Cyber Monday set another record this year — but Black Friday’s online business is nipping at its heels.
This story first appeared in the December 3, 2014 issue of WWD. Subscribe Today.
Although Cyber Monday posted double-digit gains — with sales rising 17 percent to $2.68 billion, their highest ever, according to Adobe Digital Index — it’s likely that the day will be dethroned by Black Friday next year, a historically brick-and-mortar shopping holiday.
“Lines have blurred tremendously about the importance of Black Friday versus promotions starting two weeks early,” Gilt chief executive officer Michelle Peluso said Tuesday. “The story line is that Black Friday is becoming Cyber Monday. Consumers would think about running to the stores on Friday morning and anything that they didn’t get they would shop online Monday. Now it’s all blurry.”
Adobe Digital Index’s principal analyst Tamara Gaffney noted: “Cyber Monday was still the biggest online shopping day of all time [in the U.S.]. We have seen lots of conversations about the end of Cyber Monday and where we are in the world of online shopping — it will probably be displaced by Black Friday next year.”
Gaffney said Cyber Monday would continue to be a significant shopping day, even if it’s eclipsed by Black Friday (not to mention China’s Singles’ Day, which dwarfs both days in terms of e-commerce with sales this year of $9 billion). Next year, Cyber Monday promotions will still be aplenty and retailers will offer deals because it’s “been programmed in their minds to do so,” she said. Also, there are consumers with varying purchase patterns: the ones who knock out the majority of their shopping in early November, those looking for the best deals (especially on Thanksgiving Day, when discounts were the deepest) and those who wait until the last minute.
The start of the holiday shopping season has turned into a supercharged five-day shopping extravaganza that begins the Wednesday before Thanksgiving and lasts until Monday evening — and sometimes through to the following Friday, often called Cyber Week.
Black Friday’s online sales this year inched towards Cyber Monday-levels of revenue. Friday saw $2.4 billion in sales, a 25 percent increase from last year, not far off from Monday’s take, according to Adobe.
The Custora E-commerce Pulse, which tracked more than 100 million online shoppers, 100 U.S. retailers and more than $40 billion in e-commerce revenue, reported that Cyber Monday experienced 15.4 percent growth this year.
Data from IBM Digital Analytics Benchmark, which draws information from 8,000 global brands, is a bit less optimistic. Although Cyber Monday closed a record five-day online spending period, the firm said growth in e-commerce sales for Monday was just 8.5 percent. Mobile sales were up 27.6 percent from 2013, for the first time comprising more than half of online traffic from Thanksgiving through Monday evening.
Ravi Dhar, professor of management and marketing at Yale School of Management, called the online holiday shopping season an “arms race” where retailers keep deciding to unleash their sales earlier and earlier.
He said Cyber Monday was becoming less of an event each year and that the glut of sales, which will continue through this week, would eventually cause the day to backfire. A sale that lasts for multiple days doesn’t create the same motivation or desire to shop.
“When a day loses its specialness — it’s when people don’t have an automatic trigger saying, ‘This is the day I need to buy’ and they don’t see the urgency. The psychological risk is that people don’t see any specialness about why they need to shop,” Dhar said. “If Christmas is every day it won’t be special.”
He explained that this creates the notion that there isn’t one single day associated with shopping — and creating a link to an event on a certain day bolsters excitement.
He compared it to retailers that have “everyday low prices” — and those that have “high-low prices.”
“The last J.C. Penney ceo [Ron Johnson] tried ‘everyday low prices’ and it backfired. People felt, ‘I can go into J.C. Penney any time,’” Dhar said.
According to him, online is continuing to grow because of consumer habits and the evolution of the way in which people shop, which is increasingly on their phones — a trend fueled largely by Millennials. The growth also is being fueled by the increasing number of consumers who have access to broadband Internet connections at home rather than only in their offices, which is what initially fueled the spurt in e-commerce traffic on the Monday following Thanksgiving, when people returned to work and faster Internet connections.
Now, it’s retailers who need to “get smart” about executing their online promotions, because they’re currently simply replicating their in-store discounts, which might not be the right model, according to Dhar. In his opinion, online sales currently offered by retailers, save for the flash sale model, fail to generate excitement.
“That is where retailers need to get savvier. [They] need to figure this piece out and I don’t think they have done that yet,” Dhar said.
Brands are also trying to figure out how to get the most out of their mobile business, which Adobe said has accounted for 21 percent of online sales this holiday season so far.
Wal-Mart Stores Inc., for instance, said that about 70 percent of traffic to walmart.com between Thursday and Monday came from mobile devices.
Target Corp. is heading towards similar territory, with almost two-thirds of its Web traffic coming from mobile this holiday season, according to senior vice president of target.com and mobile, Jason Goldberger.
“What’s different this year is how much of the volume that’s coming through mobile. In the past it’s been a lot of traffic and people have bought on a desktop, and it’s changed a lot. The percentage of people buying on mobile is up dramatically,” Goldberger said, declining to reveal the percentage of the retailer’s transactions that take place via mobile.
He predicted that by next year’s Cyber Monday, mobile will be half of all e-commerce sales at Target.
Not all retailers are faring as well as Wal-Mart and Target in the mobile space. Calvin Silva, a senior retail analyst at Nasdaq Advisory Services, said data shows that consumers are more willing to browse on their smartphones, but getting them to convert is a challenge.
He cited data from IBM Digital Analytics Benchmark, which stated that mobile sales were up 27.2 percent for the five days ending on Cyber Monday. Still, smartphones yielded just 9.1 percent of mobile sales even though they accounted for about 29 percent of online traffic. Tablets accounted for 12.5 percent of traffic but were responsible for 12.9 percent of sales.
“What retailers will be tasked with in the upcoming fiscal year is how to invest in the right technology to drive conversion through smartphones, given the continued growth we’re seeing from the smartphone side of it,” Silva said. “If they can increase conversion into the low teens that can have a meaningful impact.”