To avoid trying to compete with the crowds of people camping outside Walmart and Best Buy, online retailers began offering sales after Black Friday had come and gone. Consumers began to discover how much they liked shopping from the comfort of home or work and the idea of “shopping in your pajamas and bunny slippers” spread. Cyber Monday was a term coined in 2005 by the National Retail Federation. Known globally as the online shopping day, it has only grown in popularity. In fact, it bypassed Black Friday as the biggest shopping day of the year.
Amazon has long been ahead of the pack as the top online retailer on Cyber Monday. More and more retailers are taking their operations online, which has commanded a steadily growing share of the market for toys, electronics, books, and other items people try to buy online and on sale. Here’s how everyone stacked up and what shoppers were buying:
The Rise of Cyber Monday
During the early years of Cyber Monday sales and hype, some researchers attributed the popularity of consumers shopping online during a workday to having better internet at work. As high-speed internet becomes accessible to more households, this is less of an issue. Instead, more consumers are indicating when surveyed and polled is that they may not enjoy standing in the cold lines, risking getting trampled, all for a gamble that they may get the electronics or toy deal of the year. Because some manufacturers initially release the newest, hottest thing in somewhat limited quantities, shopping online gives the consumer a better chance at scoring what they want and the opportunity to compare prices. Most online retailers have higher quantities in stock than the brick and mortar stores that got a bad rap for only giving each of their store locations a minimal number of the best deals. And some deals are not as good as they seem.
Retailers are in fierce competition with one another and with technology to get a piece of the holiday shopping season pie whether it’s foot traffic into physical store locations or online traffic. Customers spent $108.2 billion buying online between November 1 and December 31, in 2017, and the amount was even higher in 2018 with a historic high of $125.91 billion. The day consumers spent the most was November 26, on Cyber Monday with the day’s totals coming in over a staggering $7.9 billion. These numbers dwarf the 3.7 billion dollars of sales on Thanksgiving Day and $6.2 billion of sales for Black Friday.
Some interesting details surround the holiday shopping season numbers. A significant change from last year was the remarkable rise in transactions taking place on mobile devices.
Consumers browsed more on their smartphones, accounting for 51 percent of traffic while the bulk of actual purchases completed took place on a desktop computer, accounting for 60% of purchases. 31% of purchases were completed on smartphones. Consumers browsed the least on tablets, with only 8% of traffic and 9% of purchases.
Retailers have learned the hard way in the past that many customers like to browse and evaluate a product in person in stores and then purchase online, often elsewhere. Stores that have both a brick and mortar establishment and a strong online presence often come out ahead with a 28% higher conversion rate when consumers either order online and pick up in the retailer’s physical location or see it in the store and then buy it on the retailer’s website when Cyber Monday sales and deals come out.
Increasingly, for higher ticket items like gaming consoles, electronics, and major appliances, consumers are choosing the buy online and pick up in the store option. These kinds of transactions increased by over 50% in 2018. Consumers like the convenience of finding and scoring a good deal online and then getting to pick up the product right away, sometimes faster than if they had ordered it online. Retailers like it because, for the most part, it enables them to fulfill customer orders even if the item isn’t physically on the shelf at the moment the consumer wants to buy it.
Online Shopping and the Decline of Black Friday
When you think about holiday shopping, many people fondly remember going to the local shopping mall with hundreds of other shoppers or waiting in long lines on the morning of Black Friday outside one or two big box stores. Not too long ago, retailers were comfortable knowing consumers would come to them, and their brick and mortar stores and parking lots would be full of people lining up to buy, no matter what the weather. And then online shopping began to grow in popularity. Holiday movies depicting happy shoppers laden with heavy colorful shopping bags now seems as old-fashioned as carefully filling out a mail order catalog form, sending it off with a check, and then waiting two weeks for a package to arrive.
For about a decade, retailers had begun starting Black Friday earlier and earlier, often starting on Thanksgiving Day, and while starting the rush “early” is still popular among many consumers, there are still many consumers that will show more loyalty to stores which stay closed on Thanksgiving to allow employees and families to enjoy the holiday. A growing number of major retailers proudly proclaim that they remain closed to show their commitment to their employees and while some consumers see it as a marketing tactic and a consequence of decreased foot traffic on Black Friday, there is a lot of positive press surrounding the decision. Many consumers do not approve of a traditional day for families to gather becoming hijacked as another big sale day, and the idea of Black Friday beginning on Thanksgiving day has not become as popular. Big retailers such as Costco, IKEA, Nordstrom, REI Co-Op, and many others choose to stay closed through the Thanksgiving holiday. And in some states, so-called “Blue Laws” prevent stores from being open on Thanksgiving anyway, with exceptions made for gas stations, convenience stores, and grocery stores.
Many consumers are disenchanted as well with how out-of-control the crowds can be on Black Friday. Shocking stories of deaths, stampedes, theft, and violence among consumers competing for a discount abound and seem to worsen every year. Consumers are increasingly galled when they discover that many stores advertise rock-bottom specials on certain items such as electronics but will only have a few of them available for purchase at that price. Standing in line for that LG television for 6 hours, brawling your way through the store to get to it only to find everyone ahead of you already got only five that were on the shelf can be disheartening to many.
