Analytics promise continuation of strong holiday online retail sales

It was a banner holiday season for online retailers, but the focus for many businesses during the busiest of shopping months was on serving customers and figuring out how to retain their business during the New Year.

"I don't think anybody found new customers this season," said Gene Alvarez, head of Meta Group's e-tailing and e-commerce group. But what he did see this past season was an increased focus on using data to understand and better serve the customer.

Alvarez expects to see this trend continue.

"This was a holiday season where having everything in stock was important," Alvarez said. "This was not a whimsical holiday season. Companies were fighting for people with constrained budgets. That's where the focus on customer retention comes from."

By obtaining additional customer information through the use of analytic software, retailers can now collect the data necessary to analyze the behavior of a customer, Alvarez said. "Now [that data] can be used to feed into what [the retailer] will do for this customer segment the remainder of the year," he said.

Investment in analytics, data integration and customer service has started to pay off, as evidenced by online retailers' recent success. Much of the success in this area is a direct result of a company's ability to support customers regardless of whether they do business online or at the mall, or in both places, Alvarez said.

According to the eSpending report, which is produced by Nielsen/NetRatings, Harris Interactive and Goldman, Sachs & Co., online shoppers spent $18.5 billion this holiday season, up 35% from $13.7 billion in 2002. Shoppers spent the most on apparel, followed by consumer electronics.

Retailers' emphasis on customer service also seems to be having an effect. In a recent study by the National Retail Federation's Shop.org and Los Angeles-based comparison-shopping service BizRate.com, 89% of surveyed shoppers said they were somewhat or very satisfied with their online buying experience, up from 84% in 2002.

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