The holiday season is the most important time for retailers and the key time to see how consumer behavior is changing. This year we saw consumers move more of their shopping online and across digital channels. Total sales grew 7.9% year-over-year (YoY) and e-commerce spending grew 20%, according to MasterCard SpendingPulse.
To achieve these gains, top retailers spent huge amounts of money on ads geared heavily toward the major holiday shopping days. But specific shopping days are becoming less important in the age of round-the-clock online retail. Between November 22 and December 22, online retailers in the US posted 31 days in which they processed more than $1 billion in daily sales, up from 25 days the year before, according to Adobe.
Within digital, consumers are spreading out their retail purchasing across channels, forcing retailers to spread out their online marketing budgets. Paid search, affiliate marketing, and email all increased their share of e-commerce referrals last year, according to Custora.
Paid search especially stood out as a major source of spending by retailers. Search ad spending grew 18% YoY in Q4 2015, compared to 5% growth during the holiday quarter the year prior, according to IgnitionOne. Increased spending was spurred largely by Google's rollout of carousel ads.
Mobile continues to drive the most sales growth for retailers, but sales still aren't keeping up with retail traffic. IBM found that smartphone traffic beat both tablet and desktop, making up 53% of all online traffic. But mobile still only accounted for 29% of all online sales.
Retailers only have themselves to blame for underperformance on mobile, as many still aren't using best practices for mobile websites and apps. Only 60% of the top 100 global retailers currently have a dedicated mobile website, according to The Search Agency.
The increase in online shopping has put stress on the shipping and logistics industry. The number of UPS ground packages delivered on time during the holidays fell from 97% in 2014 to 91% in 2015, according to ShipMatrix.
Retailers are beginning to explore alternative shipping options. Earlier this year Gilt Groupe switched its primary ground shipper from UPS to Newgistics and Amazon is investing heavily in its own fleet of cargo planes and tractor trailers to handle deliveries.
Retailers that can't afford to invest in alternative shipping options are offering consumers more fulfillment options using what many of them do have — brick-and-mortar stores. Buying online and picking up in-store, also [...]