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Cyber Monday breaks online sales record

BY Marianne Wilson

Cyber Monday sales were even better than expected, fueled by a surge in mobile commerce.

The online shopping event hit a record $7.9 billion, representing a 19.3% increase over last year, according to data from Adobe Analytics. Mobile transactions surged 55.6%. It was the single largest online shopping day of all time in the United States.

“Sales coming from smartphones hit an all-time high of $2 billion and we saw a significant spike in the buy online, pickup in-store trend,” said John Copeland, head of marketing and customer Insights at Adobe.

Cyber Monday was also big for Amazon, which announced that Cyber Monday was once again the single biggest shopping day in the company’s history with more products ordered worldwide than any other day. Additionally, the five days starting with Thanksgiving and continuing through Cyber Monday, broke records as customers in the U.S. purchased millions more products over the five day period vs. the same period last year.

According to Adobe, 2.3% of product page visits saw an out-of-stock message on Cyber Monday, up over a season average of 2.1%. This cost retailers up to $177 million in potential sales. In comparison, Thanksgiving saw 3.3% and Black Friday saw 2.8%, costing retailers up to $120 million and $177 million, respectively.

Additional Cyber Monday findings from Adobe include:

• Golden Hours of Retail:  The three hours between 10:00 p.m. and 1:00 a.m. ET on Cyber Monday were expected to drive $1.7 billion in online sales, roughly $300 million more than an average full day during the year.

• Out-of-Stock Levels: 2.4%  of product page visits saw an out-of-stock message on Cyber Monday, up over a season average of 2.1%. This cost retailers up to $187 million in potential sales. In comparison, Thanksgiving saw 3.3% and Black Friday saw 2.8%, costing retailers up to $120 million and $177 million, respectively.

• Main Sales Drivers: On Cyber Monday, direct website traffic ranked highest for driving revenue at 25.3% share of sales (down 1.2% YoY), followed by paid search at  25.1% (up 7.4% YoY), natural search at 18.8% (down 2.8%), and email at 24.2% (up 0.5%). Similar to past years, social media continued to have minimal impact on online sales, at a 1.1% share.

 

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Analysis: Strong, but not stellar Black Friday weekend as demand ‘pulled forward’

Retailers enjoyed a solid but not spectacular Black Friday shopping weekend, as online and in-store promotions proliferated earlier in the week and on Thanksgiving, cannibalizing sales that once occurred on Saturday and Sunday, the “demand pull-forward” phenomenon.

Combined with an early Thanksgiving, the demand pull-forward will also shift the traditional early December lull to a late November shopping lull. The good news is that plunging gasoline prices—down $0.35/gallon since mid-October—are giving a mid-season boost to available discretionary spending. Rising disposable income is the major driver of higher holiday sales, but the gasoline savings are giving consumers an unexpected early present under the tree, and may yet turn holiday spending from strong to stellar.

Based on CGP’s 18th annual Holiday Forecast, and updated by CGP’s 18-researcher nationwide field team’s detailed store surveys at over 100 benchmark shopping venues, the past Black Friday weekend showed solid but not record growth, with approximately $60 billion in sales (including online) for the four-day weekend, in line with its estimates. Still, several categories shined:

Consumer electronics and appliances: +6.4%, up from CGP’s forecast 6.1%

Apparel: +5.4%, in line with the forecast, and the best growth since 2011

General merchandise: +5.2%, up fractionally from the forecast.

The promotional pace was similar to last year, with 75% of major retailers offering the same Black Friday promotions as in 2017 — and the others increasing promotional intensity by only 5-10%.

The key takeaway is that shoppers and stores alike will have a happy holiday this year — assuming retailers can maintain their margin discipline. This will be the second year of 5%-plus retail growth, for the first time since 2005-2006. Looking forward, the key issue is whether this pace can be sustained into the new year and beyond. But unlike the debt-based bubble economy that led to the recession, today’s spending growth is built on a solid platform of job growth, income gains and sensible saving rates, so prospects for sustained growth into the future are improving each month.

Craig Johnson is president of retail research firm Customer Growth Partners, based in New Canaan, Conn.

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GameStop enters into $700 million deal

BY Marianne Wilson

GameStop is getting out of the mobile phone business as it moves to sharpen its focus on videogames and collectibles.

GameStop Corp. has entered into an agreement to sell its Spring Mobile business to Prime Communications L.P. for $700 million. Spring Mobile owns and operates a network of 1,289 AT&T wireless stores. The transaction is expected to close in the fourth quarter.

The move is in line GameStop’s previously announced review of its strategic and financial alternatives.

“This transaction enables GameStop to enhance our performance with an increased focus on the video game industry and the rapidly-growing collectibles space,” said Dan DeMatteo, executive chairman of GameStop’s board of directors. “These are areas where we have considerable experience and where we are well positioned to capitalize on our competitive position.”

GameStop said proceeds from the sale will be used to reduce the company’s outstanding debt, fund share repurchases, reinvest in core video game and collectibles businesses to drive growth, or some combination of these options.

In September, the retailer reported mixed results for its second quarter and confirmed it is considering a potential sale of the company among other options.

GameStop operates over 7,100 stores across 14 countries.

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