E-retail sales eclipsed $3.5 trillion in 2019 and Cyber Monday sales hit 9.4 billion. The ecommerce trend continues to dazzle retailers who are excited to offer goods yet struggle competing with behemoths like Amazon.
In the US alone, Amazon’s hold on the ecommerce market has risen from 33.9% a few years prior to 38.7% in 2020! Amazon continues to dominate ecommerce as well as dictate related trends followed by medium and smaller competitors, especially during the holiday season.
Black Friday falls on Nov. 27 in 2020, but the associated sales have already begun. Amazon is offering deals on popular products, even matching Prime Day prices.
Walmart’s holiday promotion period began much earlier this year, even before November 4th promotions. Anxious shoppers are beginning to see more signs that they don’t have to wait for Black Friday or Cyber Monday for deals.
It’s a message for online suppliers too - don’t wait for the holidays, for 2020 holiday pricing strategy has already begun.
Thanksgiving weekend, the once official “start” of the holiday shopping season has been abandoned for online shopping opportunities that can’t come too soon and are too good to let pass.
Understanding how to compete and pivot pricing has never been more vital for businesses. Read our 2020 holiday pricing playbook:
- Learn how previous holiday shopping trends inspired the current state of 2020 holiday shopping
- Better Understand 2020 holiday shopping trends - the who, what, and how
- Get actionable tips on gaining traction in your market and attracting more sales this 2020 holiday season.
There has never been a better time to be an online supplier yet your products and services will get lost in the 2020 holiday rush without proper strategy. Get the right insight to not only compete but crush the competition.
Previous Holiday Shopping Strategies
We studied 2017 and 2018 holiday shopping trends, and conducted a full analysis of what happened in the 2019.
The top 150 sellers experienced a major price drop compared to the week before Cyber Week. The prices of top products dropped by (at least) 50% compared to the Friday before Cyber Week.
Many products (not in the top 150 sellers) also had attractive price drops:
The data shows large fluctuations in price during Cyber Week, a great time for consumers to take advantage and suppliers to price strategically.
2020 Holiday Shopping Outlook
Covid-19 has impacted the world in countless ways this year. Distancing regulations has propelled many more shoppers to seek regularly purchased and one-off goods online. 36% of consumers now shop online in a weekly fashion. That’s a 28% increase compared to times before the pandemic.
72% of consumers will spend the same or more this holiday shopping season as compared to 2019. More than a third will do (almost) all of their shopping online compared to 25% in 2019.
62% of US consumers will start shopping early to avoid crowds and 33% want to complete holiday shopping much earlier this year.
So, being visible and setting prices right are just two of a broader list of concerns for retailers accommodating 2020 holiday shoppers who are not waiting for Thanksgiving weekend this year.
Holiday Pricing Strategy 2020
Figure a Minimum Price
Considering major brands like Amazon and Walmart have begun adjusting ecommerce prices for the 2020 holiday season, you’ll need to pay attention to the depth of associated discounts if you want to compete for popular items.
Making pre-holiday buying more appealing to consumers, some suppliers offer storewide promotions, slashing prices throughout a physical location or ecommerce site. In 2020, major e-tailers are not waiting for the end of the month to start holiday pricing strategies.
That means competing with promotions that are deeper, widespread, and longer than before. The following questions help figure your minimum pricing to help compete with competitor promotions.
- Does holiday shopping trends of 2020 influence my costs for shipping, raw materials, agreements with supplies? Can you benefit from making bulk purchases this season?
- Do I need to pay seasonal staff? For holiday overtime?
- Are third-party (dropshipping) prices fluctuating during the holiday season?
- What are the costs of shipping in 2020 vs prior years?
- What is the importance of digital marketing this year given the pandemic and YoY increased trust in e-shopping trends?
Create Great Experiences
67% of customers are willing to pay more for a better experience. And, if they have a good experience, 72% of customers will tell their friends.
Great experiences spread through social networks like wildfire...but so do negative ones. 62% of customers share negative experiences with others, and 57% of consumers have switched to a competitor company that offers a better experience.
Form a customer journey map to identify pain points and highlight particularly enjoyable ones. Use the feedback in sales and marketing material.
Here are simple yet effective questions to ask customers:
- How did you first hear about our brand?
- What problems are you trying to solve in relating to our product/service?
- Have you made a purchase with us? What was the deciding factor?
Offer Free Shipping
62% of US shoppers say they'll start 2020 holiday shopping earlier to avoid crowds. Retailers need to rethink the usual timelines for Cyber Monday and Cyber Week to help shoppers who are already looking for special offers and deals this October.
In a holiday survey, 72% of participants said they plan to take advantage of free shipping.
44% plan to take advantage of easy returns and 42% are in it for price matching.
The same survey found the top three reasons participants chose to shop online over in-store were convenience, saving time, and free shipping.
To confirm this sentiment, a 2017 holiday survey showed 21% of consumers claimed free shipping will have the biggest influence on their holiday shopping decisions.
Make It Easy for First-Time Online Shoppers
69% of US shoppers plan to shop online for the holidays, with more people going online to browse and buy for the very first time.
Due to the trend toward online shopping, 2020 retailers will need to be ready to offer helpful, frictionless holiday shopping experiences for an increase in first-time online shoppers.
In March 2020, 88% of online shopping orders were abandoned. Automotive had the highest cart abandonment rates out of all measured categories with an 96.88% abandonment rate.
