Holiday shopping season is here!
It probably comes as no surprise that this is the busiest time of the year for ecommerce businesses. With gift-giving traditions and shopping holidays aplenty, ‘tis the season to shop. And while a lot of holiday shopping still takes place in brick-and-mortar stores, online retailers are getting a bigger and bigger slice of the pie each year.
How important is the holiday shopping season?
The holiday shopping season can have a huge effect on every ecommerce retailer’s bottom line. If your business isn’t ready for an influx of website traffic, orders, customers, and even returns, the holidays can become a stressful time — and may even cause your business to lose money.
When it comes to preparing for the holidays, understanding consumer and industry trends is the first step. ShipBob created this infographic to help you do just that:
Download the PDF version of the infographic here.
Holiday shopping trends
All of the stats shared above point to the busiest ecommerce holiday season yet, but here are the trends we’re most excited about:
1. Spending is skyrocketing
This projection should be on every ecommerce merchant’s radar: Adobe predicts ecommerce sales will reach $124.1 billion this holiday season. That’s a projected increase of over $50 billion in ecommerce spending, with $7.7 billion in sales predicted on Cyber Monday alone.
2. Certain product categories take the lead
In preparing for the holidays, ecommerce sellers may find themselves asking which product categories perform the best this time of year. The Shopify Plus team analyzed last year’s holiday sales on Shopify and found the following categories ranked highest:
- Apparel (41.2% of purchases)
- Accessories (26.5% of purchases)
- Housewares (15.4% of purchases)
Apparel is the clear winner in holiday sales — if that’s your niche, make sure your inventory counts are ready for the rush.
3. Brands feel the buzz
BigCommerce surveyed more than 1,000 online business owners, ecommerce managers, and brand marketers on what they are planning and expecting for the 2018 holiday season.
They found that while just 57% of brands reported Q4 as their typical high sales season, 88.7% of brands expect to see an increase in revenue this holiday season.
Nearly 40% of respondents expect to see a more than 25% increase in sales.
Brands are feeling optimistic; they know that holiday ecommerce is on the rise, which means your competitors and colleagues do, too.
4. Shipping matters
In 2017, BigCommerce also reported that shipping carriers expected to do record numbers during the holiday season, with USPS predicting 850 million deliveries. UPS and FedEx weren’t too far behind, with 750 million and 400 million respectively.
With more sales comes more shipments — and shipping plays a huge role in customer satisfaction. Having a shipping strategy in place before the rush can make or break this season for online merchants.
How to prepare your online store for the holidays
The most important part of preparing for the holidays is alignment: every part of your business, from your supply chain to your marketing team, must be on the same page. The operations of your business leading up to and during the holidays must be a well-oiled machine.
Here are the main elements on your ecommerce website that must be in sync and ready to take on the holiday rush.
Optimize your checkout
With an influx of website visitors during the holiday season, it’s especially important to turn as many shoppers into customers as possible.
One of the biggest culprits of cart abandonment? A bad checkout experience.
Keep it simple
Baymard reports that 28% of shoppers have abandoned online carts due to a checkout process that’s too long or complicated. You can improve your checkout by limiting the number of form fields and clicks it takes for each customer to complete a purchase.
Optimize for mobile
Having your ecommerce website optimized for mobile can also increase holiday conversions.
During the 2017 holiday season, smartphones and tablets combined drove 52% of traffic to retail websites and accounted for 33% of all online holiday revenue. Make sure that your website and checkout are optimized for mobile well before the holiday shopping season starts.
According to that same report on checkout usability, 20% of online shoppers in the US have abandoned an order due to security concerns.
You can encourage customer trust by showcasing customer reviews, making sure that your website has an SSL certificate, and offering trusted alternative payment methods (e.g., PayPal or Apple Pay).
Meet shoppers’ shipping expectations
Customers expect fast and affordable shipping at the click of a button.
A Forrester study found that 44% of online shoppers who abandon their carts do so because of shipping and handling costs. Offering both affordable shipping and 2-day shipping or same-day delivery options can help you meet varying customer expectations.
Prepare for increased website traffic
Make sure both the front- and backend of your site are prepared for higher numbers of visitors as holiday shopping picks up.
