The holiday shopping season could look drastically different and more digital this year in response to COVID-19. As retailers plan for the crucial fourth quarter in these uncertain times, they can look toward early e-commerce adopter China for a playbook in engaging shoppers virtually.
Online sales during the holiday shopping season, and particularly the Cyber Five weekend following Thanksgiving, have been rising in recent years, but the outlook for holiday 2020 is looking even more digital.
As retail stores begin to reopen after COVID-19 closures, social distancing guidelines, consumer anxieties and the threat of a second wave of infections could mean the brick-and-mortar Black Friday crowds may be missing this year. Plus, consumers have been accelerating their online shopping habits during months spent largely at homer. For instance, mobile commerce platform PredictSpring’s clients on average saw their mobile app revenues double in March and April compared to 2019 sales.
This surge towards e-commerce may be new for the West, but digital and mobile commerce sales power retail in China. Alibaba’s digitally driven Singles’ Day reportedly brought in $38.4 billion in one day in 2019. That far eclipses the one-day $6.4 billion U.S. retailers earned on Black Friday and surpasses the $24.2 billion stores saw from Thanksgiving through Cyber Monday, according to Adobe Insights.
“While China or other parts of the world may have had some degree of an advantage of being a little bit more either digital native, digital ready, digital fluent, if you look at overall adoption of e-commerce, both digital native as well as brick-and-mortar moving online, the barriers are so low to doing so,” said Russell Klein, chief commercial officer at SaaS provider BigCommerce. “And on the buying consumer side, you look at digital adoption, broadband penetration, I would argue it’s happening at certainly an accelerated pace, and not one that would impede the ability for Western retailers to have extremely successful holiday seasons.”
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According to Klein, part of why Singles’ Day has been so successful is that it acts as a trigger or call to action toward purchasing, like Valentine’s Day on steroids. Companies can follow suit and establish their own shopping holiday to stimulate demand. However, it is more challenging to do so without an established customer audience—whether niche or mass—because building awareness would then necessitate costly advertising spend. “It’s easier for a retailer to create a trigger once they already have solved one piece of their chicken and egg, which is a great user base of prospects or proven buyers,” said Klein.
Even if companies aren’t planning their own rival shopping holiday, they can use the success of Alibaba and its peers to inform their own efforts for the holidays this year by implementing a combination of content, personalization and omnichannel solutions to court shoppers.
The price is right
Another key to the success of Singles’ Day is promotions. While some merchandise is sold at a premium price, sales are a factor in convincing consumers to shop. Experts expect discounting to last throughout the year for retailers in categories such as fashion. “There is some amount of pent-up demand that we are going to see emerge,” said Karthik Bettadapura, co-founder and CEO at e-commerce intelligence firm DataWeave. “But people are going to be looking at all non-discretionary spends from a cost versus value perspective.”
Discounting doesn’t have to be one size fits all. PredictSpring CEO and founder Nitin Mangtani is a proponent of more targeted promotions, such as unique codes personalized to a specific shopper. “Promotions should be loyalty driven,” he said. “There has to be some skin in the game from the consumer as well, where you reward your consumers who are your loyalists.”
As an alternative to the typical mass discounting, Bettadapura sees the potential for companies to emulate Chinese e-commerce platform Pinduoduo, which offers promotional prices for goods if a group of shoppers, often family or friends, all buys the same item. Aside from selling more SKUs through word of mouth, this model can replicate the social shopping experience that may be missing as consumers potentially huddle separately in their homes.
Once retailers attract a consumer to their site, they also need to consider how to move them down the purchase funnel.
Driving discovery
Consumer shopping behavior for non-essential goods tends to be less about planned purchases and more about discovery. This process of browsing a sales floor to uncover products might be out of the picture as customers are searching for gifts online. This makes it even more imperative to have an enjoyable e-commerce browsing experience.
“If people are not going to feel comfortable or quite as able to just roam the physical aisles, giving them a richer ability through an e-commerce storefront to roam the virtual aisles is critical,” said Klein. He noted that retailers can translate this to the online environment by ramping up “searchandizing” and using data to serve up product suggestions and targeted emails. This also includes retargeting, such as sending reminders about abandoned carts.
Retailers can also serve up a level of surprise and discovery through content. This could mean tactics ranging from TikTok videos and Instagram shopping posts to editorialized e-commerce pages. “Offline marketing ads are going to see a big drop,” said Bettadapura. “We are going to see more retailers leveraging the entire digital ecosystem in terms of their social media campaigns, in terms of reaching out to customers, targeting customers.” This focus on social media should also include user-generated content, which retailers can leverage to gauge consumer sentiment and opinions.
Other elements toward facilitating inspiration include clienteling and interactivity. PredictSpring’s mobile apps have quizzes for consumers, which inform product suggestions. Consumers can also speak to an associate to further mirror the in-store shopping process.
In the West, the holiday shopping season leans heavily on retail theater, from store displays to visits with Santa Claus and live performances. Remote activations can bring this to an online audience. For instance, for weeks leading up to Singles’ Day, retailers use livestreamed fashion shows, influencer appearances, augmented and virtual reality, and games to engage customers. During this build up, consumers are engaging with product pages and giving retailers data that can be used to further target them. In the U.S., livestreaming is already present on platforms such as QVC and Amazon, but Bettadapura expects this type of retail entertainment to become more popular.
Omnichannel opportunity
Even though consumers may be transacting online, brick-and-mortar will still play a pivotal role in the shopping experience.
“One thing that the Singles’ event day does well is in how they combine or fuse the entire offline and online retail experiences,” said Bettadapura. “And in my view, they kind of optimize it for the entire omnichannel experience.”
Buy online, pick up in store, or curbside pickup, will be crucial to the holiday season. “Curbside pickup is not only a mandatory requirement right now, but I think it’s going to be a continuous behavior change, at least for the remainder of the year,” said Mangtani, indicating that getting BOPIS right is now “table stakes” for retailers. This involves making sure that the pickup process is as seamless and hassle free as possible, including associate-side technology that enables them to send mobile notifications to customers once an order is ready.
Retailers can also take a page out of China’s playbook by adopting more contactless mobile payment methods. Mangtani noted that consumers are going to be wary of standing in long lines waiting to pay, potentially leading to missed sales. But if they want to be ready, stores must home in on an option now. It typically takes about two to three months to deploy a new mobile-first POS.
Much of retailers’ success around the holidays will depend on how sophisticated their existing e-commerce and cross-channel infrastructure was pre-pandemic. However, it is not too late to establish a more digital plan.
“We’re already in May, and the holiday season really starts in just a couple of months, and that can seem frighteningly soon,” said Klein. “On the other hand, I would argue that not only is there no time like the present, but that’s more than enough time for almost any merchant to identify the key variables that are going to drive success, look to be a good fast follower with programs that have worked—there’s so many good case studies from across the globe, big and small, of merchants that have made the transition—and execute accordingly.”