E-commerce growth will continue long after we have a vaccine: Shopify president
There are many things retailers would like to forget about 2020. The new rhythm of the holiday shopping season shouldn’t be one of them.
Cyber Monday accounted for US$10.8 billion in online spending this year, according to Adobe Analytics, once again making the day the annual climax for online shopping during a busy stretch that begins on Thanksgiving. However, that figure, a 15 per cent increase from last year, wasn’t as big as Adobe’s initial projection of US$12.7 billion. It was a similar picture on Black Friday: Online spending soared 22 per cent from a year ago to US$9 billion, but sales were shy of an earlier estimate. Adobe forecasts online sales will surge 30 per cent over the holidays, meaning these marquee deal days — though still crucial for retailers — won’t notch the same degree of growth as the season overall.
Meanwhile, the National Retail Federation reported Tuesday that an estimated 186.4 million people shopped online or in stores from Thanksgiving through Cyber Monday, down slightly from 189.6 million last year.
This is not a bad thing. It reflects a deliberate push by retailers to spread their deals out over a longer stretch of time. For example, analysts at Bank of America tracked the price of a basket of 35 popular holiday items for a one-week stretch that included Black Friday. There wasn’t much change in the cost of that basket at three top retailers, suggesting a shopper wasn’t missing out on much by filling her digital cart last Monday instead of Friday.
In fact, deals had been raining down on shoppers since well before last week as the industry sought to pull forward spending to relieve stress on e-commerce fulfillment networks and thin out store traffic to allow for social distancing. E-commerce sales figures suggest this strategy was effective: Adobe reports that Cyber Monday’s sales put the industry’s online haul at more than US$100 billion so far this season, passing that milestone nine days earlier than last year.
Next year, even if the distribution of vaccines restores a more normal consumer environment, retailers should stick with a version of the holiday season in which Black Friday and Cyber Monday are less of a center of gravity.
It’s tough on sellers to have shopping centered on those days. If retailers continue with earlier deals next year, it could ease bottlenecks in online warehouses and logistics networks and potentially help them avoid peak season surcharges from shippers, which crimp profitability of online orders. When stores can host bustling crowds again, they’ll be able to provide better customer service if foot traffic isn’t so concentrated.
Spread-out deals are better for consumers, too. I know from many years of interviewing shoppers in line at doorbuster events at Best Buy Co. or in the aisles of Kmart on Thanksgiving in predawn hours that some of them truly are out for the sport of it. But for those who are more motivated by the promise of a bargain, they’ll appreciate the option to get deals without waiting in lines.
The pandemic also pushed most of the chief players in the retail industry to close their physical stores on Thanksgiving this year. That is another change to I’d recommend hanging onto next year. That day — in which people, in non-pandemic times, are visiting with family and traveling — is destined to become an especially online-centric spending occasion, and retailers might as well strategize accordingly.
Of course, there were aspects of the long holiday shopping weekend that retailers will not want to see repeated. Amid capacity restrictions and safety concerns, in-store traffic fell 48 per cent on Black Friday from a year earlier, according to RetailNext. Physical store transactions tend to be the most profitable for old-school retailers, and getting people in stores is important for brand-building and impulse-buying, so the industry can ill afford to see mall traffic remain as depressed as it is.
In their attempt to make do in extraordinary circumstances, retailers found success by effectively presenting consumers with a string of mini-Cyber Mondays from October through November — and even now. Shoppers seem to have responded, and the industry would do well to make that a holiday tradition.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Sarah Halzack is a Bloomberg Opinion columnist covering the consumer and retail industries. She was previously a national retail reporter for the Washington Post.