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Salesforce Forecasts 13% Holiday E-Commerce Growth In 2019

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Salesforce Forecasts 13% Holiday E-Commerce Growth In 2019

Despite a shorter holiday selling season between Black Friday and Christmas this year, Salesforce predicts that U.S. e-commerce sales will top $136 billion, representing 13% year-over-year growth. Globally, holiday e-commerce is expected to grow 15% year-over-year.

This morning, cloud-based customer relationship management software provider Salesforce (NYSE: CRM) released its forecasts for 2019 holiday e-commerce activity both for the U.S. and globally. Salesforce shared its forecasts in a press release and on this Holiday Insights page.

Salesforce's 2019 predictions are based on data from millions of shoppers captured by Salesforce's Commerce Cloud, social media interactions and conversations analyzed by Marketing Cloud, and customer-service analytics generated by Service Cloud. Salesforce includes more than 4,500 e-commerce sites in its model and uses data from the past three holiday seasons to compute its 2019 forecast.

"With Thanksgiving falling later in the year, shoppers have six fewer days between Cyber Week (Nov. 25-Dec. 2) and Christmas to make their holiday purchases," Salesforce said in a statement. "This will result in revenue being more evenly distributed throughout Cyber Week."

Specifically, Salesforce believes that e-commerce revenue on the Monday and Tuesday before Thanksgiving will grow 22% year-over-year, and that Black Friday itself will account for $7.3 billion in digital sales in the U.S. and $39.6 billion globally. 

"Cyber Monday will bring in an addition $8.2 billion in the U.S and $32.2 globally," Salesforce predicted.

The growth of e-commerce has been one of the most important themes in transportation and logistics in North America and globally over the past five years. In North America, e-commerce has shifted consumer activity decisively away from class B and C shopping malls, and put a new emphasis on last-mile delivery and omnichannel retail.

Still, 83% of shoppers plan to shop in a physical store this holiday season, according to Salesforce.

The rise of e-commerce in North America has been associated with a rash of brick-and-mortar retailer bankruptcies (the U.S. has by far the most retail square footage per capita in the world), an accelerated pace of warehouse and light industrial construction, venture capital investment in warehouse robotics and automation and shifting freight flows.

Average lengths of haul in domestic trucking continue to shrink as shippers seek to locate inventory as close to dense consumer populations as possible and achieve next- and same-day delivery times.

In recent years, Amazon.com, Inc. (NASDAQ: AMZN) has exploited the holiday retail season as an opportunity to take e-commerce market share, while parcel integrators like UPS Inc. (NYSE: UPS) and FedEx Corporation (NYSE: FDX) have adapted to surging volumes. During the period of peak holiday shipping, parcel carriers can handle volumes double their average daily volumes; UPS and FedEx have become experts in flexing up labor capacity and price to deliver the vast majority of shipments (in excess of 95%) on time, while maintaining healthy margins.

Faster delivery times have multiplied shipping cycles, though, as consumers can now order, receive and return items before ordering them again multiple times in the retail shipping season.

"With FedEx announcing the end of its ground shipping contract with Amazon, the retailer has had to get creative by servicing much of its own last-mile delivery," said Rob Garf, vice president of industry strategy and insights at Salesforce. "But delivery is just the beginning. Fast and easy returns have been a major pain point of online shoppers.

"Especially as we head into a holiday shopping season that is six days shorter than last year, quick deliveries and easy returns will be a shopper expectation," Garf continued. "In fact, according to our upcoming Connected Shoppers Report, 52% of shoppers reported that free or expedited shipping will influence their holiday purchases this year."

In a fascinating trend, Salesforce found that one in 10 online purchases now occur on "the edge," through social media platforms, messaging apps, or through voice-enabled devices. These media are referred to as "the edge" because they exist on the edge of a retailer or brand's property and represent the closest interface with the customer possible today.

"As Gen Z gains more purchasing power and influence over their parent's spending habits, their preferences will bolster shopping on the edge," Salesforce predicted. "For the first time ever, social buying is expected to creep into the double digits this season. In fact, 37% of Gen Zers also say Instagram will be their preferred source for holiday shopping inspiration."

While overall spending is expected to rise by more than 20%, holiday retail shoppers appear more cost-conscious than ever. According to Salesforce, 47% of shoppers said that they will only buy items on sale this holiday season.

E-commerce retailers are aware of how price moves drive consumer behavior and have become experienced at leveraging user demographic and behavioral data to discover the right price for consumers on a granular level. Digital merchants optimize their pricing to distribute orders across the holiday season efficiently in an attempt to maximize sales and manage logistics.

For those reasons, Cyber Monday has emerged as a shopping day just as important as Black Friday. The day after Thanksgiving has been regarded as the beginning of the holiday retail since the early 1950s, and the day has been called "Black Friday" since the 1960s—either because of the painful disruptions that crowds of shoppers cause to retail operations or the fact that many retailers reach profitability on that day.

Though the term "Cyber Monday" was only coined by the National Retail Federation in 2005, it has quickly grown in importance. Salesforce found that the best online deals are still found on Cyber Monday, when e-commerce retailers offer an average discount of 29%.

Despite the front-loading of sales in Cyber Week, Salesforce expects year-over-year revenue growth throughout the retail season. But as Christmas approaches, click-and-collect omnichannel experiences, where a customer orders online and then visits a store to pick up the order, will become more important as shipping deadlines pass.

"Retailers offering click and collect will drive 28% more revenue share across their industry during the five days before Christmas," Salesforce found.

Image Sourced from Pixabay

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