2015
Benchmark
Report Series

Ecommerce Holiday Trends

Key Findings

Impact of the Holiday Season

November and December drive 30% more ecommerce revenue than non-holiday months.

Holiday Shopping Days

The days from Black Friday through Christmas pull in 50-100% more revenue compared to shopping days throughout the rest of the year.

Non-holiday Months Matter

The impact of the holiday season has trended downwards year over year. In 2014, holiday revenue accounted for less than 20% of total annual revenue.

Holiday-sensitive Retail Segments

Ecommerce shopping patterns vary dramatically by industry. Only two of the segments for which we have data, Apparel/Accessories and Computer/Electronics, are highly holiday-sensitive.

Executive Summary

The holiday season commands a lot of attention in the world of retail. According to Statista and the National Retail Federation, the holiday season accounts for around 20% of the retail industry’s annual sales, and can account for as much as 30% of an individual retailer’s total sales.

The importance of the season to offline retail has been proven by years of data, and established long before Cyber Monday existed. However, over the past two decades, the ecommerce industry has become an integral part of the holiday season narrative.

As the season approaches, retail pundits and forecasters are looking at predicted trends, shopping day expectations, and overall consumer forecasts. Post-season analysis measures the “winners and losers,” crunches the data, and examines changing shopping behaviors.

In this report, we wanted to look more closely at the traditional assumptions around the importance of the holiday season. We discovered that while it’s true the holidays are important for many retailers, there are several key nuances to this storyline, and some surprises about how the impact of the holiday season has changed over time.

How Important is the Holiday Season for Ecommerce Retailers?

We set out to answer a basic question: How important is the holiday shopping season? Many online retailers start planning for the season as early as August and pay top dollar for customer acquisition during this period. But is all this attention really worth it? To get a first-pass answer, we charted ecommerce revenue by month:

What we found is that November and December combined for over 20% of total annual revenue. On average these holiday shopping months bring in 30% more revenue than non-holiday months. This conclusion puts our data directly in line with numbers produced by the NRF.

When Does Most Holiday Shopping Occur?

The start of the season is important for planning ad budgets, promotions, and inventory, so it’s critical to get it right. Most industry research defines the holiday season as November 1st to December 31st. We wanted to find out if that meshed with reality—does holiday shopping really start on November 1st?

To do this, we looked at daily ecommerce revenue for the entire period of October through December on a rolling average basis. This chart paints the picture:

The days from Black Friday through Christmas pull in 50-100% more ecommerce revenue compared to shopping days throughout the rest of the year.

While the start of November shows a slight uptick in revenue, you see that it’s the period from Black Friday through Christmas where sales really pick up. These shopping days pull in 50-100% more revenue than shopping days during all other times of the year.

Is Holiday Shopping Behavior Shifting for Ecommerce Retailers?

Next, we wanted to understand if the impact of the holidays have changed over time. The chart below paints a clear picture.

The 2014 holiday season accounted for less than 20% of total annual revenue.

The importance of the holiday season has trended downwards over the past five years, accounting for less than 20% of total annual revenue for the first time in 2014.

Why is that happening?

It’s often easier to answer “What happened?” with data than it is to answer “Why?” We find ourselves in that situation here. It’s clear that holiday shopping behavior is becoming less pronounced as the ecommerce landscape matures, but we haven’t yet looked at data that would answer the “why.” We can make an educated guess though.

Traditional retailers, both catalog and brick-and-mortar, rely heavily on holiday shopping to hit their annual revenue targets. But today’s most innovative online retailers—companies like Mizzen & Main, Harry’s, Plated, and more—build relationships with their customers throughout the year. They use subscription models to create regular purchase habits, build high-quality brands to nurture affinity, and use effective (but not always discount-based) retention marketing. Because of this, they’re less reliant on holiday shopping than traditional retailers.

In the next section, we’ll look at the various ecommerce segments for which we have reliable data and see whether trends like these actually play out.

Which Ecommerce Segments are More (and Less) Holiday-sensitive?

The data shows that the holiday season is having a decreasing impact on annual revenue, but so far we’ve only been looking at these trends in aggregate. As any holiday shopper knows, there are some items that are simply more “giftable” than others. We wanted to explore the role of industry segment on holiday sales.

The chart below shows the percentage of annual sales occurring in November and December broken down by industry segment.

Unsurprisingly, the top two most holiday-sensitive segments were Apparel/Accessories and Computers/Electronics. Also unsurprisingly, the two least-sensitive segments were Food/Drug and Health/Beauty. This intuitively makes sense (people need to eat all year!), but we were curious to dig into the daily revenue data to see whether it supported these findings.

The impact of the holiday season varies greatly depending on industry segment.

Just by glancing at the two charts, it’s easy to see the difference. Around the key shopping days, holiday-sensitive segments have peaks at more than double the daily revenue of the average day. While the insensitive segments show some revenue increase on key days, there’s much greater variability throughout the season.

The bottom line from these charts is that not all segments within online retail are impacted the same way by the holiday season. Before jumping into the holiday fray of advertising and email-overload, retailers should measure their own holiday sensitivity against these benchmarks to determine how important the holiday season is to their top line.

How Have Holiday-sensitive Ecommerce Segments Been Impacted Over Time?

