Hot on the heels of Black Friday’s good news for brick-and-mortar retailers, online retail received its own dose of good news last week as initial reports on consumer “Cyber Monday” ecommerce sales revealed that US consumers clicked through to a whopping $6.59 billion in online sales—a 16.8 percent increase over last year. The caveat—Amazon took the lion’s share of those sales. The news also masks systemic issues that continue to plague legacy retailers: namely, infrastructure issues, and a continued reliance on undifferentiated discounts that leave consumers unmotivated.
By Rick Ferguson
The very notion of “Cyber Monday” is something of an anachronism, given that the term originated when most online shoppers leveraged the high-speed internet connections in their workplaces rather than log onto their slower home connections. Now that most of us enjoy high-speed internet, Cyber Monday has become more like the “Cyber Five”—those five days between Thanksgiving Thursday and the following Monday that can spell the difference between glory and ignominious defeat for online retailers. The good news: using Cyber Monday as a proxy, retailers had a very good weekend.
Adobe Analytics released its initial report documenting the nearly 17 percent increase over last year’s Cyber Monday sales. It also revealed that sales via mobile devices are nearing a majority of online site visits, with mobile users now making 47 percent of all visits. Smartphone traffic rose 22.2% year-over-year, with the record-high of $2 billion in sales made via smartphones representing a 40 percent increase over last year, and smartphone conversions growing by 12 percent. Interestingly, iPhones lead Android devices in sales, with average order values of $123 on iPhones versus $110 on Android devices.
So, while online sales are enjoying a healthy growth spurt, the news isn’t all good for retailers. Amazon, after all, still manages to take the lion’s share of online sales: 42 percent this year, according to Slice Intelligence. Several retailers also suffered from failures both IT-based and of strategy. The Washington Post, for example, reports on Macy’s troubles:
“Macy’s said it had ‘system issues’ on Friday that led to problems processing credit cards and gift cards in stores across the country. Many shoppers took to social media to voice their frustrations, creating a new set of challenges for the department store company, which has reported 11 consecutive quarters of sales declines. ‘The delays we experienced were due to a capacity-related issue that caused some transactions to take longer to process,’ the company said in an email on Saturday. ‘We do not anticipate any additional delays’.”
Over at RetailDive, Simon-Kucher partner Ricardo Rubi laments the tired promotional strategy of many department store retailers:
“‘We would have liked to see Macy’s being a bit more strategic about their promotions,’” Simon-Kucher's Rubi said. ‘They just revamped their loyalty program, they need to brickwall consumers, it would have been good to see promotions that encourage the sign-up and usage of their new program.’ As far as J.C. Penney goes, Rubi described its deals as giving away ‘everything but the kitchen sink. With extended Black Friday sale dates, no-coupon promotions, at-door coupons, more and more coupons, the retailer is making an ultimate grasp for traffic – any traffic,’ he said. ‘Once again, they resort to the extreme discounting that seems to resonate best with their dwindling base of consumers.’”
That’s a harsh assessment—but not an inaccurate one. The good news for retailers: consumers are shopping again. The danger is that, rather than capitalize on this renewed enthusiasm by building relationships with shoppers that last beyond the holiday season, retailers instead chase immediate sales by providing the same old undifferentiated discount offers, only to watch the cherry-pickers depart for the greener climes of Amazon Prime. It’s the difference between pursuing a healthy lifestyle, and chasing a sugar high.
Rick Ferguson is Editor in Chief of the Wise Marketer Group and a Certified Loyalty Marketing Professional (CLMP).