EP044 2023 Ecommerce Holiday Sales Forecast
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[00:00:00] Darin Newbold: welcome to Commerce Today. My name is Darren and your co host here with me is Josh, and we are so excited to, uh, to be with you and back again to talk about something really fun. And this is, uh, this is one of those awesome times, Josh, that you can pretty much do what I would call the Snoopy dance and say, I told you so.

But, uh, I guess we did that already last year. So what I'm talking about folks is we are back for our annual look at the predictions for e commerce sales for the holiday season. So with that, this is your happy dance time, Josh, let's recap last year. Tell us all about it.

[00:00:43] Joshua Warren: Yeah, yeah, this is the I told you so moment. My favorite part. Um, so back in 2022, which feels like a lifetime ago for a lot of us, um, industry predictions. Um, and this is mainly the Adobe predictions, but really across the industry, they all the predictions about ecommerce holiday sales were too pessimistic.

They actually fell 2 billion short of what ecommerce sales actually were for the holiday season. So the predictions last year were that sales will go up by 2.5 They actually went up by 3.5 Um, There was a prediction that Thanksgiving and Black Friday would actually be lower. That it would drop by 1%.

Big miss there in the predictions. It actually went up over 3%. So you'll see from all those numbers really the trend was the analysts thought it was going to be a really rough year for e commerce sales and it turns out they were wrong. It was a good year. Um, the interesting thing is, uh, you go back to 2019.

eCommerce was about 15 of total holiday sales. By 2022, that's up to almost 22 and it's expected to continue growing. Um, and then, yeah, last year, Cyber Monday and Black Friday were the two biggest days for eCommerce. They made up about 10 percent of total eCommerce holiday sales.

[00:01:57] Darin Newbold: That's amazing.

[00:01:58] Joshua Warren: kind of, yeah, yeah.

And then the, um, kind of the interesting things to think about for, um, this year, before we get into the predictions, is last year when we looked at the numbers, sales really started dropping around Monday, December 12th, about 10 shipping days before Christmas. So it seems like people decided they were done with their e commerce and switched to in store.

About 10 shipping days prior to the holiday. And then Adobe had predicted that 35 percent of online orders in the three days before Christmas would be for curbside pickup actually ended up even higher. 42 percent of online orders the three days before Christmas were curbside pickup.

[00:02:35] Darin Newbold: Wow. that's just amazing. So, sounds like all the pundits and everybody out there was being, well, let's just say a bit conservative in their approach to 2022. The good news is, at least for me, I didn't quite have enough time to read the entire, uh, document here, so I don't even know what's about to come, and I'm going to leave it that way so that it's all brand new.

I like it this way. So Josh, let's, uh, let's start talking predictions. What is it going to look like? What's the prognosticator of prognostication telling us for 2023?

[00:03:08] Joshua Warren: Yeah, so the, the, um, analysts that have published their findings or their, predictions, um, they believe, and we'll link to all these in the show notes, they believe that for the holiday shopping season, so November and December is what they consider holiday shopping, there'll be 5 growth year over year.

eCommerce will represent almost 222 billion in sales. Um, so they are predicting bigger growth than they predicted last year. And they are even predicting, you know, last year grew 3.5 They're saying 5 I have seen some other analysts that are coming in at 7, 8, 10%. So I think yet again, we're going to find that, Adobe's predictions may be a little on the conservative side.

[00:03:51] Darin Newbold: Well, do you think, because I find this interesting. Okay, 2. 5 percent last year is what they predicted. So they doubled it for this year. So they're really feeling good about it, uh, in comparison. So I'm guessing that as we dig through this, we'll probably, uh, there'll probably be some reasons why. That they're, that they're feeling this way, but, uh, I don't know.

What do you think about, you know, the cybers, the, you know, the black Friday, the cyber Monday, all of that kind of stuff.

[00:04:23] Joshua Warren: Yeah, so Cyber Week, um, which isn't really a week, um, just like how Prime Day is no longer one day, it's four, and it's split across the year. But, um, Cyber Week, so that's basically Thanksgiving, Black Friday, Cyber Monday. it's expected to be up 5 over last year. It's expected to actually represent 17 of holiday sales for the average ecommerce merchant.

So that tiny little period from Thanksgiving to cyber Monday is going to make up a lot of your sales. Um, Adobe is expecting that cyber Monday is going to remain, um, not only the biggest shopping day of the holiday season, but of the year. Um, they're looking at it hitting a new record of 12 billion spent via ecommerce on cyber Monday, which is a 6 increase.

