Tips for eCommerce startups looking to gain market share this holiday season

For consumers, The holiday season means enjoying gifts, family traditions and festive celebrations. But for retail businesses, this is the most critical time of the year.

We’re witnessing a storm of economic conditions—inflation, inventory and supply chain issues, and an extended holiday season—that have companies scrambling to determine the right e-commerce strategy for the holiday season. Retail e-commerce channels like Amazon, Walmart and Instacart, where the majority of all e-commerce takes place, will be the real battlefront of the holidays. The key to success this year will be flexibility, sensitivity and resilience: companies will have to be ready to respond to the market and the consumer throughout the season.

After two years of e-commerce enjoying the headwinds caused by the pandemic, consumers are now living with inflation and an unofficial recession, so we can expect more selective and price-conscious buying behavior. While prices at major e-commerce retail marketplaces such as Amazon, Walmart and Target have kept pace with inflation, consumers are feeling the pinch of their everyday necessities.

According to CommerceIQ data based on thousands of products at more than 450 online retailers, prices for supermarkets and homes and kitchens have risen an average of about 20% over the past year, far outstripping inflation. The average shopper should focus their budget more on essentials, leaving less money for gifts and other discretionary purchases.

Order as much stock as possible in advance so that you have supplies before the holiday season begins.

However, unemployment has remained low so far and consumer spending has been resilient, as we can see in the continued strength of online shopping. For example, in the second quarter of 2022, e-commerce growth has already recovered to 9% at Target, 12% at Walmart and 10% at Amazon in North America.

With this shift in value, the holiday shopping season kicks off early this year, fueled by the second Amazon Prime Day in October. Other retailers will follow suit in an attempt to attract spending from price-conscious consumers as they plan ahead for the holidays.

What does this mean for brands? The focus must be on resilience, and companies will need to be prepared to change their discounting strategy, inventory planning and advertising and marketing spending as the environment changes, while avoiding potential consumer fatigue.

Increase discounts while balancing profitability

Discounts have taken a back seat for the past few years, largely thanks to consumer-related savings and incentive checks, but that will change this year. Promotions and discounts have been on the rise throughout 2022, and Amazon Prime Day was a great indicator of what might be to come this holiday season. According to data from CommerceIQ, during Prime Day 2022, discount levels for sale items increased by 10% to 12% compared to Prime Day 2021. The trend is likely to continue at other major retailers as we approach the holidays.

While businesses and retailers look to increase promotions and discounts throughout the season, most promotions will still take place during special sales such as Black Friday and Cyber ​​Monday, rather than generally throughout the season as consumers wait for them to take place sales. deals with.

There is an opportunity for even more promotional events such as Cyber​​​​Week to drive higher volume, but the wrong discount levels can lead to major impacts on profitability. Companies that enter the season with excess inventory can face a perfect storm that erodes the bottom line.

Prices continue to rise through the 2022 holidays, but the discounts haven’t increased yet. Image authors: CommerceIQ

Here are some principles that businesses should keep in mind when planning e-commerce promotional strategies for the holiday season:

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