Retail and economic experts who wondered how long consumers’ resiliency could last in the fourth quarter of a year marked by dwindling savings and stubbornly high prices got their answer in December.
Online sales for the month increased by 11 percent over December 2022, according to Signifyd Holiday Season Pulse Tracker, to cap off a holiday season that saw total e-commerce spending eclipse year-ago activity by 7 percent. The figures would mark a solid fourth quarter in any year, but in a year of high anxiety and low expectations, the performance was nothing short of remarkable.
Higher Holiday Sales Provide Another Positive Sign
The holiday season shopping spree was another ray of light in an economic picture that’s brightening in several respects. However, like slowing inflation, rising wages and stabilizing interest rates, three months of higher-than-expected online sales isn’t enough to declare victory. And like every year, holiday sales accounting varied depending on the organization doing the reporting and the size and breadth of the data set it relied on.
Mastercard, for instance, reported online holiday spending up 6.3 percent, based on a shorter season defined as Nov. 1 to Dec. 24. Signifyd analyzed data from October through December.
Heading into the holiday season, a Signifyd projection called for online sales to outperform 2022’s fourth quarter by 5 percent. The analysis predicted October sales would rise 7 percent; November would be up 5 percent and December would stumble in at 3 percent higher than 2022. But fueled by abundant discounts, buy now, pay later (BNPL) programs, and perhaps brighter consumer outlooks than expected, the year-end stair-step pattern went in exactly the opposite direction — October finished up 4 percent year-over-year, November was up 8 percent and December increased 11 percent.
Progressively Increasing Sales Harken Back to Pre-COVID Years
Signifyd Chief Customer Officer J. Bennett noted that the 2023 holiday season spending pattern was a return to the typical pattern in pre-COVID years, when the holiday shopping peak would fall between mid-November and Dec. 20.
“Both we and our merchants were pleasantly surprised by the staying power of the consumer throughout what has typically been the peak holiday period,” Bennett said. “This felt like a return to normalcy, with consumers waiting for better deals later in the season. When retailers ultimately offered those deals, consumers responded in a big way.”
Indeed consumers depended on discounts this past holiday season to a much greater degree than they did in 2022. Discount use was up 20 percent over 2022. In all, 24 percent of online orders in Q4 were accompanied by a discount, according to Signifyd data.
BNPL options also played a significant role in keeping digital cash registers ringing — particularly during the period including the crucial shopping days from Thanksgiving through Cyber Monday. While BNPL transactions were up 6 percent annually for all of November, during the last two weeks of the month, the growth rate of BNPL doubled that performance, reaching 12 percent higher than the same period in 2022. Significantly, Signifyd data shows that the average BNPL online order in November averaged $328 — 81 percent higher than orders placed by shoppers who paid in full at the time of purchase.
With December in the books, e-commerce as a channel starts the new year with unexpected momentum. And while one quarter doesn’t make a trend, it beats the alternative.
Mike Cassidy is head of storytelling at Signifyd, a commerce protection provider.
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