With the rise of Chinese e-commerce disruptors and the continued competition between Amazon and Walmart, big changes are expected in the coming holiday season. These changes include the declining importance of cyber fives and retailers becoming less focused on profitability, according to our analysts Jeremy Goldman and Zach Stamber on the Behind the Scenes podcast. on a recent episode of “The Numbers”.
1. The importance of Cyber Five will diminish.
The early start of holiday promotions will loosen Cyber Five’s grip. “[Early holiday sales] So people have less money to spend during Cyber Five, and ultimately these major shopping events become less and less important,” Goldman said.
- In 2019, Cyber Five sales accounted for 20.0% of total U.S. holiday retail e-commerce sales. According to the June forecast, it will account for 15.8% this year.
- Still, Cyber Five’s sales are large. US e-commerce sales for this period are expected to reach nearly his $40 billion.
- Cyber Monday will be the biggest sales day of the five-day period, with online sales topping $13 billion, while Black Friday will surpass the $10 billion milestone for the first time this year.
2. Retailers may ignore profits in favor of sales.
As retailers face increased pressure to boost revenue during the holiday season, too much emphasis on sales could overshadow the overall priority of profitability, Goldman said. “Retailers will spend a lot of money on retail media advertising this year, resulting in margin pressure.”
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This holiday season, advertisers are leveraging marketplaces to drive both product discovery and sales.
- According to our March forecast, U.S. retail media ad spending is expected to reach $45.15 billion in 2023, an increase of 19.7% year over year.
- “There [are] There are many options for where you can spend your money. [and] That’s where you get lost…and you lose sight of the end. [profitability] Goal,” Stamber said.
3. Walmart will end the year on a strong note.
Walmart is having a successful year thanks to its affordable grocery offerings and strategy to attract high-income consumers. Stamber said this momentum is expected to continue into the holiday season as retail giants leverage click-and-collect solutions in physical stores and large product offerings for online marketplaces.
- According to our June forecast, Walmart Inc.’s retail holiday e-commerce sales this year will reach $20.37 billion, accounting for 8.0% of total U.S. retail holiday e-commerce sales.
- Walmart holds the No. 2 spot in U.S. retail e-commerce sales and is expected to take market share from Amazon this holiday season.
4. Chinese e-commerce disruptors will claim huge sales
E-commerce giants with ties to China, such as Temu, Shein and TikTok Shop, have bigger ambitions and bigger advertising budgets, Stamber said. They intend to capture a large share by offering highly competitive prices, marketing their products on multiple channels, and encouraging spontaneous purchases.
- According to data.ai, Temu, Shein, and TikTok were among the four most downloaded apps in the US in the first quarter of 2023. All three companies are investing heavily to acquire new users, advertising widely across social, search, app stores, and mobile apps.
- In January 2023, just four months after launching in the U.S., Temu had 65.2 million unique visitors, surpassing Target, according to Comscore Media Metrix Multi-Platform.
- As inflation continues to be a top concern for US holiday shoppers, the lure of budget-friendly options will give these brands a big advantage.
Listen to the entire episode.