Cyber Monday 2016 – Shop Away The Monday Blues
Over the past three years Cyber Monday has become firmly established as the second pillar of “Cyber Weekend“. Although the term “Black Friday” was pretty much unheard of before 2013, we in the UK started to become familiar with Cyber Monday as long ago as 2010 when Amazon first started to discount their products.
Cyber Monday always falls on the Monday following Black Friday, which takes place on the day after American Thanksgiving – the fourth Thursday in November.
The term was thought to be have been first coined in 2005 by the senior vice President of the US National Retail Federation in the US, when she noticed that following the US public holiday on Black Friday, customers who returned to work on Monday were still shopping online from their office PCs.
Until recently, UK shoppers had a completely different approach to shopping over the Christmas period than the Americans. But make no mistake, after a few early stutters in 2012 and 2013, Cyber Monday, along with the four-day “Black Monday weekend,” is well and truly here to stay. For good or bad, our Christmas shopping habits have probably changed forever.
Does Cyber Monday work?
Cyber Monday first showed a huge increase in online sales in 2013, and in 2014, the number of sales overtook the volume of Boxing Day online sales.
In 2015, according to the Experian and IMRG index, £968 million was spent on Cyber Monday. While this is slightly less than the £1.1 billion spent on Black Friday, it did show a surge in sales, after they dropped off on the Saturday and Sunday, following Black Friday.
Online sales for Cyber Monday in 2015 were up 23.6 percent over the previous year and in 2014, the Cyber Monday “sales uplift” over a normal day’s sales was 42%, and in 2015, the uplift was a whopping 139%
Winners and Losers?
It is still a little early to say who are the clear winners and losers. While there is no doubt that the Cyber Monday phenomenon is growing exponentially, year on year, some have questioned whether retailers – or indeed the customers – benefit in the long run. The jury is still out on this, but here are some of the main issues, and some of the answers.
- Although there is a huge spike in sales over this period, is the total value of sales over the entire Christmas period, including the January sales, any greater than they were before Cyber Monday came along?
Initial feedback is that in 2014, sales dropped sharply in December, but that in 2015, the sales held up much better, which led to an overall higher sales volume for the Christmas period.
There is little doubt that the volume of products sold in the January sales will continue decline, but the electricals sector will be more affected by the Cyber Monday “effect” than other sectors, such as the home furnishing and fashion. Boxing Day online sales, which now often start on Christmas afternoon, will continue to be a major item, but visits to stores will continue to decline.
- Do the high discounts offered – typically 30% simply mean a greater volume of sales but little or no uplift in profits, due to tighter profit margins?
Retailers who have planned well in advance for Cyber Monday and have negotiated special deals with their suppliers will clearly benefit. Planning properly for Cyber Monday is a key part of its success, although it is acknowledged that “supplier deals” are more easily obtained in the electricals sector than in other markets. Retailers who regularly discount their products will be better placed to take advantage of Cyber Monday than retailers who trade at the higher end. It is important that retailers remain competitive, as there is no point offering 10% if your competitor is offering 30%.
There is also an argument that the overall number of discount days offered is more than used to be the case. This reduces the number of days over the Christmas period when retailers can sell their products at undiscounted prices.
- Will Cyber Monday benefit online retailers such as Amazon, at the expense of the high street store retailers, who have a lower profile on the Internet?
Customers’ shopping habits have rapidly changed in recent years and it is the main online retailers who benefit. Cyber Monday simply reinforces the advantages that established online merchants offering convenience and competitive pricing already has over high street retailers.
- What are the other drawbacks for retailers who participate in Cyber Monday?
If retailers do not fine-tune their discounts, there is a danger they can suffer losses. Also, the high volume of sales on a single day may stretch not only their website capabilities but also challenge the logistics of delivering such a large quantity over a short period. Then there is the problem of a higher volume of customer returns and refunds than is normally the case.
- How do the customers benefit from Cyber Monday?
It is difficult to see how customers can lose out, as clearly they benefit from the massive discounts offered. An increasing number of customers wait and save up for many months to buy their favourite products at discounted prices.
Cyber Monday has become part of the UK retail lexicon, especially as most people on monthly salaries receive their salaries on this day. With their Christmas present lists at the ready, millions will increasingly take advantage of Cyber Monday to order their presents for themselves, their friends and family.
This inevitably means that the pre-eminence of online retailers over the high-street shops will continue its inexorable march.
The online payment journey is a key factor in a merchant’s ability to capitalise on retail events such as Cyber Monday. A streamlined, friction-free process is necessary to ensure a good rate of conversion, as well as offering a variety of payment methods. The inevitable increase in returns also needs to be addressed; ensuring customers receive refunds within the statutory time period.
Payment fraud prevention is also something that needs to be fit for purpose when dealing with large volumes of online transactions for a limited period of time.
All these factors should be addressed now, ahead of Cyber Monday (28th November 2016).