All of Amazon’s work with individual states suggest that by 2014, Amazon expects to have the internet sales tax issue worked out. As Internet Retailer reported, Amazon has cut a deal with another state, this time being Indiana to solve the tax issue. Their provision pledges that Amazon will voluntarily collect sales by January 1, 2014 for all Indiana consumers on Amazon. Some people believe Amazon is anti-tax, but that’s not the case. As Jeff Bezos has stated, Amazon is just pressing for a sensible tax system, and it’s looking more and more likely a system will be in place within 1-2 years, with a bill being passed either this year or next.

What makes the 2012 push for 1099 forms interesting is a rumor written about by Jason Calacanis that Amazon may open retail stores. That would be a huge change, and if it were to happen, it would make Amazon instantly tax liable in any state which a store is opened in. Adding more credibility to the rumor, the physical store roll out would also make sense because it’s inline with Amazon’s always aggressive strategy, fits with their push to grab offline sales such as Amazon’s Q4 offer to credit consumers to buy on Amazon, would stick it to Walmart (I wouldn’t underestimate this one), and fits with their same day delivery experiments where a consumer could have an item delivered to them same day and thus create a store with very little overhead expenses due to the light inventory.

I don’t usually devote space to speculation, but this rumor has a certain ring to it which may be worth listening to.

Texas

First, the defining characteristic of the sales tax argument is whether a retailer has a physical presence in a state, which would then qualify for the collection of taxes. States have progressively pushed to extend how this reach can be thought of,  thereby creating a nexus. In the state of Texas, this has recently brought about by legislators looking to expand who is part of this nexus. First Amazon was pulled into the fray because of a large distribution facility they have in the state. The facility is owned by an Amazon subsidiary, not directly by Amazon, so Amazon’s argument is that sales taxes are not owed. However, the bill being pushed would extend a nexus to related companies, in the same manner affiliate marketers have been targeted before.

As a temporary reprieve, the Texas governor vetoed the bill because the scope could have been extended to a company using just a server in Texas, thus being enough to establish a nexus. Fortunately the governor had enough incite to see the impact on technology companies in the state, so the bill has been vetoed. Right now it’s a safe assumption a modified version of the bill will be passed however, the Amazon fulfillment center will not have a future, Amazon affiliates will get the blocked out in the state, and technology companies will be safe to some extent while online marketers will feel the brunt.

South Carolina

Speaking of fulfillment centers. Amazon is coming to South Carolina with $125M to invest in a new fulfillment center creating 1200 new jobs. Of course being caught in the cross hairs of the nexus argument, Amazon has made sure to have the sign-off of the state government, which has extended a provision which will give Amazon tax breaks on their property as well as a 5 year exemption on sales taxes based on having a physical location in the state. The interesting aspect of this, beyond South Carolina really trying to get some economic activity going in the state, is that this signifies Amazon believes the subsidiary argument is no longer one which states will accept, and they are being very strategic by placing the fulfillment center in state which has a minimal amount of instate purchases, which would then be vulnerable to taxes in 5 years. There is also a chance this indicates Amazon believes the tax argument may be settled in the next 5 years, but that’s a guess at best.

Tennessee, Arkansas, Connecticut, and California

For quick notes on other states, Tennessee is targeted for a new fulfillment center from Amazon as well . Tennessee was pushing a sales tax bill, but has deferred based on the potential Amazon investment in the state. In Arkansas and Connecticut, Amazon has cut off their affiliates because of recently passed bills which force the collection of taxes based on a nexus created by these marketers. California affiliates are likely next in line, as California has recently passed a bill of their own to impose a sales tax collection.

The good thing about California’s bill, is they put together some neat facts in presenting and passing the bill. This includes facts like California estimates it could have collected $795M in taxes in 2010 from online sales, $83M could have come from Amazon alone, California residents spend 1% of their personal income on online purchases, and the top 500 online retailers own 94% of all online sales. Interesting tidbits, at least proving research can be well conducted.

