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Free Shipping Day Culminates Week of Flat Traffic Growth

The Holiday Season kicked off with very strong indications of growth.  The Akamai Retail Usage Index peaked on Thanksgiving Day (as illustrated in our newly released Holiday Shopping infographic), with retail traffic up 70% year over year, and overall page view volume throughout the Thanksgiving shopping weekend up 33% overall.  Revenue growth for those same periods was also strong - with growth reported in the mid-twenties for Black Friday and CyberMonday.

Historically the week of Green Monday, this year landing on December 12th, through Free Shipping Day on December 16th, drives more online revenue than any other week during the holiday shopping season.  Akamai's retail traffic growth last week was relatively flat, indicating the retail season is waning more quickly this year.  Page view volume was up just 2% over 2010, with both Friday and Saturday trailing behind 2010 in overall page view volume.  ComScore is reporting revenue growth for the same week falling below 15%.  

It's all still good news - while traffic is flat and growth rates have waned, revenue is up nearly 15% over last year - ringing in the highest revenue-driving week of the season.  However it is an indication that the focus of the holiday shopping season this year shifted towards the early deal hype of Black Friday through CyberMonday. 

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Less Browsing and More Buying

Comparing revenue growth data with Akamai traffic data does beg the question - why is retail traffic flat but revenue up?  Also contradictory on the surface, the percentage of overall retail purchases completed online is expected to hit a high of 10% this December.  Through the Akamai Holiday Conversion Index (below), we know the likelihood of a shopper to purchase online grows substantially as we approach Free Shipping Day.  Comparing the Conversion Index in 2010 to 2011, the likelihood to purchase grew more steeply this year, suggesting a better-organized, more well-equipped shopper.  There are several factors that may be driving down "browse and research" traffic more steeply this year:

•    Shoppers are more targeted in their purchases in a Down Economy:  When finances are constrained shoppers must be better organized.  They stick to a budget, and are targeted in their purchases.  As they progress towards the end of the season, they have seen the deals retailers are willing to offer, and are more comfortable converting on purchases with this knowledge, particularly with more free shipping options than ever before.

•    Shoppers have more Tools for Shopping Online: Shoppers are better equipped this year, with the emergence of online purchase options that are focused on the consumer context.  Price comparison tools on their mobile devices offer the capability to scan a product and purchase in just a few clicks.  Social deals, mobile coupons and shopping apps also support direct purchasing, or are driving shoppers directly to specific products on eCommerce sites.   Even search tools have improved over the last year, with continued investments in fragmented navigation and search.

•    New eCommerce Models mean Less Browsing:  With projections that mobile purchases will reach close to 10% of all transactions, more than tripling this holiday season over last holiday season, shopping behavior on the smartphone also plays a role.  Shoppers tend to view fewer pages while on their phones.  Flash deal sites, such as Rue La La, HauteLook, Vente Privee, and  Gilt Groupe, not only drive heavier volumes of mobile purchases, but also capitalize on adrenaline fueled, time sensitive, limited inventory, purchasing behavior.  Less time to purchase means less time to browse.

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And That's a Wrap

With the peak season behind us, what has this holiday season demonstrated so far?  An increasing willingness to purchase online and on devices, the necessity of deals and free shipping to drive conversions, and an increasingly competitive environment to reach the empowered consumer.  The frenzied effort to be prepared for this holiday season paid off for online retailers, resulting in strong growth overall.  But a few big open questions remain.  In the near term, has price competition driven down margins farther than is sustainable?  And in the long term, how do retailers break out of price wars and sustain broader competitive advantage online?  There is much to look forward to in 2012.

Check out Akamai's Holiday Shopping Traffic infographic for a summary view of the traffic trends this holiday season.

Lelah Manz is Chief Strategist, Commerce for Akamai

8 Comments

Interesting to see this. Are there seasonality patterns across years ?

Interesting stuff is this. Is there data to compare this across last 5 years or more. Then we can map with economic booms and recession cycles !

How this varies across US states ? example east vs west ? any thoughts ?

I just found this article following a link from the IMRG. It is interesting to see that UK trends for the uptake of online and mobile applications mirror's that of the States.

Gotta love the information you put into this blog :)

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