Retail Ecommerce Insights and Trends: 2022 and The Holiday Season

2022 has been a wild ride with so many curveballs affecting not only the retail world, but our daily lives. Society has survived the pandemic, supply chain issues have somewhat stabilized and what were once “new” routines, such as working from home, have become the norm. We want to share some of the insights we have seen with the new normal that we think are important to understand to help our merchants thrive in this environment.<h2>The Great Realignment</h2>In 2020, when the world rushed online, we saw huge spikes in ecommerce as a percentage of total retail sales. Digital Commerce 360 predicted that the spike pushed US ecommerce volume ahead by two years and it was not clear at the time if this baseline would be permanently elevated. We now have some more data to analyze the state of ecommerce, two years after the pandemic hit.For US ecommerce as a % of total retail sales:<ul><li>2021 and 2022 growth has flattened out (red line in the eMarketer chart below)</li><li>A forecast based on pre-pandemic data (black line) brings us to where we are today, erasing gains from 2020</li></ul><img src="https://res.cloudinary.com/dugcmkito/image/upload/v1671655468/pasted_image_0_f7087a7737.png" alt="pasted image 0.png" srcset="https://res.cloudinary.com/dugcmkito/image/upload/v1671655468/thumbnail_pasted_image_0_f7087a7737.png 245w,https://res.cloudinary.com/dugcmkito/image/upload/v1671655468/small_pasted_image_0_f7087a7737.png 500w,https://res.cloudinary.com/dugcmkito/image/upload/v1671655468/medium_pasted_image_0_f7087a7737.png 750w,https://res.cloudinary.com/dugcmkito/image/upload/v1671655468/large_pasted_image_0_f7087a7737.png 1000w," sizes="100vw"><h2>Ecommerce Conversion Rates</h2>By taking a closer look at some of the components that affect overall ecommerce, we can better understand how changes in consumer behavior are impacting trends going forward. Kibo released their Q2 ecommerce report and similarly to Q1, Q2 ecommerce site conversion rates have continued to decline year-over-year (YoY).&nbsp;For 2022 Q2, US site conversion rates were down 12.8% YoY! Interestingly enough, Kibo also stated that Q2 2022 AOV has increased 9.6% YoY.&nbsp;According to <a href="https://tradingeconomics.com/">TradingEconomics.com</a>, the average inflation rate for April-June 2022 was 8.7% which is almost as large as the AOV increase. Inflation, which has been driving prices up, was stated as “the biggest challenge facing the country” for US consumers in Statista’s Global Consumer Survey. If the economy continues on a downward trend, I would expect conversion rates to continue to decline into 2023.<img src="https://res.cloudinary.com/dugcmkito/image/upload/v1671655517/pasted_image_0_406fc0ca0e.png" alt="pasted image 0.png" srcset="https://res.cloudinary.com/dugcmkito/image/upload/v1671655517/thumbnail_pasted_image_0_406fc0ca0e.png 245w,https://res.cloudinary.com/dugcmkito/image/upload/v1671655517/small_pasted_image_0_406fc0ca0e.png 500w,https://res.cloudinary.com/dugcmkito/image/upload/v1671655517/medium_pasted_image_0_406fc0ca0e.png 750w,https://res.cloudinary.com/dugcmkito/image/upload/v1671655517/large_pasted_image_0_406fc0ca0e.png 1000w," sizes="100vw"><img src="https://res.cloudinary.com/dugcmkito/image/upload/v1671655548/pasted_image_0_83f9fe2937.png" alt="pasted image 0.png" srcset="https://res.cloudinary.com/dugcmkito/image/upload/v1671655547/thumbnail_pasted_image_0_83f9fe2937.png 245w,https://res.cloudinary.com/dugcmkito/image/upload/v1671655548/small_pasted_image_0_83f9fe2937.png 500w,https://res.cloudinary.com/dugcmkito/image/upload/v1671655548/medium_pasted_image_0_83f9fe2937.png 750w," sizes="100vw">To put these conversion rates into context, we can look at web traffic trends over the last few years.<h2>US Web Traffic Trends</h2>A defining characteristic of 2022 has been people getting back out into the real world (including shopping in physical stores) and spending less time in front of their computers. This explains the persistent lag in web traffic that we have seen in 2022 as compared to 2021. This gap was intensified over the summer months as people resumed their normal travel and vacation patterns.According to SimilarWeb data, we saw web traffic from the top 100 US websites decline by 2.1% (Jan 2022- Aug 2022) and after a rocky summer, the YoY traffic gap has narrowed.