5 Things We Learned from the 2018 Holiday Season

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As we get settled into 2019, we can’t help but look back on the record-breaking 2018 holiday season. Here are a few things we learned that will help set the stage for this year in ecommerce.

1. Ecommerce growth, especially during the holidays, isn’t slowing down anytime soon

The busy November and December holiday season has come and gone, but not without some good news for ecommerce growth. As ecommerce continues to surge, more and more consumers plan to do their holiday shopping online each year.

Holiday ecommerce broke records in 2018

Ecommerce sales during the holidays, running from the beginning of November through the end of the year, totaled $126 billion – up from $108.2 billion in 2017. This amounts to a 16.5% YoY increase in holiday e-commerce sales, which is a notable acceleration from previous years’ growth. Furthermore, average daily online revenue exceeded $2 billion for the first time and holiday sales continued to rise until December 17th.

We’re proud to report that Digital River merchants generated $37 million USD in sales on Black Friday alone – an 82% YoY increase from last year’s Black Friday results.

These stats can be attributed to many efforts made by retailers to attract customers and drive more sales, one being an emphasis on pre-Black Friday deals. Consumer spending occurred earlier in the season due to week-long deals that started well before Thanksgiving. In addition, Cyber Monday’s record-high discounts pushed consumers to keep their wallets open. Four hours on the tail end of Cyber Monday (7pm-11pm PST) were the most active period of the year, with over $2 billion in sales recorded.

Consumer confidence continues to grow

Undoubtedly one of the main reasons the 2018 holiday season was so successful is the high level of consumer confidence. According to Gallup, Americans’ confidence in the economy is at the highest level in 18 years. When consumers believe the economy is in a good place, they feel more secure and are usually willing to spend more. In addition, consumer willingness to shop online is also high. With perks such as free shipping and easy returns, the convenience of buying online is more attractive than ever to many consumers.

Mobile commerce won the holidays

Mobile won the holiday season – and this is a trend you’ll continue to see throughout 2019. For the first time ever, mobile phones processed over half of all digital orders during the holidays. Orders placed via mobile devices grew 38% YoY during Cyber Week, and the share of traffic coming from mobile devices was 66% – which was 11% higher than the traffic in 2017. The growing dominance of mobile emphasizes the importance of focusing on this channel. If brands don’t optimize their mobile shopping experiences, they risk shoppers going somewhere else to purchase a product.

The convenience of shopping from a mobile device was appealing to busy shoppers. And for shoppers that were really in a hurry, paying with mobile wallets saved an average of 90 seconds per order when compared with traditional payment methods. Mobile wallets are set to exceed credit cards for online payments by 2021– proof that this ecommerce trend won’t be going away, either.

2. There’s still room for improvement

The numbers speak for themselves: the 2018 holiday season was record-breaking in countless ways. However, this doesn’t mean progress can’t be made.

Cart abandonment was at an all-time high

During the holiday season, brands did a great job of driving shoppers to their sites. However, while website traffic went up, cart abandonment rates went up as well. From Thanksgiving to Cyber Monday, there was a 5.4% increase in cart abandonment when compared to 2017. Consumers shopped around on more sites before making final purchase decisions during the holiday season.

And although mobile commerce performed better than ever, the conversion rate on mobile devices still dipped as consumers were less intent on completing their purchases. Cart conversion happens over 30% less often on smartphones compared to desktops. No matter the device, cart abandonment serves as a big threat to brands. Simple, localized checkout experiences with a wide range of accepted payment methods are crucial to increasing conversion rates.

Global holiday awareness was up, but sales were down

While global ecommerce continues to soar and consumers around the world are becoming aware of Black Friday and Cyber Monday, the 2018 holiday season didn’t perform as well as expected outside the US. Sites saw increased traffic but low engagement and conversion rates during the biggest shopping period of the year.

Black Friday sales in the UK were lower than predicted, and brands responded with deeper discounts. Cyber Monday 2018 was also less successful in the UK compared to 2017, with average order value down 11.1% and conversion rates down 9.2%. Despite all of this, page views were up a surprising 35.4%. For brands to be successful during future holiday seasons, they must continue to improve engagement strategies and capitalize on increased website traffic.

Despite industry-wide global holiday sales not performing as well as expected, Digital River merchants across the world saw impressive results. Herman Miller, an office and home furnishing company, saw a daily run rate 12 times higher than average during Cyber 5 in the UK. Their significant discounts, paired with integrated marketing efforts across channels, led to a 12% increase in unique visitors YoY and a 113% increase in conversion rate.

3. Online marketplaces are more important than ever

It’s no surprise that online marketplaces are taking the world of ecommerce by storm. As their leverage and expertise grows, the expansion of these marketplaces continues. 60% of consumers surveyed before the holiday season planned to purchase from online marketplaces such as Amazon or eBay.

Amazon had a record-breaking holiday season

More items were ordered from Amazon during the 2018 holiday season than any other year in the past. Furthermore, the ecommerce giant reported that more than 50% of items sold came from small and medium-sized businesses on the Amazon marketplace. Over 1 million small and midsized businesses sell on Amazon, with hundreds of thousands added each year.

Marketplaces like Amazon and eBay aren’t going away – and as the saying goes: “if you can’t beat it, join it”. With almost half (47%) of product searches in the US starting on Amazon, it’s crucial for brands to join forces with Amazon and offer their products on the marketplace. However, with the competition being higher than ever, it’s equally important to have a balanced channel strategy with a strong direct-to-consumer channel as well.

4. Appealing return policies are crucial

With increased online spending during the holidays comes increased returns when consumers aren’t satisfied with their purchases. Online returns are expected to total $37 billion for the 2018 holiday season – up $5 billion from just last year. For products purchased in stores, the return rate is around 8%. And for online purchases, that return rate jumps to 15-30%.

One way to keep building on your holiday season success is to offer appealing return policies to your customers. And what exactly do today’s shoppers find most appealing? Free returns. A majority of US consumers (51%) will avoid shopping with an online retailer that doesn’t offer returns at no cost. Beyond just offering free returns, retailers should ensure their return processes are simple to use to ensure customers keep coming back. An overwhelming 95% of consumers say that how smooth a retailer’s returns process is influences whether they’ll buy from that company again.

5. Holiday momentum doesn’t have to end in December

Even though the holiday season is over, that doesn’t mean your ecommerce business has to lose momentum. In fact, there are many ways your brand can avoid the “January sales slump” and strengthen relationships with customers who shopped on your site during the holidays.

For example, consider deploying retargeting tactics focused on categories or products that shoppers showed interest in but didn’t buy. Or, try featuring a Q1 holiday campaign by taking advantage of existing promotional dates (think Super Bowl Sunday, Valentine’s Day, or St. Patrick’s Day). There are many ways you can engage with your customers to keep them happy in the new year. And while it seems like the season just ended, it’s never too early to start thinking about the 2019 holidays and how your brand can capitalize on what you learned from last year.

Looking for an ecommerce partner that can guide you through the holiday seasons and beyond? Contact us to learn how Digital River can help your brand grow and succeed no matter the time of the year.