This blog offers a peek at our 2020 Holiday Report. In it, we take a stab at predicting the consumer trends and shopping patterns that may define a truly digital-first holiday shopping season
To say that 2020 has not been a typical year is both an understatement and a cliché. The past eight months saw COVID-19 change nearly every aspect of our lives, from how we work and study, to our travel, to our social interactions. In retail terms, the pandemic upended consumer behaviors and priorities, making availability, convenience, and affordability the predominant factors in consumer choice. Most critically, COVID-19 caused mass-migration online: during the first half of the year, online retailers experienced holiday-like traffic.
In our latest report, 2020 Holidays: a Very Digital Shopping Season, we attempted to find method in the madness. We hypothesized holidays celebrated in the pandemic era could be indicative of what’s ahead, so we looked at two American holidays noted for their sales – Memorial Day (May 25) and Labor Day (September 7) to try and anticipate activity on Black Friday / Cyber Monday. We then looked at gift-giving days, Mother’s Day (May 10) and Father’s Day (June 21), to try and predict shopping patterns for the winter holidays. Continue reading for a few of the report’s highlights, or check out the full report.
What we learned: expect more volume
The good news is: online merchants can expect growth. Starting in April, we observed increased eCommerce activity, with volumes nearing and maintaining near-holiday-levels over the ensuing months. This upward trend played out on shopping holidays, with people buying more and spending more per order. US Memorial Day saw a 17% YoY increase in the dollar amount spent, with the average cart value up 18%. Labor Day saw 35% growth with a 2.5% increase in average order size.
We also saw a significant increase in total online spending during gift-giving holidays (Mother’s Day was up 22%; Father’s Day up 30%). On these holidays, the increase in the number of orders was relatively smaller than last year (Mother’s Day +1% ; Father’s Day +8%), which means that the bulk of the growth can be attributed to the increase in the average value of each order (~+20%).
Behind this exceptional growth are large numbers of never-before-seen shoppers: people who previously favored brick-and-mortar shopping suddenly became dependent on eCommerce. For merchants, this is a time to strike the iron while it’s hot.
What we learned: new patterns emerge
As eCommerce became the main retail engine for holiday shopping in 2020, we saw a drift away from last minute activity towards planned-in-advance shopping. For example, while Labor Day 2020 recorded a spike in sales, it was not as dramatic as the spike recorded in 2019. Compared with the average order volume and cart value for the entire month of September, this year’s Labor Day saw 7% more in volume and 1% more in cart value. Last year, the shopping day saw an increase of 50% in volume and 45% in cart value over daily averages for the month. This could indicate a change of purpose for eCommerce, from a complementary or second-choice option for late shoppers, to a primary shopping channel.
A gradual uptick in sales can be advantageous for merchants who over past months may have buckled under the pressure of growing demand. But it is important to note that changing shopping behaviors may throw off certain fraud management systems. Unpredictability is the enemy of rigid platforms, which depend on recognizable patterns to generate their score. Outliers or random spikes in activity can trigger most rule-based systems to decline many legitimate orders.
What we learned: the Holidays’ Biggest Winners
COVID-19 paralyzed some industries, but also gave rise to others. Since March, we’ve seen growing online demand for products such as groceries, consumer electronics, sporting goods, and other wellness items. These emerging consumer trends played out during this years’ shopping holidays: people spent 158% more on sport-related goods, 108% more on home goods, 65% more on jewelry and watches, and 62% more on consumer electronics.
But the biggest winners were digital gift cards, which transformed this year from a marginal product category with a shady reputation for attracting fraudsters, to a gifting go-to and an engine of economic growth. While people spent less per card on average, they bought many more of them since the beginning of the pandemic. On Mother’s Day and Father’s Day, we saw the volume of GC transactions rise by ~245% and ~140% YoY, respectively.