Give your website a festive feel by posting more holiday-themed content, such as themed product pictures and blog posts. Incorporate this content across your social media channels for cohesive holiday branding.
You can also include a countdown that lets customers know how many days remain for guaranteed delivery before Christmas. This not only serves as a useful reminder but can also encourage shoppers to buy thanks to the scarcity principle.
The same psychological rule applies to showing the remaining inventory count of a discounted item, or how many other shoppers are viewing a certain item at one time; When customers are worried that they might miss a deal or opportunity, they’ll be more likely to buy.
On the backend, the influx of site traffic can be a burden to your servers, potentially causing your site to run more slowly or even crash during the holiday season.
Since 47% of online consumers expect a website to load in under two seconds, it’s critical to make sure that your website can handle the busiest shopping season. Keeping your user experience simple can both increase conversion and decrease load time.
In order to make sure that your site can handle peak traffic, regular load testing is essential.
Load testing determines how a system will react under both normal and anticipated peak load conditions. It also helps identify which element is causing a crash or slowdown.
Online marketing strategies for holiday ecommerce
When it comes down to the wire, it doesn’t matter how seamless your checkout is or how quickly your website loads if you aren’t bringing visitors through the (virtual) door.
Holiday marketing strategies can help maximize your site traffic, increase ecommerce sales, and create customer loyalty.
Email marketing can be an effective tool to bring customers to your site and get the word out about holiday promotions.
In order to send out emails, you need a list of shopper email addresses. To collect shopper emails, we recommend including prominent calls-to-action on your homepage and checkout.
Make sure to continue sending special offers and promotions to your email subscribers around the holidays. Let your email list know about Black Friday or Cyber Monday sales ahead of time with an announcement email hinting at certain deals, then a reminder email the day before or day of the sale.
Consider offering an additional exclusive discount or presale code for email subscribers to build a sense of exclusivity and encourage customer loyalty.
In the digital age, social media defines word of mouth marketing. Different audiences are active on different social channels, and some may be more receptive to social media ads than others, which is why it’s so important to understand where your target audience spends its time online.
Over the holidays, you can offer social media promotions as an incentive for customers to share your website with their social circles by sharing or liking posts on Facebook or Twitter.
Similarly to email marketing, offering social media-only promotions can help customers feel like they’re part of an exclusive group, making them more likely to purchase.
Referral bonuses are another great way to encourage customers to share information about your store with their friends and family, especially during a time of year when most people are ready to shop.
You can offer individualized referral codes for each loyal customer to share with their social circles. When your customers’ friends use their code, both the original customer and the friend who uses the code will receive a discount.
This encourages customers to make repeat purchases, share their codes, and, more importantly, recommend your store to potential customers both during the holidays and into the new year.
Managing inventory for peak season
It’s simple math: more demand = more inventory. However, too often ecommerce businesses find themselves scrambling to stock their stores adequately for the holiday season, especially for big sales days like Black Friday and Cyber Monday. Stockouts can create unhappy shoppers who will look elsewhere. Proper demand forecasting is key.
How can I forecast inventory needs?
A third-party logistics (3PL) provider that offers inventory management software can help you analyze your historical inventory and online sales data. If you were in business in previous holiday seasons, you can have more accurate inventory forecasting by using historical data to predict sales levels this year, allowing for a more strategic ordering of inventory.
Be conservative in your estimates; too little inventory can cause stockouts, while too much can lead to low inventory turnover and high spend on warehousing and storage, products becoming obsolete, and/or too much capital tied up in inventory.
How can I prevent stockouts?
Make sure to communicate early and often about the status of inventory with your supplier or manufacturer. Share specific figures around predicted order volume so that you can make sure to order enough product well before holiday shopping season.
Keep an eye on your inventory levels as sales pick up. Within the ShipBob dashboard, you can track how much stock you have available at ShipBob’s fulfillment centers at any given time, plus set reorder notifications.
Reorder notifications automatically alert you when your stock dips below a predetermined level. For the holidays, we recommend increasing your reorder point; This will give you ample time to order additional inventory and build in a buffer just in case something goes wrong on the supply end.
