Episode Summary
The episode delves into the ecommerce landscape of 2023 and offers insights into anticipated dynamics for 2024. It highlights the record online spending during Cyber Week in 2023, driven by mobile shopping, despite cautious consumer behavior and aggressive discounts. Looking ahead to 2024, Greg talks about such factors like the election year, stable inflation, and rising consumer confidence. Key trends such as the growth of AI tools, demand for personalized experiences, social commerce, and environmental concerns are noted. Greg underscores the importance for brands to adapt to these trends to thrive in the evolving ecommerce environment.
Key Takeaways
- Record Online Spending: Despite challenges, 2023 saw significant online holiday spending, surpassing previous years and setting new records, particularly during Cyber Week.
- Mobile Shopping Dominance: Mobile devices accounted for over half of online sales during the holiday season, emphasizing the necessity for brands to prioritize mobile-first strategies for online shopping experiences.
- Aggressive Discounting Strategies: Retailers heavily relied on promotions and discounts during Cyber Week to drive sales, which contributed to increased consumer spending but negatively impacted profit margins for many companies.
- Emerging Trends for 2024: Anticipated dynamics for 2024 include factors like the election year, stable inflation, rising consumer confidence, and the accelerated growth of AI tools, social commerce, and environmental consciousness among consumers.
- Adaptation for Brand Success: Brands must adapt to key trends such as personalized experiences, social commerce platforms, environmental sustainability, and mobile-first UX to remain competitive and meet evolving consumer demands in the dynamic ecommerce landscape.
Links
Greg Shuey LinkedIn: https://www.linkedin.com/in/greg-shuey/
Episode Transcript
First podcast ever! Booyeah!
I can’t promise this isn’t going to bumpy.
So, these first few will be solocasts (probably 20 minutes each) while I get the hang of this and make sure the sound and format are good. I don’t want to be a cluster when we start bringing in some heavy hitters in the next month.
As an introduction, our podcast, 7-figures and beyond, is meant for brand owners and marketers to have a place to learn how to get their business to 7-figures and then get it to 8-figures. We are going to be very deliberate about who we bring on and what topics we will cover in order to really give you the most valuable information.
A little bit about me. I’m Greg. I’ve been in the digital marketing space for over 18 years now. I led one of the largest SEO agencies in Utah for a few years and then started Stryde. We’ve building and growing brands for 11 years and have seen just about everything out there. Nothing really surprises me or catches me off guard anymore.
I’ve worked with some of the biggest brands in the world and some of the smallest mom-and-pop shops. Right now, our agency helps brands doing between $1-4 million in revenue get to 8 figures through SEO, paid media, content, email and sms.
I also own two of my own brands, both in the automotive parts space, so what I share myself is going to be real world experience, not just theory or other gibberish.
2023 Ecommerce Recap
In today’s solocast, I wanted to spend some time chatting about the state of ecommerce.
It’s 2024 and what will that bring for ecommerce brands?
This is actually one of the most common questions I’m getting right now from clients, prospects, LinkedIn connections, etc. What I think is going to happen.
I don’t have a crystal ball. None of us do.
We do know that 2023 wasn’t a great year. It wasn’t awful, but it wasn’t great.
If we look at Q4 of 2023, things looked a lot better than any of us we were anticipating:
Record Online Spending: U.S. online holiday spending reached $221.8 billion, a 4.9% increase over 2022. Again, not huge, but not awful.
This growth exceeded the 3.5% year-over-year growth recorded in 2022, setting a new e-commerce record.
So that’s incredibly promising.
Strong Start with Amazon’s Prime Big Deal Days: Amazon’s Prime Big Deal Days in mid-October marked a strong kickoff to the holiday season that we’ve ever seen. We saw significant sales, especially in Apparel, Home, Beauty, Health, Sports, Outdoor, and Electronics categories.
Cyber Week Success: If we look at Cyberweek as a whole… the time frame spanning Thanksgiving through Cyber Monday, we saw sales totaling $38 billion, a 7.8% increase from 2022. Particularly, Cyber Monday set a new record with $12.4 billion in digital sales, the largest online shopping day in history.
That is nothing to scoff at. Pretty incredible, right? I think so and so do the brands I work with. They saw similar growth when compared to 2022.
Mobile Shopping Dominance: Mobile devices overtook desktops in online sales, with smartphones accounting for 51.1% of online sales during the holiday season, emphasizing the importance of mobile-first strategies for online merchants.
I don’t know how many of you shop on your phones. I personally hate it, but it’s all my wife does. So it’s a real thing and something brands need to get serious about in 2024.
So, I’ve talked about all of the positives, however, we know that a lot of those positives were driven by a handful of trends that we noticed.
First, if you sold online all year, you probably notice that consumer spending in Q2 and Q3 was typically lower than in 2022. To me, this tells me that consumers were a little bit more careful of how they spent their money leading up to the holidays.
I know I’ve spoken with countless people who said they saved all year long in order to have enough funds to provide their families with a good Christmas. So, even though we had a record-breaking Q4, for many brands, it was just enough to give their company a small boost in overall revenue and an even smaller boost net income in 2023. The reason for that is next.
