Customers Favor BOPIS As U.S. Holiday Sales Climb 5% Over Last Year

U.S. online sales climbed from $257 million for the 2021 holiday season to $270 million for 2022, in contrast to global holiday sales, which were flat to last year at $1.14 trillion. A key to the performance was the wider retailer offering of buy-on-line-pick-up-in-store (BOPIS) for customers. Nearly one out of every five online orders placed this holiday season globally were by customers using the BOPIS option for purchasing merchandise, according to data released by Salesforce.

BOPIS wins big

Retailers offering BOPIS between December 15th and 24th sold seven times more than those who did not provide BOPIS during this period. “Retailers closed out the 2022 holiday season with stronger online sales growth than expected, driven in large part by U.S. demand, steeper discounts on peak days, and BOPIS options,” said Rob Garf, vice president and general manager of retail at Salesforce. As consumers continually look to shop using hybrid models, including purchasing online, in-store and on mobile devices, retailers have responded to these behavioral changes by offering more services.

The run-up to Christmas saw a spike in discounts

While retailers started holiday promotions early this year (at the beginning of October), shoppers experienced better deals than in 2021 in the run-up to Christmas, including many excellent deals during Cyber Week. U.S. online sales grew 8% year-over-year (YoY) across the three weeks following Cyber Week 2022. By the end of the season, shoppers ultimately saw better deals than in the 2021 holiday season, with a 21% average discount compared to 19% the year prior. The top discount categories included beauty, skincare and makeup, with an average discount of 29%. General apparel and handbags were the following most discounted categories at 27%.

Social media remains a fan favorite for shoppers

As social media usage continues to rise, so does social commerce (buying items through social networking sites). Global traffic referrals from social media hit an all-time high this holiday, driving 12% of all mobile traffic (+23% YoY). Belgium, Italy, and the U.S. were the countries with the most social media-minded shoppers.

Returns grew for holiday

For the 2022 season, 13% of total holiday online orders were returned, representing a 63% increase in returns YoY. Returns spiked six days after Christmas at 16% of total online orders. “The number of returns was a staggering number that shot out to us and further credits where the focus should be for retailers for the rest of the year,” stated Garf, adding, “This shows that consumers are still cautious amid economic uncertainty.”

Retailers are furthering efforts to make returns easier with hassle-free packaging and more accessible shipping options. Still, the real drive is to reduce the probability of returns at the purchasing point. “We are seeing retailers evolve the product detail page to instill confidence with reviews, videos, images, forums and using personalized product recommendations,” said Garf.

Artificial intelligence, machine learning and generative AI will help shoppers select the right products, thereby reducing returns. Additionally, many retailers are re-evaluating return policies and enforcing stricter returns rules. “Retailers are curtailing return windows and offering final sales on heavily discounted items,“ added Garf.

What to expect in 2023

Consumers may spend less in 2023, with much depending on the economic conditions in the U.S. market and global markets. In the U.S. for 2022, fiscal sales have outpaced last year’s sales through November by 9.8% (minus autos and gas). Part of the increase in sales over last year is due to rising prices across most categories, with the consumer price index 7.1% higher for the past twelve months. “Retailers will be faced with continued margin pressure in 2023. While many retailers got really scrappy over the last few years to cater to new customer behavior and shopping expectations, their sites must now be on scale,” said Garf.

Retailers will focus on customer experience, improving process efficiencies and reducing costs. “That means balancing customer loyalty with operational efficiency, with a focus on leveraging technology to humanize the digital experience,” stated Garf. Consumers will be frugal going into 2023 and will continue to seek value-driven products and experiences. Salesforce analyzes aggregated data to produce holiday insights from the activity of over 1.5 billion global shoppers across more than 64 countries and includes 24 of the top 30 U.S. online retailers.