E-Tailers Cooking Up Cyber Monday Promos to Goose Holiday Sales

With the economy in a downward spiral, many e-tailers plan to offer deep discounts and special shipping deals on the Monday following Thanksgiving, aka Cyber Monday, which has become a big spending day for online shoppers in the past several years.

Eighty-four percent of online retailers plan to have a Cyber Monday promotion to stimulate sales for what many retail experts expect to be a less-than-scintillating holiday shopping season, according to a new report by Shopzilla, an online shopping site. That's up from the 72 percent of online retailers who offered similar promotions last year.

Almost a quarter of e-tailers plan to offer free shipping on all purchases -- again, in the hope that consumers will open their wallets and spend a little extra this year.

E-tailers need Cyber Monday

E-tailers have come to count on Cyber Monday for a big holiday sales boost as much as their brick-and-mortar brethren depend on Black Friday, the day after Thanksgiving.

Though Cyber Monday does not yet invoke the excitement surrounding Black Friday, it has the potential to have a major impact on holiday sales.

Retailers that run a very heavy Cyber Monday promotion could see in an increase in Web sales volume by as much as 10 percent, Sucharita Mulpuru, an e-commerce analyst at Forrester research, told the E-Commerce Times.

In the past, many shoppers would wait until the Monday following Thanksgiving to shop from their computers at work, which typically had much faster Internet connections than their computers at home. It was that behavior that gave rise to "Cyber Monday." With broadband now much more affordable and widespread, that isn't so much the case anymore, but the name has stuck, Mulpuru said.

"Black Friday is a great shopping day for Web retailers too, as is Thanksgiving Day," she said.

Deep Discounts

This year, e-tailers such as Amazon.com (Nasdaq: AMZN), Wal-Mart.com, BestBuy.com and Nordstrom.com can expect "picky shoppers looking for the cheapest prices and great shipping promotions," said Mulpuru.

Online retailers typically offer deeper discounts than brick-and-mortar operations, Richard Hastings, an equity analyst with Global Hunter Securities, told the E-Commerce Times. "There's a little bit of cost savings that they pass along to the consumer. The unit cost is lower because it comes direct from the warehouse, so there's no labor from the retailer handling the inventory, and it doesn't have to be shipped to the retailer."

If e-tailers can work out a good enough deal with freight handlers, then that per-unit cost savings can also be passed along to the consumer.

"So, the potential discounts of shopping online can be very attractive," Hastings said, "and since you're buying directly form the warehouse instead of the retail store, you have a much better chance of getting what you really want instead of what's left on store shelves."

Tough Road Ahead

The holiday season may not be enough to significantly boost revenue for e-tailers, though.

"In September, comScore said the e-tailing business grew by 6 percent," Hastings said. "In October, it only grew by 1 percent. So, trend-wise, it's possible we'll be going negative in November. The two-month period of November and December could end up having no growth or negative growth this year."

The e-commerce companies best positioned to weather the down economy are those that have the greatest economies of scale, enormous branding and traffic flows, competitive pricing and available inventory, Hastings said.