1) Retail Sales - Record-Breaking E-commerce Sales During 5-Day Peak Season
During Cyber Week, consumer spending in the U.S. saw a notable increase in e-commerce compared to traditional offline stores. According to a survey by the National Retail Federation and Prosper Insights & Analytics, e-commerce shoppers significantly outnumbered their offline counterparts during the 5-day period, with online shoppers, particularly on Cyber Monday, exceeding offline shoppers by more than three times. [3]
2) U.S. Michigan Consumer Sentiment
The U.S. Michigan Consumer Sentiment utilizes various indicators to gauge consumer sentiment for economic forecasting. Moreover, the Michigan Consumer Sentiment Index is segmented into several indexes, including the Consumer Sentiment Index evaluating the relative levels of current and future economic conditions, the Expectations Index (University of Michigan Consumer Expectations) reflecting outlooks for future economic conditions, and the Expected Inflation Index (Michigan 1, 5-Year Inflation Expectations) projecting inflation expectations for the next 1 to 5 years.
The Michigan Consumer Sentiment Index announced on December 8 surged to 69.4 points from November's 61.3, marking a 13% increase. The Expectations Index for economic outlook rose to 66.4 points, surpassing the previous month's 56.8. Notably, the substantial rebound from the previous downward trend indicates an overall improvement in consumer sentiment. [5]
1) Consumers are continuing to favor online shopping, suggesting that the growth trend in e-commerce will persist.
2) With the predominant forecast of economic downturn in the first half of next year, strategies addressing this situation are required.
3) Improving the environment to facilitate comfortable mobile shopping or actively investing in areas where mobile payment systems are not yet fully established may be considered. Additionally, there is an opinion suggesting caution in adopting new technologies, such as generative AI, in e-commerce, as their practical roles may still be limited.
Then, let's examine the seller's response strategy for the 2024 e-commerce trends.
1) Emphasis on Affordable Prices Relative to Product Value
During an economic downturn, all sellers engage in competitive price management because consumers become more sensitive to prices. In response to these consumer characteristics, sellers should not only emphasize attractive price management but also contemplate and focus on creating content that highlights the value of the product. By emphasizing the quality, features, and benefits of the product, sellers can justify the price to consumers.
2) Streamline Variations for Cost Reduction and Consider Mass Production of Products with Different Categories but the Same Raw Material
If reducing variations results in a clear reduction in raw material purchase costs, boldly reduce variations. Share the benefits with consumers and actively promote them. Expand the product portfolio to reduce dependence on specific products. Changes in the business environment may pose potential risks of decline in existing product categories. This can help mitigate such impacts and enable sellers to discover consumer needs that may have been overlooked.
3) Focus on Building Customer Loyalty
Even in challenging economic situations, customers with high loyalty are still likely to choose the seller's products. Create a unique brand identity and consistently offer high-quality products. Additionally, concentrate on securing loyal customers by discovering and providing various benefits that buyers find satisfying, such as reward programs and exclusive discounts.
4) Expand Mobile Consumer Support and Smart Utilization of Social Commerce
E-commerce sellers have reached a turning point where they should focus on overall service and content improvements to make mobile shopping more convenient. Adobe Analytics reported that during Thanksgiving 2023, 59% of online sales were made through smartphones, and throughout Cyber Week, smartphones continued to account for 51.8% of online sales, indicating a sustained high usage. [4] The sale of products and services through social media platforms is expected to continue growing. However, careful consideration is necessary when leveraging social commerce.
Adding a new distribution channel for sellers presents both a sales opportunity and an investment, requiring careful consideration of returns on investment.
Economic changes in the U.S. can have complex effects on e-commerce consumers in various areas, from preferences to expectations regarding purchased items. E-commerce sellers and businesses that proactively adapt to these changes, adjust business strategies for the value, quality, and satisfaction of their products, can navigate through uncertainties and strengthen themselves in the long run, even in challenging business environments.
* For more detailed information on the E-commerce Business Strategies in Response to Uncertain U.S. Economic Outlook in 2024, please refer to the white paper.
Go to White Paper # References [1] Resilient Global Economy Still Limping Along, With Growing Divergences, IMF
https://www.imf.org/en/Blogs/Articles/2023/10/10/resilient-global-economy-still-limping-along-with-growing-divergences
[2] America Will Face Stagflation Risk in 2024: Eurasia Group Economist, Nikkei Asia
https://asia.nikkei.com/Economy/U.S.-faces-stagflation-risk-in-2024-Eurasia-Group-economist
[3] Thanksgiving Holiday Weekend Sees Record Number of Shoppers, National Retail Federation
https://nrf.com/media-center/press-releases/thanksgiving-holiday-weekend-sees-record-number-shoppers
[4] Cyber Monday Surges to $12.4 Billion in Online Spending, Breaking E-Commerce Record, Adobe Analytics
https://news.adobe.com/news/news-details/2023/Media--Adobe-Cyber-Monday-Surges-to-12.4-Billion-in-Online-Spending-Breaking-E-Commerce-Record/default.aspx
[5] U.S. Michigan Consumer Sentiment Preliminary Results for December 2023, University of Michigan
http://www.sca.isr.umich.edu
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