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The launch of the festive winter season is a major shopping occasion around the world, but it is also a major testing period for the adoption of new technologies and online platforms. The Christmas and New Year’s period of 2014 is expected to see some consumer trends entrenched, such as social shopping, geo-targeting and digital wallets, while retailers will rely more than ever on the web to attract consumers. More consumers will also buy from handheld digital devices, such as smartphones and tablets, as opposed to conventional computers. However, as the busy festive season kicks off, businesses must be ready to deal with challenges such as web traffic spikes and stronger competition.
Source: Euromonitor International trade sources/national statistics/International Telecommunications Union/OECD
Note: 2014 Internet user statistics are forecast
The Singles Day national holiday event (11th of November) has become an e-commerce phenomenon in China, with local retailing giants providing a blueprint for the Western world to follow in terms of integrating various platforms to attract buyers.
Alibaba, for example, utilised its portfolio of social networks, e-commerce sites and payment systems to attract consumers via heavily marketed discounts and streamlined purchasing tools. On Singles Day, the company processed over US$5.8 billion in its online payments system, a record for a single day anywhere in the world. Of course, it helps that China is home to the world’s largest online population, set to reach 638 million Internet users in 2014.
The festive season will be a major testing ground for the adoption of new services, and digital wallets will have the opportunity to shine. Apple Pay and Amazon’s wireless payment app, both launched in mid-2014, will look to prove that the mobile payments segment remains dynamic after years of underperformance. According to IBM’s 2013 Black Friday report, mobile purchases represented over 25.0% of total online sales on Thanksgiving in the USA, with this proportion rising both in developed and developing markets throughout 2014. The festive landscape is ideal for a mobile payments surge.
Another potentially lucrative tool this festive period could be geo-targeting, the practice of promoting offers based on region, city or even postal code. With web-based smartphones helping to record user movement trends, merchants can now personalise marketing campaigns to specific areas. This will certainly be a vital tool in helping retailers stand out from the massive crowd of e-commerce brands. Almost a third of the world’s total mobile phone subscribers will be connected to the web in 2014.
Social commerce has been finally embraced by Western social networks, with microblogging platform Twitter’s “Buy” button and Facebook’s e-commerce integration potentially launching a new era for the segment. However, while Chinese consumers have long looked to social media for their online-purchase decision-making, it remains to be seen if shoppers in advanced countries will buy into the trend. There has already been a fairly negative reaction towards increasing advertising on mainstream social networks like Facebook. However, such platforms provide a rich and unique pool of discounts, merchants could see high conversion rates from enthusiastic social media users. Global e-commerce value is set to reach US$840 billion in 2014.
The winter holiday season will offer peak opportunities for many Internet retailers, but the increased web traffic rates will also provide challenges. As sites have become more layered, integrated with other services and generally more complex, outages and server issues can become an unexpected but expensive nuisance. Many retailers were not prepared for the surge in mobile users during the Black Friday sale in November 2014. Retailing giants such as BestBuy, Topshop and Tesco faced significant outages throughout the marquee e-commerce event.
Finding the balance between a rich multichannel offering and the capability to host a spike in consumers will be key for sales-hungry retailers during this festive season.