Nothing is normal this year. This also goes for the most popular discount events of the year, Black Friday and Cyber Monday, which took place on 27 November and 30 November respectively. Christmas sales therefore achieved new record revenues in German online retail.
This is especially demonstrated by the figures from our core sectors of fashion and cosmetics which profited the most. Here we saw a revenue increase of an incredible 240 percent on Black Friday compared to a “normal” Friday without a discount campaign. While fewer orders were recorded on Cyber Monday, revenues were even higher with an increase of 254.4 percent. In other words, Cyber Monday was more successful overall than Black Friday in terms of the revenues generated. The discount spin-off outdid its big brother – who’d have guessed that?
Goods value from fashion purchases falls
Since the outbreak of the coronavirus pandemic, sales of household appliances, consumer electronics, and home office equipment have risen significantly. At the same time, clothing is still very much a popular core sector. While Germans splashed out on fashion items this Black Friday, per purchase they actually spent a little less on clothes and shoes than in the previous year. The average value of a shopping basket amounted to around 100 euros in the fashion sector, down from 124 euros in 2019. This year, the international shopping basket value amounted to 110 euros on average – six euros fewer than in the previous year. Germans therefore lie below the international average, so the situation has reversed compared to 2019. By contrast, the picture in the cosmetics sector is more positive. There, the shopping basket value rose from 58 euros to 64 euros and lies above the international average of around 55 euros. This is also a surprise in this extraordinary year.
Growing popularity of e-payments
Less surprising, but a foreseeable consequence of advancing digitalization is that Germans are increasingly adopting digital payments. While the Germans used to prefer purchase on account, during both last year’s and this year’s Black Friday business they favored PayPal. PayPal likewise holds the lead when compared internationally, followed by credit card and PayPal Express Checkout.
What hasn’t changed, however, is the time people shop: Rush hour for online purchases continues to be in the evening. The time of orders has only moved slightly later, from a peak at 9 pm to 11 pm. Last year, besides the evening hours between 8 pm and 11 pm, the morning from 8 am to 11 am was also popular.
Huge manual order volumes in fashion
Not only is fashion popular among consumers, online fashion retail is also attractive for fraudsters. In addition to credit card fraud and friendly fraud, an increasing number of creative methods are being used. For instance, if a credit card is changed during the order process, the process is often initially blocked by the fraud system and marked for manual review. If the order has been submitted by a legitimate customer, it will be accepted by the fraud specialist and forwarded for processing. But if clear indications of fraud materialize during this analysis, the order is cancelled. In the fashion sector this year, an extreme number of manual risk checks arose as a result of the high order volumes, which our 24/7 team successfully handled. On Black Friday alone, there were around 60 percent more checks than at the same time last year.
Yet, the acceptance rate of these checks reveals something interesting. While it was 60 percent in 2019, this year it came to 80 percent. On the one hand, this rate is based on the increased caution of retailers to pass on a larger portion of orders for review. On the other, the increased acceptance rate is due in no small part to our daily work with data that allows us to learn and make more precise, “higher risk” decisions with confidence.
In terms of chargebacks, i.e. refunds booked by the credit card holders, we will only have concrete figures on the quantity and successful challenges in a few weeks’ time. I would not be surprised if the values for automatically processed orders surpassed the numbers from last year.
What online retailers can do now
It’s already clear that Black Friday business will be accompanied by returns, reversals, and chargebacks for retailers until at least January. The coronavirus will still be around then and the propensity to buy online will continue to grow. I am convinced that online shopping will remain attractive even after the pandemic comes to an end. It’s therefore high time that the right systems are set up for future peak seasons and both customer and financial processes are designed to be crisis-proof.
For anyone wishing to delve deeper into this topic: I offer fascinating insights into this and other mega peak seasons in the webinar “eCommerce Backstage”, which we recorded prior to Black Friday. During the 30-minute video, I speak with Jan van der Holst from our partner Adyen about the challenges and possible solutions for online retail in these extraordinary times. Have a look and feel free to contact me at any time if you have questions or comments.