This helps set you up for success — and happy customers.
Holiday ecommerce order fulfillment
You have ample inventory, your marketing is festive, and your user experience is a dream.
Now, it’s time to fulfill your customers’ orders.
It can be harrowing to handle peak season ecommerce fulfillment on your own or with a small team, which is why we recommend outsourcing fulfillment to an established third-party provider. Here are some important elements.
Communication is key
A successful holiday season is all about operational alignment, and the order fulfillment piece of the puzzle is no exception. Choose a fulfillment provider that values communication and transparency throughout the process, from receiving your inventory to shipping out orders and handling returns.
Your 3PL wants to help make this your best holiday season yet by getting your orders out quickly, but to do so, they need your help. If you are running a Black Friday/Cyber Monday deal or other sales promo, let your 3PL know so that they can prepare for a sudden increase in orders.
We also recommend sharing any forecasting data you have, an anticipated percentage increase from normal volume, and any planned marketing or social media blasts — and the expected resulting increase in orders.
Two-day shipping for the holidays
With big-box ecommerce companies offering two-day shipping and free shipping options, customers expect fast and affordable delivery at the click of a button — especially around the holidays, when timeliness can make or break the gift-giving experience.
But with two-day shipping as the standard set by Amazon and other retail giants, it can seem daunting or impossible for smaller businesses to offer the same speed.
While Amazon has a large network of warehouses, as well as the customer base and order volume to support their two-day shipping model, small to mid-sized businesses can leverage their 3PL’s network of fulfillment centers to distribute inventory and offer fast, affordable shipping.
The key to making two-day shipping affordable is to leverage ground shipping, which is a fraction of the cost of air. Working with a fulfillment provider that allows you to distribute inventory across several fulfillment center locations can help you save time and money.
2018 holiday shipping cutoffs
Speaking of customer expectations, make sure to be clear (and conservative) about order cutoffs for guaranteed delivery before Christmas. Shipping times can be delayed by both weather and volume of shipments on the carrier’s side, which is out of you and your 3PL’s control.
Steve Saffan, Founder and CEO of Brummell is no stranger to making tight holiday deadlines:
“We went from zero units sold to 5,000 in the first month and have been growing ever since. I know it would not have been possible to do without ShipBob, especially during the holidays.”
When tackling your own holiday shipments, we recommend adding a few days longer than what the carriers say to account for order picking and packing, as well as any unforeseen delays.
Domestic carrier cutoffs for 2018 are as follows:
- DHL Ecommerce/Global Mail: December 14
- UPS Ground: December 14
- UPS 2-Day: December 20
- UPS Overnight: December 22
- USPS First Class: December 14
- USPS Priority: December 19
- USPS Priority Mail Express: December 20
Handling holiday returns
The more you sell over the holiday shopping season, the more returns you’ll be dealing with during the first few weeks in January.
In fact, 5 million packages are returned to retailers in the first week of January.
How can you get ahead of the inevitable influx of returns?
Before the holiday rush heats up, make sure to have a straightforward returns process that is clearly communicated across your website. Work with your 3PL to figure out if and how they manage returns for their clients. Your 3PL should be able to help automate the returns process in a quick and cost-effective way, including providing your customers with a shipping label and order tracking information once their return is shipped.
Whether you handle returns yourself or leverage your 3PL, make sure that the returns process is as painless as possible for your customers.
You may even be able to create a competitive advantage from holiday returns.
Even though they’re returning an item, a great returns experience can encourage them to purchase from you again — and potentially turn a seasonal customer into a year-round one.
Working with a new 3PL
Whether this is your first holiday season at a quickly-growing business, or you need to switch 3PLs before the holiday rush, the sooner you get in touch with a new 3PL, the better. There is a definite sense of urgency when it comes to choosing a solid fulfillment partner in time for the holidays.
Fulfillment centers are likely to experience delays in receiving inventory during the holidays, as thousands of other customers are also sending more product, more frequently. Send inventory early and often. Remember, this is the craziest time of year for anyone in the logistics space.
If you are looking to work with a new 3PL for holiday fulfillment, be as proactive as you can. Click below to get started with ShipBob.