Lexington, Virginia • November 19, 2008
In today’s economy, bricks-and mortar-retailers are already offering huge discounts to shoppers.
Traditionally, online retailers have offered discounts but not to the same degree, and in the past some online stores have waited until after Christmas to offer sales. This is all changing, says Robert Ballenger, an e-commerce expert at Washington and Lee University. “In this environment, the online stores are going to have to discount up front to attract people to buy.”
Ballenger says this is already beginning to happen. “Online retailers are becoming very competitive on discounting. I think anyone who has shopped online or through a catalog in the past year or two is going to be inundated this year with e-mail solicitations offering discount coupons to encourage them to buy online.”
“Customers are going to go where the best price is,” says Ballenger, who taught the first e-commerce development course in the United States. “If they think they can drive to the mall and get 30-40% off something that they want to purchase, why would they pay 30-40% more to buy the same thing online?”
Also this year, many online retailers are offering free or reduced shipping. For example E-bay is strongly encouraging its bigger sellers to offer free shipping by discounting its seller fees to those who offer free shipping.
Online retailers do have one disadvantage, says Ballenger: they can’t handle the last minute buyer. About five days to a week before Christmas online buying drops dramatically, because regular shipping won’t get the goods to customers on time and few people want to pay for express shipping.
At this point, the retail stores, if they have the inventory, can precipitously drop their prices to attract customers. “I think there are going to be a lot of people this year who are going to wait for those prices to drop,” says Ballenger. “I remember this happened in the early 1990s. Many Christmas shoppers waited because they knew there were going to be big discounts in the last week, and they were right. And that’s not good for retailers at all.”