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Five peaks per year? What online merchants can take away from current Christmas business

Christmas is fast approaching and with it the biggest shopping peak season of the year. This is particularly the case for online retail this extraordinary year – with record-breaking revenues on Black Friday and unending online shopping sprees. But where will this lead over the days in the run-up to Christmas and the coming months? Will we experience multiple peaks at Christmas levels throughout the year in the future? I offer an outlook for the new normal in online business.

Black Friday alone broke its own records and provided a tremendous peak in revenues – as I covered in my last article. But discount events like Black Friday and Cyber Monday are just a high point in the wider Christmas business. Statista* forecasts that the online share in the German Christmas business will rise to 18.3 percent. Last year, it came to 14.4 percent. The corona pandemic continues to drive people away from highstreet shopping and into online stores. Many will even come to prefer this new routine. In other words, online retail can expect more, perhaps multiple peak seasons per year and may have to prepare for extremes. But what does that mean exactly?

High conversion also seen in shopping sprees
It’s to be expected that web shops and order management systems will be overwhelmed by the flood of transactions more often. But the purchase process including check-out should not take too long, otherwise customers will walk away. The aim is to filter out the attempts at fraud from the mass of orders, while not supressing the conversion rate with too many rejections. Nothing is more frustrating than sinking revenues due to preventable deficiencies in customer and financial processing. So, it has to be quick. And we’re talking about processes in the background running in fractions of a second.

In fierce online competition with many comparable offers, these milliseconds can make all the difference when it comes to winning over and keeping customers. This calls for automation for implementing seamless check-out processes for this surge of simultaneous orders.

Sharply rising chargebacks, refunds, and voucher processes
The aftermath of a super peak season should not be underestimated. This means returns business with repayments and the correct booking of vouchers. But there should also be plenty to do in the coming months due to the credit card business. Chargebacks, i.e. the withdrawal of payments by credit card holders, are especially susceptible to fraud. Known as friendly fraud, this type of fraud frequently occurs in e-commerce and can be costly for merchants. That’s because acquirers charge hefty fees every time for contesting chargebacks – regardless of whether or not it concerns a legitimate case. What’s more, contesting chargebacks takes time, which merchants often don’t have due to the normal, tight deadlines. Nevertheless, it can still pay to contest chargebacks in dispute management. Since around 20 percent of them do not relate to fraud, the chances of winning there are good. To save resources and comply with deadlines, I recommend entrusting the process to an external dispute management provider like Arvato Financial Solutions.

How online merchants should handle peak seasons in the future

  1. Super peak seasons require a new technological approach. Work with high-performance systems that also guarantee a seamless customer experience with high transaction volumes. Here, optimized application channels with an adjusted portfolio of payment methods are key.
  2. Prepare for the entire course of a shopping peak. In the backend, this goes far beyond the actual campaign day. Raise your staffing capacity and absorb the additional costs from chargebacks etc. using an external service provider.
  3. Observe the market: What new services are there and how are they received by consumers? New discount events or alternative billing models influence the expectations and purchase decisions of customers. Consider what’s relevant for your business and talk to external experts.

Online shop operators need to brace themselves throughout the entire year
Until there’s a reliable vaccine, retail should anticipate recurring lockdowns and unexpected peaks in online shopping. And that’s not to mention the new convenience that online shoppers expect. Online merchants need to adapt to these developments in good time. Ask yourself: If business were to reach Christmas levels five times a year, would that be a revenue dream or a processing nightmare? My clear recommendation is to make sure your systems are fit for crises today, not tomorrow.

Learn what this means in specific terms in our 30-minute webinar “eCommerce Backstage”. Have a look and contact me at any time if you have any questions.