventory investment this year, however, we still have a ways to go before we know if this is truly a "lift" or simply a "shift" and then there is that whole pesky question of profitability.

All in all, so far things are looking very merry.

Paul R. Schottmiller, Senior Vice President of Strategy, Retail and Consumer Goods, Merkle

Consumers looking for the best deal will always look around, but as the field levels in terms of sales tax, the convenience, selection and promise of availability is what draws the consumer to online channels. Brick and mortar also did well over the holidays, indicating that they are learning how to compete with pure plays and avoid showrooming on something other than price.

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Kenneth Leung, Director of Enterprise Industry Marketing, Avaya

Sales are strong -- why? A more confident consumer atmosphere, pent-up demand for postponed purchases, and last but not least, earlier and earlier deals. By pushing the holiday deal earlier, sales drift toward the end of November, taking some steam out of the final push. However, there will always be the last-minute (usually male) shopper to ring in the final numbers.

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Liz Crawford, VP, Strategy & Insights, Match Drive

Consumers are using all channels, so retailers definitely need to be active on all channels. The increase in sales could mean that consumers have more confidence in the economy and are willing to spend. It could mean that consumers have limited money and wanted to take advantage of sales. The sales this weekend are a welcome sign and we can hope the holiday season will be a good one and a sign of economic recovery.

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Camille P. Schuster, Ph.D., President, Global Collaborations, Inc.

I don't think there is an e-commerce or multi-channel retailer in business who failed to capitalize on Cyber Monday (or, in some cases, Cyber Week). So the online traffic must have been huge yesterday. Good to see this turning into real sales volume, and a sign of an improving economy -- not to mention, a sign of the continued share gains for online retailing.

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Dick Seesel, Principal, Retailing In Focus LLC

As we are living in the actual evolution of online commerce, I believe we all expected the volume to grow dramatically, as many factors contribute to its growth: A recovering economy, unemployment stabilizing across the US, more effective websites of the merchants with simpler interfaces, and ubiquitous devices to execute transactions whenever and where ever the shopper desires are all contributing factors to growth. I also think that one word alone drives growth of online commerce: Convenience.

Next year will find shoppers with even more effective devices (folding, flexible hand held screens, higher speed data, eWallet capabilities, etc.), and merchants will also step up to engage shoppers more effectively to drive brand value and loyalty like never before.

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Ralph Jacobson, Global Consumer Products Industry Marketing Executive, IBM

Many are shopping deals and believe Black Friday and Cyber Monday offer the best opportunity. If the total season growth continues at this pace, I will buy into an improving economy. My sense is that recent trends towards saving money and smarter shopping have brought more consumers in earlier for the "deals."

'OscarSmith'

I am not surprised at the continued growth of online retailing. For some consumers it is due to the price advantage of some online retailers (and the ease of comparison). For others, it is the convenience factor. But as retailers make it easier to shop online, the sales and use will continue to grow. And as Mark said, gaining customer feedback and utilizing it to improve the process helps retailers get better.

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Brian Numainville, Principal, The Retail Feedback Group

This amazes me. We can get this information instantly. But it takes two weeks for my state of Florida to count votes. Is this a great country or what?

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Ed Rosenbaum, CEO, The Customer Service Rainmaker, Rainmaker Solutions

Ordering online is easier than ever, more popular than ever and sometimes there are incentives, such as no shipping. There aren't crowded malls, shortages of parking places...you get the idea. It's easier and more convenient. And, it will continue to grow.

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Shep Hyken, Chief Amazement Officer, Shepard Presentations, LLC

PRICE ...PRICE...PRICE! After watching my 24-27 year old kids jump on the deals over the past 5 days, the core of their actions centered on PRICE. This was best price on heavily promoted items, or deals on items from standard "sales." Not new to any of us, but read on....

One of the kids needed a new Christmas tree for the apartment -- since the occupant finally got out of our basement and is in his own place, he found that he is responsible for his own tree, decorations, and being Santa for himself. He found a great deal on an artificial tree after comparing online and in-store. The store beat the online prices. Same for his new electronics (PC).

So, for the future, the reality is that price and selection (assortment) are the deciders. Online vs. store -- if my kids have to drive 30 minutes to save $30 on a pair of shoes they will do it. Mobile and online are great channels for some shopper segments, but my guess is that a majority of the shoppers still want PRICE vs channel.

They may shop mobile but they BUY on price and they BUY based on the channel that gives it to them the fastest. These are the Millennials...this is the future.

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Tom Redd, Vice President, Strategic Communications, SAP Global Retail Business Unit

To be blunt, my takeaway is "So what?" Online is still a medium in its infancy, and will grow exponentially for a long time...so extrapolations are meaningless. But even if it were mature, online is simply a component of overall retail...we wouldn't separate "sales made in buildings with flat roofs" from the rest, why do it here?

'notcom'

I think the retail industry collectively has done a good job this year of shifting holiday shopping toward "early."

This is great for the chains' November cash flow, but it does not guarantee a much larger total holiday spending season. It will be interesting to track markdowns in mid-late December -- both in-stores and online.

The 28% Cyber Monday sales growth aligns generally with my expectation. It helps that online shopping carts have apparently become more dependable and up to the challenge. Has anyone heard any virtual store flame-out stories this year? I haven't yet.

Shoppers have come to recognize the advantages of staying home to do at least part of their gifting. Free shipping works better early, and savvy cyber-ers know this.

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James Tenser, Principal, VSN Strategies

I think Mr. Roebuck said it well two centuries ago: "It was our constant desire to maintain our margin of superiority by means of improvements and new inventions."

- Alvah Curtis Roebuck, Co-Founder of Sears Roebuck

Vahe Katros, Consultant, Plan B

The 28% increase is a positive sign. However, it is early in the game. There is no guarantee these increases will continue.

In contrast, sales attributed to smart phones and tablets are lower than expected.

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Christopher P. Ramey, President, Affluent Insights

I keep waiting for a tipping point, where consumers finally realize they don't have to run out in the middle of the night on Thanksgiving to get the best deals and come to think of it, they don't have to go out at all for Xmas presents anymore. I expected the numbers to be what they are simply because of trend lines, but in reality, they should (and soon will) be much, much higher. Tipping point: 2020? 2016?

The best part about that event will be the improvements retailers will make in store as a reaction to getting the most out of their physical assets. Here's to online making physical retail better!

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Lee Peterson, EVP Creative Services, WD Partners

The online shopping experience will continue to evolve as we become a seamless, online world. This will continue to push our connectivity, technologies and communications forward as we seek to more rapidly grow this medium. Soon, online will be first, and bricks and mortar will be second....

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Kai Clarke, President, Kowa Optimed, Inc.

Online retailers have really stepped up their game in the past few years in order to remove the major hassles associated with online shopping. Between offering better, more secure payment options, reducing or eliminating shipping costs and even offering free returns, they have made shopping online easier than ever before. That, combined with the pervasiveness of smartphones and price transparency, has helped increase the comfort and convenience of online shopping, and we are seeing an increase in the proportion of online sales as a result.

Retailers that still rely predominately on their brick-and-mortar stores will similarly have to step up their game in the future, both by investing more in their online channels, and by providing customers with enough value to come in to their stores. Retailers generally no longer have the luxury of operating in a price-opaque world, but have to deliver value-added services and experiences to entice customers to visit the store, such as by offering excellent customer service, price matching, automatic price protection, hassle-free returns, warranties, installation services, and product education, to name a few.

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Alexander Rink, CEO, 360pi

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