Holiday Report

Countdown
to code freeze

How to win 2023’s holiday shopping season

66%of retailers want to know
their customers better
before the holidays

With the peak holiday season approaching, retailers can’t risk any down time for their sites. Which is why site optimizations, tweaks, and improvements happen in prep for Q4. With code freeze—the hard stop to any technical changes for websites—nearing, where are retailers focusing their efforts?

 

Bolt’s August 2023 poll of a hundred plus US-based ecommerce companies generating more than $5 million in online GMV from the sale of physical goods found 66% of decision-makers are prioritizing collecting customer data (like email addresses, phone numbers, etc.) in an effort to increase shopper accounts for ongoing marketing efforts.

 

But that’s not all they’re doing. To help you stay ahead of the freeze, we've gathered insights, proprietary data, and past performance indicators to identify key challenges, predictions, and trends. Let’s dive in. 

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A look at last year’s holiday season

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Shoppers hit “buy” on Monday more than any other day

Last year’s holiday season was dominated by headlines about inflation and supply chain issues. And yet we witnessed a new peak in ecommerce sales. According to Adobe Analytics, consumers spent $211.7 billion online over the 2022 holiday season (from November 1 to December 31), growing 3.5% year-over-year (YoY).1

 

During the “Cyber Five” (the five days spanning Thanksgiving to Cyber Monday), the average cart size was 3.2 items per order, the same as in 2021. Gross merchandise value (GMV) increased by around 2%, and average order value (AOV) increased by 15% from 2021.

 

Cyber Monday continues to be the US holiday season’s biggest online shopping day, with 5.6% YoY growth. While Black Friday was the busiest day of the holiday season on the Bolt platform, our findings show that in 2022 Mondays were peak holiday shopping days, outperforming weekends.

 

As reported by eMarketer, paid search remained the biggest driver of sales for retailers, with 29% of online sales attributed to that channel, followed by direct web visits (19%), organic search (17%), affiliates/partners (16%), and email (15%).2


 

Another notable finding from the 2022 holiday shopping season is that retailers have continued to adopt technology solutions such as ecommerce management, flexible payments, personalization, and experiential retail. According to Coresight Research, shoppers are embracing flexible payments in an uncertain economic environment.

Winter is coming: Challenges for 2023

Retailers’ key problems with growing customer lifetime value

Collecting and leveraging personalization via first or zero-party data Collecting and leveraging personalization Attribution and technology issues around measuring LTV accurately Issues around measuring LTV accurately Rising media costs

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71%of retailers are concerned consumers will spend less this holiday season due to inflation Source: CNBC Supply Chain Survey as of May 2023

The holiday shopping playbook has changed. Instead of trying to emulate the tactics that worked so far, you have to be aware of the new obstacles and build a future-proof strategy that generates revenue.

 

Already, retailers face intense challenges as they work to grow customer lifetime value (LTV). Bolt’s August 2023 poll found retailers’ key issues around this work were: Collecting and leveraging personalization via first or zero-party data (51%), attribution and technology issues around measuring LTV accurately (27%), and rising media costs (22%).

 

The holiday shopping season adds even more challenges, including:

 

  • Labor costs and labor shortages — According to CNBC, 40% of retailers cite labor costs as their main concern for the upcoming peak season, followed by 38% of retailers who are struggling with labor shortages.3
  • Inflation and holiday spending — 71% of retailers are concerned the consumer will spend less money in response to inflation. The research shows two-thirds of shoppers say they’ll buy holiday items on sale, while half plan to buy fewer items overall.3
  • Finding the right inventory mix to meet consumer demands — Traditionally, retail orders peak in late winter or early spring. However, since many retailers are still drawing down inventories, this year, the timing of placing holiday orders has been more varied.3
  • Rising acquisition costs — According to SimplicityDX, there was a 222% increase in customer acquisition costs in 2022. Data from FirstPageSage shows in increase in 2023, putting the average ecommerce customer acquisition cost at $86. This jaw-dropping stat has put a renewed focus on ecommerce profitability and repeat sales.4, 5
  • Tight marketing budgets — Marketers are scrambling to make the most out of their budgets. Research from Gartner shows that 71% of CMOs lack the budget to fully execute their strategy in 2023. That means they have to prioritize the investments that will bring the biggest ROI.6
  • Insufficient customer insights — The depreciation of third-party cookies has made retailers realize they don’t know their customers well enough. The over-reliance on paid ads to bring new customers and allow them to cut corners with guest checkout has led to empty CRMs and a lack of customer information.