Um, they also have a 6 percent increase set for. Black Friday, um, but that only takes Black Friday up to 10 billion. And then Thanksgiving, they think, will grow 5 percent up to about 6 billion.

[00:05:20] Darin Newbold: Now I'm just curious last year, did, did cyber Monday beat out a black Friday? Do you know?

[00:05:27] Joshua Warren: Yes, yup, yup, yup. Cyber Monday did. So, and that's for e commerce sales. And so I guess people still like to go get their in store specials on Black Friday. So

[00:05:37] Darin Newbold: Well, of course they do. I mean, Hey, it's a whole. I'd say it's a sporting event of its own anymore. Uh,

[00:05:43] Joshua Warren: really is, you know, 

[00:05:45] Darin Newbold: so, so, uh, again, amazing, amazing predictions and stuff. Um, we have some more here, but I guess maybe, can you, can you tease me a little bit here? Josh, what do you think is, is driving these more positive numbers going into 2023?

[00:06:04] Joshua Warren: into 2024, but we're in 2023, but 2023 holiday sales. Um, so I think that, I think there's two things and it goes back to what we've talked about a few times of how the economy is driven more by news and perceptions than by actual numbers. I think these analysts are realizing that a lot of the predictions about the doom and gloom of the economy were incorrect.

And so I think that's one thing is they're being a little bit more aggressive, a little bit more willing to assume there's going to be some growth just because when you look at the actual numbers for this year, all year long, there's been growth like the headlines have all been doom and gloom, but there's actually been a substantial amount of growth in e commerce sales really you're all year long.

I think there's a few other things going on. It's interesting. They talked about how, um, and this, I always think of the Chris Farley bit from Saturday night live, but El Nino, um, they talked about how weather patterns are starting to have a bigger and bigger impact on e commerce sales. And basically, if the weather is bad enough, you don't want to get out.

You'll shop online, but if it's so bad, you're worried that you won't get your shipments, then you might not shop online. So, I mean, there's a lot of, a lot of different factors feeding into these models now that are basically all pointing towards growth for e commerce this holiday season.

[00:07:24] Darin Newbold: That's interesting. A little rain. We just got to order it. Ship it to me. All right. Well, so what are some other, uh, what are some other predictions that you're seeing as we kind of, kind of roll into the end of 2023? Oh, yay.

[00:07:36] Joshua Warren: Yeah, so, um, basically last year there was an expectation that discounts would average 32%. There'd be a lot of discounting. Um, I think a lot of this goes back to All the supply chain issues. So at the end of the day, a lot of, um, retailers got overstocked. So they clearance that stuff. Um, this year discounting is expected to be even higher at an average of 35%.

Um, Possibly related, possibly related to the economy. Go back to our old buy now pay later episode for my opinions on this, but by now pay later spending is expected to hit a new record. Um, 17 billion in holiday sales are going to go through by now pay later. Which also means 17 billion of new consumer debt is going to be created.

Just via, just via that part. So, 

and that's actually an increase of almost 20%. So, uh, probably the biggest news though. Oh, go ahead.

[00:08:29] Darin Newbold: I was just going to say, that's, that's just, that's big. And it's kind of staggering. If you take just a second, think about it. I mean, I knew you were going to say the consumer debt. And then I was like, wait a second. That's consumer debt. That's. Yeah. That's a lot. And then that means how much ends up in potentially bad debt.

And well, we can, we can talk about 2008 a whole nother time. Anyway, moving on to the mobile shopping.

[00:08:56] Joshua Warren: Yeah. The 

[00:08:57] Darin Newbold: move on to 

[00:08:57] Joshua Warren: So this one. Yeah, one on this one. I actually had to go back and look because I'm like, wait, this, this hasn't already happened because I remember conference presentations five, six years ago talking about this. And what it is, is that mobile shopping is finally going to overtake desktop for the first time for the entire holiday season.

So the entire holiday season, Adobe is predicting that 51 of online spending will actually take place via mobile devices. So Mobile is going to hit 113 billion dollars in online sales, just for the holiday season. Uh, it's going to be up 14 year over year. Something I love and I always joke about is they really think Thanksgiving and Christmas are going to be the biggest days for that.

Because basically when you're with your family, instead of being with your family, you're going to get your phone out and start shopping. So

[00:09:43] Darin Newbold: I'm guessing, I'm guessing that's more true than you might realize. The other thing that happens is, hey, when you go visit family, you see, ooh, hey, I like that. Where did you get it? And next thing you know, you're figuring out I can order it. Boom. It'll be, it'll be at my house by the time I get home kind of thing.

