Whether your store has been around for decades or you’re closing off your first holiday season selling online, one thing’s for sure — the current holiday market is unlike anything you’ve seen before.
Not only is e-commerce growth finally slowing down from the initial Covid boost, but consumer buying behavior is shifting rapidly to cope with supply chain problems — the likes of which we’ve never seen before.
E-commerce giants like Amazon and Shopify missed their Q3 targets despite achieving 46% year-on-year growth. Shoppers also took to the streets earlier than usual, with 61% of those surveyed by the National Retail Foundation saying they had already started buying gifts and 28% actually completing their holiday purchases when asked in November 2021.
So, you’re probably wondering:
“What are some lessons we can take from this one-of-a-kind holiday season? And how can it shape our strategy going forward?”
We’re glad you asked. In this post, we’ll dive into the key takeaways from 2021’s rocky holiday e-commerce performance. We’ll also share some tips and tricks to help you adjust to the road ahead.
The scoop on a rocky holiday season
- Why was the 2021 holiday season so darn unpredictable?
- 5 major shifts this holiday season (and how to stay ahead of them next year)
- Rock the e-commerce holiday season like a total boss 😎
Did supply chain problems take you by surprise? Get the right working capital and stay ready with your inventory.
Why was the 2021 holiday season so darn unpredictable?
How did you feel leaving this e-commerce holiday season? Relieved? Excited? Anxious?
If you’re thinking all of the above, welcome to the club. These are common emotions felt by e-commerce entrepreneurs in busy seasons like Q4.
Only, this year the final quarter looked and felt completely different.
Let’s take a look at some reasons why 2021’s e-commerce holiday season stood out from the rest.
COVID-19 disruptions plague the global supply chain (yes, still)
Despite being nearly two years into the pandemic, problems created by COVID-19 are still causing significant challenges for e-commerce stores.
From battling for manufacturing space to items sitting at ports for months as overwhelmed customs offices struggle to process goods — the pandemic has hit the global supply chain from end to end. And it all came to a head this holiday season.
Rising material, labor costs, and shortages cause prices to soar… and margins to slip 💸
Political moves like Brexit and massive workforce trends like “The Great Resignation” have not only led to shortages in staff and land transportation but have also created a steep rise in labor and material costs.
For example, truck drivers in the UK are commanding high rates for their services with some scooping a 40% pay rise.
These costs add up and brands are left with the tough decision to either soak up the extra charges and lose margin, or pass on the costs to customers and potentially lose sales.
The freight industry creates a battle of the financially fittest
You don’t have to look far to notice how chaotic shipping times have impacted the availability of goods.
Even giant supermarkets have had to find creative ways to mask their bare shelves. The soaring shipping costs have meant brands with deep pockets get first dibs on the limited space — for a premium, of course.
5 major shifts this holiday season (and how to stay ahead of them next year)
Clearly, it’s been a rocky year. But despite navigating uncharted territories, you’ve made it through to the other side. Nice work! 🎉
To ensure your next e-commerce holiday season is a huge success, it’s important to learn lessons from the past and create a plan to dodge any future potholes in the road.
Let’s explore some of the key shifts and learnings from this Q4, plus tips to get and stay ahead next year.
Consumer spending is on the up before key holidays
One exciting change e-commerce businesses have experienced during 2021’s Q4 is shoppers are buying more online.
However, consumers are opting to buy goods before key holidays like Black Friday and Cyber Monday, even choosing to forgo the infamous discounts if it means they can get their products on time.
These changes in purchase times give e-commerce businesses the chance to scale faster instead of waiting for key holidays. Shoppers spent a jaw-dropping $109.8 billion from November 1st to 29th. More specifically, Black Friday sales fell by 1.3% from $9 billion in 2020 to $8.9 billion in 2021.
How to prepare your store for increased buying activity:
- Create and monitor sales forecasts to understand the demand for your products. Use the information to inform your initial purchase and restocking decisions. 📈
- Use pre-orders and early buyer discounts to capture early sales, then funnel the cash generated into production for the orders and other stock purchases.
- Always have a plan B for securing stock like getting goods on consignment from other brands or buying locally.
- Consider offering discounts to shoppers on their current or future orders in exchange for a longer wait to receive their order. This workaround can help buy your store time without decreasing customer happiness.
- Be transparent and keep shoppers updated on your stock availability. Set up notifications on your product pages and provide information on how long it takes to restock and delivery time estimates.
