E-Commerce by the Numbers: Holiday 2023 Edition
The holiday season has always been extremely important for retailers, with sales, returns, and revenue figures reaching their peak. For some segments, the holidays account for nearly 36 percent of annual sales. It's hardly exaggerating to say that your business's performance during this timeframe could make or break the rest of the year.
It's best that you go in prepared, and we can help. In this holiday-themed blog, we'll take a look at last year's statistics to gain insights into the e-commerce landscape. We'll also explore the projected growth for this year's holiday season, identifying key trends that are shaping the landscape.
Finally, we'll discuss how retailers can prepare for the holidays with Tangiblee, leveraging its seamless integration and innovative features to improve buyer confidence and reduce returns.
What Did The 2022 Holiday Season Look Like for Online Retail?
Holiday e-commerce sales experienced a massive spike in 2020, increasing by 33 percent compared to the previous year. The following year, however, the growth of online commerce began to slow, with sales only increasing by 8.6 percent in 2021. The slowdown continued last year.
2022 Holiday E-Commerce by the Numbers
According to the National Retail Federation, total retail sales during the 2022 November-December holiday season increased 5.3 percent over 2022, growing to $936.3 billion. Online and non-store sales, meanwhile, saw a 9.5 percent increase to $267.6 billion. NRF President and CEO Matthew Shay noted in a January 2023 press release that retail consumers overall still shopped in record numbers, with 130.2 million online shoppers.
Adobe Analytics provides a different figure, asserting that online holiday sales in 2022 grew 3.5 percent to $211.7 billion. GlobalData, meanwhile, reported that online sales rose by 7.4 percent and overall holiday-related spending by 6.7 percent — though holiday volumes declined by 1.6 percent and overall traffic dipped by 7 percent. As was the case in 2021, Black Friday and Cyber Monday remained the two most relevant shopping days of the year.
Deals and Discounts Dominated
Given ongoing inflation and rising interest rates, it should come as little surprise that deals and promotions largely defined online retail in the 2022 holiday season. Consumers were far more fiscally hesitant compared to 2021, with 51 percent planning to purchase fewer gifts. There was also a significant increase in demand for buy now, pay later services.
The most discounted e-commerce categories of 2022 included toys (34 percent), electronics (25 percent), computers (20 percent) and apparel (13 percent). Interestingly, video games and apparel/accessories experienced the most significant growth, with sales increasing by 115 percent and 95 percent, respectively.
Smartphones and Paid Search Continued to Drive Sales
Paid search dominated as a sales driver, accounting for roughly 29 percent of online sales. Other drivers included direct web traffic (19 percent), organic search (17 percent), affiliates and partners (16 percent), and email (15 percent). Social commerce also hit an all-time high last year, driving 12 percent of all mobile e-commerce traffic.
Mobile remained the go-to holiday shopping device, with Forrester reporting that 58 percent of US adults who use smartphones to shop online regularly use them to research products and services prior to making a purchase. Smartphone usage was especially pronounced from Thanksgiving through Cyber Monday, with 79 percent of online shoppers using their phones.
Returns Remained Troublesome — Though Slightly Less So Online
In 2022, 60 percent of retailers changed their returns policies to help them mitigate processing costs, with 73 percent of retailers ranking returns as a "moderate-to-severe" issue. However, 41 percent of retailers also offered an extended return window.
Interestingly, while the return rate for goods purchased in-store was 17.9 percent, the return rate for items bought online was 16.5 percent — down from 20.8 percent the preceding year. This is fortunate, as online returns require roughly 20 percent more space and labor capacity to process compared to in-store returns. Early holiday discounts likely contributed to the drop in online returns, as did the increasing prevalence of virtual sizing technology.
Immersive Commerce and Omnichannel Retail Grew Hand-in-Hand
Immersive retail gained in both popularity and market penetration, with retailers enriching the online shopping experience with both augmented reality and virtual reality technologies. This occurred in tandem with a large increase in visits to physical outlets. Savvy retailers saw this for what it was — evidence that an omnichannel approach was still the best retail strategy and would remain as such through 2023.
