Small retailers must respond to online holiday shopping preferences

Free shipping and promotions are the most popular online steps retailers can take to increase holiday sales this year.   

That's according to data from on-demand fulfillment platform Ware2Go, a UPS company, in which 15% of 1,000 surveyed consumers rarely shop in store and will only shop online for their holiday gifts this year. Eight in 10 (81%) surveyed consumers plan to purchase some holiday gifts online last-minute.

When asked what online steps retailers can take to entice their holiday business this year, consumers said:

• Offer free shipping (56%).
• Offer deal days, coupons or promotions for online products (55%).
• Offer one-to-two-day shipping on all online purchases (42%).
• Reward customers with extra loyalty points (37%).

The survey also asked consumers about their expectations for online holiday shipping:

• Sixteen percent of respondents have lower expectations around one-to-two-day shipping due to COVID-19, compared to 57% in 2021.
• Three quarters (76%) of respondents said they are more likely to make a repeat purchase based on a fast shipping experience.
• Three quarters (74%) of respondents also said sustainable shipping is an important factor in online purchase decisions.

Other interesting consumer findings include:

• Seventy-four percent of respondents plan to adjust holiday spending due to a possible recession on the horizon, including prioritizing lower-priced gifts, purchasing fewer gifts in general, or purchasing different typed of gifts.
• Almost seven in 10 (68%) respondents plan to start their holiday shopping earlier this year.

Small retailers face shrinking inventory, margins

Ware2Go also surveyed 1,000 small-to-mid-sized businesses (SMBs), finding 59% report that margins have shrunk, largely due to supply chain issues. Eight in 10 say supply chain costs have risen, while 46% have increased prices to cover costs, 42% cite elevated freight costs, and 19% are simply absorbing elevated supply chain costs.

Two-thirds (67%) of surveyed SMBs have faced inventory challenges in 2022, including overbuying inventory (23%) and buying the wrong inventory as consumer buying habits have changed (19%).

In response, 68% of surveyed SMBs are changing their inventory ordering strategy for the 2022 holiday season. The top three challenges are:

• Changing the type of products they’re purchasing (33%).
• Ordering inventory more than in previous years (23%).
• Ordering inventory earlier than in previous years (21%).

In July/August 2022, a survey of 1,000 SMBs and a second survey of 1,000 US consumers revealed their holiday and shipping preferences. See results here.

Sustainability remains important for back-to-school shoppers
A recent Sensormatic survey also reveals that sustainability continues to sit at the top of shoppers’ minds this back-to-school season. More than three in four (77%) respondents said sustainability initiatives will play at least a modest role in their back-to-school shopping choices this year.

The 77% of respondents who said sustainability initiatives will influence their back-to-school shopping choices also said that they plan to reuse as many of last year’s purchases as possible, and 70% said they plan to do at least some shopping at secondhand stores.