• by Laurie Sullivan , Staff Writer @lauriesullivan, December 19, 2012

This holiday season proved that paid-search ads and a well-tuned search engine optimization strategy helped to drive up online holiday spending to $21 billion through an increase in conversions, but brands and marketers with online strategies better start communicating with customers and across internal business units prior to the end of 2013. If not, online spending will take a dive by the end of next year.

Several factors will come into play, from the decision by the Internet Corporation for Assigned Names and Numbers (ICANN) to release new top-level domain-name addresses, to inconsistency in online and in-store purchase and return policies.

As for the TLDs, how will brands optimize domains for search queries? In the long run, the change aims to introduce greater choice and competition for brands wanting to reach out to consumers on the Internet supporting innovation. In the short term it will spur chaos and inconsistencies simply by moving TLDs from dot-coms to dot.[whatever].

Several experts believe the move will bring positive changes for retail, online advertising, and online marketing -- but frankly, most retailers still lack the basic knowledge to support any type of multichannel marketing, sales and ad strategy. A multi-TLD brand strategy could force each site to perform autonomously, which will require a considerable amount of link-building and optimization.

Aside from the TLD fiasco, other factors will contribute to the decline in online sales, such as inconsistent online and in-store operations. While free shipping considerably increases the amount that consumers spend online, the need to pay for returns will stifle growth. Some 81% of online shoppers revealed in a recent ShopRunner study that they were not likely to purchase again from retailers charging for return shipping.

The study from ShopRunner, which brings together a network of retailers to deliver powerful shopping services, was intended to understand how online shipping drivers consumers to click. It turns out that it's not so much the free shipping that prompts that last step, but rather thinking ahead to the free shipping on possible returns.

The industry needs standard return processes. The survey conducted online by Harris Interactive, which polled 3,036 adults in the United States ages 18 and over in December 2012, revealed that 69% of consumers viewed the return of items purchased online as a complicated process. And 67% said they would make more purchases via mobile or online if the process was the same across retail sites.

Shoppers also said they value fast delivery. Some 77% would spend more online and less in stores if free one-to-two-day shipping was offered, and faster and free shipping options would drive 65% to procrastinate and put off making purchases longer than usual.

What challenges do you think the online industry will face in 2013?