&nbsp;<img src="https://res.cloudinary.com/dugcmkito/image/upload/v1671655611/pasted_image_0_c2aeb719fe.png" alt="pasted image 0.png" srcset="https://res.cloudinary.com/dugcmkito/image/upload/v1671655611/thumbnail_pasted_image_0_c2aeb719fe.png 245w,https://res.cloudinary.com/dugcmkito/image/upload/v1671655611/small_pasted_image_0_c2aeb719fe.png 500w,https://res.cloudinary.com/dugcmkito/image/upload/v1671655611/medium_pasted_image_0_c2aeb719fe.png 750w,https://res.cloudinary.com/dugcmkito/image/upload/v1671655611/large_pasted_image_0_c2aeb719fe.png 1000w," sizes="100vw"><img src="https://res.cloudinary.com/dugcmkito/image/upload/v1671655637/pasted_image_0_630ab88853.png" alt="pasted image 0.png" srcset="https://res.cloudinary.com/dugcmkito/image/upload/v1671655637/thumbnail_pasted_image_0_630ab88853.png 245w," sizes="100vw">Not all industries saw declines, in fact, many saw incredible growth. Here are some of the highlights in terms of YoY traffic changes from Sept 2021-August 2022:<ul><li>Arts and Entertainment: Performing Arts +130% YoY</li><li>ecommerce and Shopping: Tickets +99% YoY</li><li>Travel and Tourism: Air Travel +37%</li><li>Home and Garden: Gardening -10%</li><li>Home and Garden: Home Improvement and Maintenance -9%</li><li>Lifestyle: Beauty and Cosmetics -3%</li></ul>Some of these categories were the beneficiaries of consumers wanting to catch up on experiences they missed out on during the past few years. Overall, shoppers reduced the amount of time they spent shopping online, and shifted the purchases they did make away from quarantine-friendly activities to those that involved getting out and about through travel and entertainment.<img src="https://res.cloudinary.com/dugcmkito/image/upload/v1671655684/pasted_image_0_f940b304fc.png" alt="pasted image 0.png" srcset="https://res.cloudinary.com/dugcmkito/image/upload/v1671655684/thumbnail_pasted_image_0_f940b304fc.png 245w,https://res.cloudinary.com/dugcmkito/image/upload/v1671655684/small_pasted_image_0_f940b304fc.png 500w,https://res.cloudinary.com/dugcmkito/image/upload/v1671655684/medium_pasted_image_0_f940b304fc.png 750w," sizes="100vw"><h2>Holiday 2022 Insights</h2>It is important to remember that we will not truly understand the full 2022 retail picture until we close out the holiday season. Factors that merchants will want to keep in mind this year include rising inflation, declining consumer sentiment regarding the economy, and consumer's desire to split their purchases between ecommerce and brick and mortar stores.<h3>Early Holiday Retail Sales</h3>A positive trend for both merchants and shoppers is a tendency to begin holiday shopping <a href="https://www.salesforce.com/uk/blog/2022/07/holiday-shopping-predictions.html">early </a>(i.e. beginning of <a href="https://www.insiderintelligence.com/content/holiday-shopping-season-starting-earlier-than-ever">October</a>). For retailers, this can help reduce the logistical strain during peak days. For consumers, worries about inflation and <a href="https://www.salesforce.com/uk/blog/2022/07/holiday-shopping-predictions.html">rising prices</a> are leading to early purchases. Merchants can further encourage this trend by offering promotions at the beginning of November, and even October.&nbsp;This pattern of shopping earlier in the season is not a new trend for 2022. In 2021, we saw pre-Thanksgiving US ecommerce sales grow by 19% YoY while the "Cyber Five" time period (Thanksgiving to Cyber Monday) actually dropped by 1%.<img src="https://res.cloudinary.com/dugcmkito/image/upload/v1671655729/pasted_image_0_088b7c5ea0.png" alt="pasted image 0.png" srcset="https://res.cloudinary.com/dugcmkito/image/upload/v1671655729/thumbnail_pasted_image_0_088b7c5ea0.png 181w,https://res.cloudinary.com/dugcmkito/image/upload/v1671655730/small_pasted_image_0_088b7c5ea0.png 500w,https://res.cloudinary.com/dugcmkito/image/upload/v1671655730/medium_pasted_image_0_088b7c5ea0.png 750w," sizes="100vw">One clear example of a retailer attempting to shift holiday purchases earlier this year is with Target. Target Deal Days started on October 6, 2022 and will price match any purchases from that date all the way up to December 24, 2022.&nbsp; Another good example was in 2021, when Best Buy had a “Black Friday Prices Guaranteed” promotion that automatically refunded any price drops for purchases as early as October 19, all the way to Black Friday! Additionally, according to the National Retail Federation (NRF), US shoppers have started their holiday <a href="https://nrf.com/blog/how-retailers-are-preparing-early-holiday-shopping-season-and-last-minute-shoppers">shopping earlier</a>, every year for the last ten years.&nbsp;An early start to the holiday shopping season seems to be what both retailers and consumers are gearing towards.