How Did Your Peak Strategy Go?
January 11, 2019
If you’re not in the habit of reviewing your peak season commerce strategy, it’s time to start. Likewise, if you’ve been analysing performance in previous years but have experienced issues at peak time or failed to hit expected heights, it’s best to revisit your strategies and ensure commerce readiness for next time.
Peak season, often known as the Golden Quarter for retailers, is the 3-month lead-up to Christmas and the New Year, encompassing Black Friday, Christmas shopping and the post-Christmas sales. Some retailers reportedly pocket up to 75% of their annual revenue during this time, and order levels can hit 10 to 15 times that of an average week, resulting in challenges for commerce sites and other areas of the digital supply chain.
2018 Peak Digital Commerce Stats
- According to IMRG Capgemini Online Retail Market Results November online UK retail sales saw a YoY increase of 8.1% to £2.8 billion
- Online smartphone sales in November increased by 19.5% YoY to £525 million
- Online-only retailers (11.6% growth) outperformed multi-channel retailers (6.3% growth)
- According to Amazon, Alexa orders tripled over the holiday season compared to 2017
2018 saw the continuing trend of elongating the traditional Black Friday – Cyber Monday peak period, with many deals available for several weeks. Indeed, the ‘Black Friday’ peak is now seen by many as a fortnight-long period, and some promotions run for the entire month of November. This means that, whilst there are still peaks on certain days, 2018 saw a general raising of the water line.
The shift from high street to web continued, despite many brick-and-mortar retailers offering eye-watering discounts to seize sales. McKinsey stated that 33% of German consumers would exclusively shop online, and 29% of UK consumers expected to do likewise.
An increase in online traffic and sales meant the inevitable strain on sites and support teams, with some stretched to breaking point. One prime example is J.Crew, an online US retailer, who experienced a technical glitch during checkout that lasted most of Black Friday. This not only had the obvious detrimental effect in loss of revenue (reportedly up to $700,000), but also meant long-term – possibly irreparable — damage to its reputation, due to backlash from frustrated customers on social media.
Server volume challenges are predictable with vast traffic levels and the introduction of additional content or UX functionality. APIs can also be affected by a spike in server volume, which can significantly harm UX. Heavy pages, slowed down by chunky images, videos, and third-party content, can impact page performance when traffic is high. The integration of mobile-responsive and progressive web app functionalities, whilst necessary as consumers continue to move towards mobile commerce, can also disrupt certain page components.
Also, making changes to backend codes such as SKUs or pricing information are common causes of glitches on the front end. Dynamic pricing or discount codes should be rigorously tested before peak to ensure combinations of products or offers calculate accurately.
In terms of fulfilment, more retailers than ever offered free delivery, with several introducing same-day or one-day shipping. Click-and-collect was also used successfully by many, as a way of bridging the gap between online shoppers and brick-and-mortar experience. John Lewis, for example, fulfilled 52% more click & collect orders on Christmas Eve than the previous year. These moves reflect the continued trend of retailers offering express delivery options to compete with Amazon, allowing brands to capitalise on last-minute Christmas purchases, and position themselves as a quick and reliable online option in the future.
Promotional efforts such as pay-per-click campaigns, display ads, social media shares, sponsored posts, and email marketing were lavished throughout the holiday season, with some Black Friday promotions starting on the 1st November. According to McKinsey, German (48%) and UK (38%) shoppers were most likely to use search engines when researching Black Friday deals. However, with ad spend now having to stretch across various digital, social channels and mobile-specific formats – mobile ad spend increased by an estimated 20.7% in 2018 – some retailers did not adapt and spread their budgets enough to compete.
Evidently, for businesses relying on digital sales, peak season offers unique challenges. It’s vital sellers start planning early to not only maximize marketing opportunities and sales strategies, but also to manage the operational side of digital commerce – the nuts and bolts. This starts by evaluating the peak season just past and putting plans in place early for next year.
5 Tips for Your Peak Season Commerce Strategy
1. Record what worked and what didn’t. Take stock of key successes and opportunities for improvement. Create concise paperwork and presentations that can be accessed during next year’s planning, which will be critical to ensure any mistakes are not repeated, and key learnings are carried into next year.
2. Start planning early. Plan early for success. Trading strategies, digital marketing and promotional activities, order management and fulfilment plans, and team structure can all be planned in-depth, in advance. This can remain flexible, but potential challenges such as marketing budgets, replatforming, load testing or resourcing can be identified and addressed early.
3. Be ready for all eventualities. Being ready for the unexpected means teams know how to react. Peak readiness and ‘war game planning’ is vital for a business to understand how all eventualities will be handled, with specific responsibilities and contingencies in place that will not only keep revenue in the bank during peak, but protect brand reputation should any problems arise.
4. Test. Test. Test. And test again. Platform glitches are significantly more likely to arise during peak time. The only way to be sure these errors don’t arise during peak is by load testing as early as possible in your peak preparation. Typically, this means testing at least 6 weeks in advance of the holiday you are prepping for. Where possible, remove potential bottlenecks in your front end or back end, making your digital commerce platform scalable to increased load when it comes to the crunch.
5. Be agile. The retailers who capitalise most during peak are often those prepared to innovate. Whether that’s driving a radical social media or digital advertising campaign, launching a new product, going mobile with improved UX design or an app, or offering same-day shipping for the first time -trying something new will show existing customers you’re willing to evolve, as well as attracting a new audience.
Commerce Strategy Services
LiveArea offers a range of commerce strategy services for businesses to review previous peak performance and plan early for future holiday campaigns, enabling brands to deliver their peak commerce strategies with confidence:
Independent peak commerce strategy audit. Covering the period from mid-November to mid-January, this audit includes analytics, promotions, trading strategies, digital marketing and key learnings to shape next year’s planning.
Poor performance reversal. Strategy turnaround through identifying pain points and subsequent solutions.
Organisation set-up. Working with brands to review internal roles and responsibilities, including team structures, considering global and local teams, and resourcing opportunities.
Agency review. Independent review of external agency performance during peak to understand opportunities for improvements or considering a re-selection process.