By Julian Chu, Demandware Client Success

We've all seen the headlines: Just as the retail sector overall is hemorrhaging, even growth in the ecommerce market has come to a standstill. According to the latest statistics from comScore, growth slowed considerably this summer and dropped to just 1% year-over-year in October. Many are predicting even worse for the remainder of the season.

But it's in times like these that leaders emerge, take market share and set themselves up for future success. In Demandware's own client base, we see more than a few companies continuing to post strong growth even up through last week. In a no-growth environment, every site visit is critical, each ad placement a precious investment. So the question for today is, are you prepared to engage in close-quarters, site-to-site combat for consumer market share this holiday season?

Now, more than ever, online retailers need a comprehensive competitive strategy and detailed tactical plan that focuses on retaining existing customers and winning new ones from competitors. The strategy part starts by understanding:

• Who are our target consumers and where/how do they shop?
  
• What is our share of wallet among these customers, in relevant product categories?
  
• Who are our leading competitors? Why would these customers spend their money with these competitors and not with us?

Tactically, retailers need a plan going into the holidays that anticipates and prepares them to respond to the marketing tactics (e.g., campaigns, offers, promotions) of their competitors. Not just planning what campaigns you will launch, but also:

• What will the key competitors do?
  
• How might they respond to our tactics?
  
• How should we respond in turn?

This is all about "war-gaming," thinking through different scenarios and being prepared to launch new campaigns and offers on a daily basis. Pulling this off successfully requires work to be done before the holidays begin, to strategize and develop a tactical plan for key dates in the season. It requires you to have processes and tools in place to monitor what competitors are doing in the marketplace, and to measure how you're faring in comparison.

And, importantly, it requires that you have a flexible technology infrastructure that allows you to prepare different campaigns, offers and promotions ahead of time, and then launch them on a moment's notice when and where needed.

Is your organization prepared to engage in site-to-site combat this year?

If you missed part one of our Countdown to the Holidays series, be sure to check out Part I: Getting the Basics Right.

By Adam Forrest, Demandware Product Marketing

No, not really, the holidays are still on as scheduled, but with all the doom and gloom reports about the economy; I am starting to think the Grinch may be running The Fed. Yet even with all this noise, retailers are reacting quickly to the economy and the ones who manage to go on offense early will be the most likely to succeed.

Believe it or not the holiday shopping season already began. While many retailers may not label it quite yet as holiday shopping, retailers are making a big push early with major discounts....take a look at an email I got last week from Jos A. Bank.

And rest assured this is not the only email I got today about upcoming sales.

It is not even just an online only phenomenon, even in-store retailers are trying to move customers into the holiday shopping mode quickly. For instance, being the last minute shopper I am, I went to Target one night last week to find a Halloween costume, only to find employees taking down most of the Halloween section and in its place a holiday wonderland appeared. This was 4 full days before Halloween, and I know I am not the only last minute shopper out there!

That said, retailers need to be aggressive this year, and those caught behind the curve may struggle.

Online retailers in particular, need to be able to adjust quickly and need to be in full control of their site. In a tough economy the opportunity cost of waiting a day for a simple change is too high. Merchandisers, marketers, and web developers need to be on their toes not only to react to competitors but more importantly to strike first with great content, product information, and most importantly promotions.

By Scott Todaro, Demandware Product Strategy

Free shipping was one of the first promotions used in ecommerce, and was designed to stimulate purchasing online. In the beginning, shipping was a high barrier to entry for shopping online, since in-store pricing and online pricing were often identical, and shipping often appeared as an unwelcome additional cost. Now, years later, free shipping has become standard in many retail segments–and this standard is becoming problematic for many e-tailers as the price of gas, and therefore the price of shipping, rises.

Customers have come to expect free shipping, especially for orders of significant value (over $100). It's used by almost all sites in one way or another, and, if you're like many retailers, you'd like to stop this practice all together. Free shipping decreases margins and, in many cases, it can't be used along with other, potentially more attractive promotions. If free shipping is given to customers as a site wide promotion, you risk your customer double-dipping into your margins if other promotions are applied to an order.

In many cases, the main problem with free shipping is the way it's implemented and offered. If you ship a $50 order for free, it may cost your company as much as $10 to ship, and that may turn your $50 order from a low-margin but profitable sale to a loss. Allow other promotions to be tacked on, and your sale is suddenly running you deep into the red.

Customers don't necessarily see the actual value that free shipping has since shipping costs don't come into the equation until checkout. This means that a consumer won't actually see the value of free shipping until they've already decided to buy. For example, a plasma television may sell for $1000, and free shipping can cost the retailer up to $200–suddenly you're giving a 20% discount without giving the customer a sense of the real value of this promotion. At that point in the transaction, discounting is a wasted effort unless the retailer is experiencing high shopping cart abandonment (rates of over 45%). To inspire conversion, free shipping must be offered earlier in the sales process, well before a customer makes a purchasing decision and well before they hit the checkout button.

So where is offering free shipping effective? According to a recent survey of customers by Paypal and comScore, the number one reason for abandoned shopping carts is unexpectedly high shipping fees. So, it stands to reason that offering free shipping will hook those customers who abandon their carts once shipping is tacked on to their final purchase price.

But it's not that simple–after all, loyal customers will quickly identify this process and abandon carts regularly to get free shipping. A retailer can also limit free shipping to orders with no other promotions applied to the purchase, thus avoiding double-dipping into their margins. Randomizing the free shipping offer to recipients based on previous buying behavior will also help mitigate exploitation of this promotion.

In short, you need to make free shipping part of a larger promotion strategy where you segment your customers based on value. Test the price sensitivity of your customer base and experiment with new promotion types in different stages of the selling cycle. This old promotion still can convert customers if you consider the unique way you do business, and rethink the way you leverage free shipping to maximize its efficiency.