Deloitte’s annual holiday retail forecast predicts that holiday retail sales will likely increase between 3.5% and 4.6% during this year’s November-January holiday period. For eCommerce, the forecast expects growth to reach between 10.3% to 12.8% from the previous year, resulting in a total of $278-$284 billion in sales.
What is Seasonality?
In eCommerce, seasonality refers to the predictable peak sales periods a merchant experiences year-over-year. Most obvious are the fall and winter holidays, including Thanksgiving Day, BFCM (Black Friday, Cyber Monday), and Small Business Saturday, which have been known for driving an influx in sales for most retailers.
However, with the rise in eCommerce, many online merchants experience seasonal slumps and surges throughout the year. For example, NoFraud customers KM Tactical and Bases Loaded provide equipment for hobbies and sports that are season-specific, so they see additional spikes during months outside of the traditional end-of-year holidays.
Seasonality: Cultural Celebrations and Other Holidays
Beyond traditional end-of-year holidays, seasonality is also associated with other cultural and national celebrations that happen throughout the year. For example, online flower shops may experience a significant increase in sales during Valentine’s Day and Mother’s Day, though they may not see much activity during the Fourth of July. On the other hand, an eCommerce shop that sells patriotic merchandise will find the most success during celebrations that honor the United States. Other shops may try to capitalize on seasonality during these occasions by adding specialty product lines for a limited run, e.g., an apparel company selling shirts with an American flag.
Diwali, one of the major festivals in India, occurs over a period of five days and is celebrated by millions of Hindus, Sikhs, and Jains. Shoppers are encouraged to make purchases during the month of November and are incentivized with discounts and deals. Last year, Diwali drove a 17% year-over-year increase in online sales.
Single’s Day, a relatively new holiday in China, has broken eCommerce sales records in the country. Instead of celebrating couples and married people, Single’s Day inspires single people to spend money on their friends. Marketed as a 24-hour flash sale that celebrates singlehood, it’s the world’s largest shopping event, with 2022 sales estimated at $157 billion.
Additionally, it’s also very common for online merchants to leverage holidays throughout the year to simply promote sales, offering discounts and limited-time offers regardless if their products align with the holiday, e.g., Memorial Day or Labor Day weekend sales.
Impacts of Seasonality on eCommerce
Seasonality has significant impacts on eCommerce businesses, influencing various aspects of their operations, including sales, marketing, inventory management, and overall business strategy. Here are some of the key impacts of seasonality on eCommerce shops and tips for understanding how to maximize revenue during these peaks.
Prepare for Sales Fluctuations
Seasonal changes can lead to significant fluctuations in sales. Businesses may experience peak sales during the holiday season or specific shopping events like Black Friday and Cyber Monday, while other times of the year may see lower sales. Understanding and preparing for these fluctuations is crucial for revenue forecasting and financial planning.
Seasonality also requires careful inventory management. Businesses need to stock up on popular seasonal items to meet increased demand and avoid overstocking when the season or promotional period ends. Efficient inventory management is crucial to prevent stockouts and excess inventory.
Get More Out of Marketing
Seasonal marketing campaigns can help capitalize on the increased demand during specific periods. Frank Martinez, Head of D2C at Shimano, says brands shouldn’t “underestimate the value of using quality assets in your [holiday] campaigns.” The Shimano team puts extra rigor around creative assets in an effort to get more use out of the content beyond the busy season.
Many eCommerce leaders recommend preparing marketing strategies as early as two months prior to their busy seasons, which includes ensuring automation and tooling are tested and ready to handle the influx of traffic. Businesses often adjust their marketing strategies across email marketing, social media campaigns, and advertising, to align with seasonality trends and demands. Getting creative and ensuring alignment across campaigns can help you better target shoppers to drive sales during peak seasons.
Consider Seasonal Pricing and the Competitive Landscape
Pricing strategies may need to be adjusted to maximize revenue during peak seasons. This could involve offering discounts and promotions during slow periods to maintain customer interest, while pricing products competitively during high-demand seasons to capture a larger share of the market.
Many eCommerce businesses face increased competition during peak seasons, as numerous other companies also target these high-demand periods. Staying competitive may require innovative product offerings and exceptional customer service.
Design for Demand
Increased sales during seasonal peaks may place a higher demand on customer service and support teams. Merchants need to be prepared to handle increased inquiries, returns, exchanges, and other customer service needs during these periods. Make sure to have a clear return policy and process in place to manage this effectively.
Managing demand also includes considering your payment processing, fulfillment, and shipping systems. All of these systems need to be able to handle increased transaction volumes during peak seasons. Test systems in advance to ensure their reliability and security to avoid any disruptions in the checkout process. Delays or mishandled orders can result in dissatisfied customers leaving you for competitors.
Your eCommerce platform and infrastructure should also be tested for increased traffic and transactions to prevent any downtime. Scalability, redundancy, and performance optimization are key considerations for maintaining a seamless online shopping experience.
Don’t Forget Off-Peak Strategies
Preparing for off-peak seasons is just as crucial as being ready for seasonality waves. Use your downtime strategically so you can optimize for the ups and downs your business may experience. Find ways to generate revenue and maintain customer engagement during slower times through off-peak sales, promotions, and marketing strategies.
Some eCommerce leaders recommend testing your busy season strategies during off-peak seasons. Use that time to refine and optimize campaigns that you can feel confident running during busy seasons. Be sure to maintain rigor around testing and data analysis so you can effectively forecast and prepare for seasonal fluctuations. For more advice on optimizing your shop for seasonality, read How eCommerce Leaders Prep for Their Busy Seasons.
Prepare for Increased Fraud Attempts
During busy seasons, merchants face an increased risk of fraud attempts and must create a balance between protecting their shop and ensuring that no valid transactions are declined. Fraudsters know that merchants are overwhelmed with traffic and volume, which means merchants have less time to properly screen their transactions. Fraudsters take advantage of this by hiding their schemes within increased seasonal eCommerce traffic.
When processing a high volume of orders, merchants may experience a temporary reduction in available inventory. This can mean delayed delivery times for seasonal shoppers. With the spike in orders, there are also plenty of opportunities for confusion (or frustration) surrounding updated shipping terms — and chances for fraudsters to take advantage of the increased demand placed on merchants. They may initiate more chargebacks in an attempt to disguise their fraudulent orders among legitimate shoppers.
A report by Cybersource found that 39% of merchants have fallen victim to first-party fraud. Chargebacks should not be taken lightly as customers who commit this type of “friendly fraud” are nine times more likely to do it again. To protect your shop this holiday season, learn more about NoFraud’s Chargeback Management, which helps lift the burden of managing disputes off your shoulders — even for non-fraud-related claims like “defective merchandise,” “item not as described, ”and “item not delivered.”