Original Research by The November and December shopping blitz is coming up and online retailers are in the throes of planning for this ever-critical sales period. This report details five ways merchants can stand out this holiday season. THE FOURTH QUARTER is make or break. Any online retailer willand doessay that. No retailer can ignore the holiday shopping season, and most depend on it for a successful year. Plus, as ecommerce sales continue to climb and chip into traditional store retailers market share, standing out from the pack online is increasingly important. Last year, online holiday sales season did not disappoint: Consumers spent $125.91 billion online in the final two months of the year, according to Adobe Digital Insights estimates that are based on data from 80 of the top 100 U.S. online retailers. This was a 16.5% increase in online holiday sales compared with 2017. When sales are that strong, pretty much every retailer benefits. And 2019 looks to be another year of increasing web sales as experts predict strong online holiday sales. The National Retail Federation forecasts retail sales in November and December will increase by between 3.8% and 4.2% over last yearafter growing only 2.1% in 2018. Online and other non-store sales will grow much more quickly, by between 11% and 14%, NRF says. Consulting firm Deloitte projects online sales growth of between 14% and 18% for the period Glenda Corwin Vice President, Sales, FedEx November 2019 through January 2020, well ahead of last years 11.2% growth. However, there are signs that this holiday seasons sales could be more tepid, which makes efficient execution all the more important. Among the macro-economic factors that are less favorable this year compared with last year: Consumer confidence in late 2018 was at its highest level in 18 years, but has slipped in 2019, and ecommerce growth has slowed. Factors that could make shoppers hesitant to spend freely this season include the trade wars depressing impact on the stock market and tariffs that will raise prices on many products. Some of those factors may have contrib- uted to relatively sluggish growth in online retail sales in 2019: 11.6% year- over-year growth in the first quarter and 13.6% growth in Q2 2019, compared with 16.1% and 14.8% growth in the first two quarters of 2018, respectively, according to an Internet Retailer analysis of U.S. Department of Commerce data. The information provided in the attached report does not constitute business, legal, tax or other financial advice. It does not take into account your particular circumstances, business, objectives, legal and financial situation or needs. Before acting on any information in the attached report, you should consider the appropriateness of the information for your situation in consultation with a professional advisor. EXECUTIVE SUMMARY3 Ecommerce Thought Leadership | A Report Commissioned by FedEx 5 Ways to Get a Jump on the Competition During Holiday 2019 EXECUTIVE SUMMARY Plus, U.S. consumer confidence, which is based on a survey that measures consumer sentiment on current economic conditions and prospects for the next six months, is not as high as it was heading into the 2018 holiday season. Although confidence is generally above where it was in 2016 and 2017, it is not at a higher-than-ever rate as it was in 2018. But these indicators still show that consumer spending is growing, just at a slightly slower pace, and that consumers are generally still upbeat. Earnings reports from Walmart Inc. and Target Inc. demonstrated that many shoppers are spending confidently, as both beat second-quarter sales expectations and raised their profit guidance for the full year. Plus, both Home Depot Inc. and Lowes Cos. Inc. reported strong results, a sign the housing market remains solid. And so, retailers have good reason to be optimistic about the upcoming holiday sales season. They will just have to work fast to make up for the shorter season. This report highlights five ways that retailers can stand out during the 2019 gift-giving period so they have reason to celebrate at the end of the year. Glenda Corwin Vice President, Sales, FedEx Consumer confidence index, 2016-2019 J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J 2016 2017 2018 2019 140 130 120 110 100 90 Consumer confidence is based on a survey that measures consumer sentiment on current economic conditions and prospects for the next six months. Source: The Conference Board4 Ecommerce Thought Leadership | A Report Commissioned by FedEx CONTENTS TIP 1 Make your ads stand out 6 TIP 2 T op-notch customer service sets you apart 9 TIP 3 Be agile when it comes to tariffs 11 TIP 4 Prioritize navigation; make finding products easy 14 TIP 5 Refine your email strategy 16FXADV-0899 E-Commerce Custom Ad v3.1.indd 1 9/5/19 2:34 PM40% 27% 23% 6 Ecommerce