by JJ Tyson, Contributor to Business 2 Community
Each year, a palpable shift occurs in consumer spending during the holiday season: shoppers become more impulsive. Suddenly, even reserved buyers who may normally require months to make a purchase are driven to convert. In fact, 1 out of every 3 purchases during the holiday season is an impulse buy.
As ecommerce prepares for the busiest online shopping period in history, let’s take a look and how and why consumer behavior is so affected by the holiday shopping season. We’ll also examine the projected effects of the pandemic on this year’s holiday season, and discuss data-driven strategies for maximizing revenue.
The Psychology of Holiday Shopping
For years, psychologists and consumer analysts have noted the connection between holiday shopping and impulsive spending. Instead of planning their purchases far in advance, many shoppers shift to a more spontaneous mindset. Of course, some of these decisions are simply because of lower prices. However, psychologists say there’s more to this shift in consumer spending during the holiday season.
Getting a Deal is Psychologically Rewarding
Beyond the utilitarian benefit of saving money, research shows that our brains reward us for getting a deal. Since holiday sales tend to offer the best prices of the season, consumers are willing to increase their spending to get what researchers call “Smart Shopper Feelings.” These emotions make ordinary purchases feel like an accomplishment, driving us to strike while the iron is hot.
Consumers Expect to Spend Money
While this idea seems simple, it’s important. The holiday season is one of the few times per year where most people (regardless of demographic) specifically anticipate making discretionary purchases. Last year, the average American consumers expected to spend approximately $1000 on celebrating the holidays. Since most people go into the holidays expecting to spend more than average, they feel more comfortable making spur of the moment purchases.
FOMO is Real
Also known as “anticipatory regret” by psychologists, Fear of Missing Out is a true concern for most holiday shoppers. Since holiday deals are only available for a short time each year, many consumers feel pressured to buy while they still can – even if they didn’t necessarily plan their purchase out.
Projected Shifts in Consumer Spending During 2020
Now that we’ve discussed how the holiday season at large affects consumer spending, let’s talk about 2020. We all know this year has been unusual, and the holiday season is likely to look different. The good news? Many of the changes that we expect will be beneficial to ecommerce. Here’s what will look different in 2020, and how you can prepare for major changes in consumer spending during the holiday season this year.
Expect a Seismic Shift in Favor of Ecommerce
Online shopping has experienced monumental growth in the past year. Thanks to agile adaptation by online retailers and rapidly increasing demand, ecommerce sales have shot up 113% year-over-year. As we enter the holiday shopping season, this trend is expected to accelerate.
How to Leverage This Shift in Consumer Spending
Given the projected increase in online sales, online competition will be more intense than ever. Now is the time to ensure you have on-site urgency and scarcity strategies that will get impulse shoppers to take the leap. While limited-time deals are par for the course, it’s important to make it clear that deals may not be around for much longer.
To start, try using timers and countdowns. A timer that shows visitors how long they have to act, which drives users to purchase without additional incentives. You can also use an overarching countdown clock at the top of your pages to show how long is left in the overall sale.
Low stock alerts are another highly effective urgency tactic. Emphasizing supply limitations decreases consideration time and drives users toward conversion. Furthermore, low stock alerts add an element of social proof to your site. By demonstrating that others are buying up a product quickly, you encourage users to follow the example of previous customers and convert.
A Spread Out Shopping Season Means More Opportunities
For years, holiday shopping has been largely centered around Black Friday. However, since high-traffic, in-person shopping is a less viable option this year, retailers and shoppers alike are free to break that mold. This shift is expected to have a major impact on consumer spending during the holiday season – specifically – on when shoppers choose to buy.
How to Leverage This Shift in Consumer Spending
Traditional Black Friday sales don’t always leave much time for remarketing. However since the holiday shopping season will be more spread out this year, retailers will have a renewed opportunity to revamp their holiday remarketing strategies.
While incentive-based emails are very effective, additional incentives may not be practical during Black Friday. In these cases, consider using a Cart Preserver combined with value reiteration. Of course, effective remarketing requires effective lead capture, so let’s take a look at what a non-incentive holiday campaign might look like.
Instead of offering a unique discount, speak directly to the abandoning shopper’s holiday mindset by offering to save their cart (and deals) for later. By entering their email address, they’ll be able to pick up right where they left off from any device – especially helpful for users who like to browse on their phone but buy from a desktop.
Remarketing to Holiday Shoppers
The keys to effective non-incentive emails are personalization and urgency. Start with a headline that underlines the value in the user’s cart while striking a friendly – but slightly urgent – tone.
- Sub: These holiday deals are still available (for a very limited time!)
- Sub: Get these holiday deals while you can!
For the body of the email, research says to keep your messaging short and sweet. Thank them for shopping with you, then emphasize the time-sensitive nature of their discounts.
Next, make sure to include their individual cart information in the body of the email. Remember, they’re probably shopping on a number of different sites, so remind them exactly what’s in their cart. Finally, make sure to emphasize the amount they’ll be saving by continuing with their order. Show the discount they’ll receive both as a percentage and a whole number.
Finally, include a call to action that speaks directly to the savings in their cart.
- Claim My Savings
- Shop the Sale
- Redeem My Offers
Generally speaking, a standard 3-email drip strikes an effective balance between consistent messaging and over-communicating. If the user doesn’t convert after 3 sends, change tactics and target them with a more generalized campaign.
Shoppers Expect Shortages – But They Want Options
While COVID-19 has created numerous challenges for retailers, supply chain and logistical disruptions have been especially difficult obstacles. As consumer demand swells in November and December, shortages are likely to continue for both suppliers and retailers.
In addition, because more shoppers than ever will be buying online, it’s likely that stock will run out on popular items faster than usual. While selling out is usually an indication of success, it can also mean missed opportunities as the season continues.
Unfortunately, approximately 30% of users will abandon if the item they want is out of stock. Effectively overcoming this problem requires implementing creative strategies that generate opportunities from a situation usually characterized by inconvenience.
How to Leverage This Shift
The right strategies can transform out of stock products into an opportunity to sell similar products and/or grow your list. Let’s examine two distinct strategies that can help retailers make the most of an unavailable product.
Back in Stock Notifications
If a sold-out product is likely to become available in the near future, Back in Stock notifications are an excellent way to add users to your list while providing them a valuable service.
If the shopper is viewing an out-of-stock product, simply offer to alert them as soon as the product is available. While this is frequently done via email, SMS notifications have become increasingly popular due to their high response rates and fast open times.
When the item’s stock is replenished, simply send the user a quick notification. Follow-up a time or two if necessary. Remember, consumers are likely to be shopping on a number of sites, so be sure to include the product(s) you’re referencing in the message.
In some cases, the timeline for stock replenishment may be uncertain. The product may also be part of a short-term offer which will no longer be relevant by the time stock returns. In these cases, you can curb abandonment and re-engage shoppers by showing the user similar items that may interest them.
In order to maximize profitability, recommendations should use AI and leverage known shopper data to provide the best possible options in a small space. Pages viewed, time on site, and past purchases can help the AI provide enticing options that will pave the way for conversion.
You can also consider showing the user several sets of recommendations. For instance, if the user is viewing a sale item, you can show them several items that are also on sale, several at a lower price point, and several at a more premium price point. By casting a wide net, you’ll maximize both the user’s options and your ability to recover the conversion.
Bracing For Shifts, Optimizing for Success
This year, shifts in consumer spending during the holiday season are set to have a major impact on ecommerce. As the rush begins, it’s vital to have a plan in place that addresses the changing nature of holiday shopping and the unique circumstances of this year’s holiday season.
Article originally appeared on Business 2 Community.
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