2022 State of Streaming
This year’s online retail holiday weekend proved, yet again, the power of discounts. Thanksgiving, Black Friday, and Cyber Monday all posted +28% or higher digital commerce spending versus 2017, as consumers increasingly took to online retailers to snag deals and promotions. What else did we see from the holiday retail shopping weekend?
Cyber Monday Has Highest Digital Spend Ever, Thanksgiving the ‘Most Mobile’It was a huge weekend for online shopping, as digital commerce hit several key milestones. Cyber Monday hit $6 billion in total digital spending, while mobile’s share of total digital commerce reached 40% on Thanksgiving, which was the ‘most-mobile’ day of the three key days. This was a trend we saw start in 2017, and one that certainly continued this year. After a nice Thanksgiving dinner, it seems many consumers were content to settle in, hop on their mobile devices, and get a jump on the deals and promotions online.
While Black Friday and Thanksgiving in-store foot traffic was down slightly from last year, online spending skyrocketed, with over $14 billion dollars spent online on the three key days of Thanksgiving, Black Friday, and Cyber Monday. Total digital commerce, which includes both desktop and mobile spending, grew +38% on Thanksgiving and +36% on Black Friday. Cyber Monday, which was the largest spending day in total volume, had the lowest growth of the three, but still picked up +28% versus 2017.
Free Shipping Continues to be a Major Factor for Online ShoppingWhile free shipping isn’t a new trend, it’s certainly one that expanded again this year. In 2017, most desktop purchases during Thanksgiving week had free shipping (74% of both transactions and dollars). This year, however, those numbers rose to extraordinary heights: 81% of transactions and a whopping 90% of desktop dollars were spent on transactions that included free shipping. As retailers have known for a while, free shipping has become an automatic for consumers.
But just how much importance do consumers put on it? In our Q3 State of Retail survey, 58% of consumers said that free shipping was the MOST important factor related to online retail shopping, and only 15% said it was not the #1 or #2 most important factor. That same survey also found that among those who had abandoned an online shopping cart in the past month, 38% did so due to unexpected shipping costs (the most picked reason). Especially during peak spending times such as these key holiday days, retailers seemingly have no choice but to offer free shipping options, or risk losing consumers who have come to always expect free shipping as a default.
Promotional Activity May Have Pushed Consumers Toward Earlier PurchasesRather than waiting for the traditional online sale bonanza of Cyber Monday, many retailers have been trying to get consumers to shift their spending earlier in the season. As we discussed in our holiday forecast blog, this variety of promotions, deals, and ‘deal weeks’ could have a ripple effect on online retail spending, as increased activity could shift dollars earlier and earlier in the holiday season. As an example, Amazon this year had a major push for “Black Friday Deals Week,” which began on November 16th (a full week before Black Friday). We theorized that these types of promotions could impact the distribution of dollars spent around Thanksgiving, Black Friday, and Cyber Monday.
Now that we’re past these key holiday days, what was the impact of these types of promotions? When looking at Total Digital Visits for Retail sites, including both desktop and mobile, we saw that consumers were visiting more retail sites sooner, and spending at a faster rate, than in previous years (see table below). While visits were up for all three key days, both Thanksgiving and Black Friday grew at a higher rate than Cyber Monday. Not only that, but both Thanksgiving and Black Friday digital commerce also grew at a higher rate. While both days still have a long way to go before they catch up to Cyber Monday in raw dollars, this again illustrates the importance of retailers getting a jump on early promotions. Consumers are looking for deals and making holiday purchases earlier every year, and while Cyber Monday is still the king of the three key days, its place on the throne could grow more tenuous as time marches on.
To further understand this shift, we conducted a survey the week of November 26th, which focused on online shopping around these days. Interestingly, we found that 18% of online buyers said that they had made a purchase from Amazon’s “Black Friday Deals Week” that they had originally intended to make later. Whether it was something big (for example, waiting for a TV to go on sale on Cyber Monday, but instead getting that promotion a week earlier), or something small, the fact that nearly 1 in 5 online buyers were purchasing something specifically from this sale, sooner than expected, really speaks to the power that these types of early promotions can have.
Where Does Digital Commerce Go Next?We see the results of these key holiday days as a good harbinger for a solid online holiday season. Retailers are certainly doing their best to promote early and often, which could mean heavier spending days now, earlier in the season, and softer last-minute shopping. However, the overall growth of online retail for the whole season should be strong.
One of the key strengths of digital commerce is that it has continued to grow from multiple angles. Every day, there are more mobile devices in existence, and more smartphones with larger screens being activated (which spurs mobile growth). We also know that consumers are becoming increasingly more comfortable purchasing higher-priced items online, and specifically on mobile. This means that not only are more and more people buying online, but those who are buying, are spending more. We saw this past week the average dollars spent per buyer rise for all three key days, illustrating consumer’s continued willingness to push more and more of their spending to digital channels. As we look ahead to next year’s holiday season, it’s likely retailers will continue to extend their deals and promotions, and that the line between these traditional big holiday days will continue to blur even more. We may even see entirely new days emerge as pivotal spending milestones – for example, the weekend between Black Friday and Cyber Monday may take on a significantly larger role in the future, as retailers hope to capture consumers’ attention between those key big spending days.