One thing you can do to ensure customers make a purchase is to reduce their level of stress or fear. One study found that about 60% of ecommerce sites ask “unnecessary” questions that induce feelings of discomfort. It’s a matter of perception. The question may be valid but that reason must be evident to the user and/or later addressed by the seller.
Expand M-Commerce Options
In 2021, 53.9% of all retail e-commerce is expected to be generated via m-commerce. As of February 2017, Amazon was the most popular shopping app in the United States with a mobile reach of 40%, ranking ahead of local competitors Walmart and eBay.
The average value of smartphone shopping orders in the United States as of fourth quarter 2016 amounted to 79 U.S. dollars, compared to 98 U.S. dollars per online order via tablet.
Being unique while offering similar products is a struggle for many ecommerce sites. However, infusing more mobile commerce options helps new brands appeal to audiences who embrace easy ways to transfer money, make contactless payments, etc.
Consider the following mobile-commerce-friendly options:
- Allowing for mobile money transfers
- Integrating your site with mobile banking
- Offering contactless payment and in-app payment options
- Offering location-based offers
- Providing mobile coupons and e-loyalty cards
Prepare to Be Seen for the First Time
With a third of US shoppers having purchased from a brand that was new to them during COVID-19, shoppers are ready to discover new brands and retailers as they shop for what they already know.
To connect with new or repeat customers, retailers should get their products front and center with shoppers on the lookout for ideas and inspiration. Social media is a far-reaching and immediate way to make an impact.
321 million new people joined social media in 2019, which brought the total from 3.48 billion to 3.8 billion social media users (an increase of 9%) in 2020.
But, don’t assume making a great impact comes easy. 80% of companies online are under the impression they deliver exceptional social media customer service, while only 8% of their customers agree. Conversely, customer happiness is at the core of Amazon’s success.
Amazon developed a strong brand based on convenience and pricing. A 2019 survey of 2,000 US shoppers found 89% were more likely to buy products from Amazon versus any other e-commerce provider.
66% start their search for new products on Amazon, compared with 20% who start on a search engine such as Google.
When consumers are ready to buy a specific product, 74% go directly to Amazon.
Take Advantage of Dynamic Pricing
Some suppliers easily compete with larger players via dynamic pricing. In general, automated software allows for smaller-scale operations to compete with an Amazon or Walmart by reflecting sale prices in real time.
Amazon shapes ecommerce pricing trends as more retailers seek to keep pace with Amazon’s fickle price changes. However, historical trend data helps you know which products people search for in the weeks leading up to the holidays.
Start your holiday pricing strategy well before the holidays through data analysis and identifying which of your products will be popular on Black Friday. Plan strategies for these products and spend Black Friday monitoring performance.
Take that data a step further with automation tools that provide automated price checks and automated price updates. These tools save valuable time and allow for increased focus on strategy than manual labor.
The Larger Picture of Pricing Strategy
Amazon strategic pricing is a global issue for competing e-retailers. The company’s goal is to capture as much consumer data as possible, and Amazon’s reach is limitless.
Our research suggests Amazon adjusts its prices on a per-country basis.
Last year, we looked at the top 100 Amazon best sellers across 300 categories and discovered the American company had the lowest prices on 27% of the market in Germany and 42% of the products in the Netherlands.
An analysis across 300 categories showed:
- Prices in the UK are 3% higher than the Netherlands
- Prices in France are 2% higher than the Netherlands
- Prices in Germany are 7% lower than the Netherlands
Amazon dominates in terms of market share. The company has 47% of the market share in the United States, 47% of the market share in the United Kingdom, and 31% of market share in Germany.
Since Amazon NL launched, it dominates comparison shopping engine Tweakers. In fact, Amazon NL has more than double the number of out-clicks on Tweakers as Bol.com, its next biggest competitor.
We also looked at the number of price changes on Amazon NL vs. other Dutch retailers.
Amazon.nl’s average number of price changes is represented by a dark orange line — the one that far outpaces any other retailer in the Netherlands.
We also looked at Amazon NL’s average price ratio compared to the rest of the market. Amazon NL (the dark orange line at the bottom of the graph) dominates.
With Covid-19 as catalyst, Deloitte predicts e-commerce holiday retail sales to grow between 25% to 35% from November through January 2021, reaching $182 billion to $196 billion.
The undeniable national and global momentum of ecommerce sales makes a holiday pricing strategy imperative in 2020. But the larger picture depicts this once seasonal shift in pricing strategy and demand for ecommerce supplies becoming more of the norm throughout the entire year.
Moving forward, retailers need to compete with the pricing strategy of Amazon while continuing to differentiate between the nuances of what makes a brand unique and what is lucrative in offering in 2020.
77% of US holiday shoppers say they intend to browse for 2020 gift ideas online, not in-store. With more purchase decisions being made online, retailers will need to bring the best of their store online and be ready to help customers complete their purchase.
Omnia was founded in 2015 with one goal in mind: to help shops take care of their assortments and grow profitably with technology. Today, our full suite of automation tools help stores save time on tedious work, take control of their assortment, and build more profitable pricing and marketing strategies. Omnia serves more than 100 leading brands and retailers, including Philips, Decathlon, Windeln.de, Tennis Point, Bol.com, de Bijenkorf, and Feelunique. Omnia scans and analyzes more than 500 million price points and makes more than 7 million price adjustments daily.