The holiday season in the U.S. is keenly anticipated by retailers because of its potential for high sales. In some sectors, these seasonal sales can actually surpass those of the entire year.
For the e-commerce sector, the holiday season sees significant shifts in consumer shopping behavior which can be translated into a great opportunity to boost sales.
This article will therefore highlight some of the top opportunities available to retailers for holiday season e-commerce, as well as some insights on how to capitalize on online business opportunity.
Overview of the e-commerce holiday season opportunities
The holiday shopping season in the U.S. typically starts on Black Friday, which falls on the first Friday following Thanksgiving. As a result, most retailers in the U.S. tend to start promoting seasonal sales at the beginning of November.
The holiday shopping market in the U.S. has been on an uptrend for the past few years. 2020 saw retail e-commerce sales amounting to approximately US$ 186 billion, with most of this being generated on Cyber Monday. For the first time, Cyber Monday became the U.S.’ biggest online shopping day, hitting an estimated US$ 10.8 billion in online sales.
When considered as a proportion of total holiday retail sales, e-commerce sales accounted for 17.5%. Forecasts showed expected growth in 2021, with the share projected to rise to 19%. This highlights a positive trend as e-commerce continues to rise over the holiday period.
In terms of what consumers are purchasing, the leading e-commerce sales categories over the holiday season were general merchandise (accounting for nearly 56%). The second-highest category was apparel and footwear (accounting for 10%). Following this was consumer electronics and major appliances (accounting for 9%).
Given the potential of the e-commerce holiday shopping market, these are some of the top opportunities that retailers can look out for.
Top holiday season e-commerce opportunities in the U.S.
1. Focus on increasing online holiday e-commerce sales
The best opportunity that holiday season e-commerce offers is the increased revenue potential driven by a spike in consumer spending. Year-on-year growth figures for e-commerce holiday sales reflect an increase in total e-commerce sales by a staggering 20.6%.
Over the 2021 holiday season, U.S. consumers spent upwards of US$ 204 billion on online holiday shopping. The consumer preference for convenience is one of the top reasons why e-commerce sales over the holiday season will continue to grow.
Another key factor driving growth over the holiday period is the increased adoption of Buy Now Pay Later (BNPL) payment schemes. BNPL actually registered double-digit growth over the 2021 holiday season, with BNPL orders up by 10% and purchases up by nearly 27% year-on-year.
This shows that with the right payment plans, consumers are willing to spend more because of the flexibility offered.
With increased holiday e-commerce sales, there is an opportunity for businesses to create holiday strategies that include updating product portfolios, offering holiday discounts, and optimizing online stores. They can also incorporate BNPL payment schemes to capitalize on the market trend and increase their revenues from online shopping.
2. Embrace mobile commerce
The past decade has seen an acceleration in smartphone usage, which has in turn spurred increases in mobile commerce. It has been projected that mobile commerce sales in the U.S. will likely double between 2021 and 2025, to reach an estimated US$ 359.32 billion.
The share of holiday season e-commerce revenue generated from mobile devices was 39%. While desktop and tablet devices accounted for the majority of U.S. holiday season sales revenue, it has been reported that the share of mobile-based purchases rose from 34.5% in 2019 to 39% in 2020. Desktop devices only saw less than a percentage point increase from 60.4% in 2019 to 61% in 2020.
Driving mobile commerce is the acceleration of existing technology trends such as AR, 5G, and one-touch payment systems (e.g. Google Pay and Apple Pay). Also worth noting are the new commerce channels such as social commerce and influencer direct selling. Unsurprisingly, tech-savvy millennials registered the highest amount of intent to use mobile devices for holiday shopping.
This shows that businesses should strengthen their mobile commerce strategies and invest in ensure an enjoyable and efficient mobile shopping experiences for their customers.
This can be complemented by investing in mobile marketing services such as push notifications, mobile content, and SMS. Also, it is worth creating a mobile e-commerce app as well as a website that is mobile-optimized. The goal should be to build mobile commerce experiences that increase engagement and, ultimately, conversion to sales.
3. Encouraging an extended holiday e-commerce season
A survey conducted by Radial showed that up to 57% of U.S. consumers were intending to start their holiday shopping earlier in 2021 compared to the previous year. Survey data also showed that 8 in 10 shoppers would shop sooner if brands started offering their holiday deals before Black Friday. For 1 in 5 of the respondents, this actually meant starting their shopping as early as August.
This information is essential for businesses when planning their holiday sales strategies as it is clear that there is potential to gain a competitive edge by offering holiday deals earlier. These shoppers can be targeted by messages that remind them to “avoid the mad rush.” This approach can even incentivize them to make purchases in lieu of actual promotions or deals.
As supply chain disruptions are still a reality that many industries will still be dealing with well into 2022, this approach could also ensure that businesses are able to maintain efficient service delivery for the holiday period, which, in turn, could help to increase customer satisfaction with timely order deliveries.
4. Capitalize on omnichannel e-commerce shopping
Consumers are increasingly relying on omnichannel retail to buy from brands. Social distancing measures certainly accelerated this trend as more and more people sought out convenience in their shopping.
It is therefore key for businesses to have omnichannel shopping strategies that integrate the various online and offline channels that consumers use to engage with the brand.
Some areas to consider in strengthening omnichannel strategy:
- Research the channels target consumers use and build them.
- Have consistent messaging across all channels.
- Offer flexible order fulfillment solutions (curb-side pick up, click and collect, etc.).
- Use a channel integration system for a centralized way of monitoring and maintaining messaging and service delivery.
- Use new technologies such as VR, AR, and AI to make both online and offline shopping experiences even more immersive.
5. Get ready for Black Friday and Cyber Monday
As mentioned at the start of the article, Cyber Monday became the biggest shopping holiday last year. This means that this holiday offers a great chance to increase sales. Businesses wanting to do so should begin to deliver recommendations and marketing content that is more targeted for Black Friday and Cyber Monday shoppers.
It is worth noting that consumers shopping during this period are likely looking for good deals, so creating targeted promotions will draw in deal-seeking consumers.
Also it is estimated that 45% of total Black Friday purchases were made on online marketplaces, while 23% of the purchases were made on mobile devices, and 21% were made through a brand’s website. This can help businesses to align their marketing strategies accordingly.
Strengthen your holiday e-commerce sales strategy
With the holiday season now starting much earlier, it is important for businesses to consolidate their holiday sales strategies earlier too in order to fully capitalize on early-bird shopping.
And to sum up, the top ways in which businesses can orient themselves to take advantage of projected holiday season e-commerce sales growth are:
- Offering Buy Now Pay Later (BNPL) payment schemes
- Investing in mobile commerce services, building a mobile e-commerce app, and making their business website mobile-optimized
- Targeting early-bird shoppers as early as August with either deals or messaging around making holiday shopping hassle-free
- Investing in mobile apps and social media, and offering flexible buying models
- Prioritizing the high-traffic Black Friday and Cyber Monday sales period
- Trading on both the individual brand website as well as an online marketplace for more reach.