E-Commerce Tips for the 2016 Holiday Season
With Halloween in the rearview mirror, retailers everywhere should have begun implementing their 2016 holiday marketing strategies by now. Consumers are already crossing items off their lists of seasonal wishes, wants, and needs; retailers that wait too long to appeal to them run the risk of losing valuable sales — and customers. Just as critically, stores that hope to achieve their annual revenue targets need to have specific, detailed e-commerce plans in place well in advance of Black Friday, the once-traditional kickoff to the holiday shopping season.
Most people no longer wait until that day to start shopping for the holidays. According to PwC’s 2016 Holiday Outlook, 64% of consumers will make their first purchases before Black Friday week rolls around, and 29% plan to have their most of their holiday shopping wrapped up by then. Recent data on in-store sales offer additional evidence of Black Friday’s waning influence there; spending in brick-and-mortar locations on that day fell an estimated 10% from 2014 to 2015.
Nevertheless, retailers still see serious upticks in consumer purchasing in the period from Thanksgiving through Cyber Monday, not just compared to the rest of the year but compared to previous years — due primarily, if not solely, to the growing power of e-commerce. In 2015, for example, online sales on Thanksgiving Day jumped 25% year-over-year. Even as in-store spending dropped the next day, e-commerce purchases went up 14%. Cyber Monday online sales also rose; e-tailers took in $3.07 billion — a single-day record and a 16% increase.
Naturally, individual online retail outlets fared well, too. Amazon’s Black Friday sales went up 21% year-over-year, and Apple and JCPenney also enjoyed strong e-commerce sales that day. FreeShipping.com, Clarus Commerce’s owned-and-operated subscription shopping program, saw a notable spike from 2014 to 2015. On Thanksgiving Day, the first day of its weekend-long, 20% cash-back promotion (double the program’s standard 10% cash-back benefit), FreeShipping.com saw a 274% increase in member spending; over the entire five-day period, sales went up 149%.
Overall, online shoppers spent $11.1 billion during those five days in 2015, 17% more than they laid out in 2014. In fact, for the first time ever, online shoppers outnumbered in-store shoppers last Thanksgiving and Black Friday. Expectations for e-commerce growth this holiday season are therefore quite high, especially compared to expectations for overall retail growth:
- PwC forecasts a 10% increase in total holiday spending (including travel and entertainment) and a 25% jump in digital shopping;
- Deloitte sees total sales growing 3.6-4.0%, with e-commerce sales rising 17-19%;
- eMarketer predicts3% overall growth, even as online purchases go up 17.2%; and
- The National Retail Federation (NRF) forecasts a 3.6% expansion in overall sales, compared to a 7-10% increase in “non-store” sales.
In addition, eMarketer expects online sales to comprise 10% of all holiday purchases this year, which would also be a first. It’s not all bad news for brick-and-mortar retailers, though, at least in the short term. Even if that prediction holds, nearly 90% of the remaining sales (i.e., excluding catalog, phone, and other direct-to-consumer orders) will still take place in stores.
All the same, the long-term trend is undeniable: Digital retail traffic is growing — so much so that it’s having a measurable impact, known as the “Amazon Effect,” on retailers. With consumers choosing to browse and buy online more frequently, the lower foot traffic is having adverse consequences for many stores, including well-known, popular brands like Kohl’s, Nordstrom, and Macy’s.
Fortunately for retailers, the response is obvious: They need to adapt and cater to consumers’ changing behaviors. More to the point, and to take full advantage of the surge in e-commerce sales in November and December, retailers need to give their customers convenient, 24/7 access to the holiday items — and deals — they want and expect. That means going beyond offering desktop and laptop users a fully-functioning website; retailers need to have a strong mobile presence that provides a seamless shopping experience no matter where people might be.