Without knowing your shopper's identity, you can’t offer a personalized approach or unlock insights to grow your customer’s lifetime value (LTV).

The forecast:
2023 holiday shopping season predictions

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Despite all concerns related to inflation and reduced discretionary spending last year, the pandemic-fueled surge of retail sales continued when holiday season retail sales grew by 4.8% YoY. eMarketer expects a similar gain of 4.5% for this 2023 holiday season. When it comes to US retail ecommerce sales, eMarketer expects 5.1% growth for furniture and home furnishings, 7.9% for consumer electronics, 8.5% for apparel and accessories, and 18.4% for health, personal care, and beauty. 2,7

 

Retailers should remain optimistic about the upcoming holiday shopping if they can anticipate challenges and adapt accordingly. Let’s look at the forecast for the 2023 holiday shopping season.

#1: Discount-heavy season

According to CNBC, roughly two-thirds (67%) of retailers expect consumers to look for discounts. This can be a great opportunity for retailers with bloated inventory, who can offer discounts to hook customers and clear out inventory.3

 

Last holiday season, many businesses, especially big-box retailers such as Target and Walmart, revealed huge inventory builds leading to a period of hefty discounts. There’s no doubt that discounts were the main sales driver. However, many retailers are still drawing down inventories, so we can expect a discount-heavy season once again.

#2: Returns will make or break businesses

While overall return rates are declining, the 2022 holiday season saw a bump in ecommerce returns. During the last peak season, 13% of orders were returned in November and December, a 63% increase over 2021.8

For many customers, not offering free returns can be a deal breaker. Data shows that 78% of shoppers would abandon a shopping cart if free returns weren’t available. Moreover, 93% of shoppers research a brand’s return policy before making a purchase. Salesforce predicts that poor returns experiences, policies, and processes will put 21% of online orders at risk.8

#3: The importance of social media

There’s no way around it—social media has become an integral part of customers’ shopping and purchasing journey. Data from McKinsey shows that social media is influencing the majority of US consumers’ holiday buying decisions and inspires more than 80% of younger consumers.9

 

Take, for instance, all the buzz around the new Instagram app Threads. As reported by Forbes, nine out of the top 10 retailers have activated their accounts on Threads. While the Threads team says it isn’t focused on advertising yet, Forrester predicts that Meta’s advertising backbone will position Threads as a strong Twitter alternative.10,11

#4: Buy online, pick up in-store will drive more sales

Customers value convenience and flexibility. The surge of BOPIS stretched during the 2022 holiday shopping season when BOPIS drove one in five online orders and reached over one in three orders after the shipping cutoff dates. 

 

According to Salesforce, BOPIS will drive $28 billion in incremental global store sales.8

#5: Speed will remain vital for holiday sales

If you’re overwhelmed with everything that needs to be done before the holiday season begins, start by optimizing your delivery and checkout experience.

 

The luxury fashion brand Badgley Mischka struggled with a huge drop-off at checkout. Once they enabled one-click account creation and checkout with Bolt Accounts, Badgley Mischka saw 80% higher conversion rates and a 15% higher average order value during the holidays.

 

Fast delivery is another vital component of successful ecommerce delivery. The Ipsos-Octopia study shows that delivery time is one of the most important factors for online shoppers. Moreover, 85% of them say they always check it before making a purchase.12

The countdown to code freeze:
Prepping for the holidays

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75%would pay more for personalized online shopping

With 2023 halfway done, the countdown has started. To finish the year strong you need to keep a pulse on the latest trends that affect customer behavior.

 

To help you better make sense of the changes, we mapped out all the trends to be mindful for this holiday shopping season.

 

Personalization

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Creating a personalized shopping experience can help you capture the attention of experience-driven shoppers. Here’s what the data shows:

  • 75% of shoppers are willing to pay more for personalized online shopping experiences
  • 45% of shoppers chose not to purchase a product because of lack of personalized options

Of the 100 US-based ecommerce companies Bolt surveyed, 42% of retailers said they are using personalization primarily for targeted targeted ads, while 30% prioritized it for site recommendations and 28% used it mostly in email marketing.

