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October 24, 2007

Free Shipping Still Rules for Online Shoppers and Retailers, According to eHoliday Research

Note to media: For a copy of the complete survey results, click here

For Immediate Release
Shop.org: Kathy Grannis or Scott Krugman (202) 783-7971
grannisk@nrf.com or krugmans@nrf.com
Shopzilla: Adrian Eyre, Waggener Edstrom Worldwide (415) 547-7033
adriane@waggenerEdstrom.com

Free Shipping Still Rules for Online Shoppers & Retailers,
According to Shop.org/Shopzilla Research
--Shoppers Encourage Retailers to Focus on Basics this Holiday Season--

Washington, October 24, 2007—Shipping that holiday gift across the country might not cost a cent this year…if you know where to shop. According to results of the 2007 eHoliday Study, conducted by BizRate Research for Shop.org and Shopzilla, free shipping offers will abound online this holiday season. The most popular shipping promotion will be free shipping with conditions, which the majority of retailers (78.6%) will offer this holiday season (Free shipping with conditions means that a customer must purchase a certain item or a certain number of or dollar amount of merchandise before receiving the offer).

However, retailers will also use free shipping upgrades (60.4%), discounted shipping (53.5%) and free shipping without conditions (41.4%) to drive sales. Not surprisingly, consumers overwhelmingly favor free shipping promotions, with almost two-thirds of online shoppers (61.2%) admitting that free shipping without conditions is one of the promotions they would most like to see this holiday season.

“Free shipping offers drive online sales more than any other promotion, which is why they remain popular with retailers,” said Scott Silverman, Executive Director of Shop.org. “Unfortunately, free shipping is not free for retailers. Merchants can minimize the financial impact of these promotions by carefully analyzing the conditions required for their customers to receive free shipping.”

In addition to offering free shipping promotions, retailers will use a variety of other marketing techniques to increase sales. Nearly two-thirds of retailers (63.0%) will offer online-only sales this year, up from fifty-nine percent just two years ago. Many companies will also be touting early shopper discounts (35.0%), repeat buyer discounts (37.0%) and “refer a friend” promotions (55.6%).

Even though many retailers will be featuring plenty of bells and whistles on their websites this holiday season, consumers insist that getting the basics right still matters most. The most important factor for online shoppers is that websites provide good value for the money, which received an average 4.52 rating out of 5.0. Also, shoppers said that clear product descriptions (4.37), a merchant’s reputation (4.31) and guaranteed on-time delivery (4.28) were important features when deciding where to buy.

Despite softness in the economy, online retailers are expecting strong growth this holiday season with more than half of retailers surveyed (51.4%) anticipating online revenue to grow by more than 30 percent over last holiday season.

Additionally, more than three-fourths (75.9%) of the retailers surveyed remain optimistic about the holiday season, and it appears that they have good reason to be positive. The consumer portion of the survey found that, while overall consumer holiday shopping budgets will not see much growth compared with 2006, the online sector will continue to receive a larger portion of shoppers’ wallets as one-third of online shoppers (34.7%) plan to do more of their holiday shopping online than a year ago.

Customers’ top reasons for shopping online instead of in stores is the ability to shop at any time of day (58.5%), not wanting to fight crowds in stores (43.8%), and the general convenience of shopping on the Internet (38.7%). Shoppers also said they like the ability to compare prices online (36.2%) and that items are often easier to find online than in stores (29.9%).

“As consumers become more comfortable with the web as a shopping resource and sales channel, they are naturally spending more of their holiday budget online,” said Helen Malani, Shopzilla’s Chief Shopping Expert. “If consumers continue to have a satisfying experience online, the channel will continue to grow for many holiday seasons to come.”

The survey also found that retailers will be integrating their stores and websites more than ever this year to increase sales company-wide. This year, four out of five online retailers with stores will offer in-store advertising for their websites (80.6%) and email registration for customers who do not yet subscribe (75.8%). Additionally, many retailers will offer the ability for store associates to place an online order for customers (48.4%) and for consumers to use in-store web kiosks (30.6%).

The eHoliday Study, now in its sixth year, provides an authoritative snapshot of the holiday activities of both large and small online retailers, many of which have been in business for at least nine years, and also includes the sentiments of online holiday shoppers. The Study, conducted by BizRate Research, a Shopzilla company, for Shop.org, surveyed 2,695 online buyers (defined as anyone who has made an online purchase in the last twelve months) and 116 online retailers from September 26-October 8, 2007.

Shopzilla is dedicated to helping shoppers around the world find the best price on the right products. Innovative patent-pending technology empowers shoppers with the ability to quickly and easily compare prices on more than 30 million products offered by 92,000 stores. Shopzilla, Inc. also includes BizRate.com and its renowned consumer feedback network, which collects more than 1 million merchant and product reviews and ratings each month. Based in Los Angeles, Shopzilla operates sites in the United Kingdom, France and Germany. In 2005, The E.W. Scripps Company purchased Shopzilla, Inc. adding Shopzilla.com and BizRate.com to its vast media holdings, including TV stations, newspaper publishing and national lifestyle TV networks. For more information, please visit www.shopzilla.com.

Shop.org is the network for retailers online. It's where the best retail minds come together to gain the insight, knowledge and intelligence to make smarter, more informed decisions in the evolving world of the Internet and multichannel retailing. Shop.org programs and activities include benchmarking research, events and networking communities. Founded in 1996, Shop.org became a division of the National Retail Federation in January 2001.

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