Will COVID Steal Christmas? A Prediction for Online Retailers.

Revel Blog | Sydney Kida | November 5, 2020 |

Industry Insights and Trends

The nightmare before Christmas or joy to the world for online retailers? 

It’s tough to say with certainty what online retailers should expect from this year’s holiday shopping period. Data in the immediate aftermath of Amazon’s delayed Prime Day suggests that the biggest winners were, in fact, non-Amazon sellers . COVID has turned so much of our world upside down. Will ecommerce Santa be stuffing your stockings with coal this year? Or will they be full of gifts come December? Here are four questions that every business that sells online should be asking themselves:

Does past sales performance mean anything for this year’s holiday season?

As you may have gathered, up is down and down is up this holiday season. That means that traditionally good advice — like to predict this year’s sales, look at last year’s sales — is just not good advice anymore. In short, past sales performance might not mean much for this year’s holiday season.  The longer answer is that shopping patterns have been entirely disrupted. The luxury goods and apparel industry took a major hit this year, with global luxury spending plunging 35% from last year’s numbers. Other industries, like essential goods, toys and games, and home and garden, have experienced massive growth . If you’re an online retailer in a space that has taken a major hit from last year, those numbers aren’t going to be very helpful for you. But if you’re in one of the lucky booming industries, this season could be better than ever. In addition to the numbers varying by industry. Online sales are skyrocketing, with US online sales rising 43% in September over last year’s numbers. People are clearly flocking to online retailers, which could bode well for the holiday season. In the end, your own numbers from this year are going to be much more helpful than last year’s holiday numbers. Online retailers are expected to do well in general. But take cues from your industry’s growth to predict just how well.

How much inventory should online retailers keep in stock this holiday season?

It’s clich é d, but the answer depends on quite a few factors. Demand forecasting models can take into account how you have performed in the past, but it’s understandable if you play it safe this year. You may want to prioritize having as little excess inventory as possible instead of trying to avoid running out. If you’re still having trouble planning, try getting a sense for it now by implementing some creative approaches, like running a pre-order sale to see how much appetite there is for your product. If there’s a resounding response from your audience, you’ll sacrifice a little of your profit margins for the security of guaranteed orders. If it’s a little too quiet, you can order less inventory and focus on your marketing strategy to get the most out of the season.

What sort of changes should online retailers make to shipping cutoff times this year? 

The golden rule of thumb is to be upfront, clear, and repetitive about your holiday order date deadline. This year it will be more important than ever — and earlier than ever. As the years have gone on and customers have gotten used to shorter processing and shipping times, the cutoff for ordering has crept closer to Christmas. However, this year, we’re about to see a big jump backwards. The United States Postal Service just released its 2020 Holiday Shipping Guidelines . The cutoff dates (estimated delivery before December 25th) appear surprisingly normal on their face. December 15th is listed as the deadline for ground shipping, which seems like a good conservative estimate (around seven business days when it would normally take three). December 19th is listed as the priority mail date cutoff, which leaves around four business days. However, tread with caution here. When setting your dates, remember: the more conservative, the better. Consider that by the time mid-December rolls around, you’ll (hopefully) be up to your ears in orders and your processing time may be longer than usual. The postal office (or UPS/Fedex) will likely be having similar experiences. So use the USPS dates as a general guide, add on your own processing time, a little more processing time on their end, and then however much more you want to throw in for good measure. With USPS delays already happening this summer, it won’t be surprising to see online retailers with cutoffs in early December for guaranteed Christmas delivery, just to play it safe.

What should your business do to make customer returns easier after the holidays?

A great returns process can make or break your business. It’s beneficial year-round, but especially important during the hectic holiday season. In fact, online retailers have a much higher rate of returns than brick-and-mortar stores, so the post-Christmas return rush is real. To nail this, set clear returns guidelines from the beginning. How long do customers have to return an item? Do you offer free returns, or do you charge a restocking fee? Are you shipping out orders in a package that can be used for the returns process? Having all this figured out and clearly communicated to your customers will save you a lot of headaches. If you’re working with a third-party logistics ( 3PL ) provider to handle your returns, make sure you have your policies cleared through them as well. For example, will they inspect, photograph, and restock the items?

Online retailers can and should be ready for whatever abnormalities this holiday season throws at them.

This winter, it’s likely that we will see a continuation of some of the trends that have defined 2020 since COVID began. How online retailers handle the challenges sure to come their way in November and December will largely depend on how they have adapted their inventory management techniques. One place sellers may want to consider putting their trust is cloud-based POS software systems.  Having the right tech stack in place will be more important than ever for retailers this holiday season. About the author Jake Rheude Jake Rheude is the Vice President of Marketing for Red Stag Fulfillment , an ecommerce fulfillment warehouse that was born out of ecommerce. He has years of experience in ecommerce and business development. In his free time, Jake enjoys reading about business and sharing his own experience with others.