EP097 Holiday Shopping Predictions: Trends & Strategies for E-commerce Success
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[00:00:06] DARIN NEWBOLD: Well, good day and welcome to Commerce Today. My name is Darin. Josh is here with me. And boy, it's a little warm here in our studio today,

[00:00:13] JOSHUA WARREN: is kind of fun. We're doing a holiday episode, but it's actually hot in Dallas and specifically hot in our office

[00:00:19] DARIN NEWBOLD: today. Yes, kind of crazy. But besides that, we're going to be talking about that fun.

[00:00:23] DARIN NEWBOLD: fun topic of holiday shopping, the predictions, the forecast. But for, before we do that, before we jump into that, Josh, why don't you remind us? Cause we had a episode back in August, all about election year e commerce playbook. Tell

[00:00:37] JOSHUA WARREN: Yeah. So you might be thinking, Hey, the commerce today, people they've talked about the holiday season already. And you can be thinking of last year's episode, but also I wanted to acknowledge back in August, we did an episode about How the holiday shopping season might look different due to the election year.

[00:00:52] JOSHUA WARREN: now that the election is done, we are going to look forward more towards the predictions about, you know, how busy each day is going [00:01:00] to be, what the key trends are going to be. So hopefully you, watch that or listen to that August episode already implemented. All of that have had a great run up into the holiday season, and now we're going to cover what you need to do next.

[00:01:13] DARIN NEWBOLD: well, first up on this is what are the updated e commerce sales projections from the, from the major pundits, if you will.

[00:01:21] JOSHUA WARREN: And I know y'all love it when I just rattle off a bunch of numbers. So as always, this will be in the show notes. We'll have links to all the sources and then on my LinkedIn, I'm going to do a newsletter article that breaks down all these numbers as well.

[00:01:31] JOSHUA WARREN: But, basically Adobe, their predictions are, very healthy growth for e commerce. So 8. 4 percent year over year growth in holiday sales. Last year was about a 5 percent growth. So that's a pretty big jump and they project that the sales will hit 240. 8 billion. They got real precise there with that 0.

[00:01:52] JOSHUA WARREN: 8, cyber week is going to be 40. 6 billion of that. and they then cyber Monday breaks down as the biggest [00:02:00] day at 13. 2 billion. Black Friday at 10. 8 billion, Thanksgiving at 6. 1 billion. The interesting thing is they're projecting at 10 percent growth in Black Friday, whereas just a 6 percent growth in Cyber Mondays.

[00:02:11] JOSHUA WARREN: There's some behavioral shifts they seem to be expecting in when people shop

[00:02:16] DARIN NEWBOLD: I'm guessing you're going to tell us more about that. And if you don't, I'm going to ask you about it because I want to know.

[00:02:20] DARIN NEWBOLD: But what are some other key forecasts that you've taken a look at? So we can kind of get a little bit more than just Adobe's

[00:02:27] JOSHUA WARREN: a look at? So we can kind of get a little bit more than just Adobe. They're projecting up to a 9%, maybe a little bit more than 9 percent growth.

[00:02:48] JOSHUA WARREN: National Retail Federation. They also predicted higher than Adobe and have said, up to 300 billion. and then eMarketer put out a report saying basically 9. 5 percent [00:03:00] increase. So everybody's saying increase. Now, again, this is in eCommerce. we're going to talk in a little bit about total retail and what the difference between those numbers means, but in eCommerce, it is shaping up to be an excellent holiday season.

[00:03:13] DARIN NEWBOLD: beginning to look a lot like Christmas. All right. Implications for our e commerce brands. What are the things that they need to be thinking of and be, be ready

[00:03:20] JOSHUA WARREN: always, be ready for peak. and that means your website, make sure it's ready to handle the traffic, make sure it's performing the way it ought to. make sure you have the right customer service team set up, make sure your logistics are ready.

