Analysis

Twin peaks of Christmas await retailers

UK retailers can look forward to a second spike in online shopping this Christmas, according to a study from eBay Enterprise.

Analysing data from last year, and projecting it on to what might happen in just a few weeks’ time, eBay Enterprise has concluded that while Black Friday and Cyber Monday together are the single biggest revenue driver of the festive season, there is likely to be a second peak week in the run up to Christmas.

The ‘Peak Preparedness report shows a 30% average growth year-on-year for October to December over the past three years. Furthermore, Cyber Week sales (that’s the period around Black Friday and Cyber Monday) have peaked dramatically, showing sales figures which are more than 200% that of an average October – December week.

Last year, UK shoppers spent an estimated £17.4bn online during the Christmas period, accounting for 23.4% of all Christmas spending. According to the report, online conversion rates in this second peak period were 74% higher than the average Christmas period rate in 2014. If the pattern of 30% growth manifests this year too, there’s a substantial increase in business about to take place.

novCommenting on the study’s findings, Enda Breslin, European head of business development at eBay Enterprise, said: “Conversion rates are higher at this point in the Christmas cycle because shoppers are much more focused; they have already researched their likely purchases and shopped around. Savvy retailers should be primed to cash in on this.”

The festive shopping period remains a make-or-break time for many retailers. Festive sales often mean the difference between success or failure come annual results time and online sales are an increasingly important part of this.

This has left both retailers and the carrier networks exposed to unprecedented demand. Over 180 million online shoppers visited UK retailers during Black Friday last year, with many websites crashing under the pressure. Delivery networks have also found it difficult to meet demand, as these parcels hit their supply chains, prompting at least one – Yodel – to take steps to mitigate against problems this year.

While the opportunity is huge, so are the stresses; systems will be stretched, staff at their busiest, and infrastructure at its maximum capacity. Mistakes at this crucial period are likely to be costly in the long run. In its report, eBay Enterprise has outlined what it sees as the main areas for retailers to focus on ahead of the big days.

Peak Pressure Grows

The US-derived Black Friday and Cyber Monday shopping phenomena have captured a large portion of online sales, bringing the peak shopping period earlier and earlier each year. The ‘Cyber Week’ sales volumes experienced in 2014 were over 200% higher than the average weekly volume (October-December) and grew at an average year-on-year growth rate of 84% between 2012 and 2014. Festive spending as a whole experienced a 30% year-on-year growth during the same period. Retailers should clearly be prepared to expect similar volume increases and further sharp spikes during the key dates this year.

webstore sales

Black Friday & Cyber Monday Domination

Both Black Friday and Cyber Monday represent volume increases nearly four times that experienced during an average day of the festive shopping period. Black Friday showed a 170% average growth rate over the last three years, and Cyber Monday a little less at 72%. The sheer size of these two ‘pinch points’ caught many retailers by surprise last year, with websites struggling to cope.

Retailers will no doubt be anticipating similar increases this year, it is essential plans encompass all areas of the business from the website, through payment processing and fraud checks, warehouse and delivery, and customer service.

webstore sales season trends

Get Ready for the ‘2nd Peaks’

The Cyber Week period is no doubt the single biggest revenue driver, and clearly marks the start of the festive shopping period as savvy shoppers seek out discounts and get an early start to their festive purchases. However, this week does not show the highest conversion rates of the season – the ‘2nd peak week’ (a fortnight after Cyber Week) marginally noses ahead. With conversion rates during this week 74% ahead of the average festive period rate. Clearly online shoppers are more focused during this 2nd peak period, having already researched their likely purchases and completing their orders before the anxiety of last minute shopping kicks in.

webstore sales season trends

decDon’t Forget those Last-Minute Shoppers

Analysis of last order dates shows much more focused buying behavior than average. Late last-order time cut offs have become competitive advantages for big-box retailers, but many should err on the side of caution. It is far easier to set an initial conservative cut-off and then extend, and an earlier cut-off can also have the added benefit of creating customer urgency and thereby drive sales.

