The term "Happy Holidays" has been somewhat of an oxymoron to retailers over the past few years. As the economy tumbled in recent years, holiday retail fell right along with it. Even e-commerce retail, where double-digit growth rates had been the norm, saw a dramatic decline in growth rates. Online retailers, however, have returned to growth much faster than their brick-and-mortar counterparts, seeing modest year-over-year increases.
The 2010 e-commerce holiday shopping season finally brought with it a return to prerecession growth rates, according to the 2010 Chase Paymentech Cyber Holiday Pulse Index. For the full season, year-over-year transactions rose 38 percent, sales grew 24 percent, and average ticket declined 10 percent.
The Chase Paymentech Pulse Index presents year-over-year trends, providing historical context to holiday shopping statistics and identifying emerging online shopping trends. The index tracks millions of payment transactions daily throughout the holiday season, taken from a sample of 50 of the top U.S. retail web sites as ranked by Internet Retailer magazine. Unlike similar data sources, the Pulse Index data reflects empirical merchant purchase data - it is not a consumer sample, a survey or an estimate.
Armed with this data, as we look to the 2011 holidays, there are some clear lessons that merchants should take away from the 2010 season.
Holiday shopping starts early
In early November, it was apparent that 2010 was going to have a different shopping season than the past two years. Early season transaction counts were trending much higher than in 2009, and year-over-year sales growth was consistently above 20 percent.
At peak season, the Pulse Index data clearly indicated that online shopping no longer begins on Black Friday. Thanks to the 24/7 reality of e-commerce, consumers began their shopping early, going online to take advantage of Black Friday deals before the physical stores had opened. More than ever, multichannel merchants took advantage of their online capabilities to extend shopping hours, and consumers clearly responded.
Cyber Monday matters, but don't ignore the rest of the week
The spending did not stop as shoppers returned to work. This season, Cyber Monday was the busiest single e-commerce day of the year, and by extension, in history. And the shopping fervor continued through the week, with data indicating record transaction and sales volumes for a single week.
Cyber Week is big, but the following weeks are bigger
The next week, beginning on December 5th, instead of showing the sharp spike of another Cyber Monday, the Pulse Index revealed that e-commerce shoppers logged on and made purchases all week long. And as we have seen in previous years, the following week, beginning on the 12th, fared even better, as buyers began to face shipping deadlines. Also, with Christmas falling on a Saturday this year, the week of the 19th had an additional day or two for procrastinators to squeeze in a last-minute purchase without having to opt for overnight delivery.
The end result was a record season for Pulse e-commerce merchants, with strong growth in transactions and sales volume.
Average ticket declines are not necessarily a bad thing
Average ticket size fell for a third straight year. Unlike previous years, however, the reasons for the decline were clear. First, lower prices for big-ticket electronics such as televisions and the expanded availability of lower-cost computers such as tablets and netbooks pushed transaction values down. Second, the rise of digital media, particularly music downloads and e-books, meant large numbers of relatively low-value transactions. Mass Market/ Variety retailers, many of which also do substantial business in electronics and media, saw impressively large gains in transactions and sales volume despite lower average tickets.
Vertical markets matter
Looking deeper into the Pulse data, we can see that there were some sharp differences among vertical markets. Apparel and Shoe merchants had a good season, with strong average ticket growth. Toy sellers also challenged the lower average ticket trend, with overall sales growth of more than 25 percent. Only the Gift and Jewelry sector indicated a decline in transactions, but still managed a small increase in sales.
Taking the lessons into 2011
It's clear that many of the Pulse Index insights can be leveraged throughout the year. The weekly cycle of e-commerce has been true for years, and merchants can leverage peak weekday traffic and make efforts to drive sales on otherwise slow weekends. The success of multichannel strategies may be replicated during other promotional periods, whether it's a holiday or back-to-school time. And the growth of digital media could have ripple effects across the retail landscape. In the meantime, Chase Paymentech will continue to help merchants keep a finger on the pulse of e-commerce.
Source: Chase Paymentech
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