The Black Friday and Cyber Monday Weekend is always a golden opportunity especially for companies that use e-commerce technology. The very online nature of these shopping holidays which has only been reinforced this year has seen an unprecedented change in how commerce is conducted. The shopping holidays have seen the revamping of customer service, direct to consumer programs, and curbside pickup among many other options.
On the flip side, there has been a significant drop in foot traffic to brick and mortar stores. Because of the COVID-19 pandemic and the ongoing recession, Sensormatic Solutions reported a 52% drop in foot traffic to brick and mortar stores on Black Friday as compared to 2019. Traffic dropped 95% on Thanksgiving Day as many stores decided to avoid the crowds and give their employees much needed time off. According to Sensormatic, people are becoming more purposeful especially in the face of social distancing and COVID-19 restrictions. The company predicts that sales will be higher this holiday season even though in-person shopping will drop by up to 22%.
Cyber Monday and Black Friday Setting Records
According to Adobe Analytics, customers spent approximately $27.50 per shopper on Black Friday alone. The approximate amount spent is $9 billion which represents an increase of more than 21.6 percent given that shoppers spent about $7.4 billion on Black Friday 2019. The figure makes history as the largest single-day spending online, only bested by Cyber Monday 2019.
While Black Friday was huge, Adobe projected that Cyber Monday sales could go as high as $10.8 billion which would be the biggest ever day of online sales. Talking to CNN Business, Vivek Pandya the digital insights manager at Adobe said their projects are $1 out of every $4 spent this holiday season will be on online shopping. This is an improvement to a quarter of all spending as compared to a fifth just a year earlier. Many customers are visiting stores to pick up items they bought on online marketplaces with curbside pickup increasing by up to 52%.
With such a surge in online shopping, logistics issues and potential website outages were to be expected. According to analyst and director of Gartner, Black Friday will now become a peak on top of another peak. This is because online spending has been trending higher ever since the start of the COVID-19 restrictions.
While online shopping is a boon to retailers, logistics can become a problem. Given the circumstances, most shipping deadlines were moved back to as early as December 9, which is a huge challenge for retailers. Carriers too are under pressure to deliver on time, at a period when retailers are overwhelmed by orders and cannot get the ordered goods to them on time.
With shipping windows moved up, more people are likely to buy well past the deadlines for Christmas delivery. To deal with shipping issues many retailers will have to rely on startups with the technology that can handle such a huge amount of orders.
Changes in Online Deals
Online deals could be had from as early as October and this played a huge role in driving momentum. Major retailers invested a ton of money to ensure adherence to safety precautions and protocols for COVID-19 were put in place. These measures have meant that more people prefer to shop online and the National Retail Federation (NFR) predicts that holiday sales (Nov & Dec) are set to increase by between 3.6% and 5.2% on last year numbers to top $755.3 billion. With such an increase of online orders made at the tail end of December are likely to have their orders pushed to curbside or in-store pickup.
Impact of the Pandemic on Spending
While there are still valid concerns on the ongoing recession and unemployment numbers, Jack Kleinhenz chief economist at the NFR believes that even though consumers have had a difficult year, they are going to want and be willing to spend during the holidays. Many customers will likely believe that having gone through such tough times, the holidays are an opportunity to have a better than the normal festive season. The economist believes that many households still have a lot of cash to spend given that they are more confident with wages rising, homes increasing in value, and soaring stocks.
The rise of online shopping has driven investors into pumping more than $3.3 billion into e-commerce startups. The US takes the lion’s share of the investment with more than 100 deals valued at more than $2.1 billion. Some of the cash was invested in startup ventures that have developed solutions for enhancing the customer journey. Some of these solutions are in product search, inventory management, and predictive shopping which would come in handy in the holiday season.
For instance, Suzy a New York-based startup is a technology platform that offers real-time intelligence and consumer insights which recently raised $12 million in a Series C round earlier in 2020.