Brennan Zimmer
Mrs. Straub
AP Economics
November 10, 2015
Holiday Shopping (From a Seller's Perspective)
The holidays, a fun and exciting time when many families come to celebrate together. Though realistically, many holidays wouldn’t be the same without presents. This can be quite an expensive time to many families, and this is because businesses all around the world try their best to target holiday shoppers to spend as much possible. These had been getting accomplished in many different fashions, including the internet. In 2014, 61% of shoppers in the United States bought their gifts online (Wipro Digital). This is a dramatic increase from 36% of shoppers just one year earlier (Wipro Digital). The demand has increased for shoppers being able to conveniently buy deals online. This method has become more popular over the years and it’s consistently continuing to grow annually. This is one of the reasons why I sell products online.
What products exactly, you ask? Currently, I sell a wide variety of items ranging from sports memorabilia to clothing on my eBay store. What I’ve noticed, just like many other sellers is that sales start to spike throughout November and December. Specifically my sales tend to have an average increase by about 30%. Unfortunately for me, this increase doesn’t come magically, and does take strategy to make happen. Since the demand in customers has risen, the supply of the business or producers also increased on eBay’s selling platform. If one was to look at the supply curve of eBay’s active sellers, there would be a increase due to the current market demand. In order to get as many sales possible, one of my techniques are running sales on my items. This may sounds obvious, though when marketing, in my experience customers find “On Sale” more attractive than just a fixed cost of an item. According to Shopify.com, “[businesses] use this information (on sale graphics) to grab a customer's attention and cue them to take action in making a purchase.” To summarize, the prices are technically the same, but sellers in general are much better off putting a “sale” sign or graphic on their item since customer tend to get attracted discount advertisements.
Moving on, have you ever thought why businesses put the most/largest amount of discounts at the end of the year for retail/online shoppers? Some consumers believe it’s because businesses want to give the best deals to their customers for the holidays, though that’s far from the truth. The other side the story that you may not know about is businesses have to pay taxes on the amount of inventory they have in stock. Thus for a business, it’s best to sell as many items possible then it is to keep the items at normal market prices. In addition, they can’t write off any of their profits in taxes with physical inventory. When stores are able to reduce taxes they’re maximizing profits. This is one of the behind the scene details, not all holiday shoppers have knowledge about, but is worth noting.
Lastly, I would like to turn the tables by asking you (the reader) three quick questions about holiday shopping. First, do you personally prefer to shop online or in a physical store? Secondly, have you ever shopped on eBay for gifts/presents? Thirdly, in your opinion, what attracts you to purchase gifts from the store(s) you buy from (cost, brand recognition, trust)? To conclude, the fourth quarter is a very important time for businesses, because this is where it’s time to “make it or break it”. Personally in the future, I only envision the amount of customers increasing on online platforms and the growth of online sales in the future. Many business owners including myself are looking forward to a bright looking future of online selling.
Works Cited
Khan, Humayun. “Why All Sale Signs Are Red: The Science of Color in Retail.” Physical Retail. Shopify, May 18 2014. Web. Nov 10 2015.
“No gift bag? No problem: Expert tips on novel ways to wrap presents”. Pure Minutes Mobile Long Distance. 2014 Pure Minutes. Pure Minutes Blog Team, Dec 13 2013. Web. Nov 10 2015.
Wipro Limited. “Consumers Increase Online Shopping at the Expense of Omnichannel Retailers This 2014 Holiday Season: Wipro Digital Research.” Yahoo Finance. PR Newswire, Jan 21 2015. Web. Nov 10 2015.
It's true that the prices of goods rise as the demand rises with them on holidays. Companies wouldn't blink an eyelash on exploiting a families need to buy presents, but this is how economies grow. Several hungry buyers meet several hungry sellers, and thus the economy flourishes.
ReplyDeleteThis one is mine, accidentally used the wrong account
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ReplyDeleteI like this because it is has a prospective from a seller and how things work to get the buyer to buy. I know that some stores might just change their prices from 300.00 to 299.99 to have things seem cheaper and get people to buy the products that way. I havnt bought much online. I like to walk into stores to buy things, but I think that you are right that more stores will be online and businesses will be to.