Discovering that certain industries are more sensitive to the impact of the holiday season also gives us a clue about who might be more affected by the overall decline in holiday revenue. We wanted to investigate this further by seeing how holiday revenue has trended since 2010 for both sensitive and insensitive segments.

The chart below shows the percentage of annual revenue for holiday-insensitive segments generated during the holiday season over the past five years.

The insensitive segments remained relatively flat from 2010-2014, with only a slight decrease over time. One thing worth pointing out is that since 2012, holiday shopping has only brought in 16% of annual revenue. This is particularly interesting because it means that these segments are actually generating less revenue during holiday months than they are during the rest of the year.

Now let’s see how this year-over-year data compares for the holiday-sensitive segments -- Apparel/Accessories and Computers/Electronics:

Here’s where things get interesting. Segments sensitive to the holiday season showed a significant drop-off in holiday spending over the last five years. The data shows that the holidays were massively important to these segments in 2010 and 2011, accounting for 32% of annual revenue. Yet by 2014, the holiday season was only accounting for 20% of annual revenue.

Take a look when we compare the difference in percentage of total revenue for both segments between only the years 2010 and 2014.

This chart provides valuable context around the industry-wide decline in holiday shopping. For ecommerce overall, the percentage of annual revenue dropped 3 percentage points, for insensitive retail segments this drop was only 2 percentage points, but for sensitive segments this drop was 12 percentage points. The two holiday-sensitive segments -- Apparel/Accessories and Computer/Electronics -- are being disproportionately impacted by the downward trend in holiday spending.

As we know from our earlier analysis, the big holiday shopping days, Black Friday and Cyber Monday, still bring in 50-100% more revenue compared to shopping days throughout the rest of the year. In the next section, we’ll look closely at the core holiday shopping days and how behaviors change for the sensitive vs. insensitive segments.

How Important are Black Friday and Cyber Monday to Ecommerce Revenue?

Black Friday and Cyber Monday are the linchpins of the holiday shopping season. We were curious to see how this played out for the sensitive vs. insensitive segments. Take a look at the insensitive segments first:

This chart is centered around Black Friday and shows the 10 days leading up to and the 10 days following it. Notice that even for the insensitive segments, Cyber Monday is making an impact. We see a decline over time in the percentage of period revenue that the day accounts for, but the spike indicates that Cyber Monday is important no matter what the industry. In other words, even though our prior analysis revealed that the holiday months are no different than the other ten months of the year, Cyber Monday still matters.

While our data set doesn’t allow us to hack into the complicated mind of the holiday shopper, secondary research provides some context to what we’re seeing here. According to recent research, 92% of shoppers will look for discounts online to find the best bargain, and Cyber Monday is the most heavily discounted online shopping day. While holiday shoppers aren’t doing much shopping in the insensitive segments -- Food/Drug and Health/Beauty -- they’re more than willing to purchase in these categories on the days offering deep discounts

Now, let’s look at this same chart for holiday-sensitive segments.

This chart shows the evolution of Black Friday from being primarily an offline event, to becoming a fully ingrained part of the ecommerce holiday season. In 2010 and 2011, Black Friday was primarily an offline event. While there was a small uptick in revenue, the effect is muted, especially when compared with Cyber Monday. In these years, Cyber Monday was the dominant shopping day for online shopping. This matches with the traditional narrative—it’s called Cyber Monday for a reason.

Looking at data for 2013 and 2014 tells a different story, however. More recent years show a “leveling out” in shopping patterns. In 2014, online shoppers treated Black Friday and Cyber Monday almost exactly the same.

This is another situation where the data makes it very clear what is going on, without revealing the exact cause. What we do know is that 2012 was the year of the "mobile majority" in the U.S., with smartphone ownership crossing 50% of all mobile subscribers. During the holidays last year, 45% of all online traffic to retail sites and apps came from smartphones and tablets. It’s clear that traditional demarcations of online and offline patterns have been altered, and this is very likely what’s driving the popularity of Black Friday in the online world. If this is the case, we’ll expect to see Black Friday holding equal weight as Cyber Monday in the years to come.

The Changing Significance of the Holiday Season

It’s with good reason that the holiday season commands the full attention of online retailers. The impact of the season is real. But the data reveals that there may be a shift in the impact the season is having on the average online retailer’s bottom line.

While we can’t answer the “why” of this definitively, we found some clues. It is clear that the holiday season has come to have less of an impact as the ecommerce space, and its marketing strategies, have continued to mature. For example, the strategies that are being executed by top performing ecommerce companies are focusing on the following:

These are strategies that revolve around 365-day execution, and often work best within non-seasonal industry segments, or at least within markets where the holiday shopping calendar is not as dominant.

The holidays will always be an integral part of an ecommerce site’s strategy, and will continue to have a significant impact on their bottom line. However, the data in this report shows that, when it comes to the holidays, online retailers need to be closely monitoring their buyer behavior as it is now changing in real-time. Changes in buying habits and ecommerce practices are eroding traditional industry assumptions about how the holidays are “supposed to” work.

Methodology

RJMetrics is the analytics platform of choice for over 400 online businesses, many of whom are ecommerce retailers. Our global customer base ranges from new ecommerce companies with less than $1 million in annual revenue to some of the fastest growing companies in the IR 500.

The analysis in this report is drawn from the anonymized data from these clients.

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