The 2023 holiday shopping season has arrived for retailers and brands and is well underway. Marketing strategies, inventory levels, and resources are in place, strategic initiatives for DTC, Wholesale, Marketplaces, Dropship, and social are set, and everyone is ready for a successful Q4 and a merry holiday season.
This year’s shopping season is an enigma for retailers and the financial markets. Based on the numbers from 2022, retailers and brands have reason to be optimistic for the upcoming holiday season as the projections are showing a little over $1.5 trillion in sales; however, macroeconomics, high-interest rates, inflation, and the job market are putting a question mark on this year’s Q4 and the anticipation of seeing how consumers will act and shop this year is similar to no other.
Marketplace Sales Are on the Rise
Consumers champion value and choice in today’s dynamic retail landscape. With rising inflation, soaring costs, and labor market uncertainties, shoppers are strategically maximizing their purchasing power.
A comprehensive global survey by Mirakl, encompassing 9,600 participants, unveils a compelling insight: 89% of consumers worldwide actively seek better value. The favored avenues for fulfilling this quest are marketplaces and dropship businesses, which exhibited a remarkable 38% growth (6x more than overall eCommerce) in 2022.
Moreover, retailers and brands globally are expanding their presence on marketplaces, and over 60% plan to diversify across channels in the year ahead. At Cymbio, we see most name brands in footwear, apparel, kids, and luxury brands adding more marketplace and dropship sales channels as of September in preparation for the holiday season.
Their motivation? For brands – more exposure to new potential customers. For retailers – they are adding assortments and new customer segments and increasing the AOV. Marketplaces are at the forefront of the new wave of commerce, offering value-conscious shoppers the choices they crave.
Early Bird Shoppers
This surge in early holiday shopping, fueled by Amazon’s second Prime Day in October, is poised to reshape the 2023 shopping season. Amazon’s October Prime Day “was the most successful fall sale to date,” according to Amazon. As we dive into the holiday season, consumer behavior is evolving.
Adobe’s survey of more than 1,000 U.S. consumers highlights the shifting tide, with a notable 49% of respondents expressing their intent to embark on their holiday shopping sprees as early as October. This shift emphasizes the importance of being well-prepared for the holiday rush and capitalizing on the early-bird opportunities these promotional events offer retailers and consumers.
Social Commerce’s Rising Influence
With an expected 5 billion social media users worldwide this year, the social commerce market is growing faster than traditional e-commerce and shows no signs of slowing down. According to Deloitte’s report on the rise of social shopping, this trend is predicted to impact holiday sales significantly.
Substantial spending on social commerce platforms is expected, with this trend poised for further growth in 2024 and the coming years. Preparing your brand for selling on social platforms is set to become a crucial task for all retailers and brands in 2024.
Economic Uncertainties and the Consumer’s Mindset
Economic uncertainties, including fluctuations in exchange rates, trade tensions, and supply chain disruptions, have given rise to a cautious approach among retailers and consumers alike. The latest CNBC Supply Chain Survey indicates that this year’s holiday spending season could be downbeat, with retailers buying less inventory and relying on discounts to entice consumers to buy more.
Consumer concerns about the economy, specifically inflation, influence spending decisions. A staggering 71% of respondents in CNBC’s survey expressed concerns that inflation might prompt them to cut back on holiday spending.
Managing Returns and Policies
Returns will continue to be a significant factor for retailers and consumers during the holiday season. Returns nearly doubled the week after Cyber Week in 2022 compared to the previous year and remained high throughout December. Overall, 13% of orders were returned in November and December, a 63% increase over 2021, according to the Salesforce 2022 Holiday Season Results report.
Retailers must balance the need to tighten return policies to enable reduced returns while being cautious, as tightening their return policies might impact sales. Retailers with shorter return windows may see fewer online sales in the crucial months of October – December.
The Power of Discounts
Discounts and deals played a pivotal role in the 2022 holiday shopping season. Rising inflation led retailers to offer substantial discounts, attracting price-sensitive shoppers. Electronics and toys, in particular, saw significant markdowns on Black Friday, with discounts averaging nearly 30%. We’ll likely see a continuation of discounting in 2023 as retailers aim to replicate the previous year’s success.
The upcoming holiday season presents a landscape marked by shifting consumer behavior, economic uncertainties, and new significant arenas: marketplaces and social commerce.
To thrive in this changing environment, retailers and brands must adopt a flexible approach. This involves marketplace and dropship capability, strategic pricing to entice early bird shoppers, navigating social commerce and being able to accommodate it, carefully managing return policies, and using intelligent pricing strategies as the consumer is more price-conscious than ever. By staying agile and adapting to these evolving trends, retailers and brands can ensure they make the most of the 2023 holiday season.