Holiday sales to rise on e-commerce and fall on discounts

Dive Brief:

Holiday e-commerce sales are estimated to jump 16.6% this year, driven by mobile sales growth and intensifying competition between large retailers and marketplaces, according to a report from eMarketer. By year’s end, mobile commerce will have risen 57.8% by eMarketer’s measure. According to research from CPC Strategy, mobile shopping is also done in-store, with nearly a third (32%) of customers price checking products on Amazon while in a store, and 23.1% also price checking on Google.
E-commerce’s share of total retail sales during the all-important shopping season — which all told will rise 3.1% to $923.15 billion (or 18.4% of the year’s total retail sales) — will climb to a record 11.5%, according to the eMarketer report. In fact, a lot of that will go to one retailer (Amazon), according to CPC Strategy. CPC Strategy also found that some 72.1% of consumers plan to look for gifts on Amazon, though 60.4% of shoppers plan to go to the physical stores run by Walmart, Target or other big box retailers, with 38.6% planning to shop through those retailers’ websites.
The season continues to lengthen, as it has in recent years, according to the eMarketer report. Nearly a third of holiday shoppers told eMarketer last year that they started their shopping in October or even earlier, and the firm expects even more this year, with e-commerce’s share in November and December possibly accounting for nearly 24% of the whole year’s digital sales, eMarketer said. In fact, according to CPC Strategy, shoppers are divided between two extremes, with 35.5% planning to start shopping for gifts before Thanksgiving and 32% planning to start in December.

Dive Insight:

Shoppers are planning heftier spending than last year, according to this early research. CPC Strategy found that 88.1% of shoppers plan to spend about the same or more as last year, with most (73.5%) saying they’ll spend the same and 14.6% saying they’ll spend more. Nearly a third (30%) say they’re budgeting between $250-$499 and 26.7% plan to spend between $500-$1000, according to CPC Strategy.

But margins aren’t entirely safe: discounts will once again reign, eMarketer said. Not only are customers habitually checking prices even as they shop in stores, but when it comes to shopping online, they also expect free and fast delivery, CPC Strategy said. Nearly half (46.1%) of shoppers told CPC Strategy that overall price, including shipping, is the most important reason to buy their holiday gifts from a particular retailer.

Younger shoppers (18 to 24 years old) were least likely to give CPC Strategy that reason for picking a retailer —nearly a quarter (23%) said "quality" and other factors were their top reasons. But that's no indication that retailers can relax when it comes to fulfillment and margins. Quite the contrary: free shipping to Gen Z and younger millennial consumers is not merely an expectation, it’s an assumption, CPC Strategy said. "We’re seeing the impact of Amazon in nearly every answer, but particularly in expectations for low prices and fast, free shipping," according to that report. "The bottom line? If retailers aren't selling on Amazon, they'll need to offer a shopping experience that proves they know their customers better than the retail giant."

Amazon, Target, Walmart and other big-boxers won’t be the only destinations for holiday shoppers this year, CPC Strategy found — many are heading to specialty retailers, 22% on those sites and 24.6% in store, with Etsy a destination for many younger shoppers.

This story is part of our ongoing coverage of the 2017 holiday shopping season. You can browse our Holiday page and sign up for our Holiday newsletter for more stories.