Understanding your customers is important all day, every day. When it comes to the beefy roster of Q4 holidays, though, really understanding them could make or break your whole year.
Your shoppers are primed and ready to spend, spend, spend the second pumpkin spice lattes hit Starbucks menus, and if your store isn’t prepped to connect with a blitz of buyers, you’re not going to hit your goals (and those folks will be cruising through checkouts elsewhere).
Here at Zest, we’re elbow-deep in ecommerce trends and consumer behaviors. We chat daily with folks at leading brands who share where they’ve seen success, how they’re pivoting, and what they’re doing to get ready for the 2024 holiday season and better serve their shoppers. It’s not fair to keep all these secrets to ourselves, so we’re going to share a few insights and intel that will have you outselling competitors and cruising into 2025 on a high note.
Ecommerce Holidays 2023: What the heck happened?
We don’t need to belabor the happenings of last year’s holiday season (since you’ve been undoubtedly studying the haps since Jan. 1 , right?), but we do want to jog your memory and cover some highlights.
#1: Inflation was lingering, but people still shopped.
#2: Holiday shopping started early.
#3: Ecommerce holiday sales grew year over year.
Let’s dig into these highlights a bit.
#1: Economy, shmeconomy! Shoppers are resilient.
It’s true that inflation woes were still lingering in the average US consumer’s mind (and wallet). In 2022, most of the calendar year had seen >7% inflation rates, driving up costs of everyday goods and dwindling budgets for things like holiday gifts. While rates returned to more normal levels in 2023, a McKinsey survey found that 68% of consumers were still pessimistic or had mixed feelings about the US economy in November of that year.
On top of inflation, 2023 piled even more financial burdens onto Average Joe as student loan payments resumed and average savings shrunk. Despite worries that “2023 holiday spending could be a disappointment for retailers,” the season still smashed records. Holiday retail sales grew 3.8% over 2022, which is nearly double what had been predicted, to $964.4 billion.
What did we learn from this? In 2023, US consumers showed us that they’re incredibly resilient. Despite threats like inflation and interest rates, they showed up to support retailers, spread joy, and prioritize holiday celebrations important to them.
#2: The shopping window is more open than ever.
In 2023, 39% of shoppers planned to start holiday shopping earlier than ever. Nearly 200 million still shopped over the Cyber Five span, a record number of people, but the swell of sales couldn’t be ignored.
Amazon’s Big Deal Days took place in October, and Walmart held an overlapping holiday sales event to compete. When two of the planet’s largest retailers signal that the holidays have started in October, many smaller retailers are going to react and follow suit. These behemoths shape consumer actions and expectations (two-day shipping, anyone?) and if they say holiday shopping starts in October, then holiday shopping starts in October.
Despite the pre-November shopping shift, the National Retail Federation found that 58% of consumers planned to finish their shopping in December.
What did we learn from this? Even though people are shopping earlier in the year to take advantage of some sales, they’re continuing to show up for Cyber Five and put up record numbers during Thanksgiving weekend. Don’t get too stressed if your store isn’t running huge promos in October — the main event is clearly still Cyber Five.
#3: Holiday sales are continuing to smash records.
We touched on the sheer enormity of holiday spend in the US despite impending forces in the first highlight. Now let’s turn our focus on how, even when no one thinks it’s possible, consumers keep smashing spend records year after year (and why there’s no end in sight).
In 2020, few folks were certain how the holidays would play out. It was the first holiday season most of us would spend in the throes of a novel pandemic, and forecasters weren’t sure if that would encourage or discourage shoppers from spending.
On one hand, the uncertainty of the future would mean more people conserving their dollars for a rainy day. On the other, quarantines and limited opportunities to spend leading up to the holidays mean people had more cash burning a hole in their pocket.
Turns out that consumers mostly felt the latter and holiday sales grew an astonishing 9.1% year-over-year. Then, when we didn’t think that growth could be topped, the 2021 holiday season saw an even more bewildering 12.7% growth over 2020. After two stacked seasons, most people predicted that holiday spending would chill a bit and return to pre-pandemic levels.
Turns out shoppers have no chill, and holiday spend has continued to grow.
But why is there no end in sight? Gen Z.