The number of specials available in stores to the Black Friday brick-and-mortar shopper may decline in the future, making Cyber Monday a far better choice for shopping. In spite of the crowds, the barricades, the stampedes, and the brawls, the popularity of Black Friday continues, and we think there will always be a strong turnout for the official kick-off to the holiday shopping season. Some shoppers enjoy the camaraderie, the thrill of the hunt, and there will always be a store promising a doorbuster they just can’t turn down.
Some stores offer discounts the entire week after Thanksgiving, so consumers will be encouraged in higher numbers to come and shop at stores during regular business hours without needing to pack a taser and body camera. Big brands like Apple will not usually discount their newer products but instead, offer a gift card or other incentive with the purchase of a new product. Stores like Target who sell Apple devices will offer even more generous gift cards if you purchase the device through them online and these deals often go for as long as a week, allowing the consumer plenty of time to make a decision.
Online discounts continue to set historic precedents. For example, in 2016 nearly 50% of all apparel for sale in the United States online was discounted. Luxury brands tended to discount the most with over a quarter of their inventories marked down for Cyber Monday.
Many retailers are also kicking off Black Friday 6 months early by advertising “Cyber Monday: Spring Edition,” “Black Friday in July,” “Spring Black Friday,” and similarly-named specials and sales events. Amazon has designated its shopping event called Prime Day which they describe as a “two-day parade of epic deals” available exclusively for Amazon Prime members. Prime Day has inspired a frenzy of bloggers, online shopping guides, and other third-party websites anxious to help guide consumers to the best deals while potentially benefiting from the traffic they direct towards the retail giant. After the success of their 2018 Target.com One Day Sale, Target has also entered the fray for July sales events by offering a competing Target Deal Days event on the same days as Amazon’s event.
This push for consumers to shop Cyber Monday style sales during a season that’s not typically considered a time for gift giving falls right in line with data that shows consumers are increasingly buying for themselves. Retailers encourage this because it means the consumer will not only spend more for themselves, but they will still have to buy gifts, and this can represent as much as a 50% increase in what the consumer spends on sales.
How Cyber Monday is Changing the Online Retailer & Consumer Experience
When looking at the biggest motivators for consumers to buy online, the biggest draw has historically been convenience. Smartphones are omnipresent in our lives, and most people are continually using them for everything from navigating while driving to ordering take-out dinner. Being able to browse designer handbags while sitting on the subway riding home, taking a quick break at the office, or in the waiting room at the dentist’s office makes the pleasure of shopping and browsing accessible and immediate. Next to convenience is the draw of free shipping. Free shipping allows a retailer to present the consumer with a deal that would not be offset by the cost to ship the item. Next is the ability to use coupons or discounts and the ability to price match. Nothing gives the consumer that dopamine hit like than loading an online shopping cart, typing in a discount code splashed across the website (or sent in a postcard by mail) and watching the prices of everything go down.
The fact that many consumers choose to shop on their phone but make the actual purchase on a desktop computer may indicate that consumers are not finding mobile versions of websites or a mobile app as easy to use. Functions like a shopping cart or checkout process on the phone can be challenging to some consumers who find mobile sites less robust or more difficult to navigate than the same site on a desktop computer’s browser. There is also a lack of trust in mobile phone apps when inputting sensitive information such as credit card numbers. Large retailers do better with smartphone sales, and consumers purchasing from smaller companies tend to prefer purchasing using a desktop.
The pressure to create and maintain a robust online presence as a central part of any retailer’s strategy drives the ever-evolving creation of responsive apps and websites that allow consumers to browse and buy seamlessly on smartphones and tablets. Customer data is a prized asset, and savvy retailers are always looking for more sophisticated ways to collect it. As an example, a responsive app and corresponding website will offer a highly personalized experience fed by data they have gathered about the consumer. Predictive analysis and marketing technology generate content geared specifically for the individual browsing. That individual is shown content, products, and search results relevant to their browsing history and past searches. Some of this is obvious in a creepy way, but most consumers don’t even realize how carefully and precisely they are being marketed to. Doing this in subtle but persistent ways is an effective way to keep customers shopping and following through with purchases even if they leave the site and come back to it later.
Larger retailers invest more in the personalized online shopping experience that encourages customers also to visit their physical locations. Using the online and digital experience to enhance the in-store experience is often described as “Phygital” integration. This is paying off for companies that have not traditionally done as well with online sales as Amazon, such as Target and Macy’s.
