The 'Krampus' of returns and other holiday e-commerce trends

The just-concluded holiday season revealed some trends in digital commerce that retailers should heed for the coming year.

By all accounts, the 2024 holiday season was a happy one for online retailers. Data from both Adobe and Salesforce indicates that online holiday spending hit record highs. Digging more closely, several deeper trends, including one that doesn't give tidings of comfort and joy, emerge from the 2024 holiday season that are of great interest to e-commerce retailers: 

Mobile ascendancy

Mobile has surpassed desktop/laptop as the preferred choice of online holiday shoppers in the past couple of years, and during the 2024 season solidified its dominant presence as a digital commerce touchpoint.

According to Adobe figures, smartphones drove 54.5% of all online holiday purchases and a staggering 79.1% of buy now, pay later transactions (which are also steadily rising in popularity each holiday season). Meanwhile, Salesforce data shows an even stronger mobile holiday performance, accounting for 79% of digital traffic and almost 70% of digital orders (peaking at 79% Christmas Day).

Clearly, any consumer hesitancy to make purchases via mobile device is fading, especially for BNPL purchases which tend to be for higher-priced items and what may be last-minute gift buys or impulse transactions made during idle holiday scrolling sessions. 

It’s the price, stupid

Average discount rates for the entirety of the 2024 holiday season reached 23% in the U.S. (up 1% year-over-year) and 22% globally (up 2% year-over-year).

Adobe data shows that for every 1% decrease in price, demand increased by 1.029% compared to the 2023 season. This drove an additional $2.25 billion in online spend.

Strong discounts this season also drove shoppers to purchase higher-ticket items in categories such as electronics, appliances, and sporting goods, according to Adobe. During the season, the share-of-units-sold for the most expensive goods increased by 21%. 

Retailers have been responding to consumer demand for good prices on holiday gifts by starting their seasonal discounts earlier and earlier. Black Friday has evolved from its roots as one-day event following Thanksgiving to a weeks-long event that can begin in October.

[READ MORE: Why Black Friday has become an online state of mind]

In addition, a whole new sales event dedicated to deep online holiday discounts emerged in the form of Cyber Monday, and the Amazon Prime Day extravaganza has become the unofficial start of the holiday shopping season – in July!

Returns – the holiday e-commerce Krampus

Krampus, a malevolent figure from Northern European folklore who terrorizes naughty children that don’t get presents from Santa Claus, is mercifully not real. But his spirit exists in the rapidly growing volume of returns that put a damper on retailers’ holiday e-commerce merriment.

Salesforce projects the value of online holiday returns will grow to $133 billion globally, partially due to trending consumer behaviors like buying an extra size above and below your standard size with the intention of returning two items.

And total returns are projected to reach $890 billion in 2024, according to a new report by the National Retail Federation and Happy Returns, a UPS company. Retailers estimate that 16.9% of their annual sales in 2024 will be returned.

A separate NRF study found that for the 2024 winter holidays, retailers expect their return rate to be 17% higher, on average, than their annual return rate.

To address this higher volume holiday returns, retailers are seeking additional support from third-party logistics providers (40%) and hiring additional seasonal staff to specifically handle returns (34%). Other steps can include leveraging algorithms to flag suspicious consumer return behavior, as well as accepting online returns in-store to potentially restock them there and reduce return logistics costs.

Data from numerous sources indicates consumers look for easy online returns and may penalize retailers that make returns overly complex. So unlike Krampus, online returns are a pervasive problem that cannot be simply fixed through good behavior.