Thanks to a shift in consumer behavior and budget, the ecommerce landscape has never looked better. While the number of online purchases has climbed year over year, its share has always been shy of in-store transactions — until this year. In their annual holiday retail survey, Delotte reports that 2017 will finally be the year that online transactions overtake in-store, 51percent to 42 percent.
We’re sure you don’t need much more encouragement to sell during the holidays – businesses already make as much as 20 to 30 percent of their total annual revenue during the holiday season alone. What we do encourage is maximizing your earning potential during the holidays.
Here are 5 reasons why niche retailers should sell premium products during the holidays.
Bonus: Continue reading for a list of our highest converting premium products below.
1. Shoppers want to spend more.
It's not just increased online transactions that should excite e-tailers. The amount being transacted is also expected to increase. From the same survey, Deloitte reports that each consumer is expected to spend an average of $1,226 (6% more than last year), but that number nearly doubles to an average of $2,226 among households earning $100,000 or more.
If price is the only thing holding you back from going premium, be assured that consumers expect to spend more and have specifically budgeted for it.
Tip: You don't have to make the switch storewide. Test it out first with limited time premium offerings for gift-givers.
2. Shoppers are more self-indulgent.
Reports from the past five years show a steady rise in high-end purchases during the holidays, indicating a general acceptance of spending more when the item is a gift. However, it’s not always gifts for others.
Survey respondents report that they plan to self-indulge this holiday season. More than 4 in 10 (44 percent) say they specifically wait until the holidays to buy larger or big-ticket items for themselves or their household. Additionally, half (50 percent) of respondents say they shop for themselves while shopping for others.
Tip: Play to the tune of the self-indulgent and explain why the item is such a treat!
3. Shoppers want to give good gifts.
Gift giving is part of the reason why the holidays are so stressful. No one wants to give a less than perfect gift because it's supposed to symbolize the giver's sentiment and thoughfulness. Ironically, this is why discounting isn't always a good strategy. Unless you're already a household name, deep discounts are associated with lower quality products because most consumers believe "you get what you pay for."
Premium products, on the other hand, can allieviate fears of a bad gift thanks to their higher quality associated with a higher price point.
Tip: If you want to discount premium products as a niche seller, you need to have a reason why. Sales run the risk of devaluing your brand unless they’re attached to a reason. For example, holidays or end-of-season events are common explanations.
4. Premium buyers also do holiday shopping.
There’s an entire market of consumers who only purchase premium, and they need to shop during the holidays too. Why not have them shop with you?
The polar opposite to their more well-known bargainhunter counterparts, premium purchasers will forgo anything not considered premium. These types of buyers want several guarantees that typically come with a high price point: high quality, good service, and validation.
Tip: If this is your target demographic, you may want to take the additional step of providing social validation where you can. Did another customer rave about your product? Do you have buyers sending you positive reviews? Feature these comments on your social channels to ensure new buyers sense trust between you and real-life customers.
5. There's demand but no supply.
The makings of success in a niche market – being a small enough business to profitably serve a unique but passionate interest group – speaks to the potential of going premium. Customers with unique interests already have enough difficulty searching for mid-market brands that cater to them, nevermind brands with premium offerings. For underserved markets, providing a premium product both sets you apart and gives you control of a new portion of that market.
Tip: Adding a premium product to your store for the holidays is very different from becoming a premium brand. While the idea of targeting both low-end and high-end markets certainly sounds appealing, it rarely works out in the long run. Look no further than handbag maker Coach for a lesson in what not to do to your high-end brand.
Ready to add a taste of premium to your store? Check out our most popular premium products and the potential profit margin at base cost.
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