It’s the time of year when Marketing Daily is hip-deep in holiday spending forecasts. And while some of these closely followed forecasts predict that people will spend as much as 40 to 50% of their holiday gift budget online, Gian Fulgoni, founder and chairman emeritus of comScore, has a single sentiment: malarkey. He says those numbers aren’t just off, but ridiculous. He and Andrew Lipsman, VP of marketing and insights at the Chicago-based company, spend some time explaining why marketers should take a more measured pulse of holiday shoppers, and the e-commerce trends they need to be watching.
Q. First, explain why you think these online spending forecasts are so overstated.
A. It’s because they recruit the survey sample online, which creates skewed results.
About half of all surveys are done online now, and they’re faster, so people gravitate toward them. But one needs to look no farther than government spending to see how off these numbers are. The U.S. Commerce department reports that overall, a total of 7% of spending occurs online. Even when you factor out cars, gasoline, food and beverage, it’s still only 14%. That’s nowhere near 40 or 50%. Certainly, there are people who will buy everything online. But many, many people will spend far less. It’s frustrating. If these forecasts were true, people would be spending online at something like three times their current level. Stores would be going out of business!
Q. So this is just an issue of poor research quality?
A. Yes. If they were to do it properly, they wouldn’t use online-only responses. Look at the way Pew Research Center does its research, with much larger and more diverse samples.
Q. Isn’t it also a case of people not necessarily being accurate reporters of what they tend to do or buy in the months ahead?
A. That’s less of an issue. They can be pretty good predictors of their own spending, because they have bought gifts before, although they can be spooked easily by the economy. But it’s very hard to get people to react to something new. People wouldn’t have known what to say about an iPhone before they’d seen one, for example. And this is why movie producers still haven’t nailed it.
Q. Speaking of predicting new behavior, comScore has typically reported on desktop e-commerce spending through the holiday. Any plans to include mobile?
A. Yes, we are still working out the kinks, but expect to release weekly reports on m-commerce. Right now, it accounts for about 11 to 12% of e-commerce, and might tick up to 13% in the fourth quarter. And we definitely see a trend toward lower-priced purchases being made by mobile. The more expensive an item is, the less likely it will be purchased through mobile. But we’ve seen a really dramatic shift in shopping behavior happening on phones. And the impact of apps is really important. Almost half of all the time spent on the Internet is via apps — that’s a staggering number. And perhaps that plays into the hands of pure-play retailers.
Q. Some argue that the difference between online and brick-and-mortar sales matters less, as consumers move more fluidly from channel to channel. Would you agree?
A. There are advantages and disadvantages for pure play online retailers. They have lower operating expenses, so they can have lower prices. Multichannel retailers have a better shot at having people come in and buy additional products. And when people order online and have it shipped to the store, those costs are lower. So it’s multidimensional, and comes down to how well any one plan is executed.
Q. Finally, what is your take on Amazon, which is reportedly opening a store in New York this
A. If you remember, last year, just before the start of season, Amazon’s Jeff Bezos went on “60 Minutes” and talked about drones. As a result, they won the mindshare battle, and we were able to see it drive traffic and sales. So maybe this store will generate that kind of buzz for them this year.