Many people were anticipating the in-store shopping experiences this time around having had a not-so-good experience shopping during the holiday season last year. The arrival of Omicron has definitely deterred some enthusiastic shoppers from visiting brick and mortar shops and turning back to online stores although there were quite a lot of people who still went out and shopped in-store.
Ecommerce Sites Profit And Loss
Promotions of Holiday deals on certain e-commerce sites started in early October this year and customers responded likewise rushing to claim them knowing well there is a supply chain crisis and waiting until the holiday season might mean dealing with the product unavailability later due to high demand.
Retailers like Best Buy and Amazon started with their Black Friday deals well in advance. The early kickstart of holiday shopping significantly lowered the possible impact of Omicron on the volume of sales as by then many people had already gotten a head start on shopping. Ecommerce companies supporting global shipping might have to face loss as the wind of a new virus brings with it customer discomfort as well as border restrictions.
Cyber Week recorded an online spend of $33.9B in the US, which was less by 1.4 percent YoY. Black Friday saw a dip of 1.3 % YoY as compared to the last year. By the end of the holiday season, Adobe predicts 10% YoY growth in online sales. Contrary to adobes data, salesforce reported cyber week sales observed growth of 4% YoY as opposed to the year 2020. Irrespective of figures, it is agreed that Cyber-Monday in the US turned out to be the biggest shopping day of the year with one in three people making an online purchase on the day, Salesforce report claimed.
As per Adobe Digital insights people have spent handsomely on toys, electronic items, and video games. Gift cards, books, baby products, microwave ovens,s, and small kitchen appliances particularly saw high demand among consumers. Ecommerce sites offering buy now pay later features have seen good usage of the same. Especially during the cyber week, it has contributed to a good volume of online sales. Unsurprisingly as the items keep going off virtual shelves, supply chain disruptions showed their impact in the form of out-of-stock messages on e-commerce stores. It can be said that shortage of stock and delay in restocking in light of still prevalent global supply chain challenges led to significant loss to major e-commerce websites.
Salesforce reported that product shortages led to 6% fewer sales as opposed to last year. According to Adobe, the prevalence of stock shortage was up by 169% compared to pre-pandemic levels. Looking at the current situation it is expected to stay unchanged for a couple more months through December further dependent upon the Omicron situation. GN ME UP!
A major online retailer, Amazon, declared in a press release that Cyber Monday was one of the company’s biggest-ever shopping days. Over the five days starting with thanksgiving through Cyber-Monday, the online store had received orders for over 180 million items. The company did not disclose its revenue however mentioned that toys, apparel, and home goods were the top popular categories among their customers. Big-box retailers like Walmart Inc and Target Corp also suffered the brunt of labor shortages and merchandise management.
Best Buy had reported its concern over the shortage of electronics and its possible impact on its business during the holiday season. The fluctuating share prices of best buy, Nordstrom, and Gap were significant while the holiday season was just around the corner. Shuttered factories, raise in labor cost and shortage of starting materials have battered the global supply chain badly this year. the acute supply chain has affected the ability of many online e-commerce stores to fully meet customer demand, the result of which is apparent in the sales.
The chip crunch has led to a short supply of appliances, gaming consoles, and mobile phones. Consequently, tech companies like Microsoft, Sony, and Apple have struggled to meet demands with the availability of their latest gadgets. The new wave of Omicron variant is expected to hit businesses providing travel services and possibly non-essential services badly in the coming days. The actual profit and loss statements of the majority of e-commerce sites are yet to report in public. Public comfort and government restrictions will play a major role in deciding how the eCommerce market fares through the end of this holiday season.