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2020 Holidays: Insights into an Unpredictable Shopping Season

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With Holiday shopping valued at 20% of annual revenue, it is hard to overstate the role it plays in retail. The past eight months saw the global pandemic completely change the way we live, work, interact, and buy, and we are now looking at a holiday season in a category of its own. One thing is clear - this year, consumers will lean heavily into digital channels for their holiday shopping, and merchants will have to adapt quickly to keep up. So how can merchants prepare for the busy shopping season ahead?

 

Riskified recently published its 2020 Holiday Report, which examined four pandemic-era holidays to gain insight into the consumer trends and shopping patterns expected this winter’s holiday season. America’s Memorial Day (May 25) and Labor Day (September 7), both noted for their sales, offered insights into activity on Black Friday / Cyber Monday. Gift-giving days such as Mother’s Day (May 10) and Father’s Day (June 21) can help predict the winter holidays’ shopping patterns.

 

Here are some of our key findings:

 

The good news is: expect more volume

COVID-19 caused mass-migration online: starting in April, we observed increased eCommerce activity. This trend played out on shopping holidays: US Memorial Day saw a 17% YoY increase in the dollar amount spent, while Labor Day recorded 35% growth.

 

We also saw a significant increase in total online spending on Mother’s Day (+22%) and Father’s Day (+30%). Here, the bulk of the growth can be attributed to the increase in the average value of each order (~+20%).

 

Behind this exceptional growth are large numbers of never-before-seen shoppers: people who previously favored brick-and-mortar shopping suddenly became dependent on eCommerce. For merchants, this is a time to strike the iron while it’s hot. Attracting new shoppers during this habit-forming period could make them lifelong customers, but there are complications. New customers challenge most fraud prevention systems, which rely on shopping history to approve or decline a transaction. Many fraud prevention operations automatically tag unfamiliar shoppers as ’risky,’ increasing the probability of a falsely declined transaction.



New patterns emerge

As eCommerce became the main retail engine for holiday shopping in 2020, we saw a drift away from last-minute activity towards planned-in-advance shopping. For example, while Labor Day 2020 recorded a spike in sales, the activity was scattered throughout the week leading to the holiday. A gradual uptick in sales can be advantageous for merchants who may have buckled under the pressure of growing demand over past months, but it is important to note that changing shopping behaviors may throw off certain fraud management systems. Unpredictability is the enemy of rigid platforms, which depend on recognizable patterns to generate their score.

 

This year, we also recorded a spike in the rate of fraud attempts on the days following Labor Day’s sales uptick. Merchants may expect a similar uptick in fraud during high-profile sales days in November.

 

The Holidays’ Biggest Winners

COVID-19 gave rise to certain product categories, such as consumer electronics and sporting goods, and these emerging consumer trends played out during this years’ shopping holidays: people spent 158% more on sport-related goods, 108% more on home goods, 65% more on jewelry and watches, and 62% more on consumer electronics.

 

But the biggest winners were digital gift cards, which transformed this year from a marginal product category with a reputation for attracting fraudsters, to a gifting go-to and an engine of economic growth. While people spent less per card on average, they bought many more of them: On Mother’s Day and Father’s Day, we saw the volume of GC transactions rise by ~245% and ~140% YoY, respectively.

 

These are just some of the insights included in our 2020 Holiday Report. For more data-based predictions, emerging fraud and shopping trends, and key takeaways, check out the full report.

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