Let’s make a deal? Or maybe not. Or maybe, let’s just make a deal that was about the same as last holiday season. Online sales and promotions are all across the board so far during the critical November and December sales period. While some merchants are offering deeper discounts, others, it seems, are sticking with what worked last year and still others are offering fewer or less drastic price cuts.
Amazon wins the online holiday price war
First with the basics: Amazon.com Inc. soundly had the best prices during the five-day holiday shopping period from Thanksgiving to Cyber Monday, averaging 13.8% less expensive than retailers carrying the same items, according to price analytics firm Profitero. Profitero analyzed thousands of prices collected on exactly matched products from Nov. 21–26, 2018, in five categories—electronics, appliances, tools & home improvement, video games, and toys & games—at Amazon.com, No.1 in the Internet Retailer Top 1000, Walmart.com (No. 3), Jet.com, Target.com (No. 17) and other select retailers. In the time period studied, any price collected at the item level was checked across all retailers within a 24-hour period.
The next closest priced retailer was Walmart, with an overall 6.5% gap in pricing vs. Amazon on the like-for-like products analyzed. Jet and Target.com followed, recording a 15.9% and 16.0% pricing differential vs. Amazon, respectively, Profitero says.
“During the recent five-day holiday shopping period studied, Amazon was really aggressive on price compared with a three-month study we did for Q2,” says Keith Anderson, senior vice president, strategy and insights for Profitero. “Amazon’s prices were nearly 14% cheaper, on average, than other retailers carrying the same items in five key holiday categories. In Q2, the price gap was 10%.”
While Amazon wins for lowest prices, it’s also worth investigating whether retailers were more or less promotional in their own offers this holiday-kick off vs. 2017—as deep discounts can bring in sales but too drastic of price cuts can also hurt retailers’ margins.
Wayfair is heavy on promotions
Web-only furniture and decor retailer Wayfair Inc., for example, was firmly in the “more promotional” camp. But the strategy worked to bring in sales as Wayfair reported a 58% increase in online sales for the five-day peak shopping period Thanksgiving through Cyber Monday. The 58% growth is up from 53% growth during the Cyber Five period in 2017 and 52% in 2016. Over the last two years, Wayfair’s Q4 direct retail growth rates have averaged 80-85% of the “Cyber Five” growth rate, Colin Sebastian, senior research analyst for Baird Equity Research wrote in a note to investors. That suggests Wayfair’s Q4 sales growth rate could come in at a healthy 46-49%.
However, Wayfair says it offered an “unprecedented” number of promotions to achieve that sales growth. “We anticipated the continued shift of dollars online and were well positioned to capture that growth on Black Friday and throughout the weekend with an unprecedented number of flash deals and holiday promotions,” Niraj Shah, CEO, co-founder and co-chairman of Wayfair said in a statement about holiday sales.
In addition to extensive deals sitewide, Wayfair, (No. 13), also launched its first MyWay members-only sale for members of its loyalty program, which offered discounts of up to 75% throughout November. Such deep and early discounting could weigh on margins and also front load holiday shopping so that sales spike early on and taper off significantly as Dec. 25 approaches, Sebastian writes.
“While Cyber Five growth trends have been positive, we believe the highly promotional nature of the shopping holiday may be concentrating more spending early in the holiday period, and as such we anticipate growth rates will likely normalize through the balance of the quarter,” he writes.
Other retailers are less promotional
Other research suggests that some retailers have been less promotional. For example, in its Black Friday promo tracker of 14 lifestyle brands and retailers, financial services firm Canaccord Genuity Group Inc. finds that promotions this year across the retailers it tracked were “largely consistent with or shallower” than last year. Specifically, of the 14 brands/retailers it tracked, six had lower promotion levels, seven had similar promotions to last year, and one was more promotional than last year.
“The promotional stance should come as little surprise as the consumer is healthy, inventory levels at retail are clean, and innovation across many brands has ramped up this year,” the financial services firm writes in a note.
