Cost of Marketing to Outcompete Big Box Brands Tops List of Challenges Affecting Holiday Season Sales for Scaling Businesses
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If your small to midsize business has an online presence, it’s likely you’re anticipating an increase in sales this year over last. In a recent Bigcommerce survey of multichannel merchants, nearly 50% of businesses believe the 2015 holiday selling season will produce more revenue vs. the 2014 season. And while that may be true, these same businesses are struggling to keep pace with the deep pockets of big box brands like Amazon, Walmart and the like. Why? Because marketing is expensive –– and these days, absolutely everything counts as marketing.
From SEO and blog posts to site merchandising and even free shipping, every aspect of how you get eyeballs on your products can be wrapped up under the marketing budget. And, for quickly scaling small and midsized businesses, marketing budgets may be growing, but they simply cannot compete with those of the commerce industry’s behemoth brands. After all, Amazon ushered in the era of free shipping and took a quarterly loss of $1 billion in 2014 to do so. Few companies have such financial freedom.
So, what are small to midsize businesses looking to do this holiday season to increase traffic and sales, effectively pulling shoppers away from marketplaces and chain stores onto their owned and operated sites? Well, nearly 15% of them aren’t planning on doing anything, choosing to rely solely on organic traffic, and more than 50% report their planned holiday season marketing budget is less than 20% of annual marketing spend.
For these brands, marketing during the holidays is just too expensive to justify a significant financial commitment. Instead, small to midsize brands prefer the organic method: ensure your site is search engine optimized (especially product pages), prepare for an increase in traffic as consumers search for products and then determine if you need to allocate additional marketing dollars toward any particularly high converting channel.
To be sure, not increasing holiday spend does not mean that these brands aren’t flexing their marketing muscles in other ways. In particular, these merchants are looking to use site merchandising, discounts and offers to increase conversions for the naturally occurring increase in visitors due to seasonality.
The majority of brands are looking to use percent-off discounts, free shipping, flash sales and free gift with purchase to increase site visitor to purchase rate (i.e. conversion rate). Similarly, they are also experimenting with YouTube videos and donating proceeds or percentage of sales to charity as a way to win customers over from the bigger box brands.
Here is how the percentage points break down for midsize businesses’ planned promotions according to our survey:
- 58% of mid-sized retailers plan to use percent off discounts to increase holiday conversions
- 41% of mid-sized retailers plan to use free/expedited shipping to increase holiday conversions
- 29% of mid-sized retailers plan to use free gift with purchase to increase holiday conversions
- 26% of mid-sized retailers plan to use loyalty offers to increase holiday conversions
- 24% plan to use deal of the day offers to increase holiday conversions
- 22%of mid-sized retailers plan to use abandoned cart offers to increase holiday conversions
- 21% of mid-sized retailers plan to use dollar off discounts to increase holiday conversions
- 21% of mid-sized retailers plan to use flash sales to increase holiday conversions
- 8% of mid-sized retailers plan to use free gift wrap services to increase holiday conversions
And while marketing remains the number one challenge for these brands, with 18% citing it as their biggest concern this season in regards to the success of their holiday selling initiatives, additional backend issues plague the minds of these merchants as well. After all, marketing aside, if you are able to increase your site traffic and conversion rate, you have to make sure you have the inventory, fulfillment and shipping details ironed out in order to maximize for potential repeat customer loyalty in 2016.
Here are the top small and midsize brand challenges and concerns for the success of their 2015 holiday season sales:
- 18% of mid-sized retailers are most concerned about marketing
- 13.2% of mid-sized retailers are most concerned about inventory
- 12.6% of mid-sized retailers are most concerned about competition — Many specified marketplaces such as Amazon and its competitive pricing, especially for Prime customers
- 11.2% of mid-sized retailers are most concerned about the economy
- 10.7% of mid-sized retailers are most concerned about website operations
- 3.1% of mid-sized retailers are most concerned about operating costs
- 5.7% of mid-sized retailers are most concerned about shipping
- 5% of mid-sized retailers are most concerned about timing and poor planning
- 4.4% of mid-sized retailers are most concerned about staffing
- 1.9% of mid-sized retailers are most concerned about weather , and its affect on brick-and-mortar foot traffic and online shipping delays
In all, scaling businesses need to look toward customer experience enhancements in order to outcompete their big box competitors. Nurture net new customers into becoming loyal, repeat purchasers and word-of-mouth advocates. Spend less on traditional marketing tactics and focus more on customer delight to drive sales through friend and family recommendations.
Are you a quickly scaling business? Let us know your biggest holiday season challenges and concerns, as well as how you plan to divert traffic from big box stores to your site.
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