ANALYSIS: Online Retail - Cashing in on Christmas

Online retailers are shamelessly exploiting their ability to snare consumers on Christmas Day. Revolution finds out what brands are doing to part people with their cash on the most important day in the festive calendar.

ANALYSIS: Online Retail - Cashing in on Christmas

This Christmas Day will you and your family be comatose in front of the TV after too much turkey, or fighting for time online in a frenzy to bag yourself a festive bargain?

For many, the Christmas Day e-commerce blitz is another nail in the coffin of the festive season in its traditional form. But brands including John Lewis and Marks & Spencer believe that although Christmas is clearly a day for spiritual reflection and family time, the recession justifies a commercial approach.

And the case for Christmas as a major focus for online retailers is a distractingly good one: no high street to compete against for the pure-plays; no bricks-and-mortar overheads for the hybrids; nobody distracted by work; and everybody finally free to buy things for themselves again.

Besides which, you can't go flying in the face of demand. Five million British consumers spent £102 million online on 25 December last year, according to the Interactive Media in Retail Group, a 21 per cent increase on 2007.

Is that really so wrong? From a consumer point of view, it may be inappropriate to spend Jesus's birthday shopping for sofas, but if it's a choice between buying a couple of sneaky sale items and beating your brain with Call of Duty: Modern Warfare 2, the proper moral path starts to look a bit less clear-cut.

Will those spend figures rise again this year? Let's put it another way: has it become significantly more difficult to part children rapidly from their gift tokens; to convince men to buy themselves the expensive computer items no-one else thought to get them; or to persuade women that a discounted handbag is the best possible pre-diet reward? Probably not. So yes, this Christmas most likely will be the biggest yet for online retailers.

"Christmas is targeted by retailers, and has been for the past couple of years," says Alistair Boyle, group account director at Steak. "It is one of the biggest days of the year for online retailers. People have been thinking about friends and family in the run-up, and it's the first chance they have had for a while to buy things for themselves."

There are several dimensions to this, one being the movement of traditional Boxing Day sales to Christmas Eve and Christmas Day in the digital realm. John Lewis and B&Q were among the retailers to start discounting on 24 December last year - the latter doing so offline as well as online - and the effect is simply to kick-start the rush for discounts.

"Debenhams performs extremely well on Christmas Day," says Peter Rowe, managing director of Affilinet UK, which works with the retailer. "It still has a big Boxing Day sale in stores, but it has been ahead of the curve in terms of maximising Christmas Day itself."

For those looking to drive awareness of such sales, much of it comes down to the basics, with search in particular standing out as the most important thing.

"Paid search will be a key channel in the battle for share of pocket on Christmas Day," says Simon Lloyd, search director at Jellyfish. "We are recommending that brands start their January sales early. You also need to make sure your ad copy and landing pages always reinforce tailored promotional messages - things like 'beat the Boxing Day crush, order online today and save up to 30 per cent, plus free delivery'."

At the very least, brands need to make sure they are in the running, which means not only ensuring that their search activity is switched on, but having agency staff on call in case something should go awry.

"In terms of what they need to do, one thing is ensuring that their paid-search accounts are live," says Boyle, whose search clients include John Lewis and Debenhams. "It's about being aware that there won't be anyone at the search engines to deal with any problems, so you need to make sure that everything is ironed out and ready to run smoothly over that period."

Retailers are often criticised for failing to close their virtual doors on Christmas Day - a column in The Times last year festively proposed that M&S executive chairman Stuart Rose be 'impaled on a stake of holly' for allowing the practice. But the now-traditional afternoon rush hasn't needed much encouragement. In fact, it has developed almost by accident.

John Lewis opened its online sale in time for Christmas Day last year in response to the spontaneous visit of 150,000 customers in 2007, and not, it claimed, because of disappointing pre-Christmas takings. "Shoppers spent over £100,000 on Christmas Day in 2007, so we thought we needed to cater for those customers better," said the then head of John Lewis Direct David Walmsley.

But even now, perhaps owing to an unspoken belief that it's alright to open your doors on Christmas Day, just as long as you don't run around being shameless about it, many online retailers are still letting the Christmas rush happen to them, instead of going out there and grabbing it.

There are those who believe that retailers sometimes take a too-subtle approach. "I think there is more that retailers in general could do to make people aware that things are really in full swing," says Steak's Boyle. "People do use retail sites, but the public sometimes seem surprised that people are doing business on 25 December."

Affilinet's Rowe agrees. "I think Christmas Day shopping is a given now, but many companies still fail to prepare well enough or thoroughly enough for Christmas Day itself. Most retailers still mainly focus on their advertising from Boxing Day onwards. There are some that have been proactive, but many could plan better."

Many decriers of festive spending say the internet has no place among our Christmas traditions. The irony is that, in its increasingly social form, the web is potentially a force for togetherness at Christmas, as families huddle around the webcam and individuals share emails and Facebook updates. And these online places, of course, are the very ones that opportunistic advertisers should be targeting.

"To drive traffic, you need to know what people are doing online on Christmas Day," says Pete McCormack, director at McCormack & Morrison. "I think the obvious answer is social sites. On Christmas Day, people will be communicating with friends and family, so social networks, email and Skype will all be popular, and engaging with these channels will ensure traffic."

Real-time marketing is of particular value when the window is narrow, and the beginnings of an overlap between Twitter and search enables marketers to throw a further tailored element into their campaigns.

"Online retailers need to be looking to engage with their potential customers through social networking sites," says iCrossing's head of natural search, Doug Platts. "With the announcement of Twitter search being integrated into Bing and Google, a presence on Twitter is going to enable a brand to market in real time to its customer base."

Mobile is also an important channel, and one that, like TV, has the potential to drive people online who weren't otherwise thinking about it. It can also drive time-sensitive promotions, which in themselves may contribute to the online rush.

"Smart brands will create whole strategies around how dull Christmas Day is after the turkey," says Richard Spalding, chief executive of Diffusion Media. "Advertisers should think about launching products that can only be bought on Christmas Day and build campaigns around the fact that they are only available after lunch, or during The Queen's Speech."

Given that The Queen's Speech is only five minutes long, consumers will have to be quicker than ever if Spalding's vision of Christmas shopping becomes a reality.

Let's just hope that online shoppers don't forgo the turkey and trimmings altogether in the search for seasonal savings.

CASEBOOK - HOW WATERSTONE'S RAKED IN THE CHRISTMAS CASH

Christmas Day may have become a key shopping day, but it is also a day quite unlike any other for retailers, and patterns vary in ways it is occasionally hard to predict.

Waterstones.com, the online store of the high-street bookseller, had relatively low expectations for book sales on a day that is largely driven by heavy discounts in sectors such as fashion, furniture and electronics. But last year it became apparent that there was a striking exception - e-books.

"We launched eBooks in September 2008, and we were very much the pioneers because we had an exclusive relationship with Sony," says David Kohn, Waterstone's head of e-commerce. "Christmas Day isn't a big one for us, because most people tend to be looking for bargains elsewhere, but last year, we had the biggest day we had ever had for e-books."

In fact, sales of e-books from waterstones.com on 25 December exceeded sales of physical products, for reasons that are fairly obvious, when you think about it. "People open up their Sony Reader or other device on Christmas Day, and immediately, what is the first thing they want to do? They want to get some books on it," says Kohn.

This year, with 18,000 e-books in circulation, Kohn again expects a good return on the products, and Waterstone's social and search marketing will point towards the relevant section of the online store around the day itself. "It is still a small proportion of the overall book market, but as far as the online market is concerned, it is very material," says Kohn.

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