What the Holiday Season Means for 2017
As consumer demand increases, whether it's for a specific product or expedited shipping, smart retailers are rethinking their approach and looking to find ways to optimize their fulfillment operations. Partnering with new providers can enable new capabilities (e.g., same-day delivery or in-store pick up) and break through traditional organizational boundaries that separate digital channels and physical stores.
Providing a robust and competitive fulfillment program can be difficult; according to the Pitney Bowes Parcel Shipping Index, parcel shipping volume will grow annually at 5 percent to 7 percent for a total increase of 20 percent by 2018, with cross-border shipping leading the way. In many cases, you have to be thinking two steps ahead just to maintain parity. While retailers welcome the strong growth in global e-commerce, they're not so delighted with the growing complexity and new fulfillment challenges they face. That’s where new technology and services come in. Innovative technologies and solutions can help retailers optimize their consumer experience, improve how consumers interact with their brand, and delight them so they want to come back.
This holiday season, we saw a number of trends.
The Rise of the Global Shopper
According to the most recent Global Online Shopping Study, 66 percent of global consumers have shopped cross-border in the last year. In some countries — Australia, Hong Kong, Singapore and Canada, to name a few — consumers are even more comfortable searching outside the country for the unique and authentic items they desire. Even for U.S. consumers, who have access to a broad selection of brands and retailers at home, nearly half are shopping cross-border.
Entering the holiday season and a new year, retailers and marketplaces alike should take note and capitalize on shifts in consumer behavior, which open up new opportunities for brands and retailers at home and abroad. In helping all of our retailer clients prepare for the holidays, we recommend focusing on unique items that would be harder to find locally. Those items can take many forms, depending on the brand or retailer.
The Convergence Between Physical and Digital
The connection between the physical store and the online experience was interesting to watch this holiday season. We used to just talk about the shift of sales from brick-and-mortar to online, but increasingly, the effects have become clearly visible as a merging opposed to a shift. Over the last 12 months to 18 months, we've seen more of an intermingled experience for shoppers — e.g., browsing in-store and ultimately buying online, or browsing online and purchasing in-store after touching and feeling an item. Increasingly, customers are ordering online and picking up in-store or completing in-store returns. According to the Pitney Bowes Global Online Shopping study, 77 percent of surveyed U.S. shoppers have used “click and collect” for their purchases. Retailers that get the interplay between physical and digital experiences right will continue to be the winners in 2017 and beyond.
What it Takes to Get a Consumer to Buy
We're seeing more and more evidence, particularly with online shoppers, that consumers want incentives. While this also rings true with physical shoppers, incentives really resonate with online consumers. In the Global Online Shopping Survey, when asked if they're more willing to shop online this holiday season with a coupon code, 67 percent of consumers said they were. More than half of consumers (58 percent) are also more likely to shop online with retailers offering loyalty programs and premium memberships, and 54 percent are more likely to shop during a sale event.
The feeling of exclusivity, whether it originates from a discount code or promotion, is very powerful. How retailers use it will be important. This can help explain the bump you see on Black Friday/Cyber Monday. Global shoppers wait for these dates as they feel they'll be able to get something that they otherwise wouldn't be able to get.
Using Shipping as an Enticement
It's not always necessary to use a discount off the product. Shoppers also value promotions for free and flat-rate shipping. A trend among our cross-border clients shows that a shipping promotion can be an even more powerful incentive than a discount off the product itself. Something about saving on shipping really resonates with consumers.
The Extension of Black Friday/Cyber Monday Beyond These Actual Dates
Large numbers of digital consumers flooding your site all at once can present a significant IT risk. Some retailers are extending their offers to entice consumers to continue shopping — and in the process, take some of the pressure off that weekend. This approach can help protect a retailer’s infrastructure and better support these peak volumes.
While each holiday season has it unique challenges and opportunities, the end results tend to influence the “what’s next” for retailers getting ready for success in the new year.
Gregg Zegras is the senior vice president of global e-commerce for Pitney Bowes.