Online Sales Save What Many Thought Would Be a Slow Holiday Season
The 2020 holiday season has concluded, and given the reality of a deadly pandemic the likes of which haven’t been seen in a century, there were significant changes to how consumers shopped. Because of the coronavirus, people shopped online more in 2020 than at any time in the past.
The trend of online shopping is nothing new. Since the Internet has helped to make shopping faster, easier, and more convenient, more and more people have been focusing on making online purchases. This is true throughout the year, and it proved true this holiday season.
The Reality of COVID During the Holidays Changes Buying Habits
Retailers were concerned about the holiday season for good reason. 2020 was a year unlike any other in recent memory. Many stores—online and brick and mortar—expected that they would have lower than normal sales.
Estimates are that there will be a 4.7% decrease of in-store holiday sales, and it is believed that the virus, along with many people worried about money, is to blame for this shift. However, this doesn’t tell the entire story.
Consumers in the United States are predicted to spend $190.47 billion on holiday eCommerce purchases alone. This is an increase of 35.8% and $50 billion more than in 2019. It was expected that there would be higher online purchases since many people continue to worry about being in close proximity to other people. This means that the online gains from shopping on the web made up for the losses incurred by the brick and mortar stores.
Not only did online sales make up for the drop in brick and mortar sales, but it showed an overall growth of 0.9%. This brought overall holiday sales to $1.013 trillion between November and December. This does not even include the sales of items that started in mid-October.
In 2020, 71% of consumers shopped online for gifts and other items. In 2019, this number was only 51%, which shows a marked difference in just a year. The virus is likely keeping many of these consumers at home. However, there has been a steady shift toward buying online rather than in-person over the last several years.
Many People Started Shopping Early
There are several reasons consumers began their shopping earlier in 2020. Many were worried about their income and may have suffered from financial setbacks last year. Spreading the holiday purchases out over an additional month helped to reduce these worries and allowed them to spend more.
Additionally, people knew that the virus was likely to still be a problem as they got closer to the holiday season. Anticipating this made many people begin shopping early, so they wouldn’t have to worry about being in line and shoulder to shoulder with people during the holiday rush.
Another factor that was unexpected but welcomed by many was the Amazon Prime Day sale, which took place in mid-October 2020 rather than in July. This sale caused many other retailers to start offering large discounts during the same period to siphon off some of the sales from Amazon.
Worries About the Virus and Convenience
Many would imagine worry over the coronavirus would be the top concern for everyone shopping for holiday gifts in 2020 and that it would be the main issue that kept them home. However, this did not seem to be the case according to several surveys and polls.
According to a poll from CreditCards.com, there were still many shoppers who headed out to stores without a worry. Their poll found that millennials and Gen Z were most likely to stay home and avoid stores during the holidays. 74% of millennials anticipated buying online, along with 70% of Gen Z.
Interestingly those who face the highest risk from coronavirus, the Silent Generation, were more likely to do their shopping in-person. It’s unknown whether this was because they did not believe they would be infected or because they were not as comfortable with technology. Those in younger generations, including boomers, are more likely to be proficient with technology and thus capable of finding what they need and making purchases online.
The virus is not the only reason that people chose to buy online in 2020. Another reason cited in the poll is convenience. Poll takers found that 69% of shoppers were looking to buy online because it’s easier. Other reasons for shopping online include better deals and a greater selection.
Supply Issues and Shipping Problems
Whether shopping online or in a retail store, there were significant issues with the supply for certain items. While this happens annually with the “hot items” such as special toys or game consoles, the issue was more widespread in 2020. Global supply chain networks were strained under the increased e-commerce orders. As the Washington Post reported, “[Shipping issues occurred] on top of what retail analysts say is more than two years of e-commerce growth crammed into a year, causing major growing pains as shipping networks, warehouses and supply chains rushed to keep up with demand. Adding to the crunch, the companies were scrambling to figure out how to try to keep workers safe and socially distanced, slowing things down.”
It’s also clear shipping was a significant problem during the holiday season, with some shipping companies refusing to accept additional volume from their retail customers. As NPR reported, “But to prevent their own delivery systems from being overwhelmed and collapsing under the weight of a tsunami of packages, FedEx and UPS cut off some of their retail customers after they reached predetermined limits, including Costco, Macy’s, Gap, Nike and many others.” This served only to increase the delays facing the USPS, which was already plagued with problems in 2020. In fact, an alert on the USPS website throughout December told visitors it was “”experiencing unprecedented package increases and limited employee availability due to the impacts of COVID-19.” This message remains live as of January 5, 2021.
Only time will tell whether supply issues and shipping delays will drive consumers back to brick-and-mortar stores once the threat of COVID-19 recedes. Given the unprecedented growth in 2020, it seems unlikely that online shopping will see that growth sustained in 2020. That doesn’t mean, however, that retailers should expect to return to “business as usual.”
Companies Should Market with eCommerce in Mind
Although brick and mortar stores will continue in some capacity, for the time being, the prevalence of online shopping has made it clear that times are changing quickly. Businesses that want to continue and to thrive need to consider how they can improve their current eCommerce offerings.
2020 saw many companies making these changes to their eCommerce capabilities. Gap increased the number of employees in their warehouses and call centers to handle the increase in online sales. Bed, Bath, & Beyond started to offer same-day delivery to compete with Amazon. Other large companies are likely to follow suit.
Companies–particularly smaller retailers–that want to focus more on eCommerce as part of their business strategy will want to utilize SEO practices that can help their site gain prominence. Online advertising , such as pay-per-click (PPC) ads can help them immediately gain potential customers. Remarketing campaigns used with PPC ads also help to get customers to return to the company’s website even if they did not make a purchase the first time they visited.
What Do the Changes in Shopping Patterns Bode for the Future?
Although the virus may be the blame for the massive push to online shopping in 2020, the world was already moving in that direction. People like the convenience of shopping online and having the items they need to have delivered. While no one can predict the future with 100% accuracy, people will likely continue the trend of buying through the Internet. Brick and mortar stores need to find ways to compete, or they need to ensure they have the capabilities to provide better eCommerce offerings.