ReplyDeleteI think that one of the main reasons people buy items at the store is people like to see the product and hold the product in their hands before they make a purchase. Online buying is becoming very popular now because it is so convenient, but there are still people who are going to want to see the product and receive it right away instead of waiting for it to ship. Online buying is easy and people are definitely leaning more too it now a days, but there will always be an in store market even at a higher price.
ReplyDeleteWhen do sales start to sky rocket? My guess would be around black friday because of the low prices. On black Friday people have been known to go into a frenzy and hurt other people just to get the best deal. Also which do you think is better? Ordering online or buying it in store?
ReplyDeleteI think that this is very smart of business and if it keeps working for them, keep doing it. If it brings in a lot of profit and also cuts the buyers price then it sounds pretty good. If a business claims sale when it really isn't that much, that's defiantly the buyers fault for not noticing, the business is just trying to make money and if you can't realize when it's not a sale then your probably don't deserve one.
ReplyDeleteWhat I wonder is how much profit businesses would make if they didn't drop prices so low. If they all decided to keep prices higher would they still make as much? That would be interesting to see because presents are most likely still going to be bought. I do like seeing how it works from the other side. I do not regularly sell things so it was interesting to see what businesses think.
ReplyDeleteBecause the demand is so high near this time of the year it must put your business under a little stress. One thing that could work is if you created sales during different times of the year, not just December. This could increase the demand for your products because the price would decrease. In addition to that you are only online so good deals are everywhere. Consumers can easily switch tabs to another store and purchase the same item for a smaller price. A store like yours has to compete with other stores prices, especially when the demand is this high.
ReplyDeleteWithin increasing amount of technology and the availability for people to purchase items online, it makes sense with the increasing popularity of online purchases that the amount online purchases have increased so drastically. Since it is the time of year for gift buying for various holidays it will increase the demand for supplies. Since the demand is so high it will put increased amount of stress on your business. To potentially increase your amount of sales for your business throughout the whole year would to have sales at different points of the year, not just around Christmas time. Increase Demand = Price Decrease. It was nice to think of holiday shopping from a sellers perspective because I've always seen it through a buyers perspective.
ReplyDeleteThis article was particularly intriguing to me because I am a big shopper, in stores and online. However, I have never bought anything off eBay. To answer one of your questions, I prefer to shop in a physical store, that way I know the physical condition of the product I am about to buy, as well as the fact that I can leave the store with my product the day I buy it instead of having to wait a week for it to arrive in the mail. Before reading this post, I did not realize how many people did shop on eBay and use eBay for holiday shopping. Another thing I learned was that companies get taxed with excess inventory at the end of the year. I wonder why this is and how, without this tax, seller's rates of holding sales would be effected. Overall I really enjoyed this article and I thought it was even more beneficial reading from the perspective of a seller, not just a buyer.
ReplyDeleteBecause of the amount of technology that people buy online,that fits that online purchases are constanty increasing. Because its Christmas, people are buying abundant amounts of gifts for people, making demand increase and supply as well. The stress put on a company would increase major as well because their production would need to work fastly to maintain customer satisfaction. Thinking as a producer instead of a consumer is interesting. We always assume gifts are ready at hand but don't think of how much the companies have to prepare for the holiday.
ReplyDeleteIt's very interesting to see one of the seller's true reasons for "end of the year" or holiday sales, such as Black Friday which is fastly approaching. However, as you had mentioned there is an increasing demand for online shopping. This is not only proven statistically, but also because of the existence of Cyber Monday which offers similar deals to Black Friday. This also provides the business to get rid of even more excess inventory. Personally, I do not use eBay for holiday shopping, and I think many other consumers prefer to buy products through a company or brand's specific website. So while the eBay statistic is interesting, it doesn't correlate directly with the increase in shopping, specifically for holiday presents, online. I wonder if company's who drop their prices end up loosing total revenue; it must depend on the company and its situation.