Optimization across devices is growing in importance
Gone are the days when shoppers bought only from desktops.
Modern shoppers shop on the go. Device optimization has a direct impact on customer satisfaction and we’ve seen device shopping diversification increase even more during the holidays in 2021.
Of the $109 billion sales secured from November 1st to 29th, $63 billion were pulled in from desktops and other devices while $46 billion came from mobile.
The desktop conversion rate even hit 6.4% and 3.4% on mobile on November 29th.
How to prep your store for device optimization
- Optimize your website for desktop, mobile, and tablet, using heatmaps to determine how people use your sales channels and what features work best for a quick and easy shopping experience.
- Ask shoppers what they love and loathe about shopping on your site from different devices and use their feedback to tweak your designs.
- Stay committed to a seamless shopping experience on any device. Make device optimization an ongoing task in your business. Hire conversion rate optimization and user experience experts to implement changes that boost sales and customer satisfaction.
- Take notes from winning brands in industries different from yours. Assess how these businesses are optimizing their sales channels by device type and look for ways to weave these features and strategies into your store.
Inventory inaccuracy pushed some consumers to stores
Supply chain issues have rocked inventory availability and faced with frustrating stockouts, some shoppers have taken matters into their own hands by taking their product hunts in-store.
If they don’t get inventory on track, e-commerce sellers could lose out on sales to their brick-and-mortar competitors. In fact, nearly 47% of US consumers intended to shop in-store this holiday season, an 8% jump from the winter holidays in 2020. Not only that, 65% of consumers wanted to shop in-store to reclaim the old-school benefits of brick-and-mortar shopping like being able to view, touch, and experience products before buying.
How to prepare for customers drifting towards the high street:
- Improve your product imagery and videos to help shoppers better understand your product quality and features.
- Don’t forget to reassure customers of your inventory availability and cut-off times so they can shop confidently in your store.
- Host holiday pop-ups and showcase your holiday gifts to give shoppers the chance to touch and see your collection in the flesh.
- Offer free and easy returns to remove any anxieties your customers have about purchasing items before seeing them in person. 📦
Consumers experienced the effect of supply chain issues
Stockouts became the norm in some industries during the pandemic. And unfortunately, some brands were yet to regain their “in-stock” status on many core products in time for the holidays.
This limited stock availability combined with shipping delays made the items in retailers’ warehouses even more scarce, causing them to limit discounts. As a response, some shoppers have become less confident about securing goods at competitive prices.
For example, out-of-stock messages rose by 250% compared to pre-pandemic figures and 325% compared to the holiday period in 2019.
In October 2021, shoppers got over 2 billion out-of-stock messages. Not only that, product catalog size for retailers over Cyber Week dropped 6% in the US and 5% globally compared to last year.
Needless to say, shoppers are rightfully skeptical of the supply chain and the ability of their favorite stores to have the products they want when they want them.
How to prep your store for waning customer confidence in the supply chain:
- Start your Q4 prep early between July and early August instead of the traditional 3-month logistics timeline. Also, work with suppliers to create 3 months’ worth of backup stock for the holiday season.
- Get flexible e-commerce funding like a working capital line of credit so you can make large stock orders upfront without disrupting your cash flow. From there, track your store’s customer feedback and key performance indicators with a smart ecommerce analytics tool to ensure you’re delivering the best service possible.
- Bring in items that are small and light with high margins so you can offer attractive discounts no matter what happens in the global supply chain.
- Negotiate and secure freight space and fulfillment fees early so your goods aren’t delayed once produced and remain profitable.
Rock the e-commerce holiday season like a total boss 😎
The e-commerce holiday season was anything but easy last year — but it still offers brands the chance to increase their customer base, explode sales, and kickstart new growth levels.
But to secure these perks, you’ll need to put your thinking cap on.
Anticipate problems in key areas like raw material sourcing, production, shipping, warehousing, and delivery. Create a robust plan to tackle each potential risk so you can go into the next holiday season confident about how you’ll stay in stock, wow your shoppers, and grow your sales.
Taking a proactive approach to increasing your holiday e-commerce sales will mean getting out of your comfort zone and facing challenging scenarios head-on. But the payoff will be huge. As your competitors battle stockouts, delays, and the customer complaints that come with them — you can wave their customers over to your store and continue growing your business.
Your best year yet awaits. Get ready for success with SellersFunding.