Home Page for the Holidays

A survey shows 75% of adults plan to buy gifts online from small businesses this holiday season. How do you get your share of retail dollars?

Online holiday shopping continues to gain popularity with consumers. According to MasterCard (MA), Internet spending was 14% higher on the Monday after Thanksgiving this year than it was in 2005 (see BusinessWeek.com, 11/30/06, "Cyber Monday Hype Pays Off").

And several analysts expect online purchasing to peak over the next week. So what can a small online company do to carve out its share of the retail dollars? Yahoo! Small Business (YHOO), which hosts more than 40,000 online retail sites, and the Harris Interactive market research firm, surveyed U.S. consumers who have Internet access and asked that very question.

Dmitri Krakovsky, vice-president of products at Yahoo! Small Business, spoke recently to Smart Answers columnist Karen E. Klein about the findings (see BusinessWeek.com, 9/1/06, "Secrets of Online Business Success"). Edited excerpts of their conversation follow:

So the good news is that your nationwide survey of 2,766 U.S. adults showed 76% said they planned to buy gifts online, and 75% said they planned to buy from small businesses online.

Yes. Consumers said they rely on small businesses that are online during the holiday shopping season because they offer variety, value, and unique gifts that aren't always available in stores. The survey showed that shoppers have high expectations, but also high confidence in buying holiday gifts online with small businesses.

What are some of the best ways for small, online retailers to get noticed during the holiday shopping season crunch?

Every site hoping to get a boost should have a specific holiday-season strategy, just like retailers in offline stores do. It doesn't have to be a huge overhaul, but you should pick the products you think you can move and make sure they're featured prominently on your home page and priced right.

The majority of retailers know that their sales are generated by a few specific popular items, even though they may carry thousands of products in their inventory. So think about which products are the most popular and the best fit for holiday gift shoppers, and then designate those as holiday specials that show up on your home page.

Your survey asked what consumers find most important about their holiday shopping experience. What results came up?

More than half said it was important for their favorite specialty or gift stores to have an online presence. They also expressed strong support for an online shopping experience that is both simple and secure. The two most important things they look for are a trusted, secure online payment system, and a site that is easy to navigate, browse, get information and make purchases from.

Easy checkout and customer registration also ranked high on their wish lists, as did 24-hour customer service. Things like attractive, professionally designed Web pages weren't as important consciously to consumers—only 39% ranked that as vital—but the look of a site certainly makes a subconscious impression about a small company, and drives buying decisions if nothing else.

What this tells me is that the little guys really need to offer PayPal (EBAY) as a checkout option. It says, "I'm legitimate, I'm not fly by night, I'm not going to steal from you." Anything a small retailer can do to make that reassurance helps with conversion, because the decision to buy from a small retailer is all about trust. Is this merchant for real, will they send what they promise? Will they support me if I'm not happy with what I bought? Anything you can do to answer those questions positively supports the trust you need to build with your customers.

Another thing that helps is to list the top 10 or 12 purchasing questions your current customers have and provide the answers in a prominent place on your site.

If you don't have an 800 customer line, get one for this month and cancel it in January if you can't afford it year-round. Think about hiring temps and bringing in family and friends to staff it for as many hours a day as possible. Just make sure your phone staffers can answer product questions, explain your return and exchange policy, and talk about sizing, colors, and shipping.

You also asked shoppers what they like about the online sites they already purchase from. What did they say?

Online holiday gift shoppers overwhelmingly consider free shipping an important enticement in making purchases, with discounts and free-return policies also key considerations. Ninety percent said that free shipping would entice them to buy from an online small business.

Online discounts appealed to 69% and a free or "no-hassle" return policy was important to 64% of consumers surveyed. Other incentives, like free gift-wrapping and gift certificates, were less popular—about a quarter of the respondents checked off those boxes.

We keep hearing about "Cyber Monday"—the Monday after the Thanksgiving weekend—and other weekdays during December being important online shopping days (see BusinessWeek.com, 11/29/06, "Cyber Monday, Marketing Myth"). Your survey at least partially explained that.

What we found was that 20% of online holiday shoppers said they will do holiday shopping online while at work. Men are somewhat more likely to shop while on the job, with 24% saying they would shop online at work, compared to 17% of women. In addition, younger workers are more likely to shop online at work. According to the survey, 26% of those ages 18 to 44 said they would shop online at work, compared to 13% of those age 45 and older.

This tells me that people are multi-tasking. They're working and when they have a few spare minutes they're browsing Web sites looking for gifts. That's why I said you've got to make the items you're most likely to sell as prominent and as easy to find as possible. Customers are going to come to your site, make a quick decision about what they want, and buy it. They just don't have hours to browse your site looking for what they want.

What did the results of your survey have to say about marketing?

As for getting the attention of holiday shoppers, most of those U.S. adults who plan to shop online said recommendations from friends and family and search engines are the top influences in identifying small, online businesses for holiday gift buying. So again, search-engine optimization—while it's not something you can do at this point for 2006 holiday sales—is something you need to work on year-round (see BusinessWeek.com, 7/6/06, "/smallbiz/content/jul2006/sb20060705_363880.htm").

Other important influencers or information sources our survey respondents listed included advertising on the radio, in newspapers, and on TV, and online banner or display advertising. One influence that is still small but is likely to be growing over the next couple of years in popularity is blogs and "social media" Web sites, like video sharing and social networking sites. So that's another area to be thinking about for 2007.

To watch a video with more online selling advice, click here.