&nbsp;<img src="https://res.cloudinary.com/dugcmkito/image/upload/v1671655779/pasted_image_0_f2bdf0476e.png" alt="pasted image 0.png" srcset="https://res.cloudinary.com/dugcmkito/image/upload/v1671655780/thumbnail_pasted_image_0_f2bdf0476e.png 245w,https://res.cloudinary.com/dugcmkito/image/upload/v1671655780/small_pasted_image_0_f2bdf0476e.png 500w,https://res.cloudinary.com/dugcmkito/image/upload/v1671655780/medium_pasted_image_0_f2bdf0476e.png 750w," sizes="100vw"><h3>Most Popular Shopping Day of The Week</h3>Given that holiday sales are occurring earlier in the season, merchants will benefit from a more granular look at the data. Understanding which days of the week drive the most traffic to your site will help you design the optimal plan for communicating with your shoppers.&nbsp;The chart below displays the distribution of sales by day of the week for Bolt merchants from January-September 2022, with Monday being the busiest day. <a href="https://whitebox.com/blog/best-days-of-the-week-to-sell-online/#:~:text=Ecommerce%20data%20from%20Whitebox%20shows,of%20the%20week%20for%20sales.">Whitebox</a>, an ecommerce fulfillment company, also indicated that their busiest days of the week were Sunday and Monday.&nbsp;Why is this? One theory is that after a weekend full of fun activities, people begin their week with the chore of shopping for things they need (including working down their holiday gifting list). Another idea is that a little retail therapy helps people start their week.&nbsp;<img src="https://res.cloudinary.com/dugcmkito/image/upload/v1671655814/pasted_image_0_b91835cff3.png" alt="pasted image 0.png" srcset="https://res.cloudinary.com/dugcmkito/image/upload/v1671655814/thumbnail_pasted_image_0_b91835cff3.png 245w,https://res.cloudinary.com/dugcmkito/image/upload/v1671655814/small_pasted_image_0_b91835cff3.png 500w,https://res.cloudinary.com/dugcmkito/image/upload/v1671655814/medium_pasted_image_0_b91835cff3.png 750w," sizes="100vw">Every merchant should consider what their unique daily trends look like and factor that into their plans for sales, promotions, and communication with customers. Knowing when your shoppers are most likely to make a purchase can also make time-sensitive promotions more effective, like flash sales or limited time offers.<h2>Holiday Forecast</h2>What do we think the 2022 holiday season is going to look like? In 2021, overall holiday sales grew a massive <a href="https://www.retaildive.com/news/2022-holiday-retail-sales-growth-slows/631652/">15%</a> YoY. However, for 2022, <a href="https://www.prnewswire.com/news-releases/deloitte-holiday-retail-sales-expected-to-increase-4-to-6-301622590.html">Deloitte</a> forecasted a modest increase of 4%-6%.&nbsp; Strict pandemic measures limited physical retail sales in 2020 and consumers stormed back into brick and mortar stores in 2021. 2022 is expected to be different, with less excitement about going back into brick and mortar stores, record high inflation and declining consumer sentiment regarding the state of the economy.&nbsp;While overall sales are likely to show modest growth, If we look specifically at ecommerce, Deloitte’s 2022 holiday forecast has an optimistic growth of 13% to 14% YoY, which is much higher than the 8% that 2021 saw.&nbsp;<img src="https://res.cloudinary.com/dugcmkito/image/upload/v1671655851/pasted_image_0_46983b6862.png" alt="pasted image 0.png" srcset="https://res.cloudinary.com/dugcmkito/image/upload/v1671655851/thumbnail_pasted_image_0_46983b6862.png 245w,https://res.cloudinary.com/dugcmkito/image/upload/v1671655852/small_pasted_image_0_46983b6862.png 500w,https://res.cloudinary.com/dugcmkito/image/upload/v1671655852/medium_pasted_image_0_46983b6862.png 750w," sizes="100vw">The key to a successful holiday season for merchants is understanding the macro trends that are driving the economy and consumer behavior, while also factoring in your brand’s own unique data. Here are a few key action items you might consider implementing:<ul><li>Put special emphasis on making sure your ecommerce division is prepared for the rush of holiday traffic</li><li>Consider offering promotions starting at the beginning of November to draw in shoppers early and often</li><li>Know what days of the week are the biggest for your sales and capitalize on that</li></ul>We hope that the ecommerce holiday season results are as optimistic as the projections are. Our insights team will continue to analyze patterns in shopping transactions this holiday season and we plan to share our learnings with you—stay tuned!&nbsp;