One retailer's holiday postmortem

Posted by: John Tozzi on January 05, 2009

Jeremy Shepherd, founder of PearlParadise.com, sends a note about how his holiday sales wrapped up. Throughout the season, the trend he saw was growing sales volume, but lower average amounts for each order. While he says he had a strong finish and a profitable season, the trend puts pressure on his margins.

Shepherd writes:

Continuing this trend, you will see us continue to streamline our production while focusing on increasing the number of products with a high value but lower-cost range. Further, our focus will be on increasing volume to make up for the drop in value average by strong marketing to value-conscious consumers and past loyal customers, as well as focusing more attention on comparison shopping engines and feedback-centric sites like Amazon (we’ve just partnered with them).

This is bad news for some of our suppliers from whom we typically buy a large volume of high-end materials from every year in January. These are pieces that sell in the $10k to $25k range. While there is still some demand for these pieces, our current stock is sufficient to last (if this trend continues) well into 2009.

Thanks to Shepherd and the other retailers who helped give us an on-the-ground look at this season, which saw the first ever drop in online holiday sales. For a micro view of how that drop affected on retailer’s numbers, Shepherd shares his figures after the jump:

Retail Sale Comparisons

2008 vs. 2006
Volume increased by 89.88%
Value decreased by 56.51%
Average sale in Dec., 2006 was $688.01.
Average sale in Dec., 2008 was $299.21
Overall, gross revenue dropped by 17.42%

2008 vs. 2007
Volume increased by 16.25%
Value decreased by 30.35%
Average sale in Dec., 2007 was $428.59
Average sale in Dec., 2008 was $299.21
Overall, gross revenue dropped by 19.08%

Reader Comments

Richard W. Wise

January 26, 2009 09:52 AM

John,
Good to see some hard data. No surprises though. for another take, see my blog GemWise: www.gemwiseblogspotcom.blogspot.com

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What's it like to run your own company today? Entrepreneurs face multiple hurdles new and old, from raising capital and managing employees to keeping up with technology and competing in a global marketplace. In this blog, the Small Business channel's John Tozzi and Nick Leiber discuss the news, trends, and ideas that matter to small business owners. Follow them on Twitter @newentrepreneur.

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