'Too Many Unknowns' to Forecast E-Commerce Holiday Trends, Says ComScore
ComScore analysts avoided making e-commerce holiday projections on a Wednesday webinar, citing "too many unknowns," including the unpredictability of the COVID-19 pandemic on consumer spending. The research firm said it was encouraged with 17% year-on-year digital commerce growth in July and August, vs. 8% growth in Q2. It expects continued online shopping growth across mobile and desktop shopping platforms during the holidays.
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A view of total retail spending in stores and online will give a more accurate picture of the overall holiday sales season, said Ryan Williams, head-client insights for travel and retail, because consumers have shifted behavior to online shopping. Retail will likely struggle during holiday shopping this year "because this virus is not going away anytime soon, and we are seeing spikes in a lot of states.” He cited “opposing factors at play” for Q4: Shifting behaviors to online shopping, accelerated in the spring during pandemic lockdown mandates, will drive up online spending, but “a lot of people are out of jobs and there’s less money to be spent.” Economic uncertainty could result in more spending on essential goods, which could mitigate holiday spending.
On how the Q4 Amazon Prime Day event, delayed to this week from July, will affect high-profile online promotional days such as Cyber Monday, Ian Essling, senior director-survey innovation, said ComScore will analyze “big-step changes” in data brought on by early sales events. That will determine "when the holiday season really started.’”
The percentage of dollars spent online in November increases every year, said Williams. With Prime Day coming mid-October, “it could shift spending even further” because “people have fixed pocketbooks,” he said. If they have spent some of that allocation on Prime Day, “there’s less money to be spent as we get closer to Christmas.” With other retail brands competing with Prime Day with their own sales events, that could mean retailers have to “discount even further to make Black Friday and Cyber Monday stand out."
Consumers have come to expect free shipping, which Essling called a Pandora’s box that can’t be closed. Of the 65% of shoppers who abandoned an online cart in the past month, 40% did so because of unexpected shipping costs, he said. The analysts don't see retailers passing on rising FedEx and UPS shipping costs to consumers. There's likely to be more curbside pickup this season to offset delivery costs [see Walmart story, this issue]. Many, too, are taking a page from Amazon’s Prime book, getting into the “subscription game” to offer free shipping to members who pay an annual club membership.
Growth in online shopping via smartphones and tablets continues to outpace that of desktop PCs -- 16% to 5% in Q2 -- but mobile shopping won't replace desktop shopping long term, said the analysts. Mobile devices account for 33% of e-commerce shopping, but consumers will likely always prefer the granularity possible with a large monitor when shopping for high-value goods and items requiring more detail, said Williams.
Issues that got in the way of consumers making purchases on a mobile device four years ago “are completely gone today,” said Essling, citing slow networks and lack of internet access. 4G cellular networks and faster Wi-Fi hot spots allow people to jump onto websites quickly and navigate retailers’ apps that were designed for a smartphone experience. With so many e-commerce sites being designed for mobile use today, “at some point the experience will be very similar" and the choice of online shopping method "will become almost entirely situational” based on where a consumer is, said Williams.