Shorter holiday season presents growth challenges for online retailers

By all metrics, the kickoff to holiday 2019 got off to a great start for online retailers. Thanksgiving Day was another big year for online retailers with total e-commerce sales over $4 billion, up 14.5% from the prior year, according to Adobe Analytics. Black Friday was another big win for online sales totaling $7.4 billion, with Cyber Monday sales hitting a record of $9.4 billion.

Despite a strong start to the holiday shopping season, NetElixer CEO Udayan Bose warns a season with six fewer shopping days between Thanksgiving and Christmas this year puts pressure on retailers to outperform last year. He said given the shorter shopping timeframe, online retailers have to sell 20% more each day throughout the season to equal last year’s results.

For that reason, Bose predicts a muted 9% total online sales growth for the holiday season compared to a year ago. He said selling 20% more each day is a tall order and it puts more pressure on the remaining days until Christmas. His firm, NetElixer, held a webinar on Wednesday (Dec. 4) to share insights from the five shopping days between Thanksgiving and Cyber Monday.

His Cyber 5 analytics examined proprietary information across nine categories from apparel to tools. His data found Cyber Monday was the largest in terms of online sales dominance of the five-day period with 35% of the total. That was down from 38% last year. Bose said more people shopped overall but there were more transactions on Thanksgiving Day (13%) this year, which took share away from Cyber Monday. Black Friday was the second biggest day for online sales accounting for 23%, which was flat against a year ago. The Saturday and Sunday sales dominance was also in-line with last year at 14% and 15%, respectively.

By region, Bose said the South which stretches from New Mexico through North Carolina did more shopping online than any other region. He said these consumers in these Southern states were trailblazers with 28% more e-commerce sales this year. (Arkansas is among the Southern states in the report.)  The Northeast region had online sales growth of 22%, with Central states rising 21% and the West rising 19.2%. Over the Cyber 5 days, Bose said U.S. e-commerce sales increased by 23% overall from the prior year.

NetElixer data also found the average online order size was highest on Black Friday at $118.15, followed by $115.04 on Thanksgiving Day and $113.39 on Cyber Monday. Average transactions on Saturday were $83.32 and on Sunday it was $72.83.

Looking at buying patterns on Black Friday and Cyber Monday, Bose said the busiest time was between 6 p.m. and midnight when 49.59% of sales were made on Cyber Monday. A third of sales were made on Black Friday. The noon to 6 p.m. time period was also busy as 32% of sales were made on Black Friday and 26.71% of sales on Cyber Monday. Between 6 a.m. and noon, 25% of online sales were made on Black Friday. It was 15% of sales of Cyber Monday. The early morning hours of midnight to 6 a.m. were the lightest shopping time for consumers, with just 13% of online sales taking place on Black Friday and 8% on Cyber Monday.

Bose said consumers are waiting later in the day to do their online shopping. Just a few years ago, the majority of transactions were taking place around midday. Bose’s analytics also looked at the mobile share of online searches against actual orders across nine categories. In the apparel category, 79.27% of the search impressions and 71.82% of orders took place on mobile devices during the Cyber 5 time period. Bose said that is very telling for apparel retailers. He suggested perhaps they might want to focus more heavily on mobile enhancements and advertising, given it’s the lion’s share of the business.

Pet supplies were another category with a relatively high mobile share of orders at 53.27% during the period. Grocery and tools were the next two highest share categories for mobile. While 68% of search impressions for electronics took place on mobile devices, just 30% of the sales occurred with this shopping mode. Home improvement was another category with high mobile search at 56%, but just 30% of the transactions took place with mobile devices.

Bose said there were winners and losers over the recent Cyber 5 shopping period. He said for retailers like Walmart who were winners, the challenge will be to keep the momentum going. He said retailers like JC Penney that are struggling there is still time to save the holiday. He said 76% of the total holiday sales for this year have yet to happen.

Looking back to 2015, he said 20% of total holiday sales took place during Thanksgiving and Cyber Monday. That rose to 22% in 2016 and to 24% in 2017 and 2018. He expects the recent spend was about 24% of the total expected online sales for the season.

Last year, online sales for the holiday season totaled $122 billion, up 17.4% from the prior year. Bose expects online sales of $132.98 billion this year, representing 9% year-over-year growth. That would be roughly 18.2% of the National Retail Federation’s total holiday sales estimate of $730 billion.