[00:03:34] JOSHUA WARREN: I mean, all the things that again, hopefully if you're, you're smart enough to be listening to this podcast, It's already November. Hopefully, you've already checked all those off. If not, reach out to us urgently.

[00:03:45] DARIN NEWBOLD: exactly.

[00:03:46] JOSHUA WARREN: but then also look at your historical sales data and your projections, and especially with this possible shift where Black Friday is suddenly going to be a little bit more important for e commerce than it has been the last couple of years.[00:04:00] 

[00:04:00] JOSHUA WARREN: you might want to just make sure you have the right promotions and the right inventory timing set up and ready for that.

[00:04:06] DARIN NEWBOLD: Well, interesting. Well, all right. Speaking of Black Friday, speaking of shopping and consumer behavior habits. And it's the question I wanted to ask you earlier on, and fortunately we just got right to it. So tell us about what are the kind of the key things around what you're seeing in differences and why, why is Adobe and, the others saying such high projections?

[00:04:29] JOSHUA WARREN: Yeah. So a lot of that is the shorter shopping season. So we talked about that at the episode in August. There are only 27 days between Thanksgiving and Christmas.

[00:04:37] JOSHUA WARREN: It's basically the, pretty much the shortest the season can be. so as we mentioned back in August, people were already shopping then now 50% of shoppers actually have said they want to complete their holiday shopping before Thanksgiving. So that's, that is a record breaking number. and I think that's where, yeah, that's where, [00:05:00] really we're going to see that shift in behavior of more people buying on Thanksgiving and black Friday because they, they want to be done because they just, and looking at their calendars and looking at everything they need to do, they're ready to be done with their shopping.

[00:05:13] JOSHUA WARREN: no, a carryover though from last year. So the distribution between the days is a little different, but one carryover is People still want discounts and there is an insane level of price sensitivity right now. so people they're expecting to see, the analysts say they think there's going to be an average of about a 30 percent discount on most products this holiday season.

[00:05:34] JOSHUA WARREN: That varies a little bit between categories. So electronics, those great black Friday deals, those are going to hit about 30 percent off, and then it steps down from there. toys at 27%, TVs at 24 percent and sporting goods at 20%. And we're going to talk a little bit later about how, if you're not tweaking those prices and those discounts, you are going to lose out on sales this holiday 

[00:05:56] DARIN NEWBOLD: Well, I'm wondering why, why is TV separated at 24 [00:06:00] versus the electronics at 30?

[00:06:01] JOSHUA WARREN: You know, I think that over the years, the consumers have just gotten kind of tired of the Black Friday TV special, and I think they've just gotten kind of used to it. I've also seen there's more and more, and it just become fairly well known that, Manufacturers now are making special Black Friday edition TVs that have less features to drive the price down.

[00:06:22] JOSHUA WARREN: So, there's just some shenanigans there, I 

[00:06:25] DARIN NEWBOLD: That makes sense. Well, so what are, what are you seeing in kind of the marketing and then consumer preferences as, as we have these changes and differences as you're going on? Yeah.

[00:06:34] DARIN NEWBOLD: So

[00:06:34] JOSHUA WARREN: we talked back in August about how paid search was going to be real expensive leading into the holiday season, especially on Meta, because of all the money the political campaigns were spending. Yay, that's done. So prices should start to normalize. but even with all that spending on social media, paid social media placements, paid search is actually still the top driver of e commerce revenue during the holiday season.

[00:06:59] JOSHUA WARREN: So it [00:07:00] drives 28 percent of online revenue. So. this is where if you don't have a paid search program in place already, you need to get one

[00:07:08] DARIN NEWBOLD: better get one right away.

[00:07:10] JOSHUA WARREN: sure. also we've talked a lot this year about influencer marketing and it was an, an influence on the holiday season last year, but I think 2024 is the year where influencer marketing really takes center stage in holiday sales.