Overall, the wave is building, but the various different efforts here resemble the United States in the early days of the union under the Articles of Confederation. Then states did business separately, printing their own money, charging tariffs on interstate trade, and generally proving that states (or perhaps even countries) when acting separately on their own, are not truly acting in their own best interests because acting in unison can be produce much more profit for everyone.

Speaking a few days ago at an Amazon shareholder meeting in Seattle, Jeff Bezos (CEO, Amazon) said, “The right solution to sales tax in my view, and certainly this is Amazon’s position and its been consistent and we’ve had this position for 10 years, is that the right place to solve this is federal legislation…There is an initiative called the simplified sales tax initiative. 22 states have already signed on. That legislation needs to get passed…Keep in mind, in more than half of the geographies where we do business in certain states as well as Europe and Asia, altogether, more than half of our business is in jurisdictions where we already collect sales tax or its equivalent, like the value-added tax.”

Essentially having a unified tax structure creates many benefits. The most immediate impact is that there is a level playing field not only for physical stores, but also for online marketers who are being hurt based on the state they reside in. Also, it creates a simplified structure, where if instead individual states continue to define their structure, a consumer could possibly be asked to pay sales tax in several states, based on an affiliate in one state leading to a sale, a fulfillment center in another state sending the item, and then the retailer having it’s main operation in another state. Under this scenario, 3 separate states could request sales tax be paid, leading to a cluster of overlapping interests and laws. The call for federal, and hopefully  international agreement, should continue to grow and hopefully bring some clarity that will help the expansion of business, rather than hinder through confusion and disagreement.

Shopping.com

Shopping continues to be the most innovative in billing, by supporting a value based rate card which fluctuates on the measured value of the traffic source that Shopping is using to drive traffic to the merchant site. The formula is defined by Shopping as the following:

 [Rate Card CPC]    x   [Publisher Quality Score]    =    [Billed CPC]

This formula paired with changing rate card CPCs by category and price level, gives Shopping a continuously variable CPC rate which is both innovative and difficult to pin down sometimes. The rate changes went into effect on May 16th, so it’s already out in the wild. The full rates can be seen at: Shopping Rate Card

Shopzilla

Shopzilla aka Bizrate, was the next domino to fall, announcing rate card changes effective June 1. Shopzilla has been good enough to provide a break down of current and effective CPC rates in June. As with many of the rate card changes on the engines, there is a mix of higher and lower CPC rates being put into place. You can find the complete review here: Shopzilla Rate Card Effective June 1

NexTag

Now the ball really gets rolling. A few days later this month, NexTag announced their rate card changes for June 1. NexTag’s changes are pretty heavy toward increases, but there are some decreases as well. Included in this change is the creation of many new categories, so merchants should be aware of the updates since this likely means a change to the product feed to include the new mappings. The NexTag taxonomy can be found here: NexTag Categories. In the update, NexTag did not including a rate card link, so merchants who are looking for new rates should check in their NexTag administrative tools.

Amazon Product Ads

Amazon followed up a few days later by announcing their rate card changes. The rate card changes have been nicely summed up by Amazon in their announcement. There are 36 categories effected, with 117 other categories left untouched. Of the 36 categories, 32 categories are seeing increases and 4 categories seeing decreases. As with NexTag, the CPC rates are located in the merchant’s admin panel, so there is no public link to provide. Amazon is also consistent on the date for the changes, which is June 1.

Become

Only a day behind Amazon, Become announced their rate card changes only a few days ago. There is no summary, so merchants should review to see what categories have been changed and how this effects overall expenses. The good news is that Become is giving more time than the others, making the changes effective June 15. The rates can be found here: Become Rate Card

Overall, any merchant who has tight controls on ROI, should keep June 1 circled on the calendar. More than likely, things will fluctuate on that day and adjustments may need to be made later on the month once the changes have a chance to yield a new pattern. Fortunately, there is no rate change on Google Product Search.

