digital commerceAs I mentioned in my previous blog, the 2013 holiday shopping season saw its share of winners and losers.  And as retailers begin the planning process for the 2014 holiday season, not only must they proactively up their game in order to remain competitive, but many will also have to make some major technical and strategic adjustments in order to avoid duplicating any mistakes made in 2013.

To help you start thinking about some of the things you could do to improve this year, I’ve compiled a list of three observations I made coming out of holiday 2013, including some corresponding lessons-learned to consider as the countdown to Black Friday 2014 begins.

Observation #1: Expectations Are Skyrocketing

The 2013 holiday season was dominated by the retail giants who continued taking consumer expectations to new levels.  Huge discounts typically reserved for Black Friday arrived earlier than usual.  And despite some controversy, many stores even opened on Thanksgiving day.  More aggressive price matching policies emerged this holiday season, as did universal free shipping and even some same day shipping. Shipping windows were extended, while more and more brick and mortar omnichannel features were integrated as a means to deliver reserve in-store and ship-from-store services.

The emergence of these new conveniences is putting great new pressures on small to mid-size brands to deliver the same level of customer experience with significantly less financial and human resources.  After all, customers typically don’t differentiate between big and small companies and certainly don’t care about the size of the budget or your profitability.  They just want the best product at the best price delivered as quickly as possible.  So while the big resource-heavy companies set the expectations that the others have to now live up to.  It won’t be easy to say the least. But guess what?  Today’s customers really don’t care.

Lesson #1 for 2014

If you think expectations are high now, just wait until November 2014.  The sooner you embrace this and start preparing, the better off you’ll be.  First, you’ll need to ask yourself some questions: Are you delivering the engaging experience your customers are looking for?  Are your conversion rates increasing at the same rate as other top e-tailers?  Can your technology platform and ecosystem support the new baseline expectations?

If the answer to any of these is “no” or “not sure”, and none of these are factored into your 2014 planning, now would be the time to re-evaluate priorities to make sure you’re ready next holiday season.  After all, your customers will be.

Observation #2: The Mobile Shift Is On!

While 71% of digital commerce orders were placed via desktops and laptops this holiday season, that’s an 8% YoY decline.  Tablets on the other hand were up +3%, smartphones up +6%.  Mobile sales from Black Friday through Cyber Monday grew +63%, with one out of every four dollars spent coming via a mobile device.  In fact, Amazon reported that more than half its customers shopped on mobile devices this holiday season.

Lesson #2 for 2014

Mobile will remain at the center of retail’s omnichannel evolution.  So if you haven’t implemented a mobile commerce solution or haven’t continued to optimize it, you will eventually have to invest. But first, there are more questions to ask yourself to ensure you have a baseline understanding of your situation: Is your mobile experience optimized sufficiently to meet these rising consumer expectations?  Are you prepared to handle the increase in mobile traffic and activity?  In 2013, many were not.

According to Compuware APM, while web pages for the most part, were optimized for holiday 2013, many retailers weren’t as prepared to deal with spikes in mobile traffic.  During peak Black Friday periods, mobile response times averaged around 8 seconds, an unacceptable load time that is significantly worse than best in class benchmarks, and a major reason behind shopper abandonment.

Observation #3: Performance Matters

Many retailers and brands planned aggressive promotional strategies this year.  They readied multi-touch marketing plans across customer touchpoints, and many had invested in new website features months earlier, to add a creative refresh or a streamlined shopping cart.  So that meant they were ready, right?  Not so fast.  This year, even the “big boys” realized that underestimating the operational complexities of today’s eCommerce reality can sabotage even the best laid marketing and merchandising plans.

  • First, despite all the planning, many high profile retailers suffered severe site outages on Cyber Monday, and countless others experienced severe performance issues.  On one of the largest online shopping days of the year, every second of downtime or performance degradation can mean the loss of not only revenue but customer loyalty as well.
  • Next were the well-documented failures by FedEx and UPS to meet holiday delivery promises driven by a huge surge in last minute online orders.  According to Mercent Corp, online sales in the final weekend before Christmas was +37%, and +63% on December 23. Even Amzaon had to suspend Prime registrations to ensure it could fulfill on its commitments to existing customers.  With the pressure to extend the shipping window, many retailers played with fire this year on aggressively promising Christmas delivery later into the season.  And they got burned in the process.
  • And finally, there was one very well-publicized security breach that impacted a large brick and mortar retailer.  And while this wasn’t a digital commerce issue per se, it raises many security questions for etailers of all sizes.  Are you doing everything you can to protect your customers from the hackers and fraudsters that are becoming more and more sophisticated?

Lesson #3 for 2014

As many mid-size retailers and brands try to compete with the “big boys” of etail, they need to remember that the customer experience doesn’t end with the buy button.  They need to work closely with their technology, security, operations and logistics teams well in advance of holiday to make sure sites are secure, will be operating seamlessly at peak activity levels, and that customers will get their goods on time.   Too often, smaller to mid-size brands and retailers are forced to push the envelope to keep up with larger competitors.  But they focus too much attention on the outward facing aspects of their merchandising and marketing strategies, while overlooking some of the operational aspects of their business.  As many are learning, this can be a fatal oversight.

The reality of retail in this age of hyper-connectivity is that we are always in “holiday mode.” You’re either planning, building, executing or post-mortem-ing so Holiday 2014 is actually in full gear as we speak.  In fact, at Optaros we are already busy talking to our clients about what needs to be done to “win” this holiday.  So if you think you might need some help planning and preparing, we’d love to talk with you.