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October 21, 2015 08:00 am EDT

Small Businesses Confident Holiday Sales will Outperform Previous Year

Bigcommerce survey reveals 75% of seasonal hires will be focused on online order fulfillment; SMB retailers emphasizing social media advertising for holiday marketing

AUSTIN, Tex. — October 21, 2015 — According to a recent survey from Bigcommerce, the commerce platform of choice for established and emerging brands, 48% of online retailers are “very” or “extremely” confident that this season’s holiday sales will outperform last year. With a renewed focus on online sales channels, business owners plan to hire seasonal employees for online order fulfillment, and will implement social media marketing strategies and other promotions to maximize their holiday revenue.

For small and mid-size businesses, holiday sales are expected to make up a larger percentage of annual revenue in comparison to the industry average of 19%. Nearly 60% of businesses predict holiday sales will equate to more than 20% of annual revenues, with one-third of business owners surveyed expecting the holidays to drive upwards of 40% of total annual sales. When asked about the most successful sales channels, 56% of retailers expect their online store to be the strongest performer, closely followed by marketplaces (15%) and brick and mortar stores (10%).

Small businesses bracing for higher marketing costs; heightened competition

Of the top holiday challenges online retailers face, the biggest three concerns that could impact opportunities for seasonal success are rising marketing costs (18%), inventory management challenges (13%) and heightened competition from large online retailers (13%) during the holidays.

Small businesses doubling down on ecommerce, social media

In preparation for the uptick in seasonal orders, small and mid-size retailers are planning for the holiday season in a number of ways:

  • Seasonal hires focused on online order fulfillment: As shoppers continue to move online for better search and discovery of gifts, 75% of business owners who expect to hire, plan to expand their teams for order fulfillment capabilities and to ensure accurate and timely delivery. Approximately 17% of retailers have plans to hire additional employees for the holiday season, a slight increase in comparison to last year. Approximately two-thirds of those hiring seasonal workers will employ teams for one to three months, while one-third will employ seasonal help for more than three months -- and as early as August -- to accommodate consumers’ habits of purchasing holiday gifts earlier in the season.
  • Marketing plans emphasize low-cost social media: The majority of respondents cited concerns about high costs associated with holiday consumer marketing, with more than half reporting their holiday spend accounts for no more than 20% of annual marketing budgets. Select retailers (14%) reported no plans to increase marketing expenses for the holiday, preferring to rely on organic traffic associated with the season.
  • Social media advertising eclipses paid search: Among the surveyed retailers, social media marketing is top priority for the majority of business owners. More than 70% plan to focus on promoting their business through the existing communities they’ve built on social media channels, and nearly 45% plan to spend on social media advertisements. Search engine optimization and advertising scored a close second with 60% of retailers relying on their SEO-optimized online channels to help them stand out; additionally, more than 30% are budgeting for search engine advertisements. The survey also revealed that many retailers plan to rely on traditional marketing tactics, such as email marketing (60%) and word of mouth (50%).
  • Planning a diverse mix of promotions: Approximately 85% of responding retailers are planning a variety of marketing tactics to close sales with new and existing customers. Top promotional vehicles include, percentage off discounts (58%), free or expedited shipping (41%), free gift with purchase (29%), loyalty or best customer offers (26%) daily deals (24%), and abandoned cart offers (22%).
  • Working through increased shipping costs: A number of surveyed retailers (36%) were not aware that carriers will increase their prices for the holiday season, and 20% were unsure of how to handle the changes from companies such as FedEx, USPS and UPS. Of those that were aware of the changes, 21% plan to absorb the additional costs while 16% will accommodate the increase by modifying their shipping quotes to customers.

Planning to reinvest

The great majority of surveyed retailers also reported similar optimism for their performance in the years to come. Revenue from the holiday season will be used to reinvest in their business, including budgeting for facilities upgrades and savings for summer months (61%), or purchasing additional inventory for 2016 (45%).

Bigcommerce surveyed several hundred small to mid-market retailers with annual online sales in excess of $250,000 regarding their confidence in the upcoming holiday retail season and how they will adjust their strategies to accommodate the increase in consumer purchases. The survey was conducted during late August and mid-September 2015.