[00:07:25] JOSHUA WARREN: Gen Z, if you're targeting Gen Z, Influencer led recommendations are converting 10 times higher than your paid social media placements. So huge difference there. so definitely if you have some holiday campaigns where you want to target a younger audience, make sure you've lined up some solid influencers to work with.

[00:07:44] DARIN NEWBOLD: That makes total sense. Well, now as we kind of think about it, what are the, the key trends overall? I mean, you talked about a few of them here and there, but maybe kind of, kind of break down more specifically around kind of the holiday sales and, [00:08:00] and the impact that those, those key trends are going to have.

[00:08:03] JOSHUA WARREN: this, I almost feel like you can listen to last year's episode. And in this first one, you can listen to episodes going back as far as you've had them.

[00:08:11] JOSHUA WARREN: first up is mobile commerce. Please people, please make your sites fast, make them easy to use on mobile. last year was the first time in the U S that mobile was greater than 50 percent of the total e commerce spend during the holiday season. it's expected to hit 53. 2%. So that's 128 billion or about a 13 percent a year over year growth in the amount of revenue that's going to be made on mobile transactions.

[00:08:37] JOSHUA WARREN: and again, Gen Z and younger shoppers, they're on mobile. That is the only way you're going to reach them. So especially if your audience skews younger, go check your core web vitals, go check your mobile experience, make sure that it is ready to go. How

[00:08:52] DARIN NEWBOLD: How about, how about that kind of interesting phone when the buy now pay later? 

[00:08:57] JOSHUA WARREN: we love our, I mean, is it [00:09:00] Christmas in America if there's not a whole lot

[00:09:01] JOSHUA WARREN: of 

[00:09:02] DARIN NEWBOLD: consumers out there.

[00:09:02] DARIN NEWBOLD: Go away.

[00:09:03] JOSHUA WARREN: so buy now pay later, continuing to grow. I know that for a while I've been predicting a bubble bursting and buy now pay later, but somehow These companies and these consumers keep piling up more and more debt.

[00:09:16] JOSHUA WARREN: So, Buy Now, Pay Later is going to make up 9 percent of holiday online sales. on Cyber Monday, it's probably going to hit a new record of 993 million in new debt through Buy Now, Pay Later purchases on Cyber Monday. Everyone's a little budget conscious right now. Everyone is trying to stretch their dollars and so buy now pay later is definitely going to improve your conversion rate and your average order value this holiday season.

[00:09:44] DARIN NEWBOLD: I can imagine. Well,

[00:09:46] DARIN NEWBOLD: the other thing that we wanted to talk about here is promotional strategies. You talked about, Hey, people are even numb to all the sales with TVs and stuff, but what are some things that can be effective?

[00:09:57] JOSHUA WARREN: so definitely, [00:10:00] discounting and, I mean, consumers are just so price sensitive right now, so. Know your product and know your competitors.

[00:10:08] JOSHUA WARREN: And right now, brand loyalty can be bought a little bit with. Discounting and lowering your prices. So be aware, you know, I never want to encourage brands just to race to the bottom on price. I don't think that's sustainable, but definitely if you're not using some sort of pricing intelligence system or service, you need to get one.

[00:10:29] JOSHUA WARREN: You need to make sure that your competitors aren't grossly undercutting your prices, because if they start out discounting you, then you are definitely going to lose consumers this holiday season.

[00:10:38] DARIN NEWBOLD: And that's interesting. And I brought up TVs a couple of times and there's a reason I have to show you later, Josh, why, but, It's being able to distinguish yourself from your competitor in, in real key ways makes, really can make the difference. And especially if, if your product in this case doesn't have to be a TV, but has better [00:11:00] or more keen features and those aren't highlighted and really brought forward so that someone sees it.

[00:11:06] DARIN NEWBOLD: it can be a me too situation and suddenly you gloss over it. Cause it's, Oh, Hey, that one's 30, 40, 50 more. And I would pay that, but I'm going to pay for

[00:11:15] DARIN NEWBOLD: more, more things and a better product. 

