Mastercard followed Amazon out of the gate with some positive holiday news for eCommerce and physical retailers.
While the holiday season may not be technically done, the after the Christmas sales do count into a retailer’s overall holiday sales, Mastercard is reporting a stout 4.9 percent increase in total sales for this year.
Online Sales Boomed!
Helped by a late rally in sales, online sales jumped an incredible 18.1 percent over last year.
This increase beat a preseason estimate by Adobe Analytics which called for a 13.8 percent growth in online sales.
Having more granular data by Mastercard would be interesting.
But the fact a late rally helped the company specifically stated online sales seems to indicate that shoppers are confident that online retailers can meet last minute delivery deadlines.
This is a bit surprising considering we had news reports from UPS, the nation’s largest package courier, that the company was struggling a bit with volume. In the final days, they even pulled accountants and office workers to help deliver packages.
There is no doubt that online retail was a bit lucky this year with no major snowstorm bringing the nation’s shippers to a halt. A low employment rate created a tight labor market for seasonal workers, and the system appeared to creak a bit under the heavy load.
With online shoppers becoming more accustomed to ordering last minute, UPS, FedEx, USPS, and others will have to look at more automation to handle the volume. Relying on hiring seasonal workers may not be the solution that can sustain this kind of growth.
A Few More Nuggets From Mastercard
Here are a few more interesting stats from Mastercard’s look at holiday sales:
- Electronics and appliances increased 7.5 percent, the strongest growth of the last 10 years. The home furniture and furnishings category grew 5.1 percent, as did home improvement.
- Specialty apparel and department stores, which both traditionally see the bulk of sales happen in-store, saw moderate gains. This is particularly impressive given recent store closings.
- Retailers’ heavy early-season promotions paid off, with the first three weeks of November seeing significant jumps.
- In addition, shoppers were still spending late into the season, with December 23 next to Black Friday in terms of single-day spending. This was a boon to certain categories, including jewelry. Jewelry grew 5.9 percent, largely driven by last-minute sales.
Despite Growth, Some Retailers Face Uncertain Futures
Sears Holdings made a last-minute deal this year with Amazon to sell DieHard battery chargers on the online retailer’s site.
Will Sears Holdings stay out of bankruptcy court, many analysts are skeptical.
Toys R Us, already in bankruptcy court, may need to close more stores than they initially estimated.
While retail as an industry had a banner year, the shift from physical to online sales continues at a high rate. This transition will force retailers that still are struggling to build a viable online presence to look at restructuring their operations.
There will still be very good opportunities for small business online retailers to gain ground in market segments. Keep your eyes open, especially if you have physical retailers struggling in your industry.
How did you do this holiday season? Drop us a line in the comments section below.