So about, uh, what about early shopping?

[00:10:04] Joshua Warren: yeah, so it's really interesting. Um, it's not the first time Gen Z has shown up in any of these reports, but this is probably the first time I remember Gen Z. Really influencing one of the metrics on the holiday shopping reports, and that is 49 percent of consumers are saying that they're going to start shopping in October.

If you look at a generational level, Gen Z is really what's driving this, and 34 of Gen Z-ers said, Oh, I've already started my holiday shopping. I started it in July. Um, so that's, that's a big shift and I am not that organized. Like, I can't imagine back in July. I was just trying to survive the summer, not start my holiday shopping.

Um, and those, consumers are really spending a lot more. but they're going to the places that have really strong omnichannel experiences. Uh, buy online, pick up in store has been a must for kind of that early shopping we've seen from Gen Z.

[00:10:57] Darin Newbold: Yeah. Who's that organized? I, yeah. And. What Gen Z do you know that's actually doing their holiday shopping in July and early August? That's, I don't know. Do you know anybody that's like that?

[00:11:08] Joshua Warren: Not that I'm aware of, but you know, honestly, I don't go around in July saying, Hey, did you start your Christmas shopping yet? So,

[00:11:14] Darin Newbold: maybe, maybe we should. So that could be the next thing. All right. Well, hey, to bring this all together like we always do, and, and I can even foresee a couple of things that you've mentioned so far, but how does this affect our e commerce managers, the directors out there that are managing their store, their online presence?

How does this, uh, how does this information affect them? And I know it's probably a little bit later in their cycle than maybe they'd want to hear it, but, uh, how can they take some action?

[00:11:43] Joshua Warren: Well, first you, uh, you probably were so blown away by one of the bullet points, you skipped right over it. Um, you're so used to seeing inflation, I threw you for a loop. There's one last trend I wanted to talk about. Um, and that's deflation. If you even know or remember what that is, since all we've been talking about for a few years now is inflation.

So, um, Adobe's digital price index actually shows that for e commerce, for online shopping, we have not had inflation over the past year. We've had deflation. So basically, um, last year, I know we looked at it and we said, well, wait, there's inflation. So this increase in online spending doesn't mean more people are shopping online.

It just means that they're paying more. Well, that's not what's happening this year. Adobe's digital price index is showing that prices have fallen for 12 months. They're actually down 3. 2 percent over last year. Um, so they, Adobe saying, if you actually factor this in year over year, growth is more like 8 to 10%.

And so they are really seeing that this is new demand. This is new consumers. Shifting their buying online from in store or just spending more and not spending more because prices went up and that, that surprised me seeing that basically the average price for goods online has dropped instead of increased.

So

[00:13:00] Darin Newbold: Interesting. Well, and that's what's driving people to, uh, to the online store, and I think that also drives a lot on the mobile because it's so convenient. The mobile devices have become so powerful that, hey, instantly, you've got great, you know, 5G's pretty prevalent at least here in the U. S. And so, hey, what's, what, the barriers, there's a lot less barriers to really making it happen.

So I guess now we'll kind of go to the, to the next piece on the managers and our directors out there. How can we, how can they take this, this information and make it useful?

[00:13:35] Joshua Warren: Yeah. So first and foremost, if you haven't actually gotten holiday marketing and promos out on your website, like now, um, you're behind, especially if you're targeting a Gen Z audience.

[00:13:46] Darin Newbold: You already missed those folks.

[00:13:48] Joshua Warren: yeah, yeah. Or if you're, um, even if you're using kind of the Gen Z, um, friendly marketing channels, you know, if you're marketing on TikTok, a lot of the, the competitive messaging that's out there is already about the holidays.

And so if you roll in with kind of a fall promo on TikTok, you're going to stand out probably not in a good way, um, because those shoppers are already seeing holiday promotions. Another big thing is while we. Discuss and debate the ethics of it sometimes, but by now pay later, um, you got to be offering it.

Um, You want a slice of that 17 billion dollars of e commerce spending this holiday season that is all going to be via buy now pay later Um, and that's one that um Really the technical piece of adding buy now pay later doesn't take long at all. It's more of the change management corporate approval time Um, so that's one that I would say even as late as uh, we are kind of as close as we are the holiday shopping season That's something that I would consider kind of trying to prioritize getting live if you haven't yet.

another thing is just make sure your pricing and discounts are competitive. If you have kept your prices the same, then they're wrong. They're not going to win the holiday season. Uh, similarly, because with that 3. 2 percent drop that Adobe seen in pricing, and that's not discounting, that's even just base prices coming down.

