E-tailers push e-mail discounts to lure shoppers
By ANNE D'INNOCENZIO
NEW YORK (AP) - Online retailers - grappling with a sharp drop in consumer spending from even their most gung-ho Web enthusiasts - are becoming pushier with e-mails that pitch the latest deals.
With pleas like, "Last chance to save 20 percent," or "Hurry, final sale ends," retailers from pure online players to land-based stores with a Web presence are hoping to get consumers to open their wallets - quickly and in a cost-effective way.
AnnTaylor Stores Corp. (ANN)'s recent e-mails promote knit tops as low as $9.99, while Saks Fifth Avenue's e-mail messages tout up to 60 percent off on new women's fashions. But such attempts to pump up sales threaten to drive away shoppers, who may already be starting to get bleary-eyed over the bombardment.
And if consumers are fed up with the e-mail blasts now, just wait until the holiday season gets under way in earnest - with merchants expecting to increase the pace as they do whatever they can to make their sales goals.
I find them annoying," said Cory Porter, a Web shopping fan from Washington D.C. who says he now receives about seven per day, twice as many as about two months ago. He had signed up with about nine retailers including Barneys New York, Banana Republic and Safeway to receive e-mail promotions, but thought they would be customized to his needs.
"I am a 32-year-old guy who lives in an urban area with no kids," Porter said. "In other words, I don't need blouses, high heels, or kids' juice boxes." As a result, he's opted out with some stores, directing the rest to his spam account.
The frenetic pace of offers comes as Web shopping - which had held up better in the slowing economy than store-based retailing - has been starting to slow dramatically since the financial meltdown intensified in September.
Sucharita Mulpuru, an analyst at Forrester Research, expects online retailers to fare better than regular stores this holiday season because of the convenience, the breadth of selection and the perceived value. But "there is definitely a significant slowing down" in online shopping, she said, noting that the stock market tumble, weaker job market and tighter credit have spooked even the most enthusiastic Web shoppers.
Amazon.com, considered the bellwether of Web shopping, announced late Wednesday that it was slashing its full-year sales outlook, saying it had slower growth rates near the end of the quarter and now expects annual revenue below analyst expectations.
Porter, who does public relations for government contractors, noted that he slashed his spending on clothing and gadgets to $200 this month amid "all the economic uncertainty." That compares with the $500 per month he had been spending. He said he typically does about half of his buying on the Web.
Kurt Peters, editor-in-chief of trade publication Internet Retailer, noted that stores can easily react to a sharp sales slowdown in a matter of hours by sending out e-mail blasts, which is faster and more cost-effective than redoing a mailer to consumers. Julie M. Katz, another Forrester analyst, estimates that it costs about $2 for every thousand e-mails sent. The Direct Marketers Association estimates that marketers reap $45.06 in return on investment for every dollar they spend on e-mail campaigns. That compares with $7.28 for catalogs and $15.55 for direct mail pieces.
Analysts say that during the last recession in 2001, stores didn't have the vast data bank of consumer contacts they could mine as they do now.
Internet Retailer's recent survey of 174 Web retailers, including those that operate stores, found that nearly half have increased the number of monthly e-mails they send compared to a year ago. Chad White, director of retail insights for the Email Experience Council, the e-mail marketing arm of the DMA, reports an 8 percent increase in the number of e-mails stores have sent for the week ended Oct. 17, compared to the same week a year earlier.
Overall, Forrester predicts that retailers and wholesalers will send 158 billion marketing e-mails this year; that's expected to increase 63 percent to 258 billion in 2013. At the same time, consumers are becoming turned off with e-mail. Forrester said it is finding that online consumers were annoyed with e-mail volume and are beginning to turn to social networking sites, texting and other communication channels.
Michael Wagner, CEO of etoys.com, said e-mail campaigns drive about 12 percent of overall revenue but noted that he's not sure if they will do more this holiday season than last year. "We are concerned about exhausting the customer," he said.
The big problem, according to Stephanie Miller, vice president of market development for consulting group Return Path Inc., is that less than 20 percent of retailers' e-mails are customized even though stores have the capability of targeting their messages. She thinks it's because marketers don't get the resources they need. That will change, she said, because just stepping up the frequency is not going to work in this challenging environment.
Dan de Grandpre, founder of dealnews.com, a site that keeps track of store bargains, said that he's noticed that stores are sending out more reminders and are blasting e-mails that offer discounts across many categories instead of just one item. The bulk of the e-mails are coming from apparel and furnishings chains, which have been hardest hit by the economic slowdown as shoppers cut back on non-essentials.
Forrester's Katz expects that stores may pull back on e-mail campaigns after the holiday season; she added such programs still cost companies a "chunk of change" given the millions of e-mails they send out.
"Consumers just don't have the dollars. The reality is going to sink in," she said.
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