Shoppers And Retailers Might Be Out Of Sync This Season

Thomas Borders, VP & GM for Product Lifecycle Cloud | October 24, 2022

RetailerAndConsumer2022HolidaySurvey

Inflation hasn’t been great for e-commerce, but upcoming holidays should bring an uptick in online sales. Or will they? We surveyed consumers and retailers to see if their shopping expectations were aligned, and made some surprising discoveries.

RETAILERS ARE MORE OPTIMISTIC THAN CONSUMERS.

Despite concerns about inflation and supply chain constraints, nearly 90 percent of retailers feel good about holiday shopping. But they could be disappointed. Around 45 percent of consumers are expecting to spend less this year, and with good reason:

  • Less disposable income due to inflation
  • Fear caused by economic uncertainty 
  • Change in lifestyle or life stage (i.e., retired, new baby, kids in college, etc.)

Overall, online sales — as a percentage of total retail sales — will probably remain flat as pandemic fears subside. Compared to the last two years, it’s likely more shopping will be done in person this season.

ARE FREE SHIPPING AND FREE RETURNS A FREE-FOR-ALL?

Free shipping for orders is table stakes for most online merchants, but free shipping for returns has become a point of contention. Rightly so, considering 41 percent of online shoppers are likely to buy several items in advance, then decide what to keep and what to return. Only 40 percent of shoppers said they wouldn’t shop that way.

This purchasing practice erodes margins and generates waste, yet the majority of online merchants still offer free shipping for returns. The easy fix? Charge a fee. But that might be competitively prohibitive. Consumers have already been groomed for free returns. In fact, 40 percent said they’d stop shopping with a retailer if returns weren’t free. Although, on the flip side, 46 percent said a fee would make them more selective with their purchases. Merchants roll the dice either way.

IT’S TIME TO REVIEW YOUR RETURN POLICY.

Return policies are important for setting expectations between shopper and merchant — and expectations should be a little different this holiday — but many retailers are relying on last year’s policy for the upcoming season.

  • 74 percent of consumers check the merchant’s return policy
  • 42 percent of retailers haven’t updated their return policies within the last year
  • 21 percent of retailers weren’t sure when their return policy was last updated
  • 9 percent of retailers reported not having a formal returns policy in place

Returns wreak havoc on online sellers, but many will place this issue on the back burner. Right now, their focus is on moving excess inventory to make room for holiday merchandise. Considering 76 percent of retailers are expecting holiday returns (in units) to be 20 percent or less, it’s possible they believe this year’s volume won’t be significantly different from last year’s.

ATTITUDE COULD MAKE OR BREAK THE SEASON.

If retailers and shoppers are going to realign, it needs to happen fast. Many consumers have already started their holiday shopping. Merchants willing to set reasonable expectations — for shoppers and themselves — should still have a great holiday season, but that willingness is the key.

Thomas Borders, VP & GM for Product Lifecycle Cloud