After several years of altered consumer behavior and often-conflicting news about the economy throughout 2023, retailers have sometimes found it challenging to understand what’s normal customer behavior now. Regardless of the trends and pre-holiday forecasts, assessing how your store actually performed is the key to preparing for a stronger holiday season performance in 2024 — and for building relationships with customers year-round.
Key areas in which you can compare your store to the predicted trends for the 2023 season — and to your store’s performance during the 2022 holiday season — include overall orders, spending per customer, preferred payment methods, and fraud and false decline rates during holiday sales peaks.
How Did Your Total Holiday Sales Stack Up?
Multiple analyst firms and surveys predicted growth in consumer holiday spending in 2023, with year-over-year spending growth estimates ranging from 3.8 percent to 4.5 percent. Among e-commerce alone, Deloitte forecast YoY spending growth of 10.3 percent to 12.8 percent, although it expected consumers to be more deliberate about finding deals as their savings from the pandemic decreased.
If your 2023 holiday sales numbers grew in line with these forecasts, congratulations. If they didn’t, it’s important to find out why so you can work on removing those sales growth obstacles as soon as possible. Reviewing your site data for the holiday season, along with customer feedback and input from your customer support team, can help identify any friction points that made it difficult for shoppers to find what they were searching for, find your shipping and return policies, check out, or reach your customer service team.
Make sure that what you provide is in line with customer expectations. For example, in a recent survey of e-commerce shoppers, ClearSale found that 84 percent of U.S. and Canadian shoppers said they prefer free or low-cost shipping and tend to check out a site’s shipping options before they order. Seventy-nine percent said they’re more likely to order from sites that provide accurate search tools with useful filtering options.
How Did Your Holiday Customers Pay?
By now, many retailers have embraced digital wallet payments as a way to reduce checkout friction and strengthen customer confidence that their data is secure. However, buy now, pay later (BNPL) is gaining ground as an alternative payment method, especially among younger consumers. Before the holiday season, 20 percent of U.S. consumers were forecast to use BNPL for their seasonal shopping, and several BNPL providers expanded their online and offline retail partnerships before the 2023 holiday season, per Insider Intelligence.
BNPL use is even more popular among younger consumers. In a recent e-commerce consumer attitudes survey, ClearSale found that 46 percent of U.S. and Canadian consumers aged 18 and older said they find BNPL and digital wallets convenient, and 64 percent said these additional payment options make them feel more secure when placing orders online. However, among consumers in the 18 to 39 age bracket — older Gen Z and millennials — 62 percent said BNPL and digital wallets are convenient for online shopping, and 73 percent say having those payment options makes them more secure placing an order. It’s likely that consumers’ comfort with and expectation of BNPL options will continue to increase as more members of Gen Z reach adulthood, advance in their careers, and attain more spending power.
If your store offered a BNPL option during this holiday season, review your data to see if usage aligned with industry predictions. Compare your BNPL order numbers to the 2022 season as well. If you didn’t see the level of usage or growth you expected, investigate why. It might be wise to do more promotions around your BNPL options or consider adding other BNPL providers to your payment options. If your store doesn’t yet offer BNPL, 2024 should be the year that you seriously explore the options and experiment with providing this service that most younger consumers expect.
What Were Your Fraud and False Decline Numbers?
Fraud is costly to retailers, both in terms of chargebacks and lost customers. The average cost of a chargeback reached $190 in 2023. Nearly three-quarters (74 percent) of U.S. and Canadian consumers in the attitudes survey say they would never shop again on a website that allowed fraud with their credit card. If you saw a spike in chargebacks on holiday orders, it’s time to review your fraud prevention strategies — especially if those chargebacks pushed your chargeback ratio over the threshold for higher processing fees.
Preventing fraud is a concern year-round, of course. However, changes in consumer behavior during sales peaks like faster order velocity and higher ticket values, combined with an increase in overall order volume, require holiday-specific strategies to prevent fraud without also declining legitimate orders by mistake.
False declines don’t drive away as many consumers as fraud does, but false declines are more than twice as common, so they have a major impact on retailer losses, customer experience, and customer retention. While 15 percent of U.S. and Canadian consumers in the attitudes survey reported falling victim to e-commerce fraud within the past 12 months, 31 percent had at least one order declined during that same time. Among shoppers whose orders are declined, 35 percent will never shop with that retailer again, and 32 percent will post a negative comment about the company online. That represents a loss of lifetime customer value and a potential increase in costs to acquire new customers.
Comparing your false decline numbers to the previous holiday season can show you if you’re heading in the right direction or need to course correct. If you don’t have that data, make this the year you start batch-analyzing your declined orders to find out what percentage of them were legitimate orders, then adapt your fraud prevention practices accordingly.
Whether your store outperformed holiday forecasts, delivered YoY growth, or fell short of its goals, data from the holiday season can help you get better results in 2024, including overall sales, fraud prevention, and meeting your customers’ expectations for a safe and easy shopping experience.
Rick Sunzeri serves as the client solutions director at ClearSale, a provider of e-commerce fraud protection solutions.
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