Retail

How Smaller Retailers Keep Skin In The Cyber Monday Game

Beyond the Cyber Monday deals from big-box retailers offering deep discounts on TVs, Xboxes and other big-ticket items, there are the smaller retailers trying to have skin in the game.

There is a type of “peer pressure” to have some kind of promotion, but many smaller retailers don’t have the capabilities like larger ones to offer these discounts. They can’t compete with Best Buy, Macy’s, Amazon and the like in terms of sales but more so in terms of absorbing the discount costs. Big retailers are more able to take in those discounts by enticing customers to buy more or other items.

So, what do these smaller retailers do? Some are offering special freebies and other throw-in items upon purchase.

San Francisco-based Chubbies, which was started by four Stanford grads five years ago and sells bright-colored shorts and swim trunks with clever tongue-and-cheek marketing, gives away an extra novelty item with purchases throughout the Cyber Monday day. From inflatable couches, to cushy bathrobes, to leather beer holsters, the concept seems to revolve around: Who doesn’t like free stuff?

And it seems to lure customers in, as Chubbies has been able to historically make Cyber Monday one of — if not the — biggest shopping days on its site.

The reason for these giveaways is explicitly because the company doesn’t want to have to compete on the price of their shorts. Chubbies Cofounder Tom Montgomery told The Wall Street Journal: “[It’s] game we don’t want to play. For us, it is about giving people a really fun experience.”

Chubbies, as a result of these “freebies,” said this year’s Cyber Monday is slated to bump up at least 30 percent higher than last year’s shopping holiday.

Chubbies isn’t alone. It’s joined by the likes of Go! Retail Group, which is offering an extra item with purchase: a plush teddy bear for $4.99. While it’s not free, it encourages customers to spend $15 at a minimum. Go!’s stores are run by independent operators, so the business sees this as a “no-brainer” due to its brick-and-mortar set-up.

The problem is that the strategy only really works in-store. The company will be offering discounts, but they will last through the holiday shopping season, rather than just one specific day.

“But online, the digital barrier doesn’t make a warm, fuzzy thing like [the bear] work as well,” said Paul Hoffman, president of Go! Retail Group. He added that, by definition, those added and prolonged discounts put “pressure on margins and profitability … but it is in the name of customer satisfaction and customer service and loyalty.”

According to Adept, one in three retailers will dedicate at least 31, to even 50, percent of their total online marketing budget to their holiday sales efforts. At the same time, roughly 40 percent don’t use personalization in those marketing efforts. So, while Chubbies and Go! may be adding in extra items, it’s not personal to the consumer.

“Since all the big brands are promoting their super deals, Cyber Monday is a great chance to offer new value to your customers at the same time,” said Jim Joseph at Entrepreneur. “Give them a ‘gift’ for being loyal or an extra incentive to purchase just a little more. Use caution in your offers. You don’t necessarily want to attract one-timers. Instead, try to build loyalty amongst your best customers or bring in new regulars with something of unique value.”

He added that retailers should stay within the realm of the brand’s character and shouldn’t be afraid to experiment with what those offerings could be.

Last year’s Cyber Monday online sales hit a record $3.07 billion, according to Adobe research. Beating most forecasts, 2015 sales were an increase of more than 16 percent over 2014. The average customer spent $124, but the value of the items they received could be more than triple what they spent, including those freebies.

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