Predictions and projections abound on holiday e-commerce, but come Black Friday, the data starts to fill in the blanks and determine the direction of the shopping season.
Despite a jolting downturn immediately after Election Day, online retail spending is ramping up ahead of the five-day shopping stretch that starts on Thanksgiving and runs through Cyber Monday, the Monday after Thanksgiving. The question is, how much will consumers increase their online spending?
If online spending trends continue as they have throughout 2016, it could be a good season for e-retailers. Online retail sales reached $93.67 billion in Q3, a 15.6% increase compared with the same time last year, the U.S. Commerce Department reported Thursday. But Adobe Inc. on Thursday lowered its forecast for e-retail growth during the November-December holiday season to a single-digit percentage increase from an 11% increase. The change comes as online sales totaled $15.5 billion for the two weeks of Nov. 1-14, up only 1.35% over last year and $800 million short of Adobe’s pre-election prediction. Adobe says its marketing software tracks 80% of online transactions at the top 100 U.S. retailers and 75% of spend with the 500 leading e-retailers.
But others doubt the Election Day online sales dip will persist as the holiday shopping season picks up. “Among our top 10 online retailers, overall, sales over the past 30 days are up 17% since the same period last year,” says a spokeswoman for e-commerce analytics provider Slice Intelligence. “We did see people push the ‘pause’ button the Wednesday after Election Day, but sales seemed to recover. We would not say there was a big lasting impact on sales due to the election.”
General merchandise e-retailer Shop.com, No. 59 in the Internet Retailer 2016 Top 500 Guide, expects to at least double its holiday sales this year compared with 2015, and that’s saying something. Last year the company increased sales 200% year over year, chief marketing officer Peter Gold says. One way the company has been successful in accelerating holiday sales is by releasing Black Friday promotions earlier. In 2015, Shop.com released holiday promotions the Monday of Thanksgiving week. This year, the company launched its holiday sales Nov. 14.
“We’re already seeing tremendous success by giving customers the choice to shop earlier,” Gold says. He didn’t specify dollar figures, says sales have grown each day this week compared with the day earlier.
Marketing multiplies
Retailers have been marketing Black Friday deals for weeks already, and Black Friday doesn’t just refer to the day after Thanksgiving any more. Some retailers were referring to “Black Friday pricing” as early as September, according to digital marketing vendor eDataSource.
In the 30-day period that ended Nov. 14, there were 13% more Black Friday-themed emails than there were during the same period a year earlier, based on an analysis of the email activities of 50,000 brands, according to eDataSource.
For instance, on Nov. 11, Amazon sent an email with the subject line “Countdown to Black Friday Deals Week from Amazon Exclusives” that had a 38.4% read rate (the read rate refers to an email being opened for at least 8 seconds). A Nov. 8 Tommy Hilfiger email featured the subject line “Black Friday Presale. Entire store savings start tomorrow.”
More retailers are sending Black Friday-themed emails because they work, according to eDataSource’s analysis. Roughly 15% of the Black Friday-themed emails had a read rate exceeding 20% in 2016, versus 11% in 2015.
In eDataSource’s 30-day analysis window, no retailer sent more Black Friday-themed emails than Amazon—it sent 35 campaigns. Wal-Mart Stores Inc. (No. 4) sent 27 campaigns.
It isn’t just that retailers are sending more Black Friday-themed emails, they’re sending more emails overall, according to email marketing firm Listrak. For instance, the highest email sending volume day so far this season was Friday, Nov. 11, which was both Veterans Day in the United States and Singles’ Day in China (and, to a lesser extent, throughout the world).
The Nov. 11 email volume was 5% greater than last year’s Thanksgiving Day volume. For the sake of comparison, retailers in 2015 sent 26% more emails on Thanksgiving than they did on Nov. 11, Listrak says. And those Nov. 11 emails drove more sales this year: They produced a roughly 20% increase in order values compared with Thanksgiving Day 2015. Thanksgiving Day emails drove 45% higher order values compared to Nov. 11, 2015.
Shipping it out
The three major shipping carriers expect to handle record package volume this holiday season, with the U.S. Postal Service predicting it will handle 750 million parcels this holiday season, up 12% from the 2015 season. United Parcel Service Inc. projects it will deliver more than 700 million packages in November and December, up 16.7% from 600 million, and FedEx Corp. expects a 10% jump to about 385 million packages from 350 million a year ago.
Free shipping is always a key incentive for online shoppers—53% of consumers in the third quarter call it the most important factor when making an online purchase, according to comScore. Yet the percentage of e-commerce transactions with free shipping is on the decline this year at 60% in Q3 compared with 69% in the same period last year, comScore says.
