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.
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