Gen Z encapsulates people between the ages of 12 and 27, and while a preteen’s pocket change isn’t necessarily causing continued retail growth, the generation as a whole is starting to show its true spending power.
“Gen Z spends more per capita than any other generation at the same age,” shows a Nielsen report. And over the next few years, the generation’s spending growth is predicted to reach nearly $3 trillion. They’re going to be part of the richest generation ever, which means they’ll be spending more year-round, but especially during the holidays.
What did we learn from this? Increased holiday spend, even in times of extreme uncertainty, should be expected. As Gen Z starts gaining more and more spending power in the US, we should just expect each year to be bigger than the last.
Big Bets for Online Stores: Thriving Throughout the 2024 Holiday Shopping Season
There are so many factors impacting the holiday landscape for retailers. Brick-and-mortar shops are trying to compete for in-person and online traffic, consumers have more options than ever, and ongoing innovation in retail technology poses new opportunities (or challenges) every year.
But when we look at last year’s trends, we can at least sleep well at night knowing that people are going to continue to show up and shop from Black Friday through Cyber Monday despite economic trials, super early sales, and growth rates that already seem maxed out.
As long as people keep shopping, your store has a great shot at having a successful holiday season. If you can weave the latest trends and technology into your seasonal strategies, your online brand is bound to thrive.
If you’re ready to adopt what we’ve all learned over the past few years of data and incorporate some new info into your holiday strategy, keep readin’.
Here are Zest’s big bets for the upcoming holiday shopping spree.
Big Bet #1: Millennials are the moment.
If your ecommerce strategy hasn’t been homing in on shoppers between the age of 28 and 43, this is your wake-up call. Gen Zers may be the ones spending more per capita, but they’re still very young and many, well, are below any legal age to start earning their own income. While you wait for that gen to ripen into full spending maturity, millennials are ecommerce’s prime consumer.
You may be thinking it’s because millennials spend the most, right? Wrong. Millennials spend quite a bit less than Gen X and baby boomers, accounting for just over 25% of sales in the US in 2023. But what they lack in how much they spend, they make up for in how they spend it.
Simply put, millennials love shopping online.
Gen X and boomers grew up in highly analog eras and their shopping behavior still reflects the olden days — both generations have a penchant for in-person shopping. Sixty-two percent of Gen Xers prefer shopping in-store and boomers prefer “real-life shopping experiences” more than any other generation. So even though they maybe buying more in general, they aren’t the biggest audience for your online store.
Since millennials (and Gen Z) are your most frequent online customers, it’s critical to understand how they want to engage with your brand, the experience they expect to get, and what products appeal to them. If you miss the mark with this crowd, your online store could see a serious slump in sales as these shoppers go to competitors who just get them.
To strike a chord with this group, crucial factors to consider are:
- Your brand’s mission and values.
Nearly half of millennials want companies to take a stance on social issues like racial justice, healthcare, and climate change. Take a stance on these issues and resonate with this core audience.
- Where your brand is being discovered.
Millennials find products online more often than discovering them in-store. When it comes to product discovery, social media (namely Facebook and Instagram), Google search, YouTube ads, and word of mouth are leading channels for this age group.
- Your store’s mobile-friendliness.
Mobile shopping has been steadily trending upward for years, but it’s a favorite method of shopping for millennials. Only 16% do their shopping on a clunky old computer, with 73% preferring scrolling online shops by way of phone. If your site nav, product pages, and checkout experience are still desktop-focused, it’s time to invest in mobile optimization.
Big Bet #2: Dust off your digital focus.
If you think that having a mobile-friendly website is enough to appeal to millennials, well, you have another think comin’.
A mobile-optimized website is table stakes. It’s the bare minimum need for tech-savvy millennials, and you still need to focus on the actual experience they’ll have on your website. Both millennials and Gen Z have the highest preference for buying directly from a brand’s website compared with Gen X or boomers, so your on-site experience needs to be frictionless and memorable.
Convenience plays a huge role in the customer experience for millennials. (After all, what’s more convenient than checking off a shopping list while binge-watching The Office again?) They want the whole process to be seamless, but 42% emphasize that a frictionless checkout experience is a top expectation when online shopping, and the same survey found that 59% of millennials are loyal to brands that offer a convenient shopping experience.
