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2020 holiday season: What to expect down under

As we approach the end of the year and the lucrative holiday season, If there’s one certainty, it’s that nothing is really certain. COVID-19 has changed consumer behaviors and priorities. It caused shifts in brand loyalty, making availability, convenience, and affordability the predominant factors in consumer choice. 

In Australia, retail sales have been erratic to say the least. Unpredictable month-to-month highs and lows were recorded as people tried to adjust to a reality dominated by confusion and lockdowns.

Source: Australian Bureau of Statistics, undefined August 2020

But from an eCommerce perspective, the pandemic caused mass-migration online: during the first half of the year, retailers experienced holiday-like traffic and sales via digital commerce channels.

Australian shoppers, according to a recent report by creative ad agency We Are Social, were on-trend. Online sales in April grew by 80% YoY, and Easter shoppers flocked online in 2020, beating Cyber Monday sales from the previous year.

In September, consulting company Deloitte predicted that the 2020 holiday season will see tepid-to-modest sales growth of 1% to 1.5% YoY. ECommerce sales, however, would be responsible for the lion’s share of activity, and are expected to balloon by up to 30% (compared to last year’s 14.7% rise in online holiday sales.)

Trying to Predict the Unpredictable

With so much uncertainty, how can merchants really prepare for the opportunities to come? Clues could be found in the holiday shopping patterns that unfolded thus far in 2020. We looked at America’s Labor Day (September 7), a traditional shopping holiday in the US, and Mother’s Day (May 10), a traditional gift-giving holiday. Both holidays were celebrated deep into the pandemic. 

Right off the bat, it was clear that the increased online engagement played out on sales days: Labor Day saw 35% growth with a 2.5% increase in deal average.

We also saw a significant increase this year in total online spending during gift-giving holidays. Mother’s Day sales were up 22%. This represents a potential shift in the role digital shops played on these holidays, from a complementary channel to brick and mortar shops, to the main gifting channel. 

Australians took advantage heavily in online shopping holidays, even ones that are not celebrated locally. Cross border orders made with an Australian IP recorded a dramatic increase on America’s Labor Day in 2020, for example, up 90% in dollar spend and a whopping 140% in the number of orders from the previous pandemic-free year.

Gift Cards reign supreme

Under the auspices of widespread lockdown, digital gift cards transformed from a marginal product category with a shady reputation for attracting fraudsters, to a gifting go-to and an engine of economic growth.

Our data show that GCs saw a dramatic increase in demand this year. While people on average spent less per card, they bought more of them. This year’s Mother’s Day saw the volume of GC transactions rise by ~245% YoY. Last minute shopping goes hand-in-hand with digital gifting: on Mother’s Day, we recorded an increase of 191% by deal count and  135% in value compared to the average of the week prior to the holiday. 

Takeaways

  • Expect growth: globally, two opposing factors are pulling at the ropes of the digital economy. On the one side, the global recession brought on by the pandemic, and on the other side, a massive shift to eCommerce. So far, eCommerce is tilting the balance in favor of online retail. This means high-velocity activity and a lot of never-before-seen consumers, both of which can overwhelm websites, logistical operations, and fraud prevention operations. Merchants should refrain from restrictive fraud prevention systems that could increase false-declines and turn away good customers. 
  • Expect the unexpected: the 2020 holiday season will be characterised by new shopping patterns and shifts in brand loyalty. We are also looking at a potentially longer season, as many consumers might look to bypass inventory problems and fulfillment delays by starting their holiday shopping earlier. This ‘anything is possible’ environment can fuel growth, as long as rigid fraud detection systems don’t get in the way.  For retailers, an automated and scalable fraud management strategy will be key.
  • Bet on Gift Cards: GCs are the growth engine of the season. Merchants who promote them in time for the holidays could carve out an additional revenue stream. The key is to do it safely, as GCs are highly sought out by fraudsters, and the fact that they are instantly fulfilled makes manual review an unsuitable solution. 

A technologically advanced fraud detection partner with the ability to deliver instant decisions can support merchants through a volatile business environment, especially during what will turn out to be a very digital holiday shopping season.