Finding Cross-Border Commerce Success in China
- Singles Day 2019 was bigger than ever, with $38.3 billion in sales by gross merchandise value. Learn how China makes Singles Day bigger every year.
- Generation Z is a key demographic for many retailers. See how they’re driving traffic back to brick-and-mortar stores.
- 65% of American shoppers believe they are at a higher risk of having their financial information exposed during their holiday shopping. Read why holiday fraud has shoppers on high alert.
Holiday shopping is the main event for retailers worldwide. This is the time of year when many merchants meet their annual revenue projections and become profitable. Shoppers show up en masse to claim big sales and deep discounts at brick-and-mortar and ecommerce stores. eMarketer forecasts that the 2019 holiday season will top $1 trillion in U.S. sales, making it the first-ever trillion-dollar holiday season,.
Retailers are already deep into their sales and marketing strategies in the hopes of attracting customers to their stores, websites and apps. But there are still a few tricks out there that any retail leader can learn from. Here are four things you might not have known about the holiday shopping season, with lessons to help improve your strategy.
Singles Day is the unofficial kickoff to the holiday shopping season
It seems like the holiday shopping season starts earlier every year. Major retailers like Target and Walmart insist on staying open on Thanksgiving Day to capitalize on holiday shopping. But the big sales started weeks ago on the unofficial kickoff for holiday spending: Singles Day, also known as the world’s biggest shopping event.
Every year on November 11 in China, Singles Day shoppers embrace the idea of spending money on themselves. The one-day shopping event became a massive hit on the Chinese e-commerce platform Alibaba thanks to the nation’s economic growth and increasing individual purchasing power.
Singles Day 2019 netted $38.3 billion in sales by gross merchandise value, surpassing last year’s $30 billion record, according to CNBC. Alibaba’s genius two-pronged approach drives sales by offering deep discounts on products from featured merchants on the website and hooking customers in with presales that allow for down payments on certain products and the ability to pay the rest on Singles Day.
As we pointed out in our e-book, “The Land of 800 Billionaires: Finding Cross-Border Commerce Success in China”: Social shopping is a huge driver of Singles Day sales for Alibaba. According to eMarketer, 34.6% of Chinese consumers spent four or more hours a day on WeChat, a platform that rolls social media, phone and text messaging functionality all into one. Shoppers can follow celebrities and influencers on WeChat and buy directly from live streaming shopping programs. This is an enormous sales channel in China — and America is finally taking notice. Kim Kardashian West recently did a WeChat livestream announcing her fragrance brand KKW will be available for sale on Tmall, another major Chinese shopping platform.
Lesson learned: Holiday shopping can take off any time of the year. With a yearly occasion, a strong integrated marketing campaign and omnichannel shopping options that provide a delightful customer experience, even American retailers can capitalize on a uniquely Chinese shopping holiday like Singles Day.
What Gen Z really wants for the holidays
Singles Day thrives because retailers understand that success comes from giving shoppers what they want. For merchants targeting Generation Z shoppers (people born in the late 1990s and early 2000s), this might be a tougher task. Gen Z’s demographic doesn’t operate by the same rules and patterns as previous generations, and some of their shopping preferences contradict tactics that work for other groups.
The difficulty of reaching this demographic shouldn’t discourage merchants from trying. Gen Z has close to $300 billion in direct purchasing power, according to Hana Ben-Shabat, founder of the research firm Gen Z Planet. Ben-Shabat’s research also shows key verticals that drive sales for Gen Z:
- Top categories for this demographic include entertainment and experiences, and health and wellness
- 60% of the demographic say it is very important for brands to be environmentally friendly
- 57% prefer shopping in stores to online shopping
Pay close attention to that last bullet. Gen Z might be the saving grace for brick-and-mortar retail. This demographic tends to see shopping as a form of entertainment, and younger shoppers are keener on the discovery process while shopping. Stephanie Wissink, a Jefferies analyst, found this is where and how Gen Z shoppers form their opinion on brands.
Nora Kleinewillinghoefer, a principal at A.T. Kearney who co-wrote a report on Gen Z retail habits, said 83% of Gen Z respondents and 86% of millennials value in-store technology like support tools, kiosks and maps. For Gen Z, physical retail and technology go hand-in-hand for delivering immersive, fully customizable shopping experiences that the old retail guard and even ecommerce can’t match.
