2015 European Peak Planning GuideYour essential guide to the online festive season shopper

2015 European Peak Planning Guide

The festive shopping period remains a make-or-break time for many retailers. Festive sales often mean the difference between success or failure come annual results time and online sales are increasingly important to this – last year an estimated £17.4bn was spent online in the UK during the festive period [1], accounting for 23.4% of all peak spending. Events like ‘Black Friday’ and ‘Cyber Monday’ have firmly established themselves amongst British consumers, with online sales of £810m and £720m for the days in 2014 [2].

This has left both retailers and the carrier networks exposed to unprecedented demand. Over 180 million online shoppers visited UK retailers during Black Friday last year, with many websites crashing under the pressure. Delivery networks have also found it difficult to meet demand, as these parcels hit their supply chains.

Whilst the opportunity is huge, so are the stresses. Systems will be stretched, staff at their busiest, and infrastructure at its maximum capacity. Mistakes at this crucial period are likely to be costly in the long run. For this reason, Radial has identified the main areas for retailers to focus on ahead of the big days.

Black Friday madness hits the UK, 2014

Average Year-on-Year Festive season online sales growth (October - December, 2012 - 14)

+30%

Cyber Week online sales vs. Average Festive season weekly sales (October - December)

+200%

Black Friday & Cyber Monday sales volume vs. Average Festive season day

x 4

Conversion Rate during ‘2nd peak’ vs. Average Festive season day

+75%

Black Friday peak online visitor hour10am

Cyber Monday peak online visitor hour9pm

2015 European Peak Planning Guide

NewYearCyber

2012 2013 2014

PreNovNovNovOctOctOct

week

Cyberweek Cyber

Post

week

2nd Xmas Peak Count-

down

Webstore Sales - Year-on-Year Trends

AVGSeason

Black Friday Cyber Monday

Last Order

2nd Peak Days

Dates

Nov Pre-Cyber Cyber week week

Post-Cyber week

2nd XmasPeak countdown

NewYear

Webstore Sales - 2014 Season Trends

Oct(1st - 21st)

Average Daily Sales for Period

Peak Pressure Grows

The US-derived Black Friday and Cyber Monday shopping phenomena have captured a large portion of online sales, bringing the peak shopping period earlier and earlier each year. The ‘Cyber Week’ sales volumes experienced in 2014 were over 200% higher than the average weekly volume (October-December) and grew at an average year-on-year growth rate of 84% between 2012 and 2014. Festive spending as a whole experienced a 30% year-on-year growth during the same period. Retailers should clearly be prepared to expect similar volume increases and further sharp spikes during the key dates this year.

Black Friday & Cyber Monday Domination

Both Black Friday and Cyber Monday represent volume increases nearly four times that experienced during an average day of the festive shopping period. Black Friday showed a 170% average growth rate over the last three years, and Cyber Monday a little less at 72%. The sheer size of these two ‘pinch points’ caught many retailers by surprise last year, with websites struggling to cope under such spikes in visitor volumes. Retailers will no doubt be anticipating similar increases this year, it is essential that plans encompass all areas of the business from the website, through payment processing and fraud checks, warehouse and delivery, and customer service.

2015 European Peak Planning Guide

Get Ready for the ‘2nd Peaks’

The Cyber Week period is no doubt the single biggest revenue driver, and clearly marks the start of the festive shopping period as savvy shoppers seek out discounts and get an early start to their festive purchases. However, this week does not show the highest conversion rates of the season – the ‘2nd peak week’ (a fortnight after Cyber Week) marginally noses ahead. With conversion rates during this week 74% ahead of the average festive period rate. Clearly online shoppers are more focused during this 2nd peak period, having already researched their likely purchases and completing their orders before the anxiety of last minute shopping kicks in.

Don’t Forget those Last-Minute Shoppers

Analysis of last order dates shows much more focused buying behavior than average. Late last-order time cut offs have become competitive advantages for big-box retailers, but many should err on the side of caution. It is far easier to set an initial conservative cut-off and then extend, and an earlier cut-off can also have the added benefit of creating customer urgency and thereby drive sales. The dates for 2015 last-order dates, along with all other key dates in the festive shopping calendar are laid out below.

Webstore Conversion Rate - 2014 Season Trends

Season AVG

Black FridayCyber Monday 2nd Peak Days

Last Order Dates

Nov Pre-Cyber Cyber week week

Post-Cyber week

2nd XmasPeak countdown

NewYear

Oct(1st - 21st)

Average Daily Sales for Period

November 2015

sun mon tues wed thur fri sat

1 2 3 4 5 6 7

8 9 10 11 12 13 14

15 16 17 18 19 20 21

22 23 24 25 26 27 28

29 30

December 2015

sun mon tues wed thur fri sat

1 2 3 4

6 7 8 9 10 11

13 14 15 16 17 18

20 21 22 23

28 29 30 31

24 25

5

12

19

26

27

Black Friday: 27th NovemberCyber Monday: 30th November

2nd Peaks: 14–15th DecemberLast Order Dates: 18th December (Standard) 23rd December (Express)

2015 European Peak Planning Guide

Black Friday & Cyber Monday - a Detailed View on What to Expect

Retailers’ planning should not stop at dates – taking full advantage of peak shopping volumes requires planning right down to the hour. Radial analysed the key days in detail to provide insights to aid micro level planning to help ease potential pain points.

