More online shopping is done over holiday than at any other time of the year.

Two recent consumer behavior reports revealed that tech-savvy shoppers who spend more per visit do more product research while, overall, people who buy online continue to expect deals such as free shipping — a habit retailers are finding hard to change.

And as online spending continues to grow, profits are being impacted.

In its holiday retail index report, researchers at DynamicAction said consumers’ expectation to receive free shipping “has continued to rise this year, with an average 10 percent increase in orders shipped free this year and a 13 percent increase in orders shipped free in November.”

The firm noted that more than half of the online orders leading up to the kickoff of the season on Thanksgiving were shipped free. Moreover, DynamicAction said markdowns are driving a lot of the sales. “Retailers have relied on discounts to drive consumer spending this holiday season,” researchers said in their report adding that 90 percent of orders placed from Thanksgiving and throughout Cyber Week “used a promotional code in North America and 51 percent of orders offered a markdown.”

These discounts, though are taking a toll on margins. DynamicAction said due to the promotions this season, “profit margins were down an average 5 percent for the year and down an average 1 percent in November compared to 2016.”

Sarah Engel, chief marketing officer at DynamicAction, said heading into 2018, “retail is more complex than ever and understanding and motivating your profitable customers is paramount. To succeed, retailers will need to leverage and achieve new understanding of addictive products and affinities in order to bridge loyal shoppers toward more profitable purchases. Additionally, retailers will need to look at inventory through a new lens in which new metrics like views availability — how much inventory is available that shoppers are actually looking at — can inform buying and mitigate markdowns.”

Meanwhile, consumers are increasingly using mobile apps and devices for shopping. In a separate report from TD Bank, the company’s Retail Experience Index and survey founded that 34 percent of respondents frequently use a mobile app while shopping.

“Consumers cited the top benefits for using this channel as the ability to shop during off hours (52 percent) exclusive in-app promotions, coupons or discounts (51 percent) and no lines or crowds (48 percent),” authors of the report said adding that consumers “who spent more than $2,000 on a single purchase, are more tech savvy when researching products.”

TD Bank found that “big spenders use social media and blogs (32 percent) and retailers’ mobile apps (23 percent) more than the average shopper (compared to 21 percent and 12 percent, respectively).”

 

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