Target, for example, has launched a program called Circle that rewards customers with perks, discounts, add digital coupons, and more. In exchange, Target tracks their buying histories. This allows them the opportunity to collect data and follow the shopping habits of the customers who do not utilize the Target RedCard credit or debit cards for purchases. While the retailer clearly benefits more, and the consumer sacrifices a level of privacy, there are still benefits for consumers that many enjoy. Data collected on consumers allows Target to send both mailed coupons and digital coupons to its customers for things they actually want to buy in exchange for allowing the company to screen and monitor their shopping habits. It’s possible to log into your Circle app or look at your Circle account on a desktop computer and view your complete shopping history as long as you scanned your phone with the Circle barcode each time you make a purchase. We’re anxious to see how Target will integrate Cyber Monday specials into this app.
Lowes offers its customers the ability to find just about anything in the store with real-time inventory, maps, and location of every item down to a specific bolt or piece of pipe. This gives many customers the ability to quickly find products within the store and even better, to determine if their Lowes location has what they need before even leaving the house. The old saying about a plumbing project taking 2 or more trips to the hardware store is a thing of the past. So is having to wander a store looking for the employees you can’t seem to find the moment you do need somebody’s help finding something. We’ve utilized the Lowes technology ourselves and were so impressed we returned to that store instead of The Home Depot when looking for particular hardware because it was that much easier to track down and find.
While it was inevitable for retailers to have to get with the times and adapt to a changing world where most commerce occurs online, Cyber Monday sped up the process considerably.
The Cyber Monday “Giants” and the “Little Guys”
These days consumers are used to getting what they want quickly and without delays. Is one store out of stock? No worries. There’s almost always an app to find it nearby and available for delivery tomorrow or the day after. Many third-party companies build apps to help navigate and track the inventory of stores like Target and Walmart, helping consumers locate popular or hard to find items. And there are even more websites with millions of visitors and subscribers that help consumers find discount codes and coupons they can use online.
As the next generation of consumers and their buying power factor into the equation, retailers have had to learn quickly how different their buying preferences and habits are from the previous generation. More technology-savvy consumers use a vast array of tools to find and score the best deals. While the group of consumers aged 18-34 is heavily targeted with advertising and marketing, they are surprisingly some of least impulsive consumers with major purchases, reading reviews and conducting more research in advance about their intended purchases than 35-55-year-olds.
In less than ten years, the online shopping landscape has completely changed. Free shipping went from being included as a bonus or part of a deal to an expectation most consumers demand with a very minimum purchase. Retailers are having to constantly find new ways to make it as easy as possible for consumers to find and buy exactly what they need instantly and try and get it in their hands nearly as fast.
Amazon has consistently dominated Cyber Monday as the first place bargain hunters go to check prices, read reviews, and begin their holiday shopping. In 2018, 32% of shoppers indicated they would go to Amazon first. Walmart comes in second, with around 24% of shoppers indicating they think they’d find the best deals there. Conversion rates are where Amazon’s competitors begin to edge in. Many consumers go to Amazon to check prices and may end up actually buying elsewhere.
In their never-ending quest to maximize efficiency and the speed at which their customers receive their smiling boxes, Amazon has begun expanding not just their fleet of delivery vehicles but their entire transport and logistics system. In 2019 the online retail giant announced it was adding 50 new planes to its dedicated fleet of aircraft, opening new operating hubs and expanding operations. Amazon has realized early on that relying on companies like FedEx and UPS costs more than to integrate the shipping function into its business plan and can lead to gaps in the customer service experience. The appeal for many customers shopping with Amazon is the speedy delivery. If USPS, UPS, or FedEx drops the ball at any point along the way, Amazon will have to absorb the expense of making it right for the customer and accept responsibility. With the capital and resources to enter the shipping and logistics industry, they are choosing build-their-own in-house solution- a seamless experience from shopping, ordering, and delivery.
In stark contrast to the online retail giants like Amazon and its competitors, there is also a growing interest in shopping locally. The Great Recession helped birth a wave of entrepreneurs and renewed interest in a more “boutique” experience that comes from “shopping local.” The term Small Business Saturday was coined by American Express in 2010, who encourages consumers to “Shop Small” and support local or smaller businesses to build communities and stimulate economic growth on a grassroots level. It has grown from an alternative to Black Friday to a year-round initiative encouraging consumers to take their business to the community, both online and in person.
In 2018, shoppers spent nearly $18 billion at these smaller shops, boutiques, and restaurants. The movement continues to grow as customers find they enjoy a more unique, personalized experience that comes from an independently owned business whose lifeblood depends on excellent customer service. Large companies such as Shopify, WooCommerce, Squarespace and yes, even Amazon, provide e-commerce solutions to many of these smaller companies, making it easier for them to maintain an online presence with the same functionality and tools that the “big guys” use. Most of the consumers who shop small businesses may initially visit the business in person. The odds of them becoming return customers increases significantly if the business maintains an online presence. Word of mouth is a major marketing tool for these entities and consumers love to share and rave about their discoveries, sharing this information -you guessed it- online.
Whether it’s the promise of a deal, the comfort of shopping in pajamas, or the convenience of being able to easily compare prices and choose from a large pool of retailers without even having to find your car keys, Cyber Monday will continue to be a huge draw for consumers of all ages. Consumers in their pajamas will flock to retailers, both big and small, to do their holiday shopping as long as they have an online presence.