What Ecommerce Brands Can Learn from the 2021 Holiday Shopping Season

With 2022 officially here, many brands are racing to put 2021 in the rear-view mirror. While this is understandable, it would be a missed opportunity to ignore the most important lessons of the past few months. The following are the top takeaways from the holiday shopping season that will help elevate your brand in the new year.

Ecommerce is Still Growing

Despite a pandemic, people are shopping. U.S. retail sales rose 8.5% from November 1 to December 24, according to a recent report by Mastercard. Ecommerce fueled much of this growth, accounting for 20.9% of total retail sales, up slightly from 20.6% in 2020. In the end, online sales grew 11.0% during this year’s holiday shopping season.

“Shoppers were eager to secure their gifts ahead of the retail rush, with conversations surrounding supply chain and labor supply issues sending consumers online and to stores in droves,” Mastercard Senior Advisor Steve Sadove said in a statement. “Consumers splurged throughout the season, with apparel and department stores experiencing strong growth as shoppers sought to put their best dressed foot forward.”

Mastercard U.S. retail holiday sales report.

Holiday Shopping Started Earlier

Since the 1950s, the end of Thanksgiving has served as the kickoff to the holiday shopping season. However, this changed in 2020 when Amazon pushed its annual Prime Day event to October (instead of summer). The highly anticipated event generated more than $10 billion in 48 hours and brought customers into an early holiday shopping spirit.

Prime Day 2021 took place during the summer, but holiday shopping began early again as retailers and customers anticipated supply chain issues. By early October, virtually every major retailer had launched holiday sales. According to Mastercard, total retail sales were up 8.6% year-over-year for the 75 days between October 11 and December 24.

Cyber Week Sales Dipped (But Are Still Important)

Despite some reports to the contrary, the most anticipated shopping week of the year is still relevant. Black Friday marked the top spending day of the 2021 holiday season. Mastercard reported that shoppers drove U.S. retail sales 14.1% year-over-year during Thanksgiving weekend. In-store sales also rebounded, increasing 16.5% year-over-year, while ecommerce sales grew 4.9%.

A widely cited report by Adobe Analytics found that shoppers spent a total of $10.7 billion on Cyber Monday this year, down 1.4% from the previous year. This is about $100 million short of what shoppers spent in 2020. Still, Cyber Monday was the largest online shopping day of 2021. In the peak hour (11pm-12am ET), consumers spent $12 million every minute.

More evidence that Cyber Week still matters is the rise in cost of advertising – particularly on Amazon. According to a 2021 Cyber Five report by Pacvue, the average cost of Sponsored Brands ads rose 27.22% week-over-week and 27% year-over-year on Black Friday. Similarly, the cost of Sponsored Brands ads rose 34.86% on Cyber Monday. This increase shows that brands are still competing aggressively for Cyber Week sales despite an early start to holiday shopping.

Online Holiday Traffic Tapered Off Sooner than “Normal” 

In years past, the holiday shopping season maintained strong momentum right up to the end. This year was different. The early start to holiday shopping meant many customers finished much sooner. This is evident in the decline in traffic and sales on Black Friday and Cyber Monday.

Other factors like low inventory due to supply chain issues only compounded the problem. By late November, many brands were unable to restock their inventory even if there were customers ready to purchase. For most of the retail industry, overall online traffic peaked during Cyber Week and tapered off significantly in December.

Channel Key Takeaway

By and large, the holiday shopping season was a success for most brands. While ecommerce growth dipped from the astronomical gains of 2020, it continues to gain market share over brick-and-mortar stores. Moving forward, brands should pay close attention to how purchasing habits evolve. Those that meet customers wherever they are shopping – whether online or in physical stores – will reap the lion’s share of rewards.

Posted January 7th, 2022 in .

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