Thought Leadership | A Report Commissioned by FedEx TIP 1 Make your ads stand out Online retailers can have the best product in the world, but without a smart advertising strategy its unlikely they would generate a lot of sales. Advertising that grabs attention is especially necessary in the holiday season when shoppers are actively looking for products to buy and buying products they normally wouldnt be looking for. Among the various ways marketers can spend their dollars, social media, email and paid search were the top three channels where retailers plan to “significantly increase” their budgets for the 2019 holiday season, according to an Internet Retailer/ Bizrate Insights survey of 106 retailers in July 2019. Among retailers who responded, 40% said they planned to significantly increase their social media budget, 27% plan to spend more on email and 23% plan to spend more on paid search. 5 WAYS TO GET A JUMP ON THE COMPETITION DURING HOLIDAY 2019 RETAILER SURVEY Top marketing channels where retailers will up their holiday budget Portion of retailers indicating they will significantly increase their 2019 holiday marketing budget in each area SOCIAL MEDIA EMAIL PAID SEARCH Source: Internet Retailer/Bizrate Insights survey of 106 retailers7 Ecommerce Thought Leadership | A Report Commissioned by FedEx 5 Ways to Get a Jump on the Competition During Holiday 2019 But its not just how much you spend: Timing also matters, in the view of Dan Bischoff, senior director of acquisitions at mattress retailer Purple. When Purple plans its strategy of when to show shoppers ads during the holiday season, it factors in the higher costs of digital marketing in the fourth quarter compared with other times of the year, as well as higher costs on the big sales days, such as Black Friday and Cyber Monday, Bischoff says. Purple points to data from digital marketing vendor AdStage Inc., which reports that the median cost per click for Facebook Audience Network ads in the fourth quarter is 18% higher than in Q3, 53% than in Q2 and 162% higher than in Q1. Purple, which sells a high-ticket home furnishings product, showcases in its ads how it is different from other direct-to-consumer mattress brands. While many digitally native mattress brands use a memory foam-type material, Purple manufactures its own materials and positions itself as a more premium brand, Bischoff says. To make that case, Purple works hard to ensure that consumers understand the value and uniqueness of its product before they see a coupon code. Purples strategy entails targeting shoppers with multiple pieces of content, such as an explanatory video. But Purple understands that consumers often research a mattress for months before making a purchase, and that shapes its advertising strategy. Purple may spend more on advertising in Q3 to expose shoppers to videos that explain all the ways its mattresses are superior to those of competitors. Doing that kind of top-of-the-funnel marketing would be too expensive during the fourth quarter when competition drives up online ad prices. Purple sees competing brands and other retailers spend the majority of their budget on only a couple of big While mattress retailer Purple does buy holiday advertising, it uses a targeted strategy to maximize ROI, often focusing on other times of the year when ads are cheaper The median cost per click for Facebook Audience Network ads in Q4 is higher compared to other quarters by: Q3 Q2 Q1 18% 53% 162% Source: AdStage Inc.8 Ecommerce Thought Leadership | A Report Commissioned by FedEx 5 Ways to Get a Jump on the Competition During Holiday 2019 sales days, and then cut back on ads on other days, providing an opening for Purple to step in when competitors are taking a break. “We take that trend into consideration when planning our advertising spend over the holidays,” Bischoff says. Plus, after Christmas, when some shop- pers have gift money to spend, Purple may resume efforts to close the deal with engaged consumers. January is some- times referred to as “the 13th month” for sales for mattresses because of this post-holiday bump in sales, Bischoff says. Hardware retailer True Value Company LLC is hoping to have its ads stand out based on their content. The retailer recently invested in 360-degree spinning images of its products. The rotating product image consists of 20 static images stitched together so a shopper can view the product from different angles as its spins. A shopper also can zoom in on the product from a different angle. While True Value initially invested in the spinning images for its product detail pages, the retailer finds they also boost returns when included in digital ads, says Dave Elliott, senior vice president of marketing at True Value. “Weve seen far better ROI in adver- tising on Facebook, for example,” Elliott says, without revealing