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43%

of smartphones users already expect beauty brands to use AR

90%

of Americans use or would consider using AR to shop

Brands can also think about hyper-personalizing their engagement strategies to keep customers coming back for more. For example, recovering an abandoned cart by sending shoppers an email with a QR code, redirecting them to the checkout page where they left off. Retailers can also SMS a checkout link to shoppers who are in store where there’s an out-of-stock item, allowing them to purchase that item online. The sky’s the limit when it comes to personalization. Stay tuned as Bolt will be unveiling products to solve these exact challenges very soon. 

No more gift guessing

Wish lists are one thing; imagine a world where your giftee can tell you exactly what they want for the holidays—a PlayStation 5 console, but not just any PS5, the Marvel’s Spider-Man 2 Limited Edition Bundle, please. A “drop a hint” feature takes the wish list one step further by helping shoppers generate a link from the product details page to share with their family and friends. Bolt will soon be launching this “drop a hint” shareable wish list feature among several other holiday-timed products, right before shoppers start plotting their gifting escapades.

Social Commerce

Social commerce is the convergence of social media and retail to meet customers where they are and facilitate transactions.

 

Brands can rely on social commerce to create exciting new ways to engage and convert consumers through inspiration, interaction, discovery, and ease of purchase. As reported by Deloitte, social commerce is estimated to reach approximately two trillion USD by 2025, growing by around 18% YoY between 2021 and 2025, which is the equivalent of roughly 28% (or 13% excluding China) of all online retail sales in 2025.13

Immersive experiences

Technology has completely transformed the way we shop. Consumers are using new technologies to virtually try on clothes, visualize furniture in their homes, and even shop with interactive assistance. According to Google, more than 90% of Americans currently use or would consider using augmented reality (AR) for shopping.14

 

In the past, the biggest roadblock to the widespread adoption of AR was the need to download an app to get the AR experience. This is now a thing of the past. Technology advancements have made AR experiences more immersive, realistic, and accessible. Consumers can enjoy web-native AR experiences on the go, using just their phone’s camera. In fact, 43% of Americans would rather shade-match using AR at home than doing so in-store.

 

Immersive experiences have quickly become table stakes. This is especially true for industries such as home furnishings, automotive, and beauty. Google’s research shows that 43% of smartphone users expect all beauty brands to use AR. The “try before buy” experience helps online shoppers overcome the uncertainty of making a purchase, thus closing the online-offline gap.14

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-Christian Dreisbach, Head of Sales at Vaimo US

“One of the best ways to provide exceptional customer experience is through seamless checkout, eliminating as many obstacles as possible for your customers. Converting a shopper to a buyer to a return customer (and ultimately someone who refers others) relies on the simplicity and ease of the checkout process.” 

The power of AI

Predictive AI has been around for quite some time, and ecommerce retailers have used it to offer personalized product recommendations on the product detail page and in the shopping cart. However, the rise of generative AI will once again change the way of doing business. According to Salesforce research, 17% of consumers have used GPT for product research and inspiration, and 10% will likely use it to help build their holiday shopping lists.15

 

Using AI-powered tools, retailers can analyze customer behavior and offer a more tailored shopping experience catering to customers’ individual preferences. AI can help brands enhance product design, improve inventory management, enhance supply chain efficiency, automate marketing campaigns, offer conversational site search, use chatbots to respond to questions, and so much more. 16 

Seamless checkout experience

The need to create an account and the complicated checkout process are two of the top five most common reasons for cart abandonment, according to Baymard. Even so, brands are torn between allowing customers to use guest checkout and losing valuable information that comes with account creation. Forcing customers to create an account can be frustrating for shoppers, and often leads to forgotten passwords or account duplication—which makes keeping track of customers incredibly difficult.17

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“When we optimize the checkout process and flow, it can increase conversion rates by double—sometimes triple—digits.”

- Penny Porterfield, VP of Operations and Business Development at The ZaneRay Group

10%

uplift in Polywood’s conversion after introducing the one-click checkout experience

The good news is that this doesn’t have to be either/or. With best practices in place, you can optimize your checkout flow so it’s a fast, frictionless experience that speeds up the overall checkout process. If you want to completely remove the friction, improve conversion, and reduce the necessary checkout steps, solutions like Bolt One-Click Checkout exist to solve those problems.

