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November 24, 2008

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"THE CUSTOMER IS king" is taking on a whole new meaning as online retailers struggle to grab shoppers' attentions and turn a profit this holiday season.

U.S. consumers plan to spend an average of $832.36 on holiday shopping this year, according to a recent survey by the National Retail Federation. That's a measly 1.9% increase over last year's $816.69 and is the smallest bump in planned consumer spending since 2002. And, according to online marketing research outfit eMarketer, sales at online retailers (excluding travel) will rise just 7.2% year-over-year, compared with last year's 19.8% jump.

“This holiday shopping season is going to be very competitive,” says Thomas Harpointner, chief executive of AIS Media, an interactive marketing and web services firm in Atlanta. “Consumers are still in high-gas-price mode.” As a result, online retailers are going to have to work even harder to capture and retain shoppers' attention.

To help, we've dug up some low-cost ways to lure shoppers in and entice them to buy:

Offer free shipping

Shipping fees and charges are reason enough for any shopper to abandon their virtual shopping cart. Offer free delivery, however, and you give customers incentive to stay and complete the deal, says Harpointner.

Of course, offering to ship all of your orders for free can get pricey. To help offset costs, offer free shipping only on orders of a minimum amount. (The added bonus: some shoppers will spend more just to nab the deal). For companies that can't afford to offer free shipping, offering a flat shipping fee may do the trick. Gap (GPS), for example, now charges a flat $7 shipping rate no matter if shoppers buy a hat and gloves or an entire wardrobe. “Customers are encouraged to buy more,” says Harpointner.

Make sure search engines and shoppers can find you

Just like in the bricks-and-mortar retail world, if shoppers can't find an online store then they just won't come. To make your site more visible to shoppers, work toward improving the store's odds of popping up in the results of search engines like Google (GOOG) and MSN. Include popular but specific keyword search terms such as “free shipping” or “holiday gifts for dad” in your site’s content, says Joel Book, director of eMarketing for ExactTarget, an email marketing firm in Indianapolis, Ind. Hit the right search words and it opens up a whole new audience to your store. The term "free shipping" for example, is currently being searched by 75% of online consumers, according to Google’s 2008 Holiday Shopping Intentions Study. To help search engines locate your store, embed other corresponding “meta tags” in your html code that further describe your site’s content. (Click here for our video on seasonal search engine marketing strategies.)

Make shopping easy

“When customers head to your site, the thing that they don’t want to do is to spend two hours drilling down menus and submenus to find the page that they want,” says James Gabberty, an associate professor of Information Systems at Pace University in New York. To avoid provoking customer ire, make sure the site is easy to navigate and that processes are streamlined and convenient. Also, consider offering in-store returns for online purchases and loosening your site’s return policy. While you’re at it, offer extra perks like free gift wrapping, says Paul J. Rauseo, managing director of George S. May, a small-business management consulting firm in Chicago.

Offer discounts

Discounts always help get shoppers in the door, but now it's almost imperative, says Harpointner. Daniel Kogan the co-founder of eModa.com, the online retail arm of a clothing store based in Philadelphia, is adding more sale items to its clearance section than normal this holiday season. “We are literally seeing people buying five or six items. Last year, it was harder to move clearance items,” says Kogan. EModa.com also alerts customers when prices for items on their watch list drop — a service that's gaining a lot of traction with its shoppers. “People are just really price-conscious right now,” says Kogan.

Provoke word-of-mouth marketing

In the retail industry, the ability to create buzz can make or break a store. One way to get customers talking is to offer them discounts that they can extend to friends and family, says Tem Balanco, president of OneWebHosting.com, a web design and hosting firm in Sacramento. The customer effectively becomes your marketing machine, referring the company's products and services. To maximize the value of these referral customers, collect email addresses for future marketing purposes, he adds.

Get in the holiday spirit

Treat your web site as if it were a store window, says Rauseo. Add a holiday theme to the content and look and include a special holiday landing page with decorations and holiday-themed gifts. Continue this idea with holiday-themed video tutorials on your site, suggests Rauseo. For example, a craft store could film a holiday home decorating session using items from the store. It’s an opportunity to both connect with customers and share tips about using your company’s products or services, he adds.

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