ReplyDeleteA lot of this had to do with psychology because people will not necessarily want something but all of a sudden when it is cheap or buy 1 get 1 free it opens their eyes and makes them want it even though they do not really need it. Such as when buying clothing people will buy more and more because they think they are getting a good deal when in reality all they have to do is not spend the money in the first place. Also this is a very good business plan because they make more money compared to if they sold their products more expensively.
ReplyDeleteBrennan it was very interesting to see things from the seller's perspective and in your case it was particularly special since you are a young entrepreneur, therefore it was neat to learn about the strategies you have utilized for the promotion of your company such as placing things "On Sale"- even though that may appear as the most obvious strategy, looking at from a consumers' mindset, it is very effective, naturally I am more drawn to things that do have a sale price versus if they were not on sale. Being that it is a busy holiday time of the year,it does make sense for there to be an increase in the supply curve to meet the demands of the market, since the market is fluctuating constantly at this time of year. Before I never realized that it was better for businesses to sell off as much products as possible to maximize profits, with that said I did not realize the effort and techniques that go into making a business successful.
ReplyDeleteThe holidays are enticing especially when thinking about the money that's spent during them. Larger companies try to expand their profitable margins by getting consumers to spend even more money than they usually do. They do this by proposing bigger sales on such days as black Friday and recently cyber Monday. These days are essential to bigger companies like Amazon and Best buy because they sell big ticket items and they're going to sell more of them at 25% off rather than if they kept them the same price. This is all part of the plan to get consumers to spend more money and get out there and shop so companies get a big payday!
ReplyDeleteThe holidays are enticing especially when thinking about the money that's spent during them. Larger companies try to expand their profitable margins by getting consumers to spend even more money than they usually do. They do this by proposing bigger sales on such days as black Friday and recently cyber Monday. These days are essential to bigger companies like Amazon and Best buy because they sell big ticket items and they're going to sell more of them at 25% off rather than if they kept them the same price. This is all part of the plan to get consumers to spend more money and get out there and shop so companies get a big payday!
ReplyDeleteA lot of this had to do with psychology because people will not necessarily want something but all of a sudden when it is cheap or buy 1 get 1 free it opens their eyes and makes them want it even though they do not really need it. Such as when buying clothing people will buy more and more because they think they are getting a good deal when in reality all they have to do is not spend the money in the first place. Also this is a very good business plan because they make more money compared to if they sold their products more expensively.
ReplyDeleteI really like the approach you took for your post. It's easy for us to relate to the consumer's point of view because all of us are, but I really enjoyed the firsthand insight that you gave us from a seller's perspective. I have definitely noticed the trend toward online shopping and didn't find it surprising that the percentage has almost doubled. Last year, my dad bought most of our Christmas presents online because of the convenience and ability to efficiently compare prices. I always assumed that the end of the year sale prices were an effort to empty a companies stock and prepare for new products but I didn't realize that companies are actually taxed for their remaining stock. This makes sense, however, because the burden of tax which is usually shared between consumer and producer must fall completely on the producer if the good is not consumed. To answer your questions: 1. I like being able to look at a physical good in stores but I do a significant amount of online shopping for convenience 2. I have purchased off of eBay but I tend to use Amazon more 3. I am definitely attracted to deals and sale prices
ReplyDeleteThis was a very interesting piece from a seller’s point of view. I never realized that businesses increased sales to reduce the impact of the taxes. One thing I was curious about was the demand in the holiday season. I believe that demand would increase although I think it might become more elastic. This is since the buyer will have a wide variety of opportunities from other stores. Overall, this piece definitely brought a new perspective on holiday sales to my mind.
