Retailers are offering holiday deals earlier than ever before, but could these early holiday shopping promotions actually hurt sales instead of helping?

Today we’re helping growing merchants make sense of the many hot takes and headlines surrounding early holiday shopping trends by sharing some of the most important insights on the subject.

If you’ve heard conflicting information on early holiday shopping (or if you’re experimenting with offering your own early shopping deals) you might be wondering:

What’s the real value of early holiday shopping? And what are the potential opportunities or drawbacks for online retailers? 

We’re answering both of these questions and more in today’s article on all things early holiday shopping.

All About the Rise of Early Holiday Shopping:

  • Will Early Holiday Deals Increase E-commerce Sales? (Or Are We in for a Rude Awakening?)
  • Holiday Spending Is Projected to Be Weak After Months of Early Discounting
  • Putting the Spotlight on Your Customers: What Do Shoppers Want and Need This Holiday Season?
  • Plan to Win Before the Holidays Begin

Will Early Holiday Deals Increase E-commerce Sales? (Or Are We in for a Rude Awakening?)

Inflation is hitting retailers and consumers hard as it continues to accelerate to its highest rate in four decades. In response, retailers have been coming in strong with early holiday discounts, hoping to inspire shoppers to capture more savings by buying from their online stores, instead of a competitor’s.

It’s no secret that Q4 is a critical time of year for e-commerce, with November and December typically accounting for nearly 19% of annual retail sales on average.

Rodney Sides, Deloitte’s US retail lead, says what many sellers are thinking:

“If I can take care of that demand early, then I get a chance to win against my competition.” 

In addition to the pressures stemming from increased inflation, excess inventories have been looming over retailers all year, adding to the contraction in the US economy.

In fact, US e-commerce stores have been sitting at a record-high inventory rate of $732 billion since July, a whopping 21% increase since just last year.

Elaine Kwon, managing partner at retail consulting firm Kwontified, and a former manager at Amazon Fashion, believes “There is an increasing smell of desperation in the air because retailers are saddled with a ton of excess. Some brands that claim they never discount are going to start discounting, especially outerwear, winter wear, cold weather items, inventory from last winter — they’re desperately trying to get rid of that before their new stuff comes in.”

To both avoid and offload excess inventory, “discount early and discount often” has become this holiday season’s slogan for large retailers, such as Target, Walmart, Amazon, Nike, Gap, and Dell.

Matt Friend, Nike’s chief financial officer, sums up the problem perfectly:

“Because we had late product arriving for the Spring, Summer and Fall seasons, we effectively have a few seasons landing in the marketplace at the same time. We’ve decided to take that inventory and more aggressively liquidate it.”

With retailers rushing into early shopping to both get rid of stockpiles and hold onto customers, can we expect to see an increase in e-commerce sales? Or are we looking at a slow holiday season? Let’s take a closer look.

Holiday Spending Is Projected to Be Weak After Months of Early Discounting

Despite many retailers’ biggest hopes, online holiday spending is projected to have the smallest growth it’s seen since Adobe began tracking the figure seven years ago — even after months of early discounting.

As retailers flood their customers’ screens with early discount specials, holiday spending will be spread across a longer shopping period, giving consumers a chance to come up for air as they buy gifts in smaller waves.

Patrick Brown, vice president of growth marketing and insights at Adobe says, “The shape of the holiday season will look different this year, with early discounting in October pulling up spend that would have occurred around Cyber Week.”

According to Adobe, the early deals are expected to cut into sales on Black Friday and Cyber Monday, with online sales on Black Friday expected to increase by just 1% since last year. Cyber Monday’s revenue is set to grow by a mere 5.1%.

In November and December, online sales are expected to increase 2.5%, or $209.7 billion, a substantial slow-down from last year’s 8.6% gain.

Even large retailers aren’t immune to the impact of weak sales due to early discounting.

In fact, Amazon attempted to lock in customers and shoppers before the holidays by offering not one but two big Prime member sales this year — an effort that generated little enthusiasm and revenue.

Though Amazon offered generous discounts on some of its most beloved items, the poor results of its Prime Day sequel may signify a drop in enthusiasm around constant seasonal promotions, especially in our current early holiday promotional climate, says Mike Blight, market research manager at Sprout.

Still, Scott Gravelle, the head of robotic logistics firm Attabotics, believes Amazon has an opportunity to win back market share even if shoppers pull back. With millions of merchants, Amazon offers a significantly broader selection of goods than other retailers do, without the need to buy inventory.