I won’t spend time echoing the study when instead I suggest reviewing SEOClarity’s .PDF yourself:

SEOClarity: Clarity Insights Google Algorithm Change 2/24/2011

In the beginning portions of 2009, there was seemingly little innovation on the horizon. Since around 2004, online shopping had been done in relatively the same fashion. Consumers typically used different search engines to initiate the purchasing funnel, and many times consumers would find themselves funneled into a comparison shopping engine based experience through paid and natural search listings. Now the patterns are changing, and it’s not the result of any one specific company or development.

The Rise of Amazon

In case anyone had missed it, Amazon has become a Goliath since beginning to sell books. Using a third party selling platform that is second to none, Amazon has single handedly changed the conception of a retail site. When Amazon first began to integrate third party sellers with their own platform, eBay was easily the king of the hill (or queen if you will) of partner selling. Using eBay’s auction format, individual merchants, with barely a keyboard, could easily sell their goods to millions of customers. Amazon however, pursued a slightly different format.

Amazon built a platform that allowed for typical single price transactions instead of time consuming auctions (although Amazon did try to do auctions as well). This platform was tear-jerkingly hard to integrate with, because of endless fields of product information that had to be created and kept updated in addition to orders, to ensure consumers would have a positive experience. Amazon was also keen on eBay’s empowered buyer model based on feedback. So Amazon evolved strict rules to ensure a seller was offering a quality transaction. Even today, if a merchant lowers their guard for 30 days, enough damage can build up to bring down the entire account. This adhesion to quality began to slowly retain costumers looking for a consistently good experience.

As Amazon grew, more third party sellers and greater selection came. Amazon poured resources into making sure products were understood systematically, so that product selection was accurate and comparable. Using the Amazon Unique Product Identifier (ASIN), a product listing could be monitored, controlled, and enhanced. By matching seperate sellers, Amazon could also build out robust product information by having the merchants tell Amazon, not Amazon having to find the information themselves. The overall product catalog grew not only in quantity, but also in detail. Having so much information on purchase activity, allowed Amazon to accumulate extensive merchandising information. Being able predict order volume and profitability, Amazon could now also sell products their merchants were selling and maximize profit. Amazon continues to expand their selection, and by providing lightning quick shipping and guaranteed satisfaction, Amazon has used it’s relationships to enhance the consumer experience to such an extent that Amazon is the default destination for consumers above any other retailer (meaning Amazon sells more online than anyone, end of story).

Covering All The Bases

Just in case the average Joe didn’t know about Amazon, they covered the bases by pressing hard on all fronts. Having an extensive product base, Amazon had a large selection to market, and also knew which products were the most valuable. Amazon aggressively utilized Google AdWords, among other paid inclusion systems, to place listings by related keyword searches. Rarely could you run a search for a certain product or type of product without seeing an Amazon paid listing. Of course, Amazon also had such such an extensive online presence, they also ranked highly for natural listings as well. Confronted on both fronts in paid and natural search, there was another channel of advertising available for Amazon to utilize.

Amazon looked to the shopping engines, and comparison engines running Amazon listings is one of the worst decisions they could have made. The reason is that shopping engine consumers are constantly driven back to Amazon. How many times will a consumer search for a product and hit Amazon, without actually starting at Amazon to begin with? A quick guestimate would be between 3-10 times, but the point is that consumers will just start with Amazon eventually. So using the comparison engines’ own systems, Amazon is slowly draining away market to their site. Brilliant really, except the next part is even better.

I Went To a Fight, and A Sale Broke Out

When two 800 Pound Gorillas meet in the forest, what does it look like? It looks like Amazon and Walmart sizing each other up in 2009. Walmart has been established as the preeminent retailer in the world for a number of years now. Utilizing an industry changing just-in-time inventory system, an extremely aggressive negotiating startegy to lower prices, and a flat out will to win, Walmart is the world leader in physical store sales. However, as many people are becoming aware of, online retail will dwarf physical store sales for nearly all companies, in the very near future. Walmart has it’s eyes set on being the destination for online purchases, and Amazon sees that coming.

