Holiday shoppers will use apps and AI.
Holiday shoppers will use technology to obtain the best deals, according to a new Salesforce forecast.
Salesforce has released its 2024 holiday shopping predictions. During the 2023 holiday shopping seasons, Salesforce estimates that online sales reached $1.17 trillion, up 3% year over year (YoY), with U.S. online sales rising 1% YoY to $272 billion
While Salesforce is not yet estimating 2024 holiday sales totals, the cloud computing company is releasing predictions for five broad trends it says will help shape how, why and where consumers shop during the upcoming holiday season:
Chinese shopping apps will take market share
As consumers face uncertainty around rising prices, Salesforce says they are changing shopping habits. Two-thirds of global shoppers report that prices dictate where they choose to shop, with less than one-third prioritizing quality of the goods, creating a conducive environment for Chinese shopping apps.
According to Salesforce analysis, in the last six months, two-thirds of consumers from Western markets made at least one purchase on Aliexpress, Cider, Shein, Temu or TikTok, with 58% of them citing lower prices.
More than six in 10 (63%) Western consumers plan to purchase from Chinese shopping apps during the upcoming holiday season, including two-thirds of millennials and higher number among Western consumers with children.
Overall, a leading 43% of Western consumers who shopped via Chinese shopping app in the past six month used Temu. However, Shein is most popular among Western Gen Z consumers, with half of this demographic placing an order recently.
During the 2024 holiday season, Salesforce predicts that Chinese shopping applications will capture $160 billion in global ecommerce market share outside of China. Salesforce advises U.S. retailers to counter competition from Chinese shopping apps by using data and artificial intelligence to start early and create a promotion and discount strategy for the month of November.
Middle- and last-mile shipping puts strain on margins
According to Salesforce, instability in the Middle East negatively affected middle-mile infrastructure with higher container and oil prices in the first half of 2024, while incidents like the collapse of the Francis Scott Key bridge in Baltimore and rising delivery costs have increased the time and cost of last-mile delivery.
Salesforce predicts retailer and brands will incur an extra $197 billion in middle- and last-mile expenses, increasing 97% over 2023. However, free shipping offers are a top-three reason why consumers choose to make a purchase from a particular brand or retailer, and more than half of shoppers say they are more likely to purchase online than in-store if delivery is free.
Therefore, Salesforce advises retailers to make reduced or free shipping standard practice during the 2024 holiday season. However, they should motivate shoppers to buy online and pick up in store, lowering costs and potentially increasing basket size, as well as consider some kind of incentive for making returns in stores rather than mailing them back.