Current E-Commerce Projections for the Holidays in 2023
According to Deloitte, overall holiday retail sales growth will continue its gradual slowdown this year, increasing by between 3.5 percent and 4.6 percent and totaling $1.54-$1.56 trillion. The forecast for e-commerce sales is more optimistic, however. The analyst expects e-commerce sales to grow between 10.3 percent and 12.8 percent year-over-year, reaching between $278 billion and $284 billion.
There are several factors influencing the projections above:
- Although sales volume is expected to increase thanks to employment and income growth, inflation means that the total value of sales will grow more slowly.
- Most shoppers are now working with a decreasing pool of savings from the pandemic.
- Forty-five percent of shoppers expect inflation to significantly impact their discretionary spending during the 2023 holiday season.
- The Consumer Confidence Index reached its highest level since July 2021, earlier this year, indicating considerable improvement in consumer sentiment.
- Student loan debt repayments resumed in October.
Interestingly, a significantly larger portion of consumers began their 2023 holiday shopping in September — 38 percent, a 25 percent increase over 2022. Almost 50 percent of people began shopping in October, while 26 percent indicated they planned to bypass Black Friday. Deals and discounts are the primary motivators for most early shoppers, though supply chain issues and concerns about availability also play a part.
Three Trends That Will Shape Digital Retail This Holiday Season
Immersive Shopping Experiences
Technologies like augmented reality and virtual reality will continue to enhance shopping journeys in the 2023 holiday season, and not just online. Retailers that provide amenities like in-store digital interfaces and mobile apps are likely to perform better than retailers that don't, particularly in segments such as furniture and apparel. Similarly, e-commerce stores that provide shoppers with interactive product visualization options should see better sales and fewer returns.
Given that shoppers this year will be more price-conscious and hesitant than ever, retailers will need to do everything in their power to secure buyer confidence and reduce the chance that someone will regret a purchase.
There's been an ongoing push for deeper personalization and a more cohesive customer journey for several years now — and not just in retail. Modern consumers expect businesses to meet them where they are with tailored discounts, promotions, and messaging. Businesses have increasingly begun to rely on artificial intelligence to meet these expectations across the entire sales funnel, allowing them to analyze and react to behaviors on a level and scale that would be impossible with humans alone.
What's more, AI can augment and enhance technology that's already in use, such as dynamic on-page recommendations.
Returns and Sustainability
Returns will unsurprisingly remain a bugbear for retailers and customers alike this holiday season. According to a recent Salesforce survey, roughly 88 percent of retailers intend to make their returns policies stricter this year. Those who overcorrect will suffer for it, as shoppers will increasingly seek out retailers that offer extended return windows and policies such as "buy online, return in-store."
Rather than incorporating stricter return policies, it's far better for retailers to prevent returns from happening in the first place. Doing so both improves customer satisfaction and helps the company be more sustainable. And sustainability, in case you didn't know, is increasingly important to consumers.
Prepare Your Business for the Holidays with Tangiblee
If you're looking for a solution that makes it easier to gear your online store up for the holiday rush, look no further than Tangiblee. Our immersive shopping solution integrates seamlessly with any e-commerce platform and has no impact on your store's performance. Better yet, implementation is both incredibly quick and completely hassle-free, even if you have thousands of SKUs in your catalog.
Once everything's set up, your customers can make more informed decisions about your products. Through features like Ring Stacking, Virtual Try-On and Room View, you can not only reduce returns but also increase both sales and average revenue per visitor.
You Know the Trends. But Are You Offering an Immersive Shopping Experience?
The holiday season is a critical time for retailers, particularly online. Understanding both the e-commerce landscape and how wider retail trends impact it is essential for success. By assessing last year's statistics, being aware of the latest trends, and listening to analyst projections — retailers can position themselves to thrive not just during the holidays but over the course of the entire year.
Looking to create a more engaging shopping experience this holiday season? See how Tangiblee helps retailers create immersive shopping experiences that reduce returns and maximize revenue.