What is truly brilliant, is how Walmart and Amazon used a dull, drained economy to fuel more growth. As consumers had their pocket books squeezed, consumers began to search for better deals. Walmart and Amazon had already become leading destinations for cost conscious shoppers, but in case anyone had missed the point, a price war developed between the 2 retail giants and played out in the media. Just the advertising from a typical sale can drum up sales, but exposure of having the press cover your sale, and essentially label both Walmart and Amazon as the destinations of price sensitive shoppers, that was priceless attention. Wonderfully orchestrated, whether completely planned or not.

Google Labs Get Cooking

2009 also saw the emergence, or perhaps reemergence of Google. The economic tail spin that was 2008 shook up a lot of people, including the folks at Google. Plans were changed, office expansions put on hold, workers moved around, etc. One other thing that happened, is the Googineers (a nod to Google’s engineer focused culture) looked at their presence in the retail area and began to pull together a new direction. Google Product Search had been in beta for a long time, but didn’t get huge amounts of traffic. That began to change within the last couple of years, especially with increased placement on the search results page. Google began to take products from Google Product Search (aka GoogleBase), and insert these offers with natural listings, as a type of search result supplement, known as the Google OneBox. The listings included picture, title, and price, store name and condition. Simple and efficient, Google began to absorb the comparison engine style listing into their results creating large amounts of traffics for retailers. Anyone see where this is going?

Google fluctuated the placement of these listings throughout 2009, but more and more consumers began to use them. It must of been such a clearly good idea, that someone decided these enhanced product listings should be part of the Google AdWords program as well. However, how do you do that?

Google had experimented in the past with the idea of a drop down box, known for a while as the Plus Box, and now known as Extension Ads. Essentially, product listings funneled from Google Product Search could be dropped down in some cases from the paid search listing, with a click of a “+” sign. It’s still a good idea, but for now the product listing choice quality is sporadic in relation to the keyword search, and a relatively small percentage of consumers click through the box currently. However, there is a more overt way to display the listings: just throw them out there like the OneBox. However, Google had gotten creative with the sauce again. Just like the auction platform of AdWords was a new step, Google went away from the PPC model. Instead, as is widely reported and seen in product search results, Google Product Listing Ads are now populating the upper right menu bar and driven by commissioned sales.

It’s pure speculation, but the sucess of Amazon, eBay, and and the rise of Microsoft’s Cashback program must have convinced Google that there was an opportunity in commission based selling that needed to be captured. With Google Checkout proving to be difficult to expand, Google went in a new direction. By leveraging the Google Affiliate Network and Google Product Listing Ads, which can be easily integrated with the Google Product Search feed and tracking code installation, Google could now be a part of the retail business without shipping a single item. PPC based ads are nice, but instead, for a merchant to simply pay a commission from each sale is a great business model. The wizardry is taken out of the accounting department, because ROI is easy to control and measure. Simply set a commission rate, and then balance that against your sales revenue and find the sweet spot. In the end, Google is served and so is the consumer, by having an easy time finding what they are looking for. Hey, finding what people are looking for is what Google specializes in, right?

What About CSEs?

All this leads up to a simple conclusion, it’s time for comparison shopping engines to change, or disappear.

That sounds drastic, but lets take a holistic view. Already through the course of 2008 and 2009, there has been tremendous pressure on the shopping engines to deliver high quality, high ROI traffic to merchants. Since the economy was contracting, and the consumer’s pie was shrinking, shopping engines became increasingly focused on delivering high quality traffic to ensure a sale, not just funneling part of the increasing avalanche of internet based revenue. This refinement process has already resulted in financial pressure on shopping engines that have not been able to keep up in the smaller, tighter pond. The stresses from other sources has made this pressure even greater.