ReplyDeleteYour topic was very relevant in that this is the time where buying and purchasing increases due to, as you stated, the holidays and the advertised discounts. You hit the main points of business, discussing individual firms' profits and how they maximize this. However, I think you somewhat missed the economic portion of the article. To strengthen your argument, you could've mentioned the competitive-nature of the businesses and how the market structure affects sales. When you mentioned that most sales are "online," would you consider the "online" marketplace perfect competition? Considering all of the products viewed are simply digital while browsing which, in theory, could make them all substitutes for one another? It would also be interesting, because you mentioned sales frequently in your article, to understand how other market structures react to the holiday season. Would monopolies put their product on sale? I wouldn't think so because there is no outside pressure for them to do so, the same question goes for oligopolies as well, where in that case I believe that they might put their products on sale. Also, I definitely agree with you that the consumer demand for material products are higher at this time of year. I don't necessarily believe that supply is increased because as you stated, the producers are trying to get rid of inventory. Overall, good job on your article, it was interesting to hear your perspective.
ReplyDeleteWith Christmas just around the corner, demand for many products is increasing. While black Friday use to be a time for everyone to go out late and find great deals, the new way to shop is actually online. Cyber Monday is growing every year because people would rather sit on their computer at home then go out at 2 a.m. to get the best deal. There is also a lot of competition between the two days and so far, I think people are doing more of their shopping on Cyber Monday.
ReplyDeleteSince black Friday is next week, I would though that's when many families go out and buy their gifts since they are deals everywhere around the mall.I never thought that buying gifts online for Christmas would be more popular and have a higher demand for the consumers. Personally, I love to shop and actually go to the mall buy clothes. But, I can also understand why people would want to stay at the comfort at their own house and buy things gifts especially from eBay, since it would be cheaper this time around.
ReplyDeleteHey Brennan, Id like to answer your three questions. Firs I prefer shopping in a store versus online, however going to the store is harder. I have used Ebay to buy specialized gifts. Finally I think the most attracting feature for blackfriday would be the hype, not a specific type of sale but overall people just believe that business are slashing prices. I mean all year round business say they're slashing prices by large percents but few people believe it, however on black Friday everyone mostly believes it. -11/30/2015
ReplyDeleteIn my opinion, I am starting to prefer online shopping opposed to shopping in stores. I began realizing this last week when I wanted to buy an SD card for my phone at Wal-Mart, but I searched the price online to compare. I discovered that the price was actually cheaper online and came with free shipping opposed to Wal-Mart higher price and the opportunity cost to drive there. This purchase was: more affordable, faster, and more efficient for me. I have shopped on eBay a few times for gifts and presents, but I primarily use Amazon. Lastly, I tend to buy items from a certain store based on their loyalty and reviews from other customers on the products the company sells. Overall, great post and I hope that you are able to increase your sales on eBay as time goes on!
ReplyDeleteThis must have been a very interesting topic to write about, seeing that you yourself are an avid online seller. I find that there are so many other products similar to the ones you are likely selling that there is the need to do some in depth research into those similar products to figure out what price you should sell at. If a consumer sees several other deals on Ebay that are much better than the deal you are having, then the chance of your product being sold is much lower. It is nice to see that you take a lot of strategy into account, because it really grinds my gears when people complain about certain objects they are selling online never being sold. In order to be a successful online seller, it is necessary to understand the competition and what deal would be most profitable for you while thinking that you can still realistically sell the product. I sincerely hope that you continue your success on Ebay and as the holiday season arrives that more and more of your items get sold.
ReplyDeleteIf the taxes on inventory at the end of the year were administered as a flat tax for all businesses, instead of a per unit tax, I don't think we would see the same pattern of end of year sales which you discussed. A flat tax would remove the incentive for stores to lower their inventories as the cost to them would be the same regardless of their actions. It would also be interesting to see how the cessation of such sales would affect consumer shopping habits during the holidays.
ReplyDeleteI thought that your blog post was very interesting and insightful. Although I knew that it was popular, I had no idea that the amount of internet shopping had increased by that great of a percent. It makes sense that it did however, because for a family with multiple kids and jobs it is far easier to purchase their Christmas presents online rather than trying to beat everyone else to the store for the holiday sales. I do, however, believe that it would have been interesting to stress the new found importance for businesses to fabricate an online marketplace for their product, as without it, their business could slowly fade away into bankruptcy. Overall, I thought that you had a great blog post! Nice job!
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