BFCM 2022: Aftermath Report
This foul year of our lord, 2022, has presented many-a-challenge for the ecommerce industry. Shipping issues, both in terms of delays and increased costs, continue to cause some headaches for online sellers, as do lingering supply chain issues, as a result of the now receding COVID-19 pandemic. Even for those online retailers who have successfully navigated these waters, there is still no clear sailing. Rising energy prices have contributed to inflation in the cost of goods and services across all industries and fears of an economic recession in the US loom large.
These factors have further created uncertainty in the financial markets and therefore contributed to significant losses in wealth for both consumers and banking institutions in the form of stock market declines. In turn, these institutions, which extend credit to millions of businesses and consumers alike, have begun to tighten their belts as interest rates rise. Unless you live under a rock, you already know this, but that is the backdrop for Black Friday and Cyber Monday (BFCM) in 2022.
Signs that American consumers are feeling financial pain are apparent too. Credit card debt has jumped 15% in Q3 of 2022, the highest rate in 20 years. This past week, the use of buy now, pay later (BNPL) services such as Klarna, Affirm, Afterpay, saw a 72% spike in usage compared to the previous week and a 10% jump compared to last year. If you aren’t familiar with BNPL services, they are an alternative to credit cards and similar to layaway except you get your items up front and pay the balance over a few weeks. These are signs that many consumers are willing to stretch themselves thin instead of sitting out the gift giving season altogether.
With all of this doom and gloom, how was BFCM affected?
As it turns out, not so much. It was another record year for online sales during this period, with the Friday after Thanksgiving seeing an increase in sales of 2.3% over 2021. In fact, Cyber Monday 2022 was the largest online shopping day ever at $11.3B, an increase of 8.6% over last year. While that growth is not at as high of a rate as in some previous years, especially when factoring inflation at 7%, it proves that consumer demand is still strong and so is consumer spending ability. One thing is undeniable, ecommerce growth continues to outpace traditional retail sales growth as more consumers choose online shopping over the shopping mall. For FY2022, online purchases accounted for 14.6% of total retail sales and some forecasts expect that number to hit 22% by 2025. Looking back to 2013, when ecommerce accounted for only 5.8% of the retail market, any savvy business person should realize that ecomm IS the future of retail.
Not to belabor the point that retailers are focusing on ecomm in a big way, but sales attributed to email jumped nearly 46% compared to last year, according to internal metrics at major email platform, Klarna. And for good reason; email is effective and cheap compared to traditional digital media. Social media channels like Instagram, Facebook, TikTok, Twitch, Reddit and Etsy have also proven to be viable revenue drivers from both paid advertising and organic sources. There are over 4.5B social media accounts worldwide and users spend an average of 2.5hrs per day on these platforms. With 76% of users having purchased products through social media channels, incorporating an email and both paid and organic social media strategy for your ecomm business in 2022 is not to be ignored.
It should be noted that traditional “PPC” or search engine optimization strategies are historic revenue drivers for the ecommerce industry, and 2022 is no different. Google reports that for every dollar spent on advertising through their search engine, two dollars is returned. This year it is projected that Google will have generated over $200B in revenue for its advertisers at a cost of approximately $116B. While that is a big revenue number, many ecomm businesses cannot afford to spend 50% of revenue on marketing and still remain profitable. Strategies for getting repeat business from these high-cost new customers can help offset that expense, but many businesses are looking to cheaper alternative channels such as email and social media.
So what’s the tech takeaway?
Implementing a full funnel marketing strategy that maximizes your return on advertising spend (ROAS) by actively managing media budgets and target audiences in each channel is more important now than ever. This is not the only consideration to ensure ecommerce success. For the 2022 holiday shopping season and going into 2023, offering customers a wide array of payment options and understanding how consumers complete their purchasing journey – including from a technology perspective – is crucial.
For instance, in 2018 less than half of all ecommerce revenue came through a mobile device. In 2021 that number bumped up to 56% for the year, however, 71% of BFCM sales came from mobile devices in 2021. This phenomenon is not to be overlooked as the 2022 “m-commerce” numbers are projected at 76% of sales coming through mobile devices. We have seen upwards of 85% of site traffic coming through mobile for most of our clients throughout 2022 and expect that number to increase. As a result, building an “optimized for mobile” website that functions well on small screen devices and which incorporate EZ pay features like Apple Pay and Google Pay is now a requirement for any successful online business.
How did BFCM 2022 work out for our clients?
I am proud to say that across our entire ecommerce client roster, we had a banner year. Without giving away any client specific information, cumulative sales figures for BFCM were $1.804M in 2022, an increase of 95% over 2021. Similarly the total number of orders increased over 2021 by 95.5% to 12,485 transactions. While AOV stayed the same year over year, we see this as a positive in the current market. Yes, you are reading those numbers correctly. While the rest of the ecomm industry saw about 10% revenue growth over BFCM 2021, our clients were at 95% growth. So, how did we do it?
- We have great clients who sell great products. This cannot be understated. A business that focuses on providing excellent customer service and selling a quality product that they stand behind, is the easiest client to help achieve online success.
- We have a large staff of professionals with proven records of success and who each specialize in specific aspects of online selling. Each team member is indispensable.
- Collaboration is key. Working together with the client to understand their goals requires regular communication. We have weekly meetings with our clients, either remote or onsite, where we set goals, strategize and report on results.
- All of our team members are on site and in-person at our offices, M-F, 9am-5pm. We do not have remote workers who are spread out in different regions or time zones like other agencies. This means we collaborate with each other efficiently and effectively to the benefit of our clients.
- Our agency has over 20 years of experience building and optimizing every element that touches the customer journey on both the marketing and development sides.
- We use a proper mix of the marketing and development strategies discussed in this article and custom tailor our services for each of our clients – there is no “one size fits all” strategy for online success.
- We focus on reviewing data to analyze and prepare for changing market conditions or trends, with the ability to react quickly and not miss out on sales opportunities.
Closing Thoughts: Biggest online opportunities for 2023
With BFCM in the books, we are quickly shifting focus to 2023. The technology and platforms are ever changing, and so must the strategies for using these tools to our client’s benefit. We believe social media will continue to dominate the ecommerce landscape for the foreseeable future, and possibly forever. Platforms such as Tiktok and Snapchat have already proven to be viable options for driving sales, just as some older platforms like Twitter reinvent themselves to become a more consumer friendly (read: better targeted ads with ability to shop from the app) environment. We expect to make greater use of those platforms in 2023 to generate both paid and organic traffic.
Other technologies and strategies revolving around a video shopping experience, expanded payment options and loosening of cross-border restrictions prove to be interesting possibilities all designed to get the end consumer a better product, at a better price and in the most user friendly manner possible. As always, we look forward to seeing what’s next!