Early online sales down 7% globally as consumers hold out for holiday discounts
Data and insights from the shopping behavior of 1.5 billion consumers and Salesforce Customer 360 helps retailers deliver success now
Shoppers are holding off on purchases until Cyber Week in the hopes of receiving the most attractive offers.
Driving the news: According to Salesforce digital commerce data, early (Oct. 1–Nov. 14) online holiday sales softened compared to 2021 – flat in the United States and down 7% globally year over year (YoY).
- Thanks to increased prices (inflation), rising interest rates, and lowered consumer confidence, retailers are under more pressure than ever to deliver better value to grab price-conscious Cyber Week shoppers’ attention.
- From loyalty programs to personalized recommendations to unique store experiences, retailers will need to pull out all the stops while balancing cost and margin pressure.
The Salesforce perspective: “Retailers are once again playing the game of discount chicken, where they execute earlier promotions to drum up demand, only to have consumers wait for that last and biggest deal during Cyber Week,” said Rob Garf, VP and GM of Retail, Salesforce.
- “Early season online traffic was strong, but online sales were soft. This means while consumers browsed online early in the season, they didn’t necessarily bite on the uninspiring deals. Rather than pulling back on discounts, retailers can find success now by focusing on automation and productivity gains to reduce costs and combat increasing margin pressure,” Garf continued.
Salesforce Shopping Index early holiday indicators (Oct. 1–Nov. 14):
- Online traffic remained elevated ahead of Cyber Week: Digital traffic was up 3% for the United States and up 1% globally YoY as consumers began their hunt for holiday gifts.
- Holiday shopping gets a slow start: While consumers started their browsing early, digital commerce revenue was flat in the United States and down 7% globally YoY.
- Rising prices put shoppers on edge: Average Selling Price (ASP) rose 14% in the United States and 8% globally compared to 2020. Even with discounts, consumers are still paying more than they did two years ago.
- Discounts and digital marketing pulled back after October Prime event:
- Discount rates dropped by 16% in the United States and 6% globally for the following four weeks, on average, after Prime Day 2022, compared to the same timeframe the year prior. This was also 11% lower in the United States and globally compared to 2019 during the same period.
- Email and mobile marketing messages decreased by 5% globally the week after Prime Day.
- Some sectors offered bigger, better early deals: The highest discounts were found in:
- Home Appliances (26%)
- General, Handbags, and Luggage (24%)
- General, Apparel (22%)
- Beauty, Makeup and Beauty, Skincare (21%)
- Automation is playing a key role for retailers: Customer service chatbot sessions increased 44% YoY.
Retailers are once again playing the game of discount chicken, where they execute earlier promotions to drum up demand, only to have consumers wait for that last and biggest deal during Cyber Week.ROb Garf, VP and GM of RETAIL
Salesforce’s Cyber Week 2022 predictions: Reviewing early season data, Salesforce expects to see four major trends driving the biggest holiday season shopping rush:
- A sluggish start will equate to a bigger-than-expected Cyber Week.
- Cyber Week is anticipated to have the highest concentration of holiday purchases. While holiday shopping was largely spread out across November over the last several years, this year’s more price-conscious shoppers are now holding onto their wallets in anticipation of enticing later-season deals.
- Discounts will deliver value to consumers and free up retailer inventory and shelf space.
- Global average discount rates will likely reach 25% during Cyber Week 2022. This would be a 12% increase compared to 2021, when retailers had unique leverage with strong demand and inventory scarcity.
- The biggest jump in discounts during Cyber Week will come in three categories:
- Luxury handbags (3X increase)
- General apparel (2X increase)
- Skincare and makeup (2X increase)
- In addition, the best day to buy toys and electronics will likely be on Cyber Monday, and the best days to buy apparel and sporting goods will likely be Thanksgiving and Black Friday.
- Buy Online Pickup In Store (BOPIS) will deliver immediate satisfaction from gift purchases.
- Data indicates that retailers will see a 1.5x–2x surge in BOPIS and curbside pickup orders placed on Thanksgiving and Black Friday morning as shoppers look to avoid lines and snag early promotions.
- Share of BOPIS orders doubled in the last four days before Halloween and peaked on Oct. 30. As shipping cutoffs for major holidays approach, this consumer behavior is expected to continue.
- Chatbot and automated service usage will skyrocket. As companies focus on cutting costs and saving agent time for complex customer service requests during Cyber Week, chatbot usage will grow at 43% year over year.
- Beginning on Nov. 22, visit Salesforce’s Shopping Insights HQ for real-time Cyber Week results.
- Find Salesforce’s 2022 earlier holiday predictions here and here.
Salesforce delivers retail success now with data and insights from the shopping behavior of consumers around the world. Powered by Salesforce Customer 360 data, the Shopping Index uncovers the true shopping story with a look at the previous nine quarters to uncover a deep understanding of how consumer behavior is evolving and how the market is moving. The Shopping Index analyzes the activity and online shopping statistics of more than 1.5 billion unique global shoppers from more than 64 countries. This battery of benchmarks covers both the recent history and the current state of digital commerce. Several factors are applied to extrapolate macroeconomic figures for the broader retail industry, and these results are not indicative of Salesforce performance.