OrderDynamics Black Friday Through Cyber Monday 2013 Report

As the dust settles after arguably the busiest shopping weekend of the year, it is interesting to look at how retailers fared in the midst of tighter budgets due to impending health taxes in the US, yet even lower promotions than seen in the past. Top that all off with the Jewish celebration of Hanukkah coinciding with Thanksgiving for the first and last time in several lifetimes, there was a lot of curiosity leading up to Thanksgiving as to how the early gift giving would affect retail sales. Overall retail spend over the 5 days between Thanksgiving and Cyber Monday fell 2.9% from last year to $57.4 billion; however, only a third of consumers shopped in-store, and online spend increased considerably.

OrderDynamics Retailers Continue to Outpace Industry Standards

While online spend over the 5-day shopping weekend increased almost 20%, OrderDynamics retailers saw a substantial 46.2% increase in sales from the same time last year.  More specifically, long-standing OrderDynamics retailers generated 38.2% more revenue over last year, with newer retailers padding the extra 8%. Processing nearly 30% more orders year-over-year, OrderDynamics servers saw traffic and sales peak around 9pm each evening. It is interesting to note that many OrderDynamics retailers leverage omni-channel fulfillment processes that are built into the OrderDynamics retail Order Management System; based on consumers’ obvious desire for omni-channel and store-fulfillment options, this may be what gives OrderDynamics retailers a significant edge over their competition.

Omni-Channel is the Future

A Black Friday forecast report by ComScore and UPS found that consumers place significant value in omni-channel shopping and fulfillment options, which was evident in the substantial increase in mobile sales during the holiday weekend. Notably, 56% of shoppers prefer to shop the online stores of omni-channel enabled retailers; however 60% of consumers surveyed indicated that being able to return online orders in-store is the most important element of shopping online, followed by 44% stating the desire to pick up online purchases in-store. A recent study by Forrester Research indicated that retailers are aware of consumers’ increasing demands for omni-channel options, as 83% ofretailers already support or plan to implement omni-channel offerings including store-fulfillment tactics like in-store pickup and return anywhere. With Christmas fast-approaching, it would appear these omni-channel initiatives instill confidence in shoppers looking to ensure they can have their purchase in-hand on-time for Christmas gifting, while also minimizing the hassle of returns by being able to take care of them in a single trip to the mall.

The Creep into Thanksgiving Day Shopping Continues

With surprising and somewhat unexpectedly high revenue last year on Thanksgiving, it’s no shock that even more retailers pushed for consumers’ cash this Thanksgiving. Kohl’s, JC Penny and Macy’s opened on Thanksgiving evening for the first time ever, while Turkey Day retail veterans Target, Best Buy and Toys R US opened even earlier than last year, before most tables were even cleared at 6pm.  Online Thanksgiving Day shopping increased 27% over 2012 according to the NRF, yielding a record-breaking $1.06 billion in revenue, proving that Thanksgiving Day shopping is sure to become a new holiday tradition.

Black Friday Breaks Records – Again

In 2012, Black Friday spending surpassed the $1 billion mark for the first time. This year, online sales alone reached nearly $2 billion, up 15% from last year’s record. According to the NRF, 92 million people shopped on Black Friday (almost 7% more than last year), nearly half of which shopped online and spent 2.2% more on each order than seen in 2012. Despite there being more shoppers this year, ShopperTrak reported that in-store traffic fell more than 11% year-over-year, indicating a significant shift toward couch-shopping over braving store crowds.  This may suggest that consumers are increasingly comfortable with the deals available to them online - including an increase in free shipping offers -  making shopping from home more worthwhile as they realize they can efficiently take advantage of great deals in a matter of minutes from their computers rather than spending hours in-line at a store.

Cyber Monday is the Largest Spending Day of the Year

Cyber Monday 2013 blew Black Friday out of the water, surpassing Friday’s impressive online cashout by 15% at $2.29 billion. Online sales peaked at 11am with 23% more traffic over 2012, and while this traditionally has tapered off throughout the day, PSFWeb stated that the morning traffic maintained a steady pace well into Monday evening. The continued yearly growth of Cyber Monday may be attributed to extensive marketing, as mobile marketing alone increased 77% on Monday compared to any other shopping day, keeping promotions in close proximity and top of mind which would undoubtedly test consumers’ ability to refrain from shopping.

Consumers Are Giving Mobile a Larger Slice of Pie This Year

Mobile shopping activity saw a significant boost over the 5 day holiday weekend, again likely due to extra mobile marketing efforts. Of the $1.93 billion spent online on Black Friday, 22% came from mobile devices, yielding $259 million across smartphones and tablets. PayPal noted a 121% increase in mobile payments globally on Black Friday, likely due to the redesign of their mobile wallet app and introduction of Beacon payment technology, both released earlier this year.  Still, Black Friday mobile stats were dwarfed by Cyber Monday, boasting 55% growth at $419 million, accounting for 18.3% of total online sales. Tablets appeared to be the device of choice, accounting for twice as much revenue as smartphones at nearly 13%, and an overall higher average order value.

Key Thoughts & Notable Trends

Based on consumers’ shopping habits during this year’s Thanksgiving shopping weekend, what can we expect next year?

• Consumers’ will become even more interested in Thanksgiving Day shopping in the coming years, as noted by the 27% increase in Thanksgiving shopping this year. However, they will continue to do so online as opposed to in-store, likely out of respect for the holiday itself, while faster shipping and store fulfillment initiatives act as extra encouragement to shop from home instead of braving crowds.

• With the overall 5-day spend yielding 2.9% less revenue than last year despite greater overall shopping traffic, retailers may soon have to consider that competing for the sale is leading them to discount too much. That said, it is interesting to note that OrderDynamics saw increases in shopping traffic as early as Wednesday night. With Thanksgiving happening later in the month this year, and holiday sales and promotions still kicking off around mid-November, it is likely that holiday spending is being diffused across a longer period of time, leaving less money to be spent on key shopping days such as Black Friday and Cyber Monday. This holiday shopping weekend will again be in the last week of November next year in 2014, so this trend can be expected to continue; it will be interesting to see whether retailers can sustain the same level of revenue as seen this year, or if sales will continue to decline.

• Omni-channel fulfillment will be a key selling point next year, as indicated by recent studies. With retailers such as Walmart already heavily promoting in-store pickup this year, being able to retrieve purchases in-store better accommodates consumers’ need to have what they want when they want it. Last year, free shipping was the competitive advantage, but has since become table stakes. With delivery times, the potential to miss a scheduled delivery when not at home, and weather conditions that may delay delivery, in-store pickup is just more reliable. It begs the question, though, whether retailers and their store staff will be ready to accommodate the increase in store traffic should customers opt for same-day in-store pickup of their Black Friday/Cyber Monday online purchases. With store traffic already amplified on these shopping days, retailers will need to be able to allocate additional resources - including scheduling more sales associates and allotting space to pack and store customer orders - to maintain a level of service that meets customer expectations, and keeps them coming back.

• With retailers continuing to invest in omni-channel retail as part of their rapid fulfillment strategies, and concept ideas such as Amazon Drones already fuelling considerable conversation, we can infer that same-day delivery and fulfillment from distribution centers and store stock may be a prominent strategy for next year’s holiday season.  For web-only retailers, same-day delivery would allow them to compete with omni-channel store fulfillment tactics that enable customers to receive their purchases more quickly than standard delivery options.