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Why embracing e-commerce is essential for holiday sales

Jan 07, 2014 Dave King

Retailers and payment processing companies across the country have started to implement more electronic transaction tools in recent years. As more consumers are starting to rely on wired devices that can easily link to bank accounts, businesses have started to recognize how lucrative e-payments can be. Despite the growth in this market, many outlets still place too much emphasis on storefront sales during the busy holiday period.

More consumers are starting to utilize e-commerce portals, even during the holiday season, which has traditionally been a lucrative period for brick-and-mortar outlets. However, Reuters reported that data from the National Retail Federation found sales during Thanksgiving weekend dropped 3 percent this year compared to 2012 levels. On the other hand, the source indicated ComScore data showed e-commerce sales during the recent holiday weekend jumped 17.3 percent from a year ago. That outpaced the 16 percent spike ComScore predicted for e-commerce growth.

These trends show that consumers are starting to switch to online channels to make purchases during the holidays. For retailers and payment companies, recognizing this trend is important, as Reuters stated that the holiday season accounts for 40 percent of annual profits for American retailers. This year, the stakes are even greater because there are six fewer days between Thanksgiving and Christmas than in 2012.

Discounts viewed with skepticism
Some retailers take advantage of in-store discounts to drum up business at physical locations during the holidays. While these sales are often also used in e-commerce stores, they generally offer lower prices because there are fewer overhead costs associated with operating online sales channels. This means that in-store sales are usually higher than online clearances, which could be important for businesses to note if recently released Google data is analyzed.

According to the search engine giant, 70 percent of American consumers do not believe that holiday sales are genuine. For the savvy purchaser, comparing in-store prices to online rates could show that e-commerce portals are more affordable. Also, it could make consumers unhappy with a given brand that they believe may have attempted to pull wool over their eyes.

"Losing the trust of your customers is incredibly bad for business," said David Rawlings, a marketing expert who commissioned the research. "In the light of this data retailers should be very cautious of jumping on the 'before Christmas sale' band wagon and prioritize their credibility over short-term sales strategies."

E-commerce allows lower pricing
By implementing online sales mediums, businesses can make it easier for consumers to compare prices to determine if products listed at discounted rates actually represent a cost-effective deal.

Modern American buyers are using new technology to help them make more informed decisions during the holidays. In fact, CIOL reported that a MobPartner study found that three quarters of U.S. consumers will use mobile devices to shop during the holidays. More importantly, the source noted the most cited activity Americans will use their smartphones for is to compare prices.

This shows that leveraging in-store discounts will likely do little to attract the increasingly tech-savvy consumers who are popping up across the U.S. Rather, businesses should consider establishing online sales portals that allow them to reduce their operational expenses, enabling them to list products at lower rates. Doing so could set earlier e-commerce adopters apart from their rivals. Potentially, retailers may see a spike in consumer loyalty if customers believe listed sale prices to be genuine. This will help businesses get the most out of the lucrative holiday period.

Understanding shifts in the market is essential for any company. With digital tools becoming more common, embracing electronic payments makes sense for retail outlets.