By Amazon and Walmart increasingly becoming the default destinations for budget minded shoppers, this has begun to squeeze precious traffic away form comparison engines. The motivated shopper who is looking for the best deal is no longer starting at a shopping engine, but that motivated shopper is now going to Walmart and Amazon.

The next part of the crunch happens in finding shoppers who are in browse mode, and perhaps don’t care for Walmart or Amazon. That shopper is primarily doing searches on Google.com. When searching, the consumer is still bombarded with Amazon and Walmart listings, but they now have image enabled ads which easily catch the eye. Remember that web based shopping is all visual: you need to see the screen first before you mentally process the information. Having image enabled advertising on Google search result page is no small change. Increasingly these image based Product Ad Listings, Google Product Search Results, and Ad Extensions are pulling traffic right to the merchant without any help from comparison engines.

Remember the question from before, “do you see where this going”? There is where: Google has now begun to move beyond traditionally formatted text based results, and into more of a virtual result. Whether video, images, text, or now actual products, Google has taken shopping engine structure and begun to integrate this with their typical search results. Increasingly this provides less incentive for a consumer to bother going through another shopping engine, when they are essentially already using one in Google.com.

David vs. Goliath

Malcolm Gladwell rocks. Gladwell as an author is brilliant in his ability to draw connections and seek patterns in data which at first are not apparent, if not completely contrary to conventional wisdom. One of his articles focuses on the David vs. Goliath situation. This occurs when two parties face-off, and one party is seemingly over matched by the other’s strength. This situation occurs constantly, whether old Microsoft vs. old IBM, or new Microsoft vs. Google. Goliaths such as Walmart, Amazon, and Google are pursuing strategic goals which do not leave much room for traditional shopping engines. When considering rumors that Google is looking to limit the shopping engines’ ability to advertise using AdWords, the urgency level picks up a couple of notches. The key for the seemingly weaker David figure, is to change the battle ground and change the way of engagement. In this sense, the shopping engines need to change they way they do things, aka, use their apparent disadvantages as strengths. Being smaller, shopping engines can more easily evolve and maneuver.

Put simply, to change the tide, shopping engines need to become innovative again. At one time they were cutting edge in their ability to deliver multiple offers, additional merchant information and consumer feedback. Literally the CSE worked as a complete resource, aggregating purchasing data which helped merchants target consumers, and in turn which helped the consumer’s purchasing decision. Shopping engines need to find some of that creativity again. Whether this is done through dynamic social engagement, iPhone enabled scanning devices, or many other options is irrelevant. The point is that another large e-commerce shift is occurring, and if the shopping engines don’t get out in front of that change, then shopping engines face the prospect of becoming e-commerce relics of a by-gone area. That, would be too bad.

What is the Amazon Buy Box?

The Amazon Buy Box is the way Amazon compares like products. Instead of a product listing page with rows of matching results as you would see on a typical CSE, Amazon creates a master product page which incorporates all information known to Amazon, as passed on my eligible sellers of that product. Next, Amazon displays the competitive offers from merchants in the upper right hand portion of the page. The buy box contains a single offer and frames the now classic Amazon ‘Add to Shopping Cart’ button which has been duplicated by webmasters around the world. Below this section, Amazon delivers up the consumer a quick review of competing merchant offers.

What Does It Mean to ‘Win the Buy Box’?

All offers are not created equal, and Amazon has developed a system to lead the consumer to the desired offer. Amazon has constructed a tiered offer sheet, where the most desirable listing is located at top and is directly connected to the main shopping cart button. In order to buy from other merchants selling the same item, the consumer needs to examine the much smaller and less obvious product offers below the buy box and then click on the much smaller “Add to Cart” buttons.  Because Amazon sees one offer as superior, Amazon attempts to drive the consumer to the winner of the buy box, and thus receive the majority of sales. Compared to the winner, sales significantly drop off for other merchants underneath the buy box. Remember every site design study you have seen, where consumers are drawn to bold calls-to-action, and you understand why winning the buy box is so important.