“There’s a battle about to happen for market confidence about who captures more consumer spending dollars when shoppers spend less. I think Amazon has a bit of an advantage,” says Scott.

On the topic of competitive edge, is there any hope retailers large and small can hold onto this holiday season? For that, let’s dig a little deeper.

Opportunities for Sellers: The Positive Spin on Early Discounting

While sales may trickle through in dribs and drabs instead of one large wave, the good news is the e-commerce market is still in high demand.

“Even though we expect to see single-digit growth online this holiday season, it’s notable that consumers have already spent over $590 billion online this year at 8.9% growth, highlighting the resiliency of e-commerce demand,” says Patrick.

What’s more, that $590 billion was generated between January and August 2022. This leaves ample room for more sales before the year ends.

Despite comparatively low holiday sales, consumer demand for e-commerce isn’t going away anytime soon. So what can sellers do to capture more sales this holiday season?

Putting the Spotlight on Your Customers: What Do Shoppers Want and Need This Holiday Season?

While inflation has made it necessary for shoppers to hunt for deals and spend more carefully, retailers can still step in to work with, rather than against, the changing economic landscape.

Ted Rossman, senior industry analyst for bankrate.com says, “Consumers are still spending, but they’re being especially thoughtful about where each dollar goes.”

Bankrate’s holiday survey reports that 95% of holiday shoppers will be actively looking for ways to save money. The survey also found that 59% of shoppers plan to buy fewer items. 52% are on the hunt for more coupons, discounts, and sales.

To meet consumers where they are, retailers need to look for meaningful ways to offer discounts and deliver more value to shoppers.

Here are some options to consider if you want to appeal to cost-conscious customers:

  • Tiered pricing and buy-now-pay-later options
  • Discounts on favorites and best-sellers
  • Time-sensitive discounts and deals offered in small windows over time (to avoid creating shopper overwhelm)
  • Personalized email marketing and consistent social media engagement
  • Customer stories and user-generated content showcasing how a product added value
  • Hybrid shopping options, like curbside and in-store pickup
  • Optimized site speed and product search for desktop and mobile devices
  • Quick and easy checkout and returns
  • Multiple payment methods

Of course, don’t forget to ask your customers what they want this holiday season.

Launch surveys, questionnaires, and polls for an inside look into their shopping preferences. Peel back the curtain further by conducting focus groups and analyzing your customer’s shopping behavior and buying habits.

When sending out surveys, questionnaires, and polls, be sure to ask intentional holiday shopping questions, such as:

  • What do you expect your holiday budget will look like? Leave room for an open-ended reply or provide multiple-choice answer options.
  • Have you started holiday shopping yet? Why or why not? Provide multiple-choice answer options and an “other” box for open-ended replies.
  • Will you be shopping early? If so, when will you start and when will you stop? If not, when are you planning on shopping for holiday gifts this year? Provide multiple-choice answer options and leave room for an open-ended reply.
  • Will you be putting shopping off until the last minute? Why or why not? Provide multiple-choice answer options and leave room for an open-ended reply.
  • Do early holiday deals help you, add to shopping fatigue, or hinder you from shopping early? Offer multiple-choice answer options here.
  • How can we best support you during your holiday shopping? Leave room for an open-ended reply.
  • What product sets, deals, discounts, and offers are you hoping to take advantage of this holiday season? Why? Provide multiple-choice answer options and leave room for an open-ended reply.
  • Are our products on your holiday shopping list? Why or why not? Provide multiple choice answer options and leave room for an open-ended reply.

Plan to Win With Early Holiday Shopping 

Stay in the loop on all things pre-holiday sales. When you do, you’ll set your store up for success long before the holiday rush begins.

While today’s guide is a great place to start, it’s pivotal to continue educating yourself on the state of the e-commerce market and how it translates to the ebb and flow of retail sales.

Even without record-high early holiday sales, the fact is shoppers have become increasingly savings-hungry. Meet them where they are so you can gently nurture them closer to conversion.

By taking a human and customer-centric approach, offering meaningful deals and payment options rooted in delivering value, you can build a brand that lasts no matter what the market throws at you.

And if you need a flexible funding partner to see you through it, we’re here to help. At SellersFunding, we help growing retailers get the cash they need when they need it.

With our Daily Advance solution, you can receive up to 90% of your previous day’s marketplace sales with rates as low as 0.5% of the advanced amount. That includes a zero prepayment penalty and no impact on your personal credit score. Apply today to experience the freedom and flexibility of early payouts.

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