PITNEY BOWES INC. Despite inflation and other economic headwinds 80% of consumers will buy online spending more or the same as in 2022 with just 20% expecting to spend less.
At the same time, consumers are trading down on brands and they'll do what it takes to earn free shipping. In fact, consumers are most likely to either add more items to their cart to qualify for free shipping (44%) or try to find the same item with a different online brand that will offer free shipping (37%).
Those are just a few holiday season trends in place, according to data from
Top challenges in play for retailers include difficulties with comparing carrier cost structures, differentiating customer tracking experiences, managing returns fraud, and finding cross-border shipping partners who can handle both compliance and logistics.
The survey also revealed:
- Among the 20% of consumers planning to spend less online, slightly more than half are cutting back on overall (i.e., non-holiday) spending — a significant reduction from the 71% who expected to be cutting back last year.
- Gen Z and millennials are even less likely to curtail online spending, with 22% and 18% year-over-year declines, respectively, among those age groups saying they were to say they plan to spend less online versus last year.
- In addition, 42% of consumers already expect it will become harder to qualify for free shipping this holiday season compared to last year. The results also revealed consumers are most likely to either add more items to their cart to qualify for free shipping (44%) or try to find the same item with a different online brand that will offer free shipping (37%).
RetailCustomerExperience reached out to
Q. There have been dozens of studies that consumers are spending the same or just a bit less this holiday season — is that your view and if so what's driving that trend, and if not, what's driving your expectation on holiday consumer spend?
A. Our most recent BOXpoll consumer surveys show that online holiday spending is shaping up to be just as strong as last year. More than one-third plan to shop online more this year than last year, about half plan to shop about the same amount, and less than a quarter plan to shop less — roughly the same breakdown we saw in our 2022 holiday surveys.
What's more, significantly fewer consumers who plan to buy less online cite cutting back on overall spending as their reasoning. The proportion of those who cited cutting back on their overall spending fell 14% year-over-year, with those shoppers moving to the "I prefer to shop in-store" camp. The shift is even more pronounced among younger shoppers: 22% among GenZ and 18% among millennials.
These responses track with what we've already seen in the market this year: Online spending that appears to defy gravity. Consumers are spending more on goods versus 2022, even after accounting for inflation (spending on services, already elevated, is flat year-over-year). Online sales are up more than 7% versus 2022, even though online prices have been on a deflationary trend.
This is not to say that consumers aren't feeling pinched — retailer earnings show that consumers are "trading down" on brands as they seek lower prices.
Q. What matters most to the consumer today when purchasing — price, delivery, discount?
A. Consumer delivery expectations have settled into a new norm. The latest edition of the Pitney Bowes Order Experience Index, which tracks changes in consumer preferences around e-commerce experiences, revealed a notable shift in delivery speed expectations. Many consumers — especially information workers — have settled into working in hybrid environments and no longer have a set daily or weekly schedule, painting a picture of cluttered calendars with personal errands, kids' activities, travel and work all increasingly intertwined.
While they may have the flexibility to be home to receive an occasional urgent delivery, having every online brand promise a conformant two-day delivery window has become a nuisance. What's more, time-sensitive purchases are once again easy at local stores, so the need for same-day and next-day delivery has lost significant utility and appeal, particularly for cost-conscious shoppers constantly on the move and are willing to settle for a "good enough" product at a store nearby.
For unique products consumers do decide to buy online, shoppers are already primed for higher-than-last year free shipping thresholds. As shipping costs rise, several enterprise e-commerce brands have raised the required purchase amount to qualify for free shipping in recent months. It's no surprise that our most recent BOXpoll survey found 42% of consumers already expect it will become harder to qualify for free shipping this holiday season than last year.
Q. Is there anything retailers must do this holiday season?
A. Stay focused on what differentiates your brand. Marketplaces and chain store retailers who compete on convenience (i.e., shipping speed, product selection, low prices) more so than differentiated products need to focus on offering a variety of shipping methods as well as buy-online-pickup-in-store.
However, brands that sell unique products consumers can't easily buy elsewhere have an opportunity to save some margin—without falling short of consumer expectations—by testing the following options:
Increase the free shipping threshold at checkout. According to our BOXpoll surveys, most consumers are poised to add more items to their order to qualify for free shipping, while one-third of customers who say they would look for a similar product elsewhere will be unsuccessful.
Consider subsidizing slower shipping options to save on transportation costs — especially from now to early December when consumers aren't yet at risk of missing a holiday gifting occasion.
Offer loyalty programs and subscriptions, particularly if you sell a replenishment product, such as cosmetics, personal care, and apparel basics.
Copyright © 2023 Networld Media. All rights reserved., source