specific data. He says that consumers find the ads that spin more engaging and useful. For example, on one Facebook ad of a rotating electric stove, the click- through rate to TrueValue from Facebook was 4.5%, above a normal industry rate of 2.4%, Elliott says. This will be especially useful during the holiday season, when True Value wants its ads to grab consumers attention at a time when they are seeing many other ads, and to give shoppers as much content as possible, he says. “During the holidays you get a lot of people buying for other people, which makes it more difficult to make a decision,” Elliott says. “So anything that makes a decision easier to make, thats more thorough and complete, will just be helpful during the holiday season.” “ Anything that makes a decision easier to make, thats more thorough and complete, will just be helpful during the holiday season.” Dave Elliott, senior vice president of marketing, True Value9 Ecommerce Thought Leadership | A Report Commissioned by FedEx 5 Ways to Get a Jump on the Competition During Holiday 2019 TIP 2 T op-notch customer service sets you apart “The number of people contacting us increases during the holiday season, so we need to be able to have the means necessary to answer questions.” Roxana Gulea, customer engagement manager and head of fraud prevention, Adore Me With competition at its height during the holidays, retailers need to ensure they provide top-notch customer service. When an online shopper is comparing two similar products from two different retailers, the reason she may choose to go with one retailer over another could be customer service. Sometimes a previous experience, positive or negative, may be the reason a shopper buys from one retailer over another. Two retailerslingerie retailer Adore Me and denim and apparel brand Lucky Brand LLCare prioritizing customer service during the holiday season, but going about it in different ways. Adore Me receives 15% more customer service calls during its two major peak periods, the holiday season and Valentines Day, compared with a normal time of year, says Roxana Gulea, customer engagement manager and head of fraud prevention at Adore Me. About 5% of Adore Mes annual sales are generated on the two days of Black Friday and Cyber Monday, and November and December together account for roughly 20% of annual sales, Gulea says. With the influx of calls, Adore Me needs to greatly increase the number of agents that can take calls in its service center, which is located in the Philippines, Gulea says. Heavy promotions make Black Friday and Cyber Monday big sales days, she says. “The number of people contacting us increases during this period, so we need to be able to have the means necessary to answer questions,” Gulea says. However, the retailer does not need to typically have these agents available all year long. “There are high peaks at certain times of the year that are super growths, and we need certain features at that time, but not at others,” Gulea says. 10 Ecommerce Thought Leadership | A Report Commissioned by FedEx 5 Ways to Get a Jump on the Competition During Holiday 2019 To help solve this problem of needing more agents at some points in the year but not others, the retailer uses a cloud-based customer service platform called TalkDesk. Because agents can connect via the internet from anywhere, TalkDesk can add staff to handle calls to Adore Me at peak periods without needing to add equipment or full-time employees to its contact center. Another bonus of using TalkDesk is its live-reporting tool. For example, the manager at the call center can see in real time the productivity of each agent, such as if a rep has several calls on hold for a while, or if an agent has been on the phone for 40 minutes. With real-time monitoring, Adore Mes call center manager can ask an agent who has been on the phone for a long time what the issue is and if the manager should intervene. Or if the agent is taking too long to send follow-up emails, standard practice for Adore Me after each phone call, the manager can tell the agent to keep the follow-up messages brief or save them for later, and move on to waiting phone calls. Previously, Adore Me would not know its agents productivity until a day or week later, after it pulled a report. By that time it was too late to intervene and solve a problem. Agent productivity has increased since Adore Me began using this monitoring tool in early 2019. For example, the average time it takes for an agent to finish a call has decreased roughly 30-45 seconds, resulting in savings of $1,500-$2,000 per month, Gulea says. “That also helps increase their produc- tivity, and, of course, less time talking on the phone, and being precise and not beating around the bush, helps with taking more calls per hour,” Gulea says. While Adore Me is focus