3 Ways Asian Start-ups Can Get More Money During the Holidays–With Little Risk
Nearly $70 billion in holiday gifts end up as costly returns. Here’s how improving gift giving can help.
PHOTO CREDIT: Getty Images
Many businesses and startups get excited about holiday sales opportunities like black friday, cyber monday and last minute holiday shoppers. But few realize that holiday sales don't just have goldmines, but landmines as well. Per Optoro nearly $70 billion dollars of gifts will be returned during the holidays, of which one quarter to one half of that value cannot be recouped. It is even worse if you sell online, as one third of e-commerce purchases are estimated to be returned per Kurt Salmon Associates.
At the core is the truth that we are collectively bad at gift giving. This is because we often have mixed motives for gift giving, particularly at the holidays. More often than we want to admit, we gift out of obligation, without really thinking, knowing or caring about what the recipient wants. If we were good at gift giving, re-gifting wouldn't be so rampant half of consumers believe they have received a re-gifted present per CreditDonkey
To make more money during the holidays, you have to change your thinking, your target and your tactics. Your mindset should be win long-term relationships not just temporary transactions. This implies your seasonal strategy should be to acquire superconsumers and convert potential superconsumers, who want a long term relationship and thus have great life time value. Finally, you should embrace three tactics that can help you execute your new thinking and target.
Offer both great deals and unique value at the holidays.
When it comes to black friday or cyber monday, most people think about the great deals and discounts that can had. This is still important, but it shouldn't the entirety of your offer during the holidays. Think about introducing unique products that are more expensive because they have even better or more benefits. This will naturally appeal to superconsumers during the season.
Costco does a magical job of this in candy for Halloween. Costco routinely has the number one selling product for Halloween, largely because they manually combine the top candy brands from competitors into one large bag for Halloween. You can't get it any other time of the year, nor can you get it from any other retailer.
Sell subscriptions that last all year, not just the holidays.
In my experience, products are more easily returned than services. And you can easily turn your product into a service if you convert it into a subscription. When Netflix first came out, I loved the DVD by mail product so much I called them and asked if I could gift my brother-in-law Netflix for Christmas for 12 months. They were surprised by the request and weren't sure, but ultimately helped accommodate my request which turned out to be a great gift. Last I heard, he's still a Netflix user.
This seems like it is upping the ante during the holidays where deals abound, but that is the point. You want to appeal to the highest common denominator, not the lowest, if you want to retain relationships that last all year. The beauty is that superconsumers often don't have seasonal spikes in their consumption. Sparkling wine superconsumers buy it year round, whereas the category sales spike at the holidays. Win those superconsumers, and you'll have a consumer year round.
When in doubt, push gift cards not gifts.
This may seem like a lame gift, but it is still better than a bad gift. The truth is the National Retail Federation says that 59 percent of consumers want to receive a gift card, as it gives them more flexibility to buy what they want, when they want it.
Gift cards are a huge win-win-win. The recipient likes the flexibility. The gift giver is grateful for the easier path to a good gift outcome. The retailers/manufacturers like it because it reduces returns, but also a good amount of gift cards go unused which turns into pure profit for them.
But perhaps even more important is the opportunity to build a list of potential superconsumers that you can use to re-market to them in the future. The data gathering opportunities amongst people who love the category a lot and spend even more has lasting strategic value that will cause the whole year to be happy, not just at the holidays.