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E-Commerce Will Dominate Holiday Shopping This Year. Is Your Business Ready?

E-Commerce Will Dominate Holiday Shopping This Year. Is Your Business Ready?
As Thanksgiving and Christmas approach, one prediction is a no-brainer: online shopping will explode this holiday season. Deloitte predicts e-commerce retail sales will grow 25% to 35% from November through January, reaching a total of $182 billion to $196 billion.
Online sales for retailers in many popular gifting categories will experience a hefty boost in 2020. Forrester Research Inc. predicts health and beauty will be up 23% year over year, consumer electronics will increase by 20%, fashion will be up 19% and home furnishings will grow by 16%.
The flip side of the coin is just as dramatic. Forrester predicts dramatic declines for in-store revenue: health and beauty offline sales will fall 8.2% this year, home furnishings will decline by 15.2%, consumer electronics will drop 26.3% and in-store fashion sales will be off by 33.7%.
The main reason for the dramatic shift, of course, is the pandemic. Many consumers prefer to do their purchasing from their home computer these days rather than going to a store. And many families’ buying power has increased because travel, vacation and dining experiences are no longer part of the typical domestic budget.
The focus on staying home will lead to some ancillary trends. Deloitte predicts more self-purchases directed toward home improvements and decorating. And feel-good purchases will probably skyrocket, too. After a trying year, many families will probably spend more than usual on Christmas decorations of all kinds. People may also be more indulgent in their gift giving. Absence makes the heart grow fonder, and social isolation could result in overcompensating with holiday gifts.
All of the rosy e-commerce forecasts were bolstered recently in a new survey conducted for Redpoint Global, a software company providing omnichannel support to retailers. It found that almost two-thirds of the 1,000 adult shoppers in its survey planned to do all their holiday shopping online this year.
2020 caps a multi-year growth trend for online shopping. “For the last four years, (annual) e-commerce growth has averaged between 13% to 17%, and last year it was up 14.7%. This year it will go ballistic,” said Rod Sides, Deloitte’s vice chairman and U.S. leader for retail and distribution, in a recent Forbes Magazine interview.

Growth brings frustrations and challenges

All of that growth will inevitably bring wrenching challenges. Traditional retailers will be forced to dramatically shift resources from brick-and-mortar stores to fulfillment centers to process an expected tsunami of online orders. As consumers have already discovered this year, the supply chain has slowed because of hugely increased demand. Ordering early, especially for holiday gifts, is crucial as the gifting season approaches.
Retailers need to improve their customer-satisfaction experience in anticipation of potential shipping delays and handling out-of-stock situations, Sides says. “The physical supply chain may not be able to handle the flood of orders and making those deliveries. Retailers have been building more capability for that last mile, including buy-online-pickup-in-store, but this year is going to be a stress test for the retail supply chain.”
Another problem area for online retailers is personalizing services. “Retailers are not meeting customers’ expectations for personalized omnichannel experiences,” said John Nash, Redpoint’s chief marketing and strategy officer. He added that more than 7 in 10 consumers surveyed in a recent Harris poll complained of a “personalization gap” between expectations and results with online retailers. Nash thinks retailers can remedy this shortcoming by using easily accessible consumer data to personalize their online marketing and customer engagement processes.
Among the greatest sources of frustration for e-commerce consumers are retailers sending needless offers for a recently purchased item (34% said this practice was very frustrating), sending irrelevant offers (33%), and failing to recognize them as existing customers (31%).
Personalizing the customer experience can result in significant benefits. Nearly half of consumers say they would be more inclined to purchase from retailers that send them personalized content and offers this holiday season. Messages tailored to individual consumers are a strong sign that the company is paying attention to them.
“Retailers need to integrate all the data available about the individual customer, not just past transactions, response data to previous emails or demographic data,” Nash advises. “They should overlay that with other behavioral data, attitudinal data and survey information. And this customer information needs to be activated at every point of contact with the customer, whether they are shopping on the website, in-store, via a mobile app or reaching a call center.”

Among the e-commerce trends strengthening in late 2020:

  • Voice shopping is growing among Internet users. 13% of U.S. smart-speaker owners say that they were making purchases by voice at the end of 2017. That number is predicted to grow to 55% by 2022 (OC&C Strategy Consultants, 2018).
  • The number of social media shoppers is rapidly increasing. With the introduction of the “Buy” button on Facebook and Instagram Checkout, social media is playing a significant role in the world of e-commerce. Businesses can also enlist Instagram influencers to increase their visibility.
  • Green consumerism is on the rise. Half of all digital consumers say that environmental concerns impact their purchasing decisions. E-commerce businesses should strive for creating more sustainable practices.
  • Global retailer spending on Artificial Intelligence (AI) will reach $7.3 billion annually by 2022, up from an estimated $2 billion in 2018, according to BusinessWire. This will help retailers perfect new methods to personalize the customer experience.
  • By 2022 over 120,000 stores will be using Augmented Reality (AR) technologies, offering a much richer buying experience (Prnewswire, 2018). For online consumers this could be a game changer. With the help of AR, customers will be able to better understand if the products that interest them meet their demands.