Holiday Shopping Has Moved Online. Here’s How Small Businesses Can Compete

So, what do we know about how the last stretch of the holiday shopping season will play out?

The battle for holiday shoppers will be won or lost online this year. While brick-and-mortar operations struggle in the face of a resurgent pandemic, e-commerce continues to skyrocket. Online sales for the second quarter of 2020 topped $200 billion, a 37% increase over the previous quarter.

It is not just the e-commerce giants that are reaping the benefits from this changed landscape, however. Third-party sellers on Amazon, most of which are small and medium-sized businesses, saw $3.5 billion in sales on Prime Day – a 60% year-over-year increase.

The flip side is that as more customers move online, competition grows amongst brands seeking visibility and conversions. Brands risk seeing their marketing efforts blur into all the other messages bombarding customers.

So, what do we know about how the last stretch of the holiday shopping season will play out? And how should smaller brands pivot to stand out and drive sales during the final weeks of 2020? There are clues in the data from the season so far that suggest there are some relatively quick marketing pivots brands can perform to win over customers.

Let’s take a look at what some of those are.

Focus on What Customers Are Looking for Now

This is a holiday season unlike any other, which means historical trends are less likely to hold true this year. Amazon’s Prime Day – delayed to October this year – showed that the pandemic has shifted consumer spending towards products that help get people through lockdown. The big winners being items in the home, electronics, and nutrition and wellness categories. Third-party sellers on Amazon had strong sales in the bedding, wireless accessories, nutrition and wellness, arts, crafts and sewing, and healthcare categories. Through the holiday season, customers will continue to shop for products that make them more comfortable and productive at home, which run the gamut from at-home fitness equipment to headphones and home decor. Showcasing items in those categories in your marketing will help engage customers and drive them to your site.

Keep Campaigns Creative to Fight Burnout

The holiday shopping season started much earlier this year as retailers were concerned about keeping up with demand and avoiding delays. Online merchants on our platform saw a 23% increase in revenue in September compared to last year. The longer holiday season means that by this point customers are experiencing message fatigue. The risk is that marketing campaigns will become less effective as consumers stop opening emails with the same offer they’ve seen for weeks. Although online spending is soaring, this is no bumper holiday season, and overall sales growth is expected to be relatively flat. Brands must fight for every sale by refreshing their marketing and communications through the final stretch of the year.

Track Discounts to Maximize Value

While it may seem tempting in an e-commerce year as competitive as 2020, it’s important for brands to be careful with aggressive discounting. In the days leading up to Prime Day, Amazon ran a Spend $10, Get $10 promotion that was successful for many small retailers. On the increasingly popular Singles’ Day, which falls on Nov. 11, many brands took 11% off their prices. Consumers have come to expect discounts, but do not cut prices too far too fast. And make sure these deals are bringing in new customers. If you use affiliate marketing, you can test campaigns and track the use of coupons and codes to quickly understand if discounts are helping attract new customers. Discount aggressively only if you can see it delivers incremental revenue growth.

Be Transparent About Shipping Delays

According to FedEx, this holiday season is seeing three years’ worth of growth in e-commerce deliveries crammed into a single year. Carriers are stretched and shipping delays are inevitable. If you have a physical store, encourage shoppers to use BOPIS (buy online, pick up in-store) services. E-commerce retailers will need to be clear about order deadlines in their messaging and that unforeseen delays will likely occur. If there is a delay, be sure to communicate transparently and often with the affected customers.

Cater to Your Existing Customers

It’s somewhat common knowledge that it’s more expensive to acquire a new customer than to hold on to an existing one. The e-commerce giants compete on convenience and price: they build habits, but they struggle to build the deep loyalty that a smaller brand can. Smaller businesses can use that to their advantage through content that recognizes the importance of their community and their business’ mission and values. Consider offering special deals for returning customers and promote your loyalty program, if you have one, across your channels.

Partnering with cashback sites that offer customer rewards as well as offering strong incentives for both new and returning customers is a potent way to compete with companies like Walmart. Use affiliate marketing to pour gasoline on the fire. If you have a strong product and a strong customer base you can leverage affiliate marketing to maximize the value of current customers while bringing in new ones.

This is a holiday shopping season unlike any before it. But the move to online retail is unlikely to be a blip. Although in-person shopping will recover somewhat once the pandemic is over, a significant share of customers who embrace e-commerce this holiday will not go back. Businesses that invest in their online sales and marketing this year will be setting themselves up to compete effectively now and in the future.