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10/24/2007
02:56 PM
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Online Holiday Shoppers Will See Lots of Free Shipping Deals This Year

Although expensive, free shipping has proven to be the most effective promotion in luring online shoppers.

The majority of retailers plans to offer free shipping deals to online holiday shoppers this year, a recognition that the expensive promotion is the most effective in luring customers, an annual study released Wednesday showed.

The most popular shipping promotion will be free shipping with conditions, which means customers must purchase a certain number of items or spend a minimum dollar amount to get the offer, BizRate Research found. Fully 78.6% of the retailers surveyed planned to offer free shipping with conditions.

Not surprisingly, almost two-thirds of the 2,695 online shoppers surveyed by BizRate said free shipping without conditions is the promotion they would most like to see this holiday season; 41.4 % of retailers plan to offer such promotions.

Despite the expense of free shipping, retailers feel compelled to offer the incentive to potential buyers. "Free shipping offers drive online sales more than any other promotion, which is why they remain popular with retailers," Scott Silverman, executive director of Shop.org, said in a statement.

BizRate Research, owned by retail site Shopzilla, conducted the study for Shop.org, a retail trade site owned by the National Retail Federation. Shopzilla is owned by the media company E.W. Scripps.

Retailers also plan to use a variety of other marketing techniques to lure online holiday shoppers. Nearly two-thirds of retailers will offer online-only sales, up from 59% two years ago. More than a third will tout early shopper discounts and more than half will offer refer-a-friend promotions, BizRate found.

While promotions are important, online shoppers rated providing good value for the money as the most important factor in choosing a retail site, the survey found. Other important factors included clear product descriptions, a merchant's reputation, and guaranteed on-time delivery.

Despite the softness in the U.S. economy, more than half of retailers expected online revenue this holiday season to grow by more than 30% over last year, and more than 75% were optimistic about the season. The consumer survey backed up that positive attitude, as more than a third of the respondents planned to do more holiday shopping online than a year ago. Consumers, however, expected their overall shopping budget to be about the same as last year.

Convenience and the ability to compare prices remained among the top reasons for shopping online, the consumer survey found. With online holiday shopping growing, retailers planned to integrate their stores and Web sites more than ever this year to increase sales company-wide. More than 80% of retailers with stores would offer in-store ads for their Web sites and e-mail registration. In addition, many retailers would make it possible for store staff to place online orders for customers, and for customers to use in-store Web kiosks.

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