If you can slip personalization into the customer experience, millennials seek it out. Of all the generations, millennials are most likely to switch brands if it means they’ll get more personalized offers elsewhere. When personalizing, though, be careful to balance the human touch with the robotic one.
Roughly one in eight don’t like when a brand uses artificial intelligence in any capacity, but if you must, we recommend limiting its use to automated chatbots and the occasional product descriptions, i.e., don’t let a robot do all the personalization.
Big Bet #3: Expand your sales tactics.
Now that you know your core consumer’s fondness for online shopping and their appetite for shopping on your site directly, we recommend taking a step back and seeing which channels you can leverage this holiday season that will amplify your site’s effectiveness.
For millennials, social media plays a big role in product discovery. In lieu of static ads vying for screen space, we recommend leaning into influencer marketing. Millennials are five times more likely than Gen X to make a purchase because of an influencer’s recommendation, and 19% of millennials think that a good recommendation from an influencer is the leading factor when it comes to their relationship with a brand.
The global influencer market is expected to bypass $22 billion by 2025. Its growth can be attributed to how much pull certain influencers have. Micro influencers can lend a tremendous amount of trust to a brand while fostering the highly desired personalized vibes, while huge celebrity influencers bring the star factor to the table.
Similar to influencer marketing across Facebook, Instagram, and YouTube, user-generated content (UGC) resonates deeply with millennials. Whether it’s because this age group that grew up with close-knit AOL AIM chat rooms or literally building Sims neighborhoods, millennials especially enjoy the feeling of being part of a community and helping create content that’s helpful for others. Tap your coworker to create some branded content with you — while it might not feel super polished, that’s exactly the quality that pulls in millennials.
Influencer marketing and UGC are different sales tactics but follow a similar theme. To shoppers engaging with that content on social media, it feels like they’re getting a personal recommendation from a friend or family member. It’s modern-day word-of-mouth marketing, which leads us to the last channel we think you should try: gifting.
Big Bet #4: Make gifting an easy experience.
The holidays inherently stoke a desire for buying more gifts. And as we learned earlier, the amount that US consumers spend on gifts is only going to keep climbing.
Couple that fact with the fact that millennials are attracted to digital-first, super convenient experiences, and the strategy you need to invest in is obvious.
Your online store needs to make gift-buying a ridiculously easy experience.
Walk through your online store’s gifting flow as it is today.
- Does it require people to fill out and submit a form?
- Does every gift sent require a separate checkout transaction?
- Are personalization options limited to a gift message?
- It’s not easy to identify which of your products are hot gifts.
- Gifters and recipients don’t automatically receive tracking information.
- Gifting to multiple addresses isn’t mobile-optimized.
- Insight into who is gifting (and what they’re gifting) is limited, and it’s hard to personalize your brand’s marketing to gifters in the future.
- You don’t gain access to recipient details so they can opt into marketing (and turn into your next best customer).
If you can say “yes” to any or all of the points above, the gifting experience your store offers is not up to snuff for millennials. It’s lacking convenience and ease for them, and it’s not helping you personalize their experience going forward.
Zest is the first-of-its-kind online gifting tool that plugs right into your website and offers a streamlined gift-buying experience right out of the box. Create gift-centric storefronts that are easily shoppable and require gifters to go through the checkout just one time no matter how many gifts they’re sending.
Gifters can personalize gift messages, customize e-gift card designs, choose to send gifts digitally or physically, and even schedule their gifts to send on a later date (an amazing way to capture all those early seasonal shoppers).
If gifting from your ecommerce store is full of friction, or even impossible, you’re missing out on your biggest online customer during the biggest online shopping moment of the year. As soon as you invest in gifting as a channel, the more millennials you’ll attract straight through your digital doors.
Learn From the Past To Look Toward the Future
Every holiday season presents huge stats and stacks of data to dig into and learn from so you can make the next season even better. We’re sitting on mountains of information that can help you create an innovative, thoughtful, and intentional online shopping experience that fully centers on what matters most: people.
When you know who’s shopping with you, how you can help your brand resonate with people, and where your store is making the biggest splash, you have all the information you need to craft a future-proof ecommerce experience for the best holiday season and beyond.