Can you sell items when not winning the buy box? Sure, of course you can. However, if you want to sell a reasonable amount outside of the buy box, you better have a very enticing offer (that means the cheapest price). So,that leads to the final question…

How Does A Merchant Win the Buy Box?

As stated, Amazon looks to show the most desirable offer. Amazon uses many different variables to calculate the buy box winner. Ultimately this can be divided into 2 types of variables. On one hand, Amazon is looking to give the best value to the consumer, and then Amazon is looking to determine how likely it is the merchant will provide the product in a satisfying manner.

Factors for the buy box:

Be eligible: First, you need to be eligible. This means being an Amazon Gold Level merchant or higher. (Essentially, this means Amazon trusts you)

Price: The most important aspect. This includes the selling price of the item plus shipping. The lowest combined price gets the most relevancy.

Availability: This includes how many of the items are available and how quickly the item will ship. Pay more attention to shipping time, or fulfillment latency. The quicker an item can be shipped, the better.

Volume: This refers to how many of these products are being sold. So the more products sold by a merchant, the higher the relevancy.

Refunds: This refers to the amount of refunds given based on merchant error. The more refunds a merchant dishes, that is the more the merchant backs out of the sale, the worse the relevancy.

Costumer Feedback: Just like eBay once was, feedback can be king. If a merchant can not maintain minimum levels of feedback (determined by category), then a merchant may be blocked from being eligible for the buy box.

A-to-Z Guarantee Claims: This refers to returns, and is another component of measuring costumer satisfaction.

When all of these factors are combined together, this results in a combined value which is then measured against other sellers of the item. The most relevant, or the highest value offer then wins the buy box.

What we know – Looking back at 2008

At this point, it’s well documented what type of economy we ran into at the end of 2008. Consistency compared with the Great Depression, global wealth shrunk significantly and according to the latest jobs report, the US has not seen job shrinkage like this since 1945 (and that drop was created artificially by the end of World War II).

The fallout left some major players in bad situations, with bankruptcy filings by Circuit City, K-B Toys, iFloor, Lenox, and others (see Internet Retailer). The lone good news was the falling of gas prices, but with gas supplies being cut back by OPEC,  gas prices are slowly increasing and should rise back up steadily throughout 2009.

In looking at e-commerce, web sales were flat year over year (see Internet Retailer). In reviewing Q4 2008 sales, according to comScore Networks, there was some peaking, like the day after Thanksgiving (Black Friday) through December 1st, up 13% since 2007. Total web sales rose 7% the following week (Dec 1-7), then fell 2% the next week (Dec 8-14).
Looking at the entire period, from October 1 – December 28, total web sales were down 4%, which marks the first time this has happened since comScore began tracking web sales in 2001 (see Internet Retailer).

So, in the midst of the floor falling out of the retail season, did anyone do better? The answer is ‘yes’.  According to a survey by Shop.org and Forrester Research Inc., 63% of 84 retailers surveyed, reported a year-over-year rise in sales Nov. 1 through Dec. 21.  The best growth in the group surveyed was said to be among mid size and multi channel retailers (see Internet Retailer).

Outside of sales, we can say that traffic was also up at some major sites. Sites experiencing significant gains were Amazon, Apple and Wal-Mart. However, some major brands found their traffic was down significantly like eBay, Best Buy and Overstock.com. (see Internet Retailer)

What we think we know: 2009 e-commerce predictions

Now that we are done with the 2008 data, the executive question then emerges, ’so what?’.

First, let’s talk about all the data just reviewed. It’s pretty obvious web sales were hit, just like all of retail sales were, including brick and mortar, catalog, etc. Consumer spending was down to such a low point, the momentum of the previous years in ecommerce growth were brought to a sudden halt. However, consumer behavior is still shifting to online shopping and research. Conversion rates were down as shoppers had a long list and short budget, but for some, free shipping and heavy discounts helped greatly. In looking at the high traffic sites, these were sites known for discounts (Walmart), or simply on a wave of popularity (Apple). Sites left out were either suffering from other issues (eBay), or hurt from a lack of luxury based shopping (heavy consumer electronics retailer Best Buy). In fact, from my reading, Best Buy is currently in 2009 experiencing a surge in traffic since Circuit City is struggling for life, but still not seeing high revenue as purchases are hard to come by.