 

Digitally savvy younger consumers report higher desirability for one-click checkout, alternative payment methods (APMs), and fraud protection compared to older generations. Aware of this, Polywood transformed its shopping experience with one-click checkout on its site. The one-click checkout experience now lifts Polywood’s conversion by 10% and increases the retailer’s monthly revenue by a whole 5.4%.

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- Penny Porterfield, VP of Operations and Business Development at The ZaneRay Group

“[Mobile checkout] is where a highly efficient checkout flow pays off, including a one-click purchase option. If you combine a highly efficient checkout with effective shipping messaging that tells you the options and estimated delivery date, this is the golden ticket to increased conversion and revenue.” 

Loyalty programs to gather first-party data 

The rise in customer acquisition costs has emphasized the importance of loyalty programs. When done properly, loyalty programs can increase customer lifetime value, drive repeat purchases and create brand advocates.

 

With the death of third-party cookies, first-party data becomes the new marketing currency. Only brands that own enough customer information can excel at customer targeting, offering tailored shopping experiences. By asking customers to sign up for a loyalty program, you can collect critical demographic information, such as name, age, email address, and phone number.

 

The card you have from your local grocery store, the special discount you get for your birthday, and the gift you get after a certain number of purchases are all different forms of loyalty programs. On one hand, they help the merchants understand their customers better, and on the other hand, they make the customer feel valued, so it’s a win-win. 

Mobile experience to boost conversions 

Mobile commerce accounts for nearly two-thirds (65.7%) of all global ecommerce retail sales. Unfortunately, many merchants are putting the mobile experience on the back burner, causing a poor customer experience. This is especially true for the checkout process. Without an intuitive and easy mobile checkout process, you can’t expect to see conversions.18

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Benefit Cosmetics UK noticed that customers are gravitating towards a frictionless experience, a mobile-friendly checkout process, and the ability to use alternative payment methods. After implementing Bolt One-Click Checkout, they witnessed a 24.2% higher conversion rate.

 

Last holiday season, 45% of revenue came from mobile devices, according to Adobe. If you want to make the most out of this holiday shopping season, you must create a pleasant mobile shopping experience.1

Breaking through the ice

The upcoming holiday shopping season is just around the corner. However, instead of just focusing on how to maximize sales during the holidays, think of strategies that will futureproof your business and set the foundation for growth—well before it’s time for a code freeze. Elbowing your way through the fierce competition by offering steep discounts will lead you to an unsustainable business model that prevents you from turning one-time shoppers into loyal customers.

 

“Today's online shoppers have high customer experience expectations that encompass payment methods, the checkout experience, and mobile-friendliness. Creating even a single hiccup for your customers at checkout can guarantee a percentage of your shoppers will abandon their carts,” said Christian Dreisbach, Head of Sales at Vaimo US.

 

Instead of going with the flow, prioritize knowing your shopper’s identity to increase LTV. Here’s where a seamless checkout experience can help. Ready to retain customers beyond the holiday season? Do it by using one-click checkout.

Sources

  1. 2022 Holiday shopping trends & insights report - adobe experience cloud. Adobe.
  2. Deals ruled the 2022 holiday shopping season. Insider Intelligence.
  3. Retailers are preparing for a discount-heavy, Down Holiday Season: CNBC survey.
  4. E-commerce profits: Rising acquisition costs. SimplicityDX.
  5. Average customer acquisition cost (CAC) by industry: B2B edition. First Page Sage.
  6. Gartner Survey reveals 71% of CMOS believe they lack sufficient budget to fully execute their strategy in 2023. Gartner.
  7. The State of CPG ecommerce in 5 charts. Insider Intelligence.
  8. Shoppers call the shots in retail now, Our Holiday Results Show. Salesforce.
  9. US holiday shopping 2021: Strong demand meets big challenges. McKinsey & Company.
  10. How brands and retailers are reacting to threads. Forbes.
  11. Meta’s advertising backbone guarantees threads’ monetization. Forrester.
  12. 85% of online shoppers say that a poor delivery experience. IPSOS.
  13. The rise of Social Commerce: A growth opportunity for brands. Deloitte.
  14. How AR is creating highly personal brand experiences. Google.
  15. Keep your loyal customers closer: 5 holiday shopping predictions. Salesforce.
  16. Peak holiday shopping. Salesforce.
  17. 49 cart abandonment rate statistics 2023 – cart & checkout. Baymard Institute.
  18. M-commerce as share of total online retail by region 2022. Statista.