$9.4 Billion is the expected take from holiday sales on Cyber Monday 2019 and is the highest ever online retail sales collected in the United States in a single day.1 This Cyber Monday projection has grown 19.6% since last year. With consumer confidence at an all-time high and record-breaking retail sales growth, it’s no surprise that consumers are spending more.
We know some of the common drivers causing this trend are empowered consumers, retail omnichannel, and improved digital retail capabilities. Advances in API-first complete commerce platforms help satiate consumer demands such as free deliveries, online promotions and click and collect. What we still need to think about are the consequences of this growth spurt for online sales – especially during the 2019 holiday season. We’ve identified seven notable trends we expect to see this holiday:
The concept of a holiday sales day is a bit contrived and confusing to consumers. Retailers push promotions, discounts, and special deals during the holidays to attract consumers. As Cyber Monday and other holidays became more prevalent, retailers spawned new shopping “holidays” to further market their stores, deals, and merchandise. Today, we have Black Friday, Singles Day, Small Business Saturday, Direct to Consumer Shopping Day, Super Saturday, Giving Tuesday, the real holiday-Thanksgiving and even Non-Buying Day for protesters of all these shopping holidays. Combined dates also form different selling time periods – such as Cyber 5 or Cyber Week, denoting the five days of shopping beginning with Thanksgiving Day or Black November denoting the month of November. The fact of the matter is the entire season is littered with sales and markdowns. For the consumer the story is filtering through the information to find the right deals.
Figure 1. Cyber Week Online Sales Show Double-Digit Growth
Mobile accounted for 36% of sales during Cyber Monday 2018, raking in over $2.83B.2 Over 66% of consumers used a mobile device to make holiday purchase decisions over Thanksgiving Weekend in 2018.3 This trend is closely tied to the growth of overall online as larger screens, easier entry, more efficient devices, infrastructure, and speed of information makes online purchasing on devices frictionless. The trend will continue into 2019 as the desktop wanes in its dominance of ecommerce. Mobile sales are expected to exceed desktop this holiday season.4
Outside the US, Singles Day (11/11) dominates the online arena – particularly in China. Total sales in 2019 brought in over $38.4B, a majority of which was driven by Alibaba.5 Singles Day also brought in over $29B for JD.com.6 A lesser known fact was cross-border trading. Retailers from the US and Europe benefited substantially on Singles Day. Companies like Bose, The Gap, Nike, Levi’s, H&M, Loreal and Apple drove over $140M each, while another 300 brands like Under Armour, Dyson, or LVMH Givenchy brought in over $10M each.7 Holiday shopping will become more pronounced as brands seek to expand their online retail presence globally.
Over 54% of shoppers made both online and in-store purchases, numbering over 89.7 Million shoppers in 2018, eclipsing both in-store only shoppers and online only shoppers.8 Buy online pick up in store (BOPIS) customers increased 73% in 2018 and are expected to increase again this year.9 The interesting fact was higher spending by almost $100 from omnichannel shoppers over single-channel shoppers.10 The ability to service customers across channels has become much more acute as holiday shoppers value omnichannel experiences. It only follows that retailers must invest in seamless fulfillment capabilities such as buy online pick up in store (BOPIS) and cross-channel marketing embedded into their complete commerce platforms.
We’ve seen the effects of earlier selling by many retailers already – based on the fact that in 2019, we have six fewer days between Thanksgiving and Christmas than the prior year. Companies like Walmart, Costco, Target, and Best Buy have started their holiday campaigns before the end of October.11 The time compression for buying has shifted the consumer focus on buying even more during the few days that are available – especially for bargain hunters. This effect may continue into 2020 with retailers starting earlier in the year with the holiday merchandise and discounting schedules – especially if results show dramatic increase in selling on the seasonal shopping “holidays” like Cyber Monday.
Unfortunately, retailers are training the consumer to expect higher discounts, greater markdowns on products, and more promotional sales during these periods. At the same time there is less waiting for hours in long lines for a store to open, only find that there’s no more inventory on Black Friday. The effect will continue to push higher expectations from retailers in the following year. This can impact the retail space through lower margins in the future for retailers engaged in heavy discounting as well as excess inventory on hand when closing out the season – becoming a far costlier outlay for pushing online selling.
Increased shipping costs will lead to retailers driving more omnichannel sales. For retailers, the adoption and growth of online selling, especially on Cyber Monday doesn’t come for free. In the week following Cyber Monday, package volume increased by over 68% and continues to increase through December, putting pressure on carriers and delivery companies.12 87% of shippers expected shipping rates to increase at similar rates to 2018 (4.9%) or more at the beginning of the holiday season.13 Over 80% of products during cyber week shipped for free.14 Consumers are also expecting retailers to deliver in faster, especially as the purchase date closes nearer to the holiday. Retailers absorb much of this cost to promote and push the top line. Combined with heavy discounts, the retailer would come out with tiny margins for their ecommerce position that could only made up with enormous volume. This further drives a push for omnichannel and pick-up in store options that help retain retailer profits.
The holidays are usually a time to rejoice – especially for retailers as consumers open their wallets. Holiday shopping days like Cyber Monday are creating changes that need the capabilities of versatile, complete commerce platforms like Oracle Commerce Cloud and retailers need to be ready for the expectations of the coming year that they sow in the current one. Many of the holiday growth effects outlined above, such as omnichannel and mobile, address shopper convenience. We will see far more of digital impacting the retail environment as shopper convenience adjusts the tipping point for online holiday purchasing.