After analyzing hundreds of businesses over the holidays, the thing I noticed the most is how large the discounts and promotions were during Cyberweek. Retailers leaned heavily on promotions to drive sales, with record-high discounts across major categories like electronics and toys. These aggressive discounting strategies were crucial in driving consumer spend, however, they did negatively impact the bottom line of so many companies.
Lastly, we saw increased usage of buy now, pay later options. These are services like Shopify Pay, Klarna, Afterpay, etc. I noticed through my own ecommerce that the percentage of customers using a buy now, pay late option, increased by 34.5% in the month of November.
The last numbers I saw for buy now, pay later were around $940 million on Cyber Monday alone. I have not been able to find a start showing all of Cyber Week. I’m sure it’s probably 4-5 times that number.
So yeah, that is my recap of 2023. Pretty wild, huh?
2024 Ecommerce Dynamics
When we look at 2024, we’ve got some interesting dynamics working either for or against us, some of which include:
It’s an election year – Usually, election years are far more favorable for consumers. Have we seen that yet, no, we’re only halfway through January, but consumers believe that the economy will start to move in the right direction over the coming months.
We also continue to battle inflation and interest rates. At least inflation has slowed quite a bit and interest rates have flattened out. It’s still insane how much housing, fuel, and food cost, which means consumers will be spending more of their money on the essentials until we start to see those come down.
Consumer confidence is on the rise. The last survey was done in December and the consumer confidence index is just over 110. This is up from November which was exactly 101.
For those not familiar with the consumer confidence index, it is a score that provides an indication of future developments of households’ consumption and saving, based upon answers regarding their expected financial situation, their sentiment about the general economic situation, unemployment and capability of savings.
Does that mean that everyone will start spending more, right now? No, but it’s an indicator that consumers feel a little relief based on their financial situation and are likely to spend more.
So that’s great!
AI is growing and expanding rapidly. It enables brands to adapt more rapidly, which helps in reducing time to market and acts as a revenue multiplier. The number of AI tools hitting the market every day is astonishing. I believe we are going to see a lot more brands doing one of three things:
Figuring it out themselves and using it to cut costs and accelerate their growth.
Hiring someone internally as their AI guru and using it to cut costs and accelerate their growth.
Hiring agencies who already know how to leverage AI, coupling this with high-level strategic direction, to massively grow their brand.
Customers are going to expect more brands to personalize their experience and content delivery. This trend focuses on delivering more efficient conversions, higher customer loyalty, and greater brand awareness through tailored experiences.
Social commerce is going to accelerate faster than we think. Brands will need to leverage platforms like TikTok, Instagram, and Pinterest to create unique content that showcases their products, enhancing user engagement and facilitating purchases.
More consumers will be concerned about environmental issues. Consumers will be seeking out information about the sustainability and ethical considerations of products, emphasizing transparency. I saw a stat on LinkedIn yesterday that said 41% of shoppers would rather do business with eco-friend brands. I feel like that number is high, but it’s a real thing that needs to be addressed by brands.
As mentioned a few minutes ago, more users are shopping from their phones. It’s going to be critical for brands to lead with mobile-first UX vs desktop. The latest study showed that 91% of all consumers use their phones to make online purchases and it is assumed that 41% of all ecommerce sales in 2024 will be through a mobile device. If brands don’t or can’t adapt fast enough, they will see a hit to their revenue this year.
Other trends that I’ve seen talked about include the use of hyper-personalized marketing, conversational commerce with AI chatbots, inclusive sizing in product representation, augmented product information, robotics in warehousing and delivery, interactive livestream shopping, zero-contact retail, and a growing emphasis on sustainability-driven branding.
These trends indicate a dynamic and rapidly evolving eCommerce landscape, where technology, consumer preferences, and innovative business models are driving significant changes.
If you plan on building and growing a brand over the coming years, you will need to adapt to these trends to remain competitive and meet the evolving demands of consumers.
That’s where we are at? Does that scare you? Be honest, are you a little freaked out? I’m not, I’m actually incredibly optimistic and excited.
So, to wrap up, let me take a minute and hit all of the dynamics one more time:
- It’s an election year. Typically, the economy is better during an election year. Take advantage of that.
- Inflation and interest rates are holding steady. You should be doubling down right now to take advantage when they start to come down.
- Consumer confidence is on the rise. Don’t feel down and discouraged, the numbers are telling us that there is light at the end of the tunnel.
- AI gets better and better every day. How are you using it to build and grow your brand?
- Customers are expecting brands to personalize their experience. How are you doing this for your customers right now?
- Social commerce is on fire right now and will continue to grow. Get in early with Tiktok shops and Pinterest to capitalize on this.
- Consumers will spend more money with brands that care about the environment. What are you doing to be a sustainable, ethical brand and how are you communicating that?
- Mobile shopping is expected to grow this year. Is your site developed for mobile first? Or it is just responsive to any device?
You’ve got this! Make a plan and take massive action.
Greg is the founder and CEO of Stryde and a seasoned digital marketer who has worked with thousands of businesses, large and small, to generate more revenue via online marketing strategy and execution. Greg has written hundreds of blog posts as well as spoken at many events about online marketing strategy. You can follow Greg on Twitter and connect with him on LinkedIn.
