comScore reports online sales declined 3 percent this holiday shopping season making this the worst online retail season - ever.  With aggressive price slashing and free shipping promotions after CyberMonday (the first Monday after Thanksgiving),  one shutters to think about their profit margins.

Here’s an even more interesting tidbit  gleened from the data: although some e-tailers like Best Buy  experienced a decrease in traffic  (17%),  overall online traffic during this holiday retail season increased 5%  over last year. Here’s a summary of what we saw in online retail over the past several weeks:

• A decrease in traffic
• A decrease in sales
• A increase in discounts and promotions
• A decrease in household income
• Virtually no change in traffic conversion rates (see fireclick index - 1 year)

The #1 way e-tailers can increase their profit margins will be to increase their conversion rates. 

How to do this:

1. Collect online metrics and make them visible

You know not what you do not know.  There are free  and paid web analytics programs out there.  Implement one.

2. Define “conversion”

What are your primary goals for the visitors you are attracting? Registration, purchase, referral?  Set up goals in your web analytics framework to define a “conversion”.   Be wary of SEMs that define a conversion as a landing page clickthrough.

3. Evaluate campaign effectiveness

Evaluate your referrers and sources (site your visitors are coming from and the campaign that drove them to your site).  How much are you spending to invite each visitor?  How many visitors converted? 

4. Shift lower performing campaigns to campaigns that are more effective

Duh.  But without visibility to metrics, defining goals and evaluating effectiveness this is kinda hard.

5. Remove barriers to conversion

Don’t get in the way of visitor that has made the decision to purchase, register or interact.  Make it easy for them to fulfill the goals you’ve set.  Improve the user experience.

Increasing conversion rates through site usability and traffic quality improves ad effectivenss and will help e-tailers recover from the worst online retail season ever.