Your competitors are offering lower prices than you are, if you haven't taken a look at your pricing in a while.

[00:15:13] Darin Newbold: do they give any segmentation at all on that price drop? Um,

[00:15:17] Joshua Warren: do. Um, but I did not dig into that data. That would be a whole other podcast basically. But yeah, they do. Um, and I would encourage you to click through the links in the show notes. You can see some of that data. You can also see something that I always actually send to my wife is they even say these are the hottest products.

for the holiday season that may sell out, including toys. And so I basically send it to her each year and say, Hey, if we're going to want any of these toys for our kids this year, buy them right now before people start reading this report. So yeah, definitely some, some interesting stuff and it'll be linked.

Um, uh, depending on where you're watching this, you should be able to find that pretty easily. If you can't, you can go back to our YouTube channel, um, the creativity YouTube channel, find it and it'll be there. Um, a couple other things. So expect your traffic on peak days to be at least 10 percent higher than last year and make sure your systems are ready for it.

So tune up those servers and just kind of looking at all the stats expect, you know, unless you do substantially more marketing or some other big change, you'll probably see about a 10 percent increase in traffic. And then the last thing is put yourself in your customer shoes and really shop your site.

And there's two scenarios I thought through that I think would be really good for e commerce managers to think through is just imagine you're standing in one of your competitor's stores, you're using your smartphone and your price matching products. Does the mobile omni channel experience for your store make you want to place a buy online, pick up in store order and actually drive over to your store?

Or do you just want to say, You know, it's kind of, the site's kind of clunky. This is going to take a while, and it's going to be faster and easier just to buy this from the competitor's store I'm already in. Um, and that's where you can really win out in some business, but consumers aren't driving as far or as much as they did before the pandemic to kind of get those deals, so you have to have a really compelling experience.

And then, um, this is where I hope none of my family ever watches this, but the other scenario to work through is, Imagine it's Thanksgiving or Christmas Day, you're relaxing after a filling meal with your family, you decide to get out your phone to either, you know, maybe it's Thanksgiving, you're doing some, some of your Christmas shopping for your family, more realistic, it's Christmas Day, and you're thinking, man, this is the stuff I really wanted, but I didn't get, so I'm going to buy it for myself.

What's that 

[00:17:33] Darin Newbold: never happened to you before, has it?

[00:17:35] Joshua Warren: Oh, never, never, but you want to ask yourself, like, what's the experience like? Am I getting frustrated? Like, or is it a really remarkable experience that makes me, you know, excited to shop from this brand and excited to buy? So that's kind of the two. And there's, you know, if you find major glaring issues and you're thinking, man, I need to redesign my site.

Well, it's too late for that. You know, you can get started now, but you're not going to get that live for the holidays. But, yeah. Lots of times it'll be little stuff. You know, we talk a lot about Shipper HQ. And so think about, are you able to see, say it's Thanksgiving day and you're shopping on the mobile app or mobile site, can you see the exact date you expect to receive that product?

If you can't. And a competitor site does have that. Well, you're probably going to buy from the competitor. Well, that's a feature that ShibberHQ can drop in to almost any e commerce platform. So that's a, those are the kind of changes, the lower hanging fruit I would look to try to implement here in the last couple of weeks before things get real crazy.

[00:18:35] Darin Newbold: That is awesome. That is awesome. Well, hey, let's, uh, let's put a bow on this, uh, and, and wrap it up. I mean, hey, in the long and short of it, guys, uh, last year, everybody was conservative, and those numbers got smoked. This year... Not nearly as conservative. They're coming in, Hey, it's going to be hot. Let's hope that it stays this and maybe even better.

And it really does look good. Like things are going to really, uh, really, uh, really come through. as with all things, make sure you're psyched and make sure the things you've got, the discounts and pricing are in alignment, definitely, definitely. If at all possible, consider buying out pay later. And if you haven't figured it out for the love of peanut butter and jelly.

Mobile, mobile, mobile. Uh, gotta be ready early and often and be on mobile. So bring that together. and really take a quick look and be willing, and I like your examples Josh, be, a lot of it is be willing to be your customer and go go explore and see what is maybe on the other side, what is out there. So your last thoughts.

[00:19:42] Joshua Warren: Just have a happy and successful holiday selling season.

[00:19:47] Darin Newbold: Absolutely. And to all of you as well. We appreciate you. Appreciate any of your comments and thoughts. And as always, take care until next time.