[00:11:18] JOSHUA WARREN: it's so true. There's so many sites where the experience still doesn't really surface those details and those features well. And that's where sometimes it's a, it's a simple user interface issue where you just need to do some design work.

[00:11:30] JOSHUA WARREN: Lots of times it's a product data issue where maybe you don't have a PEM or you don't have the right PEM. But making sure that yeah, whatever distinguishing features your product has, you have to get that across because consumers, as we'll talk about a little bit, they're starting to feel a little bit more optimistic.

[00:11:47] JOSHUA WARREN: They're starting to get a little bit more money. So at times they're willing to really spend this holiday season. but only if they feel like they're getting the value and your product data and your website experience has to show them that for sure.[00:12:00] 

[00:12:00] JOSHUA WARREN: the 

[00:12:01] DARIN NEWBOLD: purple, whatever color was your favorite.

[00:12:03] JOSHUA WARREN: whatever 

[00:12:06] DARIN NEWBOLD: Economic factors. Now we're into the game. Consumer spending trends. Tell us all about

[00:12:10] JOSHUA WARREN: Oh yeah, the fun stuff, fun stuff. Well, first of all, in all the different colors, my favorite election meme I saw was, this is the only map I'm tracking tonight, and it was, I believe, the states in which it is legal to own a 

[00:12:22] DARIN NEWBOLD: kangaroos. I love 

[00:12:22] JOSHUA WARREN: So that one was great, but no kangaroos here. so. On the economic side of things, so we still have inflation. It's coming down, but there is still inflation, but even throughout all this inflation, consumer spending has remained stable. and I think we're going to see that definitely go into this holiday season and a big part of that when you dig into the economic data.

[00:12:43] JOSHUA WARREN: And if you want, if you're a nerd like me and you want to dig into the data, The links will be in the show notes, but it's wage growth. So we have actually this year wage growth. So the increase in the average pay is outpacing inflation. So people actually have a little bit more money to spend, [00:13:00] unless you were trying to buy eggs, but that's another story.

[00:13:03] JOSHUA WARREN: but we're still all a little nervous. And especially as people were starting to talk about their holiday budgets before the election, I think there was just so much uncertainty that still some price sensitivity. And then this is the, where the, the data gets really interesting. National Retail Federation actually shows that retail growth as a whole is going to slow this holiday season.

[00:13:24] JOSHUA WARREN: Re total retail sales in the holiday season are only going to grow by 2. 5 percent to 3. 5%. But e commerce is going to grow by 10%. So what's happening is actually a whole lot of people are shifting their purchases from in store to online. I think it could be the biggest shift we have seen since 2020. I don't think it's going to hit that 2020 shift, but I think it's going to be bigger than we've seen in the years since.

[00:13:48] JOSHUA WARREN: And so a lot of this is because consumers find it so easy to Compare deals and shop deals online. So if you're a, mainly a store based retailer [00:14:00] and you don't have a strong omni channel web presence, probably too late for you now, but your competitors that do have that strong presence are going to make a lot of money this holiday season.

[00:14:10] DARIN NEWBOLD: Wow, that's, that is always amazing. It's that, that behavior that's behind it and drives it all. Well, what are some action actionable insights for the brands? What they, what can they do to,

[00:14:20] JOSHUA WARREN: Oh, I got to talk a little bit more about the election first. I want to see how much we can talk about the election without talking

[00:14:26] DARIN NEWBOLD: about the election.

[00:14:27] JOSHUA WARREN: so there's still the whole context of the election year.

[00:14:32] JOSHUA WARREN: The fact that now there's going to be a transition of power, it's still influencing, spending habits. 43 percent of consumers are actually planning their budgets more cautiously and conservatively this holiday season. We're seeing more where it's not necessarily that they're going to have a lower budget, but more people that before maybe didn't really have a holiday budget, they're sitting down and making that budget.

