Third Quarter Momentum into the Fourth and Final Quarter
When March rolled around, triggering the second quarter of 2020, we saw a monumental surge in ecommerce – for obvious reasons that we have spoken about almost every day since then.
Then as spring surged into summer, ecommerce reached heights that hadn’t been expected for at least half a decade. Even those who had never – or rarely – opened a laptop to buy goods became comfortable doing so, and incorporated it into their new routines.
So much so, in fact, that most people (75%) expect to maintain or increase their levels of online shopping once the pandemic has disappeared.
And according to the Salesforce Shopping Index, Q2 saw an increase of 71% in ecommerce spend year over year, with Q3 registering a 55% increase in year over year online sales.
Yes it was a deceleration in growth, yet nevertheless growth all the same. The key contrast from Q2 to Q3 was that we were more calculated in what we bought, more planned and less spontaneous shopping.
So with that in mind, shall we take a glimpse into the major movements during the third quarter, and how it sets the landscape for the fourth quarter?
Higher browsing fewer purchases
Despite a deceleration in the growth of ecommerce from the second quarter to the third quarter, online traffic actually rose by 2% from quarter to quarter – representing a 37% increase in a year on year comparison.
So we have not disappeared, fatigued with online shopping nor opting for the store instead of the site. We are still strolling down the digital aisles, but making more conscious choices as to what to buy.
In terms of the general conversion rate, the holy grail seemed to be opening up during the second quarter, with a year-on-year increase of 35% – yes that’s thirty-five, not three point five! Yet those company eyes that saw dollar signs have started to settle down, with their feet firmly back on earth once again. Quarter three saw conversion rates drop 15% from quarter two, yet still represents a nice 20% increase when compared to the same time last year.
Much of this is likely down to the fact that during Q2 many shops were closed and were not offering online availability, leaving us to choose from a limited supply of shops, and thus a narrower range of online window shopping.
Holiday season is set for a huge number of consumers heading online, turning to digital channels to get a bargain and discover gifts for whatever type of festivities are set to be allowed.
Basics over games & luxury
The second quarter was a time for fun and games – or at least when it came to our online shopping habits: toys and games was the top performing category during the quarter, with a 181% growth year on year.
This dropped in the third quarter, as toys and games dropped from its top position, replaced by the food and drink category, with a growth of 153%. What’s interesting about this category is that it is generally one of the lowest in terms of online sales. Yet its strong growth points toward changing consumer habits when it comes to how and where we get our food from – even as shops and supermarkets have been reopening across the country.
The worst-performing categories, which have suffered the most for the longest time, have been luxury apparel and footwear – with very few events, formal get-togethers, festivals, concerts, it comes as no surprise that these categories continue to lag.
Fourth and final quarter
Holiday season has long been the most crucial for brands and retailers. And this year it has already started, thanks to the postponement of Prime Day, and the ripple effects of other retailers putting on their own sales events.
Some have been putting all their eggs into the fourth quarter basket, anticipating high-volume sales, making or breaking their financial year. We have already seen a large number of retail bankruptcies, with Q4 potentially deciding whether others will fall, too.
The Salesforce Index, at least, predicts the holiday season growth of ecommerce to reach 34%, meaning a continuing of the deceleration in growth from the third quarter.
Given that we’re already into the holiday season – and already into the fourth and final quarter – we’ll have to wait for these predictions to materialize or crumble. As Hegel once said: “The owl of minerva spreads its wings only with the falling of dusk.”
PS: ArganoUV is one of the world’s leading Salesforce B2C Commerce Cloud tech teams. Contact us to see how we can work together.