Mobile commerce, after all, is growing at a faster rate than e-commerce. As of February 2016, nearly 80% of all U.S. mobile users owned smartphones, and vast numbers of them are becoming more and more comfortable with their devices. Indeed, in yet another industry first, smartphones accounted for more traffic to retail sites in Q1 2016 than computers did. Furthermore, over half of online retail searches now start on smartphones, and it’s estimated that, by the end of 2017, they’ll be used for 60% of all retail visits.
Clearly, retailers will need to keep optimizing their e-commerce and m-commerce channels throughout the 2016 holiday season (and beyond). While their plans for the Thanksgiving, Black Friday, and Cyber Monday should already be well underway, there are a few preparatory actions that they might still consider (or confirm).
Treat customers like friends. That doesn’t mean giving them items below cost, but it does mean addressing them by name, whenever possible, and alerting individual shoppers to deals of specific interest to them. Every shopper should be told about a sitewide free shipping offer, for instance, but customers with a history of purchasing (or even just pondering) a particular item should be alerted whenever that item — and/or related products — are on sale. These might seem like small touches, but they can go a long way toward building loyalty.
Resolve their pain points. Shipping costs have long been the biggest deal-breaker for online shoppers, and return shipping charges aren’t far behind. Retailers might therefore consider joining the 60% or so of stores that will offer free shipping and return shipping over the holidays. At the very least, they should provide a mix of convenient delivery and/or pick-up options, since nearly 40% of consumers plan to use “buy online, pick up in store” (BOPUS) services. Again, making things a little easier for shoppers can help bring them back.
Go mobile. Consumers are using smartphones not just to research, browse, and buy items, but also to steer them into stores — and help them make decisions once they’re there. According to various studies, 50% of consumers who conduct local searches on smartphones end up in a nearby store within 24 hours; mobile ads that highlight a store’s inventory can increase visits by 122%; and 82% of shoppers use their phones in stores to get more information about purchases they’re about to make. Finding ways to fulfill the needs of mobile shoppers this holiday season can help retailers gain an advantage on rivals that haven’t embraced that channel yet.
Apply and expand lessons learned from customers. By continuously gathering and analyzing as much customer data as possible, retailers can stay in step with their customers’ tastes, behaviors, and desires, both collectively and individually. However, they also need to use their data-mining efforts to optimize customers’ overall site experiences by, say, identifying and eliminating process bottlenecks, unappealing messages, and other audience turn-offs. Retailers should confirm that these improvements are in place well before Black Friday arrives. They also need to make sure they’re ready to run their holiday tests — and ready to respond to compelling results with quick tactical adjustments, if necessary.
Prep the customer service team. Whenever purchase activity increases, so do questions from shoppers. It’s therefore incumbent upon retailers to ensure that their customer service agents are fully prepared for the surge of inquiries about holiday offers, shipping speeds, delivery deadlines, and whatever else might come their way. Pleasing customers these days requires an omnichannel, multi-pronged approach, before, during, and after the purchase, but the payoffs can be considerable. Satisfied shoppers are more likely both to keep coming back and to recommend high-performing retailers to family and friends.
Catering to consumers’ interests and needs is the common thread running through all of these suggestions. With the competition for holiday shoppers likely to be as intense as it’s ever been, retailers will need to set themselves apart from the pack. For many stores, the next two months will determine whether they reach their yearly goals. Meeting and exceeding their customers’ expectations will help ensure a happier holiday season for themselves — and increase their chances of ringing in a rewarding 2017.
Tom Caporaso is the CEO of premium loyalty solutions pioneer Clarus Commerce, with over 24 years of experience in the retail, e-business and customer loyalty industries. Appointed Clarus’ Chief Executive Officer in 2011, Tom’s leadership has led to exceptional growth for the once 10-person start-up which now boasts over 90 employees.
Under Tom’s guidance, Clarus has cultivated partnerships with brands and retailers such as MasterCard, FedEx, Bluestem Brands and Good Housekeeping; creating and managing premium loyalty programs that reward both the brand and its customers.
Caporaso is a noted expert in the retail, customer loyalty and e-commerce industries who contributes regularly to Nasdaq and has been frequently featured in numerous other outlets.