Breakfast Bargain Hunters

Black Friday is strongly associated with bargains, and therefore online shoppers like to hunt out these deals when availability is at its highest. Between 7 and 10am we see a spike in both visitor numbers and associated sales, with volumes plateauing and sales tailing off later in the day. This was the time in 2014 that we saw most UK websites struggling to cope under the increased pressure of spikes in visitor volume. Retailers must ensure they are prepared to handle the sharp increases in volumes.

Evening Sofa Surfers

Cyber Monday patterns highlight a key difference against those of Black Friday, with the emergence of a strong evening peak between 7 and 10pm. Shoppers keen to take advantage of last minute bargains, further price reductions, or simply completing purchases researched earlier in the weekend demonstrate more focused shopper behaviour with higher conversion rates. This group represents a big opportunity for retailers to drive visibility of remaining deals, and target abandon baskets from earlier in the weekend.

Black Friday Cyber Monday

12am

2am

4am

6am

8am

10am

2pm

12pm

4pm

6pm

8pm

10pm

Webstore Vistor Numbers - Peak Days 2014

Black Friday Cyber Monday

12am

2am

4am

6am

8am

10am

2pm

12pm

4pm

6pm

8pm

10pm

Webstore Sales - Peak Days 2014

2015 European Peak Planning Guide

Dealing with the Unexpected

No matter how much advance planning a retailer has undertaken based on previous trends and forward forecasts, there will always be the unexpected to deal with. Just last year the carrier network almost collapsed under the sharp spikes in parcel volume. Factor in other factors outside of your control, such as inclement weather, and contingency planning will always be necessary. Even if you ultimately don’t fall back on these plans it is a necessary safety net allowing you to quickly put plan B or C into action.

Collaboration & Performance Monitoring:The most successful retailers operate a dedicated peak planning board across the entire business, with a common set of goals, performance metrics, and forecasts. This group should prioritise transparency to mitigate against difficulties arising when one departments’ decisions has a potential adverse affect on another. For example, running a heavy promotional campaign when the warehouse is at breaking point is a poor investment, and likely to cause knock on effects such as an increase in customer service enquiries relating to delayed parcels.

Website & Front-End Processes:The short, sharp spikes in visitor numbers and hopefully associated transactions put a huge burden on systems that are built 95% of the times for handling much less demand. Cloud based networking provides retailers with excess capacity to handle such large fluctuations without heavy investments in infrastructure. Similarly, payment and fraud processing systems must be built to cope with the same demands – failure on back-end systems ultimately result in lost customers.

Delivery:Retailers should work closely with carriers to ensure that they are able to cope with expected volumes and clearly understand performance expectations. Working with multiple carriers helps to mitigate against risks like overcapacity, bad weather or technology difficulties. Monitoring carrier performance and listening to feedback is essential. The carrier network has finite capacity, so a reliable two-day delivery service may become a three-day service. Whilst this isn’t ideal, knowing it in advance allows retailers to set clearer expectations with customers both at the stage they place their order and through order confirmation emails.

Store Networks:Those with a store network and omnichannel fulfilment options (such as click-and-collect and ship-from-store) are in an enviable position. Such assets helped retailers in 2014 to maintain home delivery options through local carrier based ship-from-store options, and relieved the delivery burden by enabling in-store stock for customer collection.

2015 European Peak Planning Guide

Customer Care:This is the final line of defence, and a key asset to solve issues for unhappy customers. Just as cloud networking provides flexible capacity for websites, outsourced customer care solutions provide flexible increases to capacity when it is needed most. One key facet often missed by retailers is outward communication – if there are delays in service these should be communicated to customers through email, website messaging, social media, and even automated IVR telephone line messaging. Those in the unlucky position of running out of stock of an unexpected best seasons seller can communicate this, and if possible share details for when products, or similar alternatives, come back into stock.

This festive shopper season is poised to be bigger than ever, with rewards and risks available in good measure for retailers. Radial will continue providing you the latest updates, commentary, and recommendations as the season unfolds.

About RadialRadial is the leader in omnichannel commerce technology and operations, enabling brands and retailers to profitably exceed retail customer expectations. Radial’s technical, powerful omnichannel solutions connect supply and demand through efficient fulfillment and transportation options, intelligent fraud, payments, and tax systems and personalized customer care services. Hundreds of retailers and brands confidently partner with Radial to simplify their post-click commerce and improve their customer experiences. Radial brings flexibility and scalability to their supply chains and optimizes how, when and where orders go from desire to delivery. Learn how we work with you at www.radial.com.

1. Centre for Retail Research & RetailMeNot, Infographic on the Black Friday and Cyber Monday in the UK in 20142. IMRG & Capgemini, e-Retail Sales Index, January 2015

Images courtesy of dhester, morguefile.com, retailweek.com

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