Commerce chronicles: Online sales surpass early holiday season predictions, Forrester finds free shipping is most important

This week’s wire featured the numbers from December’s online shopping surge. Plus, the results are in: Forrester report says free shipping is most important. Longtime online retailer Zulily is closing its doors, and Japanese ecommerce giant Mercari will start taking Bitcoin. Visit our blog every Monday for a roundup of the latest commerce news.

Online holiday sales surpass early season predictions

Early in the 2023 holiday shopping season, experts predicted spending would slow through the fourth quarter and end with 3% growth. Instead, December sales remained strong, pushing growth 11% over 2022¹.

Consumer resilience was on full display, and, after a slow start, spending rocketed, resulting in higher online sales in 2023 for groceries, electronics, leisure and outdoor, luxury goods, fashion and apparel, home goods and décor, beauty and cosmetics. Moreover, Signifyd data² found that a discount code accompanied 23% of online sales in December. In addition, online orders with discount codes increased by 38% during the BFCM compared to last year.

Overall, December sales shattered expectations, with consumers returning to pre-pandemic buying patterns – and it looks like discount codes were the catalyst.

Forrester report says shoppers prefer free shipping more than same-day and next-day delivery

It’s no secret that delivery times have gotten faster over the years. The average global delivery time expected by consumers fell from 2.36 days in 2022 to 2.15 days in 2023³. However, a new report from Forrester found that the costly same-day and next-day delivery are not strongly desired by shoppers. Instead, three in four US consumers⁴ say free shipping is more important in making their purchasing decision.

The report showed that free, no-hassle returns and the final price also influenced consumers. Breaking down the report further, same-day and next-day delivery were only cited as a critical factor for one-fifth of online consumers when choosing where to buy. However, three-fourths of US consumers said free shipping is one of the top critical factors in deciding where to shop online. Additionally, 47% of shoppers said that same-day delivery had no impact on their decision, and 22% were interested in buying online and picking up at the closest store.

Giants like Amazon, Target and Walmart have driven the increased speed in shipping and heavily invested in same-day delivery. Despite their capabilities, smaller online retailers can still compete with free shipping.

Online retailer Zulily shuts down

Launched by former Blue Nile executives Mark Vadon and Darrell Cavens in 2010, Zulily became a thriving billion-dollar ecommerce business. Marketing by word-of-mouth to moms, the company inspired deep loyalty, with 80% of its sales driven by returning customers by 2015⁵.

Zulily defied expectations and spearheaded a unique shopping experience. Each day, the company listed new events and products through their social media, website and emails. Product presentation was innovative and appealing, resulting in avid buyers. Zulily’s daily shopping adventure was a welcome relief for consumers who leaped at the chance to purchase discounted shoes, tees, organic body products, strollers, toys and more – all presented in a magazine-worthy way.

Over the years, business periodicals touted Zulily’s ingenuity and analyzed its success. But by December 2023, the articles started to showcase that Zulily’s glory days might be over. Early in the month, the online retailer shut down three offices and laid off more than 800 people⁶. Before long, a liquidation sale was announced. NBC reported on December 27^th that Zulily had made the difficult but necessary decision to shut down⁷.

The saga is not fully over. In December, Zulily also filed suit against Amazon for anticompetitive practices. However, Amazon has asked the federal court to dismiss the FTC’s larger suit, citing that the FTC has failed to show evidence of anticompetitive behavior⁸. That said, Zulily’s claim that Amazon set out to harm them might come into play.

Mercari to accept Bitcoin payments

Mercari, a Japanese ecommerce company founded in 2013, announced recently it will allow users to purchase app-listed products using Bitcoin starting in June⁹. Transactions will be facilitated by Mercari’s crypto exchange subsidiary, Melcoin.

Items will be listed in yen, and there will be an option to pay with Bitcoin. According to FXStreet, vendors and sellers will still receive fiat currency for payments made in Bitcoin, converting the BTC through its exchange partner in real-time.

Mecari is no stranger to cryptocurrency, launching its own Mecari Bitcoin trading service that lets users buy and sell BTC that using sales proceeds. It also allows users to swap points for cryptocurrency. The company – which operates like an online flea market – has a 94% usage rate, making it the largest community-based ecommerce platform in Japan. Its move to allow Bitcoin could further advance cryptocurrency within the nation.

Retail stores acting as micro-fulfillment centers to speed up shipping

The demand for fast and free shipping has placed a burden on retailers. It often comes at a cost. However, stores like Target, Walgreens and Boot Barn are carrying more inventory to facilitate faster shipping in less time.

Many customers seek a shorter order-to-delivery time, making this strategy effective. In essence, adjusting the supply chain to better meet expectations and consumer desires. As an example, Walmart has increased store-fulfilled delivery sales by more than 200% in recent years¹⁰. Walgreens is repurposing 8,700 retail stores into retail and micro-fulfillment hybrids.

Pick and pack for same-day delivery is assigned to store employees, adding to their work. Some retailers aim to add associates to handle the additional service and workload. As ecommerce demands evolve, retailers are looking for new ways to keep up with supply chain and fulfillment trends.  

References:

1. https://www.martechcube.com/signifyd-reveals-new-ecommerce-data-on-holiday-sales/
2. https://www.signifyd.com/blog/cyber-five-2023-will-be-remembered-fondly-by-ecommerce-consumers-as-the-year-that-discounts-were-everywhere/
3. https://ecommercedb.com/insights/ecommerce-delivery-expectations-2023-speed-beats-price/4635
4. https://www.forrester.com/report/three-in-four-us-consumers-consider-free-shipping-influential-in-their/RES178703
5. https://www.fastcompany.com/3041404/inside-zulily
6. https://www.geekwire.com/2023/zulily-had-better-days-co-founder-mark-vadon-shares-startup-lessons-from-the-online-retailer/
7. https://www.nbcnews.com/business/business-news/zulily-going-out-of-business-why-refunds-outstanding-orders-rcna131310
8. https://www.retailtouchpoints.com/topics/market-news/as-zulily-folds-retailer-points-the-finger-at-amazon
9. https://www.fxstreet.com/cryptocurrencies/news/japanese-e-commerce-giant-mercari-to-allow-bitcoin-payments-from-june-202401081058
10. https://www.globest.com/2023/12/29/more-retail-stores-are-doubling-as-micro-fulfillment-centers/?slreturn=20240008100854