Industry News and Analysis
Many of your websites experienced a dip in sales during the government shutdown, which lasted October 1-16. The first week (Oct. 1-8), sales were generally steady. During the second week (Oct. 9-15) there was a noticeable drop in parts sold, mainly for non-luxury brands. Generally, the websites which saw drops during this period experienced stronger than normal sales the following week, and overall saw very little net impact from the shutdown. It is reported that effects of the shutdown on car sales and the real-estate market may be more severe, and could create instability through the final (?) resolution to the debt debate in the spring.
Advance Auto Parts is buying General Parts International Inc., owner of Carquest and WorldPac. These companies are already very active players online; besides their own branded web properties, it is believed that WorldPac powers several of the leading aftermarket parts websites. These players are also likely active in your local retail/wholesale space as well. The combination of these companies will undoubtedly result in changes in both areas.
Free shipping is becoming more of the rule than the exception amongst online merchants, especially ahead of the holidays and for larger ticket orders. About 35% of e-retailers now offer free shipping all year long. Offering free shipping at calculated levels can be a very effective way to boost volume and profits. Our Market Intelligence Team can help you analyze customer behavior, and understand how order completion (and profits) could be affected by adjusting shipping rates – or offering free shipping above certain dollar levels.
About 20% of online product prices change at least daily, and some merchants surveyed are even adjusting pricing throughout the day based on market conditions and customer behavior. If you are interested in experimenting with dynamic pricing, please let us know - our platform has the ability to optimize your part-level pricing based on a variety of factors.
Many merchants physically track customers within their brick and mortar stores using publicly available information from cell phones. Efforts by NY Senator Chuck Schumer to curb this practice has resulted in a voluntary “code of conduct,” which has been agreed upon by eight of the ten major companies providing cell phone tracking technology to stores. The code calls for merchants to notify shoppers that they are being tracked, and allow them to opt out.
Amazon is increasing its minimum order amount for free shipping from $25 to $35, in an effort to transition customers to its Amazon Prime subscription program. Free shipping has been one of Amazon’s key tactics in edging out other online merchants, and this change signals an interesting strategy shift. Amazon reported Q3 results, and despite sales of $17b (24% YOY increase), returned a $41m loss – driven in part by a $2b (34% YOY increase) fulfillment expense, which would include shipping.
The count of states for which Amazon must collect sales tax is increasing – starting this month it will collect sales tax from customers in Wisconsin, its 14th state. That means Amazon is now collecting sales tax on nearly half of the U.S. population. Maryland could become the 15th tax state later this month. Amazon has been lobbying for Congress to pass the Marketplace Fairness Act, a bill that would allow states to collect sales tax from online businesses with no local brick-and-mortar presence. As currently written, the bill applies to businesses of $1 million in web sales or more.
This month, we also got a glimpse of something neat – the inside of one of Amazon’s giant warehouses. Amazon uses a system called “chaotic storage,” meaning there are no pre-arranged shelving sections for specific categories of items – all the products are mixed together and managed by a joint human/robot staff.
Facebook had an outage for a few hours on the morning of October 21. Payments were down, and users trying to update their status or post comments got an error message. Facebook released a statement saying the outages were “due to network maintenance.”
Facebook is rolling out a new retargeting feature called Custom Audience, which will allow advertisers to more efficiently target shoppers on mobile devices. The feature lets advertisers use non-Facebook information they have collected to set up retargeting campaigns directly in Facebook’s interface instead of through Facebook Ad Exchange.
Yelp is making major revisions to its cost-per-click advertising program. Yelp has been working to turn around its advertising image after taking some heat about its ads’ effectiveness, in addition to lawsuits relating to alleged fake reviews.