Below is an analysis of the year-over-year Black Friday promotions of several retailers as noted by Canaccord:
Nike Inc. (No. 27): Similar promotion to last year (25% off clearance) but fewer SKUs on sale. For example, there were 310 types of men’s shoes on clearance this year vs. 417 last year and 128 lifestyle items on clearance vs. 231 last year.
The North Face (owned by VF Brands, No. 784): Similar level of promotion on brand website as compared with last year (up to 25% off) but 26% fewer SKUs on sale, 222 vs. 302 on Black Friday 2017.
Finish Line Inc. (No. 101): Similar promotion to last year (20% off orders $99 and over).
Uggs (Owned by Deckers Brands, No. 169): Similar level of promotions on company website as last year (20%-30% off).
Aritzia (No. 566): Up to 50% off everything; 50% – 60% off: 0 for 2018 vs. 276 items last year; 30% – 50% off: 406 vs. 426 items last year; 20% – 30% off: 473 vs. 309 items last year. Up to 20% off 1,367 SKUs vs. 1,365 items last year.
Steve Madden (No. 612): Lower level of promotions with 20% off on company website vs. 30% last year.
Columbia Sportswear Co. (No.158): Similar level of promotion (up to 50% off) compared to last year on company website.
Lululemon Athletica Inc. (No. 90): Free shipping and free returns (same as last year). Slightly higher number of women’s SKUs on sale (225 vs. 203 last year).
Roots of Canada: Similar level of promotion (30% off) vs. last year on company website.
DSW Inc. (No. 153): Similar level of promotions to last year (20% off).
Under Armour (No. 33): Similar level of promotions on company website (40% off Black Friday exclusives).
Michael Kors Holdings Ltd. (No. 295): Higher level of promotions on company website (up to 60% off markdowns vs. up to 25% off last year) Higher number of handbags on sale on company website (286) vs. last year (210).
Overall web discounts by merchandise category on Cyber Monday
The discounts for televisions and computers were comparable to last year’s with computers being slightly more discounted (18% vs 14% on Cyber Monday in 2018 and 2017, respectively), and TVs slightly less discounted (19% vs 21% on Cyber Monday 2018 and 2017, respectively). Adobe uses prices from the month prior as the comparison base, so in Cyber Monday’s case, average prices of products across categories in October. Adobe’s data is based on an analysis of more than 1 trillion visits to retail sites over the last 12 months. Adobe Analytics measures transactions from 80 of the top 100 U.S. online retailers. The interesting category this year is toys, Adobe says. That category saw much steeper discounts this year at 31% compared to last year’s 19% on Cyber Monday. One driver might be retailers battling for the void created by Toys “R” Us. They’re trying to capture that market share by enticing consumers with great deals, Adobe says.
Help for shopping procrastinators
While The Cyber 5 holiday season kick-off is a key period for analyzing the size of promotions retailers are putting out over the holidays, many consumers don’t fully cross everyone off their gift lists that early in the season. In fact, after record-breaking Black Friday and Cyber Monday spending, nearly 60% of U.S. adults had made only half or less of their holiday purchases as of Nov. 27, according to an exclusive survey of 1,002 adults for Internet Retailer conducted by Toluna. In fact 22% had not even started shopping as of Nov. 27.
For consumers with ample shopping to do still, services from vendors like Shopbrain aim to help consumers find the best deals. Last month Shopbrain launched a browser extension that searches the prices of more than one billion products across more than 10,000 retailers, merchants, and search engines, including Amazon, Best Buy, Home Depot, Walmart, Target and Google Shopping, to help shoppers find the best deals.
In a test of the tool, Internet Retailer added the Shopbrain extension and searched Walmart.com for a Dyson V6 Animal cordless vacuum. The Walmart marketplace returned a lowest price of $333.98 from marketplace seller EZ Tech. After searching its network of websites, Shopbrain found the vacuum available at a few retailers for much less via Google Shopping results—including Dyson’s direct e-commerce site—which was selling the vacuum for $240. (Both Dyson and the Walmart marketplace offered free delivery).
For more on how the holiday season is progressing, listen to the replay of Internet Retailer’s Cyber Five Insights: What We Learned From Thanksgiving to Cyber Monday webinar.Favorite