ECommerce won Black Friday & Cyber Monday – but you’re already losing those customers
The holiday shopping season is in full swing, and the numbers have started to come in for Black Friday and Cyber Monday. Although the results are preliminary, it’s overall good news for online retailers and eCommerce companies.
According to Adobe, online sales were up 18% from last year, coming in at $4.47 billion. Cyber Monday beat forecasts, hitting $3.07 billion in sales and showing a 16% increase year over year. Mobile continued its reign of 2015 with 37% of Thanksgiving sales made on smartphones, up 131% from last year! We anticipate mobile shopping to increase by 15-28% during 2016 holiday shopping season.
Brick-and-mortar companies had less reason to be jolly, with in-store sales dipping 11% year over year, proving that the traditional Thanksgiving holiday model is in decline. Retailers like TJ Maxx, Home Goods have been broadcasting TV Commercials that they’re closed on Thanksgiving Day to encourage shoppers spend quality time with their families. The market is noisier than ever, and many other retailers like Macy’s already started slashing prices and offering deals two weeks prior to Black Friday sales.
Another thing that can’t last: how eCommerce retailers handle Black Friday and Cyber Monday shoppers. The results for the holiday weekend are positive for eCommerce, but the majority of these sales were won through deep discounts and promotions. The problem is that these deals don’t make for significant ROI, and often draw in the “wrong” kind of shopper.
To prove it, we ran the numbers. We analyzed nearly 6 million orders placed over the holiday season by more than 3 million consumers to take a closer look at who exactly retailers compete so fiercely for – and what long-term value they bring to your company.
Black Friday Shoppers: Fewer Purchases, Quick to Churn
The study found consumers making their first purchase with a retailer on Black Friday are 19 percent less likely to purchase again during the holidays than other customers and made 20 percent fewer purchases from the retailer over time. What’s more, first-time Black Friday shoppers will churn 274 percent faster than customers who buy during other times of the year.
Cyber Monday Shoppers: Even Fewer Purchases, Even Quicker to Churn
Turns out Cyber Monday shoppers are even more fickle, 26 percent less likely to make a repeat purchase during the holidays. They made 23 percent fewer purchases over time and churn a whopping 296 percent faster than customers who buy at other times of the year.
Though the numbers are bleak, they’re not overly surprising. It makes sense that huge deals will draw out shoppers who hop from retailer to retailer looking for lowest prices. By putting the emphasis on prices over value, retailers are setting themselves – and their profit margins – up for taking a hit over the holiday weekend.
But: Black Friday and Cyber Monday Shoppers Spend More
Despite being less-than-ideal long-term customers, one thing is clear: Black Friday and Cyber Monday shoppers come ready to shop. Customers who made their first purchases over the Black Friday/Cyber Monday weekend spent 12 percent more than other customers throughout the year.
This speaks to both the potential value of these customers, and to the wastefulness of the current shopping-weekend strategy. It’s clear that there is much more for retailers to gain beyond a one- or two-day sales bounty.
Excitement for Holiday Weekend Means Faster Purchases, Longer
Our study found the time it takes consumers to make an initial purchase after registering with a retail site is significantly shorter in the period leading up to and through Black Friday and Cyber Monday, and persists for a short time afterward.
One month before these holiday sales events, the time from registration to purchase averages 23 days. However, this number drops as it gets closer to Black Friday and Cyber Monday: One week before the holiday weekend, the time to first purchase averages 13 days, and it stays in this range for at least three weeks following Thanksgiving.
The significant portion of this finding is that the time to first purchase remains short well after the Black Friday weekend. It suggests that the excitement generated for shopping during the holiday weekend carries over into the rest of the holiday season, which means there is clear opportunity to score repeat business.
The idea that your hard-earned Black Friday and Cyber Monday customers already have one foot out the door puts a dampener on the holiday weekend’s overall success, but it doesn’t have to. There’s still time to capitalize on the momentum gained for this holiday season.
Our best advice? Focus on building loyalty, even just within the shorter holiday shopping window. Black Friday and Cyber Monday shoppers as they are now don’t deliver long-term value, but there is clear opportunity there to better your retention strategies and lengthen their engagement. Your profit margins will thank you.
Holiday Shoppers Infographic