In case you have not seen the writing on the wall, or perhaps you are nowhere near building a 2009 budget, this year will be the year of monetization (see William Flaiz’s piece, among other predictions, on SearchEngineWatch). Budget’s will be tightly controlled, and in many cases reduced quite a bit. From a macro viewpoint, there will be a strain on Web 2.0 standouts and will bring pressure to begin to bring in money. Twitter which has yet to put together a plan to make money, and social networks like Facebook and MySpace, which so far sell banners with notoriously low click through rates, will be put under pressure. New technologies and entrepreneurs should build a strategy where either imminent monetization is present, or a source of funding is already in place (i.e., get some friends together now). With only 6 venture backed companies going public in 2008 and the credit crunch still taking it’s toll, VC outfits are not lining up right now to help out and won’t be for some time.

What can typical retailers expect? I’ve seen some growth estimates in the 4% range (see emarketer), however, I’m not sure how realistic this. For a sobering report on just what the odds are, I strongly suggest taking a look at Seqouia Capital’s PowerPoint from October 2008. This presentation started the lock down cycle for a number of VC backed companies, and rightfully so. The ‘death spiral’ shown here, where a company’s expenses quickly break off from revenue, is a perfect example of why 2009 should be about not just site optimization, but complete business optimization.

So, the economic retooling has begun. The great thing is, if you want a green economy, an economy not structured on borrowed money and consumer debt, an economy to operate on new principles…well, that should be an easy choice now.
On a company level, take the growth you saw year over year in Q4 2008, and that is close to what you should expect over the next 6 months. This is very much survival time in the sense of working to make a profit. I have seen some companies cutting budgets regardless, and this machete approach makes no sense if the program is making money. A set 50% reduction will do no good, but if a program or programs are under performing for the past 4 months or more, then try to put things on hold. Also, work with partner companies. Everyone is under the same pressure, so keep in mind there are no free rides but people do understand the need to stay in business. I would expect to see more casualties in Q1 and Q2 2009, but things start looking brighter after that. Current trends point to a turn around beginning in Q3 2009. If you can make it that far profitably, indications are an explosion in growth beginning at then. Things won’t turn around immediately, but if government and private organizations continue to accurately and responsibly work on issues instead of borrowing to ignore them, then the end of 2009 looks promising and 2010 may just begin something special.

Forgive me for waxing poetic, but this season has been a particularly intriguing (and busy) one. For this first post in over a month, there are too many things to talk about all at once, but at least I can start building some momentum again with what is going on right now.

The most interesting question to me is how this week will end. This year I expect to see more of a pronounced late run in sales than in years past. Of course it has been documented quite well that sales have been hit by the economic conditions and per capita spending is down. However, ecommerce is still driving hard as has been the case for the past several years. I expect this will lead to some significant changes in strategy early next year for many companies, but let’s save that for a future post.

For now, there are several factors at play which should keep retailers on guard until at least Monday, 12/22. Historically the busy season is on it’s way down at this point, however there are 3 things I believe will keep this week busy:

1) The shortened holiday season initiated by the late Thanksgiving (5 days shorter than last year)
2) The early hand wringing over the economy leading to pent up demand
3) The latest news that consumers are doing last minute shopping online this year instead of rushing through malls

All of this should lead to a better late trend in holiday shopping for 2008. I advise everyone before completely letting your guard down by the end of this week, to see what the weekend brings.  Also, get to work thinking and planning about post Christmas sales. Since many people won’t get the same barrage of presents this year, expect some demand in the last days of 2008.