Insights Into the 2021 Holiday Season and E-Commerce Trends

woman holiday online shopping from bedroom

2021 Holiday Trends

NetElixir forecasts slower than usual growth this holiday season, with a 6-7% YoY growth in e-commerce sales. While our predictions are more conservative than others, (eMarketer forecasts 14% YoY growth), a 6% increase on top of 2020’s 30%+ increase is no small feat. We estimate that this holiday season will bring in 500+ million unique website visitors across key holiday retail categories – gourmet food, fashion and apparel, home and décor, gifting, and consumer electronics.

A strong Q1, 2021 (34% YoY online sales growth) led many to forecast consistently strong and steady growth. That was not the case, as we saw a slower Q2 (about 5% YoY online sales growth) and a slower than anticipated back-to-school season (7% YoY online sales growth). With Q3 sales picking up more (about 19% YoY online sales growth) and we’re heading further into the holiday season, we see consumer interest is spread between a mix of categories. Fashion and beauty categories drove higher sales in Q2 and Q3, as shoppers sought to refresh their looks for traveling, dining, and other experiences they indulged in throughout the summer and warmer months. 

The pandemic has led to a massive surge in e-commerce, as online sales currently account for 19% of total retail sales (up from 14% in February 2020). Mobile traffic is driving more sales than ever before at 49%. We anticipate mobile shopping will be the primary sales channel this holiday season, contributing to 52% of total website sales.

 Key E-Commerce Channel Trends

It’s crucial to ensure your website is optimized for easy mobile searching and the holiday shopping season. However, other key e-commerce channels will also play an important role in shoppers’ online purchase journeys.

Amazon continues to increase its dominance on product searches: 74% of U.S. shoppers start their online search on Amazon. To appear on these searchers, we recommend optimizing your Amazon SEO. We anticipate that Amazon’s share of total online sales will cross 49% this holiday season. Fine-tune your Amazon growth strategy and use the platform as an extra distribution channel to introduce new customers to your brand. 

Beyond Amazon, other marketplaces are also growing rapidly. Instacart is expected to cross $1B in ad revenue next year. Placing ads strategically on high-traffic marketplaces can increase your brand awareness and exposure, though it is important to ensure your ads stand out amongst the competition.

Primary channels like Google, Microsoft Advertising, and Facebook are applying AI to help marketers target and engage customers more efficiently and at scale. We estimate that 50%+ of Google ad budgets are already being influenced by AI. 

Every business and channel is trying to understand how digital advertising will change with the demise of third-party cookies next year. The attributable revenue of Facebook ads has declined significantly since Apple’s iOS 14.5 update, which allows users to block tracking and data collection. 

Gathering valuable customer insights this holiday season will not only improve your performance this year but assist your post-holiday strategy in the cookieless world next year. During this uncertain and unpredictable holiday shopping season, real-time data and insights will be your guiding light.

What Makes This Holiday Season So Uncertain?

New Online Shopping Habits

The pandemic changed the online shopping landscape. Between altering customers’ personas based on what they value most, to bringing in over 7MM new-to-online shoppers, there are many new customers to engage. We estimate that 25% of the estimated 1.8MM new-to-online shoppers from 2020 will continue to shop online.

Last year, the pandemic-influenced holiday season brought a host of new-to-online shoppers to discover new brands and products. Those shoppers had no history with e-commerce and had unique trends, behaviors, and purchase journeys. We’ve had over a year to get to know these new shoppers and incorporate their consumer profiles into our overall marketing strategy. 

It’s not just new-to-online shoppers, though, whose changing habits require new strategies and tactics this season. Q2 e-commerce sales dropped YoY, as customers chose to spend their budgets on experiences and traveling rather than physical items. Our experts predict that these new shopping habits will continue through the holiday season. 

Your Holiday Strategy Tip: Consumer Insights

Be agile and flexible to your customers’ changing needs and expectations. Don’t be afraid to ask them directly what they want through surveys, social polls, and more. Use this time before the holiday frenzy kicks off to do A/B testing with social posts, ad graphics, and copy so you can get a better understanding of what makes your customers engage with your brand. These learnings can improve your holiday campaigns, as well as inform your 2022 strategy.

This holiday season, focus on simplifying your customers’ lives and giving them what they want.

Inventory Shortages

Many shoppers are getting an early start to the holiday season, in anticipation of growing supply chain disruptions. The increased demand during the post-pandemic recovery, paired with disruptions caused by geopolitical unrest have posed challenges for retailers and shoppers alike. Last year, 26% of shoppers completed their holiday shopping by the first week of November, reports NRF. We’re expecting an earlier start to the holiday season, but it’s still unknown just how many customers will stop shopping in early November. 

While some retailers can’t keep items on the shelves, others have an overflow of old inventory that hasn’t been selling. This makes a perfect opportunity for deep discounting on Black Friday and Cyber Monday. NetElixir can help showcase inventory surplus through gift guides and blogs that highlight the advantages and uses of these products. We’ll wrap them together with similar products for a similar target audience.

Your Holiday Strategy Tip: Communication

Ensure your holiday landing pages clearly communicate any changes in your inventory. Adding language like “selling fast” or “only a few left” will drive urgency in customers. If products are out of stock, direct customers to similar items or add them to an alert for when it’s back in stock. Add BOPIS options if stock returns closer to the holidays. 

Waning Consumer Confidence

Prevailing uncertainty caused a sharp drop in consumer confidence. The University of Michigan’s Consumer Sentiment Index fell by 13.4% from July, recording the least favorable economic prospects in more than a decade.

Consumers are switching brands primarily because they found a better value, according to McKinsey. Over 40% of consumers are also looking for what’s in stock. Being transparent with inventory, shipping delays, and deals will help customers trust your brand, even if overall consumer confidence is lacking.

Your Holiday Strategy Tip: Authenticity and Transparency

Humanize your brand to your customers so they know that there is a face that they can connect to. Connect with your customers on a personal level. Be transparent about any update or change that may impact a customer’s holiday shopping or package delivery.  

Building a Successful 2021 Holiday Strategy

The continuing supply chain challenges and low consumer sentiment pose a massive challenge for businesses. Competition is intense and uncertainty is high this season. Nimbleness and quick decision-making will differentiate the successes this holiday season. Have a plan B ready to stay ahead of changing variables and take advantage of any opportunities that come your way.

Your customers are your most important element this holiday season. By gathering better customer insights, you can target more effectively, thus wasting fewer ad dollars and getting better ROIs. Maximize your holiday performance with customer insights.

“This month, so far, has seen strengthening of online sales in some categories (namely, consumer electronics, apparel, and home improvement). If the online sales trends continue (and businesses can at least partially address the inventory issues), we will have a stronger than expected holiday season. Also, as the threat posed by the delta variant continues to diminish, holiday sales are likely to be positively impacted,” summarizes Udayan Bose, NetElixir’s Founder and CEO.

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