Each year at around this time, we dust off our e-commerce crystal ball and make some predictions for the rest of the year; particularly holiday season. Having been in this game for many years, we’ve become quite successful at it. So, in 2021, here’s our summary of what we think will happen, and what successful e-commerce merchants will be doing to set them apart from the competition.
To begin with…let’s face it; this holiday season is going to be different than any other holiday shopping season ever for e-commerce. The pandemic. Supply chain issues. Massive increases in e-commerce activity. A lot of issues are coming together to create challenges for merchants – but in every challenge, we can usually find opportunity…
Big Merchants Have an Advantage – Strategize Accordingly
If you sell products that at their core are directly competitive with the largest e-commerce merchants (Home Depot, Walmart, Target, Amazon, etc.) think hard about how you are going to position with or against them.
- These larger merchants have a significant advantage in a supply chain that is currently stuck.
- Their containers are moving and your supplier’s containers may not be. So be realistic if you are selling on their marketplaces.
- Bigger players will typically be able to more actively stockpile products in warehouses, etc. without the overheads crushing their profit margins.
If you are competing against them make sure your order fulfilment is honest. The chances are at some point they will be able to fulfil an order and you won’t be. With consumers well aware of the supply chain issues, they will understand that the large merchants may be more able to deliver on time this year, so they are likely going to check those sites first and google second.
Stocking and Protecting Inventory as early as possible.
People are already shopping for holiday. And it’s only mid October. Wise merchants are looking closely at inventory levels and price, and modeling out how they can charge the best price while still providing value for their consumers. Our intelligence is telling us that merchants are looking carefully at last year’s numbers and moving forward demand by 2 weeks. This means protecting inventory for holiday season when conversion rates are higher but also starting holiday marketing programs and promotions earlier.
Inventory management is going to be tricky this year if you expect shortages. Unless your products are produced locally or domestically, if you don’t have it in stock now, don’t expect to have it for holiday season. If possible, consider incentivising consumers to gift during the holiday season while delivering later, especially on gifts that aren’t going to be used until well after the holidays:
- Outdoor games
- Outdoor furniture
- Camping equipment
- Summer apparel choices, etc
This brings us nicely onto our next topic…
A Big Year for Gift Cards and Subscriptions
Merchants this year will also leverage unpredictability to push gift cards for unpredictable items and subscriptions to items that are predictable. Consumers are still going to look for value, so merchants will diversify gift offerings and provide an additional % value to get consumers to buy.
We’re hearing about merchants in durable consumer goods (furniture) offering gift certificates that can provide a lot of value like “a room full of furniture” gift certificate that costs $1,000 but provides the giftee $1,200 worth of furniture. Merchants are going to wrap these certificates in attractive packages so they provide a lot of gift value to the recipient when they are opened.
Partial Shipment and Delivery Innovation
Merchants will also look for ways to take the sale but deliver over several shipments. We think that if this is done in an honest and transparent way, merchants will be able to get away with it for high-demand items. Consumers will be more understanding than normal; especially as the supply chain issues extend well into 2022. Merchants will look to deliver goods with unpredictable timing by providing incentives and estimates for tracking packages that have a lot of buffer. After all, would you rather have that new BBQ smoker and the accessories delivered together a year late (or not at all), or at least part of it now? (especially the core of the order).
Honesty and Transparency will Win New Customers
Gone are the days of making a consumer wade through a merchandising and checkout process prior to telling them that their shipping for an item is going to take 90 days. Forward-thinking merchants are going to use visual indications, data, and real time delivery stats to be upfront with consumers about when their items will ship. They will also offer ways to help consumers feel better about the purchase and the receipt if the item is not received. With risk of non delivery increasing, especially as key holiday dates approach, forward-thinking merchants will offer didn’t arrive in time incentives like free accessories and add-ons in order to get the initial sale:
“Your Grill has 85% chance of being delivered by Holiday. If it doesn’t arrive in time we will send a personal gift box with $100 gift certificate for the accessories that go with your grill. We are working hard this (unpredictable) holiday season to make sure you and yours have a great holiday”
The Bottom Line
It’s not going to be an easy holiday season for many e-commerce merchants. But if merchants (and suppliers) look at the situation and plan accordingly. By taking an honest, up front approach, merchants have an opportunity to set the expectations appropriately and build real consumer trust. We think this approach will prove successful for many merchants; winning them new customers, and increasing ROI through lifetime value (LTV).