Thursday, December 12, 2013

SimplePart November Update Part 3

Read Part 1 and Part 2 of the November Update.

Industry News and Analysis

According to an Internet Retailer study this month, 623 of the top 1000 e-retailers offer free shipping on at least some products. Of those, 255 ship products for free regardless of order value. Of the merchants with a threshold for free shipping, a majority set that threshold between $40 and $100.

China’s version of Cyber Monday, called Singles Day (celebrated on 11/11 and started by Amazon competitor Alibaba), generated $5.75 billion in web sales this year. Among the estimated 20,000 participating merchants, says it sold 17,776 cars online during the 24-hour event for $427 million. To put this into perspective, our own Cyber Monday generated $1.465 billion in online sales in 2012.

WalMart’s realtime pricing adjustment suffered a technical glitch this month, and for several hours offered products for sale on at a fraction of their intended price. Some shoppers took advantage of price-matching deals at retailers like Best Buy, and used’s pricing to get those same items from other retailers at discounted prices as well. Walmart is cancelling orders for incorrectly priced items, and giving customers $10 gift cards.

A new trend in fraud is beginning to affect some internet retailers, and I want to be sure our customers are taking appropriate steps. Account takeover, where criminals with stolen credit cards change the actual address associated with the card with the card company, is becoming more and more common. In this situation, the criminal’s address will be validated by the credit card company – and shipping/billing will both match on the retailer's end. There is no way to know there is anything amiss with the transaction. In a variation on this technique, criminals will place an online order using the true shipping/billing address for the card, then go back into their profile on the website and change the shipping address on their order. Our customers will begin seeing warnings soon in their Control Panel when a customer has done this. We are seeing instances of both of these types of fraud rising – please be careful.

GM CEO Dan Akerson very delicately suggested on their earnings call this month that he wants to give shoppers the ability to buy GM vehicles directly over the web, saying quickly “It doesn’t mean we’re going to try and bypass our dealers”. This is a sign of things to come.

Intuit recently performed a study on the impact of website speed on conversions (orders/leads). They found dramatic increases for every second that load time was reduced – the speed of a business' website directly affects orders/leads. In addition, it’s one of the metrics that Google uses to determine where a site show up in search results and can bring more visitors.
·         +3% conversions for every second reduced from 15 seconds to 7 seconds
·         +2% conversions for every second reduced from 7 seconds to 5 seconds
·         +1% conversions for every second reduced from 4 seconds to 2 seconds
·         In a related study, the 2011 Obama for America campaign increased onsite donations by 14% by reducing page load time by 3 seconds – for an increase of $34 million in election contributions.
There are clear monetary benefits to improving the speed of a website – it’s one of the metrics we watch closely. We target a page loading time of 2 seconds or less across the board, particularly for Mobile users. There are many techniques and guidelines for achieving this kind of loading time; the link below is a good starting point. Be sure that your other web properties also take advantage of the money on the table by delivering pages as quickly as possible.

The “small business exception” to the online sales tax legislation allows businesses with remote sales below a certain cap to be exempted from collecting sales tax. There is ongoing debate about where the dollar value of that cap should be set – currently legislation has it at $1 million, but some are arguing for $5 million. A study by the University of Tennessee for the Small Business Administration concludes that the tax revenue collected under either cap would be effectively the same. Apparently under either scheme roughly 57% of online purchases would be taxed – according to the study, even if the cap were reduced to $500,000 only 0.07% of all US merchants would be required to collect sales tax for online sales.

Surprising no one, recent research has revealed that most Black Friday retail deals are artificial and manufactured. While there are loss leaders, gross margins at retailers through the holiday shopping period have historically been flat at 27.9% (according to a study by FactSet). According to combined research from FactSet, Wall Street Journal and Market Track LLC:
Most deals are planned to be profitable by setting list prices well above where goods are actually expected to sell. Prices climbed an average of 8% in the weeks leading up to Thanksgiving for 366, or about a fifth, of the [1,743] products; the items were then discounted on Black Friday. Toys and tools had the biggest pre-Black Friday price increases—about 23%. Retailers could run into legal trouble if they never try to sell goods at their starting price. Otherwise, there’s nothing wrong with the practice. In 2012 Ron Johnson, JC Penney’s then-CEO, said the company was selling fewer than one out of every 500 items at full price.
                For more reading on this:

The BBB is rolling out Verified Reviews for businesses, which include verification that the reviewer is a true actual customer of the business. These reviews are being incorporated on the BBB website alongside the traditional accreditation, ratings and scores.

UPS, FedEx and USPS have all announced rate increases for 2014.
·         UPS announced 4.9% average increases starting December 30th. Rates will increase by almost twice that rate for small packages, and far less so for larger items.
·         USPS announced 2.4% average rate increases, pending regulatory approval.
·         FedEx announced 3.9% increases to domestic express rates, starting in January.

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