Salesforce Commerce Cloud’s Q3 2016 Shopping Index, which analyzes the activity of more than 500 million shoppers worldwide, finds that 67% of online orders in Q3 in the United States and globally involved free shipping, up from 65% in Q3 2015. The index previously was called the Demandware Shopping Index, and reflected transactions by retailers that used Demandware’s e-commerce platform technology. Salesforce bought Demandware earlier this year.
Retailers often adjust their free shipping policies or thresholds throughout the holiday season or tied to a special promotion. For example, Urban Outfitters Inc. (No. 39) offered free shipping through Nov. 8, Nike Inc. (No. 47) has free shipping on orders only to Nike+ plus members, Zappos (part of No. 1 Amazon) has free shipping and no minimum order, The Children’s Place (No. 112) has free shipping for a limited time (it does not state when the offer ends), and Best Buy Co. Inc. (No. 12) offers free shipping on everything through Dec. 24.
Regardless of whether orders come with free shipping, retailers are getting their products and boxes in a row.
Wal-Mart has doubled the number of mega-fulfillment centers it uses to fulfill online orders. There will be 10 such centers operating this holiday season, up from five in 2015. Built specifically for e-commerce, each measures more than 1 million square feet, houses millions of items and uses advanced automation to retrieve items and bring them to associates for processing, a Wal-Mart spokesman says.
“We’ve also made hundreds of upgrades to add functionality to our warehouse management system, allowing us to pick, pack and process orders even faster. These centers combine with dozens of smaller e-commerce centers and store distribution centers located across the country, more than 80 ship-from-store locations, 4,600 U.S. stores that serve as conveniently located pickup points and Wal-Mart’s world-class transportation network to ship a broader assortment to customers faster,” he says.
Traffic trends
Web and mobile web traffic trends identified by Internet Retailer in early November continued into the middle of the month, as total visits to 100 of the largest holiday-oriented e-retailers increased slightly compared to last year, while mobile visits dropped slightly year over year.
Top 100 merchants collectively received 2.37 billion visits to their e-retail sites from Nov. 1-15, a 5.0% increase compared to 2.26 billion during the same period last year, according to an Internet Retailer analysis of data from web traffic measurement firm SimilarWeb. At the same time, visits from smartphone and tablet users reached 1.245 billion, down 0.4% from 1.250 billion a year ago. Roughly 52.5% of total traffic to these sites came from smartphones and tablets this year, versus 55.4% last year.
Declines in mobile web traffic could be the result of increasing mobile app usage, as SimilarWeb does not include app activity when estimating mobile traffic. Additionally, conversion rates and average order values could be increasing enough to offset any declines in traffic, as retailers and experts acknowledge that, in general, sales from mobile devices are on the rise for most web merchants whose sites are optimized for mobile users.
Collective gains in total traffic among the group are benefitting some e-retailers: 37 of the Top 100 merchants experienced an increase in traffic volume so far this month compared with last year, while 63 merchants brought in fewer visits. Amazon.com Inc. (No. 1 in the Top 500) experienced by far the largest increase in web visits in terms of volume, as consumers visited Amazon.com 135.4 more times this year than last year. Etsy.com (No. 23) brought in 9.6 million more visits; HomeDepot.com experienced 9.5 million more; and Walmart.com 8.6 million more.
Mobile’s march
The reach and power of mobile to drive and influence online purchases keeps growing, and experts say this holiday season will be no exception.
Digital measurement firm comScore Inc. expects mobile retail traffic will be three times greater than desktop retail traffic and higher than average every single day of the holiday season, as it was during the same period in 2015. ComScore also predicts Cyber Monday will be the biggest online shopping day ever in the United States, with e-retail sales totaling $3.5 billion and $1 billion of those purchases coming from mobile devices.
For the two weeks of Nov. 1-14, desktops still had the lead, accounting for 53% of site visits and mobile devices (smartphones and tablets) accounting for 47% of site visits. Desktops also drove the majority of sales, at 71% vs. mobile’s 29%, during those two weeks, according to the Adobe Digital Insights unit, which bases its estimates on transactions on e-commerce sites using Adobe’s analytics and marketing technology. During Thanksgiving and Black Friday, mobile’s contribution to sales and traffic will increase, Adobe predicts.
Digital marketing firm HookLogic Inc., now a division of ad technology vendor Criteo S.A., found that for the first two weeks of November, mobile devices accounted for 52% of product page views (40% from smartphones and 12% from tablets), according to its client data. In 2015 mobile also accounted for 52% of product page views, with smartphones contributed 37% of traffic and tablets accounting for 15%.
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