Black Friday & Cyber Monday – a Detailed View on What to Expect

Retailers’ planning should not stop at dates – taking full advantage of peak shopping volumes requires planning right down to the hour. eBay Enterprise analysed the key days in detail to provide insights to aid micro level planning to help ease potential pain points.

visitor numbers peak days

Breakfast Bargain Hunters

Black Friday is strongly associated with bargains, and therefore online shoppers like to hunt out these deals when availability is at its highest. Between 7am and 10am we see a spike in both visitor numbers and associated sales, with volumes plateauing and sales tailing off later in the day. This was the time in 2014 most UK websites struggled to cope under the increased pressure of spikes in visitor volume. Retailers must ensure they are prepared to handle the sharp increases in volumes.

sales peak days

Evening Sofa Surfers

Cyber Monday patterns highlight a key difference against those of Black Friday, with the emergence of a strong evening peak between 7pm and 10pm. Shoppers keen to take advantage of last minute bargains, further price reductions, or simply completing purchases researched earlier in the weekend demonstrate more focused shopper behaviour with higher conversion rates. This group represents a big opportunity for retailers to drive visibility of remaining deals, and target abandon baskets from earlier in the weekend.

Dealing with the Unexpected

No matter how much advance planning a retailer has undertaken based on previous trends and forward forecasts, there will always be the unexpected to deal with. Just last year the carrier network almost collapsed under the sharp spikes in parcel volume. Factor in other factors outside of your control, such as inclement weather, and contingency planning will always be necessary. Even if you ultimately don’t fall back on these plans it is a necessary safety net allowing you to quickly put plan B or C into action.

Collaboration & Performance Monitoring:

The most successful retailers operate a dedicated peak planning board across the entire business, with a common set of goals, performance metrics, and forecasts. This group should prioritise transparency to mitigate against difficulties arising when one departments’ decisions has a potential adverse affect on another. For example, running a heavy promotional campaign when the warehouse is at breaking point is a poor investment, and likely to cause knock on effects such as an increase in customer service enquiries relating to delayed parcels.

Website & Front-End Processes:

The short, sharp spikes in visitor numbers – and hopefully associated transactions – put a huge burden on systems that are built for handling lower levels of demand. Cloud-based networking provides retailers with excess capacity to handle such large fluctuations without heavy investments in infrastructure. Similarly, payment and fraud processing systems must be built to cope with the same demands – failure of back-end systems can ultimately result in lost customers.

Delivery:

Retailers should work closely with carriers to ensure that they are able to cope with expected volumes and clearly understand performance expectations. Working with multiple carriers helps to mitigate against risks like overcapacity, bad weather or technology difficulties. Monitoring carrier performance and listening to feedback is essential. The carrier network has finite capacity, so a reliable two-day delivery service may become a three-day service. While this isn’t ideal, knowing it in advance allows retailers to set clearer expectations with customers both at the stage they place their order and through order confirmation emails.

Store Networks:

Those with a store network and omnichannel fulfilment options (such as click-and-collect and ship-from-store) are in an enviable position. Such assets helped retailers in 2014 to maintain home delivery options through local carrier-based ship-from-store options, and relieved the delivery burden by enabling in-store stock for customer collection.

Customer Care:

This is the final line of defence, and a key asset to solve issues for unhappy customers. Just as cloud networking provides flexible capacity for websites, outsourced customer care solutions provide flexible increases to capacity when it is needed most. One key facet often missed by retailers is outward communication – if there are delays in service these should be communicated to customers through email, website messaging, social media, and even automated IVR telephone line messaging. Those in the unlucky position of running out of stock of an unexpected best seller can communicate this, and if possible share details for when products, or similar alternatives, come back into stock.

“This last-minute rush presents a big opportunity for retailers to drive Cyber Monday sales online by promoting any remaining deals and targeting abandoned baskets from earlier in the weekend. Equally retailers should think about their presence throughout the day – targeting messages different by time of day and making the most of the early morning peak,” said Breslin.

“The Christmas period remains the ‘make or break’ time for UK retail. Last year a number of retailers were flawed by the unprecedented demand, which put a considerable strain on supply chains and customer service channels. Learning from last year, preparation is key,” he added.

A full copy of the Peak Preparedness report can be found here.

 

 

 

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