Lesson learned: Don’t believe everything that you read about the death of retail. Ask your key demographics directly what matters to them — then provide it. Younger generations have different wants and needs from their parents’ generations, and their native understanding and experiences with technology drives the changes that will shape retail for generations to come.
The beauty category is still good for big wins
Gen Z is a key demographic for many verticals. Beauty is no exception. But with recent reports of Ulta and Estée Lauder’s stock being downgraded to neutral, does this mean the cosmetics market is on the decline going into the holidays?
According to Retail Dive, Piper Jaffray analysts wrote that the reasoning for Ulta’s downgrade was primarily due to weakness in the segment following several quarters of double-digit growth, and overall signs of weakness in the prestige segment. Financial analysts remain skeptical on beauty giants keeping pace for holiday sales, but there’s more to the big picture.
Larissa Jensen, executive director, industry analyst, Beauty, at The NPD Group sees value as a key driver of beauty product sales for Holiday 2019. She predicts that hot holiday items in beauty will include makeup minis, skincare sets and new fragrance launches — which always score high with shoppers this time of year. Plus, consumers are eager to try new products containing CBD specifically in skincare, which has been on a hot streak all year long.
If the beauty industry is truly in decline, Instagram did not get the memo. The platform recently revealed a curated collection of products inspired by some of the year’s biggest style trends. Users can purchase from the collection without leaving the app. The collections are timed for release ahead of the holidays, according to Mobile Marketer, and “themed around popular Instagram hashtags like #PartyLewk for seasonal partygoers, #MakeupQueens for fans of beauty products” and even #NewParents for baby-related gifts.
Lesson learned: Growth is important when forecasting retail success, but one metric doesn’t tell the whole story. Pay close attention to what customers are saying — and give them ample space to talk within your own channels like your brand’s social media profiles, your website chat bots and product reviews or forums. Always consider the source first. Your customers will tell you what they expect from you.
Holiday data breaches have shoppers on high alert
Retailers are focused on sales during the holiday season, as they should be. But while they’re chasing more revenue, merchants often miss how fraud can upend their best laid plans to claim profit wins at the end of the year.
Fraud surges during the holiday shopping season, especially in ecommerce. Terbium Labs released a report called “How Fraud Stole Christmas” that examines holiday retail fraud from many different angles. The most telling findings show how shoppers have zero tolerance for poor experiences and fraud losses:
- 68% of consumers would hold their bank at least partly responsible for fraudulent activity, regardless of how the compromise occurred
- 66% of Americans believe they could easily become a victim of fraud over the holiday season
- 65% believe they are at a higher risk of having their financial information exposed as a result of their holiday shopping
Signifyd’s own market research illustrates that consumers also blame retailers for fraud, no matter who was ultimately responsible for the fraudulent order. In fact, 51.2% of those polled by Survata on Signifyd’s behalf said having a fraudulent charge on their account left them with a negative opinion of the retailer where the charge was made. And negative impressions matter, as 52.8% of consumers said they would stop shopping at a retailer after the first or second bad experience with that retailer.
Brands are at risk, too. Cybercriminals love to pass off fake websites and ads to trick shoppers into turning over money and data for fraudulent online coupons and offers. ZeroFOX researchers filtered 124,000 domains containing a brand name by the certificate issuer to determine how many were imitating a legitimate business. 26 brands were identified in the report, with Apple, Amazon and Target as the biggest impersonation targets.
Fake websites flourish during the holiday shopping rush. Check Point research found a 233% increase in phishing URLs for online stores this year. Anything with keyword combinations promising free offers with a call to action like logging in or verifying an account to continue are easy to spot as fraud. And yet, they succeed in stealing money and data from shoppers every year.
Lesson learned: Since customers are already on high fraud alert, assure them that they are safe shopping with you and that their data and privacy are protected. Keep website and app security top of mind, and work with a solution that provides a financial guarantee against fraud on approved orders, like Signifyd.
Learn from hidden ecommerce holiday lessons
Merchants can capitalize on trends any time of the year, but the winter holiday season is the best time to strike. With the new perspectives from these four news items on lesser-known holiday facts, retail leaders can build on their success from this holiday shopping season to reach even bigger profits in 2020 and beyond.
Don’t stress about holiday order spikes, increases in fraud and other ecommerce woes. Work with us to shift fraud liability away from your business and allow automated order fulfillment. Focus on making the sale. Leave the fraud review to Signifyd. Contact us to learn more.