[00:14:53] JOSHUA WARREN: And so this is where there's been some really interesting research done, asking consumers basically how [00:15:00] they're setting that budget, how they're planning on making their purchasing decisions. And this is where that price sensitivity comes in. So based on these consumer surveys for every 1 percent you lower your price, your demand is actually going to go up by slightly greater than 1%.

[00:15:14] JOSHUA WARREN: Now it's only slightly, it's 1. 025%, but if you're a large enough scale retailer, That basically shows that you bring your price down, say four or 5 percent and suddenly you're actually increasing your, demand and sales. And so depending on your profit margins, you know, your, your mileage may vary. you can run that math and see how, again, you really can win this holiday season by some really smart discounting.

[00:15:41] DARIN NEWBOLD: That is, yeah, that's amazing. Well, along with that smart discounting, there's some other insights that you want to share here. What, what are those things that they can take action

[00:15:50] JOSHUA WARREN: So definitely, be ready and willing to have some adaptive kind of in the moment pricing changes. So I mentioned already kind of the [00:16:00] pricing intelligence and seeing what your competitors are doing, but definitely consider even small adjustments to your discounts and pricing to capture that additional demand, especially with.

[00:16:09] JOSHUA WARREN: Black Friday sales expected to increase. I would really recommend that your e com team looks at your Black Friday numbers on Saturday or Sunday and then makes adjustments to your Cyber Monday plans because you still have time to capture the biggest day of the season. And that can be a good way to see, okay.

[00:16:27] JOSHUA WARREN: Have we discounted enough? Do we discount too much and how are we doing compared to our competitors? I also think while the election is behind us, mostly, I think that, there's still going to be a lot of news over the next couple of weeks of how the economy is doing, of how, what the plans are for the economy, what the plans are for business and consumer spending, it's going to influence consumer sentiment.

[00:16:52] JOSHUA WARREN: So. Whether you enjoy it or not, I know we're all tired of following the news this election year. You really need to keep an eye out for the [00:17:00] news and kind of that macroeconomic environment because even relatively small things that happen in the next couple of weeks could greatly change that price sensitivity we discussed.

[00:17:10] DARIN NEWBOLD: And yeah, that's an interesting thing to think about because with often we're buying stuff from places that are not, may not be in the, definitely the same city, state, you know, Possibly even country in some cases, but for the most part in the U. S., not in the same state. So there are a lot of different referendums that are gonna, that affect the economies of those states possibly.

[00:17:31] DARIN NEWBOLD: Well, hey, as a summary, as we're kind of putting this all together, there's several things that I know you want our listeners to take away. Josh, why don't you, why don't you run us through that summary?

[00:17:40] JOSHUA WARREN: So hopefully you're already prepared for Cyber Week. If not, reach out to me on LinkedIn right now because you need to be prepared for Cyber Week and expect higher traffic, especially expect higher traffic on mobile. make sure that you have a good Buy Now Pay Later program in place.

[00:17:56] JOSHUA WARREN: Know that You need to have already planned out some transparent [00:18:00] good discounts. Know that your consumers are very cost conscious and they're going to be comparing your discounts against your competition. So that's kind of the biggest takeaways for me.

[00:18:09] DARIN NEWBOLD: Well, yeah, and, with that, start early, stay focused and reach out to Josh if there's anything else. Any last, any last words here before we, no.

[00:18:21] JOSHUA WARREN: no, just, we survived this rather hot studio episode and, hopefully it'll be cooler next week. and you can always find me as Joshua Warren on LinkedIn with a creativity gold background behind my headshot, for free 30 minute e commerce problem solving sessions.

[00:18:38] JOSHUA WARREN: We'd love to talk through your holiday prep or anything else I can help you with.

[00:18:42] DARIN NEWBOLD: We'll definitely take advantage of that opportunity as always. And with that, we want to wish you a fantastic Black Friday, Thanksgiving, Cyber Monday, and whatever grooviness happens on Tuesday. So with that, we appreciate you as always listening in and you guys take care. Have a great [00:19:00] day. 

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