How to prepare your small business for the Christmas shopping season
There’s no shopping season quite like the window between Black Friday and Christmas. Shoppers flock in record numbers to in-person and online stores to buy gifts for loved ones (and themselves). Ecommerce and brick-and-mortar retailers prepare all year for this influx of business, and with good reason. The sales volumes continue to set records year after year.
During the 2022 holiday season, consumers spent a total of $1.14 trillion online globally. This number is likely to grow in 2023, with 62% of surveyed shoppers reporting that they plan to mostly buy online this year. And while most people tend to do their shopping early, 13% of surveyed consumers say that they continue shopping through to the end of December.
The Christmas season means great opportunities for businesses to increase their annual sales volumes and set them up for a successful start to the new year. But to reap the benefits, retailers need to be prepared and strategic with how they attract and serve customers.
This article will provide some insights into why preparing for the Christmas shopping season is important, and share tips from fellow ecommerce businesses.
How big is the Christmas shopping season? Stats from 2022
The importance of the Christmas shopping season for businesses cannot be overstated. Black Friday in the United States is seen as the unofficial start of the Christmas shopping season, and accounts for a significant portion of retail sales each year.
According to Adobe Analytics, consumers in the United States alone spent $211.7 billion in the 2022 holiday season. That’s a 7.6% year-over-year increase from 2021, a year that was still seeing surging demand for online and in-person sales in the waning days of the pandemic. Insider Intelligence predicts that 2023 will see an additional 4.5% growth in sales this holiday season, indicating the ever-growing demand for Christmas season deals.
Unsurprisingly, the leading category for sales during the holiday season is toys, which saw a 206% increase from pre-holiday levels in 2022. Following closely behind are video games and apparel/accessories. Businesses that operate in these spaces can expect to see a big uptick in demand for their products during the holiday season.
Shopping during the holiday season is also characterized by increased total expenditure online. People are willing to increase their typical spending amounts during this timeframe to ensure that they and their families have gifts under the tree on Christmas morning.
Here’s a breakdown of the planned holiday spend per individual, according to a survey from Tinuiti.
30% plan to spend $251 to $500
21% plan to spend $501 to $1000
10% plan to spend more than $1000
This is a time when cross-selling, upselling, and bundle promotions are likely to pay off. Consumers are often more willing to increase their average order values from stores they—or their families—like.
But while there is an increased appetite for spending, consumers are still facing higher-than-normal prices, driven by a combination of heightened interest rates and inflation. Retailers should be aware of the main drivers of, and barriers to, online purchases when planning their sales.
According to Tinuiti, the three most important factor that come into play when making holiday purchases include:
Sales or discounts (22%)
Free shipping (13%)
Consumers want favorable deals on their holiday purchases, they want to save money where they can, and they want shipping services that are both affordable and reliable so that their items arrive in time for Christmas. This is a three-pronged list of priorities that retailers must prepare for in the lead up to Christmas.
Let’s dig into why preparation is so important, and what retailers can do to get themselves ready.
Why it’s important to prepare ahead for the shopping season
As mentioned, the Christmas season is traditionally when small businesses see their biggest spike in revenue and sales. It’s a way to end the year on a high note, and set the business up for a healthy start to the new year. But with this spike in sales comes a surge in demand and stress on the business that needs to be managed correctly.
Ecommerce stores receive higher-than-normal traffic and transactions. Shipping and logistics channels are pushed past their usual levels of output. Warehouses are at risk of running empty without the proper foresight. And customer service and in-store retail teams are also on their toes during the holiday shopping season, adding a threat of potential stress and burnout among employees.
Preparing for this surge is critical to ensuring that the entire business is prepared to handle this increase in demand, and thrive under the added pressures.
But, while many retail businesses see a marked increase in sales during the holiday season, that surge is not a given. Businesses also need to properly plan their sales and marketing activities to generate awareness of and demand for their products and services.
By properly preparing both the logistics and sales and marketing sides of the business, retailers can both surge traffic to their stores, and handle the influx with ease. Together, this is how businesses can survive and thrive during the holiday season.
8 ways to prepare for the Christmas shopping season
Prepare systems and processes early, and plan sales and promotions that align with the season and customer demand. That’s the perfect blend of priorities that businesses should focus on in the lead up to the holiday season.
We recently sat down with a panel of top online retailers to discuss how they’ve prepared for the holiday shopping season. Here are eight tips they shared.
1. Start early and maintain momentum from Black Friday
Early bird consumers tend to start thinking about Christmas as early as late September or early October. Once Black Friday hits, U.S.-based consumers are in full-flow shopping mode through to the end of the year.
To meet this demand early, and maintain momentum through to the New Year, our panel recommended loading up on high-demand stock items starting in the summer, and ensuring that shopping logistics are streamlined and ready for the surge.
According to Faye and Simon from Married2Reselling, retailers should be primarily focussed on administration, shipping, and maintaining their sales and marketing campaigns during the holiday season. Stock levels, website maintenance, and any other routine tasks should all be accounted for before the holiday surge hits.
To do so, businesses need to get started early. That means:
Identifying products to put on sales and planning promotions
Ensuring the website is properly optimized, with sales and promos loaded into the system and timed for launch in advance
Getting sales collateral, graphics, and product photos created to promote campaigns
Ensuring staff are aware of upcoming sales and are ready to handle the spike in customer support inquiries
“Get everyone up and running as early as possible so that you can focus on moving product,” summarize Faye and Simon.
2. Create dedicated Christmas and New Years sales
Businesses in the United States will likely have been through the Black Friday surge by the time the holiday shopping season ramps up. They will have already run sales and, hopefully, generated a spike in awareness and interest in their stores.
Remember, Black Friday is just the start of the shopping season. People will continue to hunt for sales through to the end of the year. To meet this demand, businesses should continue offering discounts and promotions to customers, promoted through a Christmas lens.
Patricia from Raf Rossi Gold Plated runs a variety of sales and promotions for customers throughout the season to increase demand and sales.
Buy one, get one half off
When running these sales, always be strategic about what products go on sale and how much the price is dropped. Don’t lower the price of the most in-demand products too low. This risks eating into the profit margin on products that likely would have sold anyway.
Instead, focus on finding the right level of discount that will move products without harming the bottom line. At the same time, consider category-specific discounts and bundles to encourage cross-selling and upselling that will increase total order value.
3. Tailor merchandising and product promotions to the season
Target seasonal products that are likely to move faster due to the time of year. Look to historical sales data from past holiday sales cycles to see which products and categories are likely to be in the highest demand.
During the holiday season, shoppers are likely looking for gifts for others, or deals for themselves. There are specific categories—like toys, clothes, and electronics—that typically peak during this time of year.
When planning stock levels and promotions, think about which products are likely to be in the highest demand amongst gift seekers. Ensure the warehouse is stocked with these items, promote them prominently on the website, and launch targeted sales and promotions around them.
4. Plan for shopping issues and delays
Shipping over the holidays is always a challenge. There may be major backlogs at distribution centers, and there’s always a risk of packages being delayed or lost.
For those selling through online marketplaces, the promoted delivery date can also be an issue. According to Faye and Simon, marketplaces may automatically show delivery dates that have the product arrive after Christmas. This is a major barrier to purchase that can dramatically decrease sales on those items.
In these cases, the pair recommends regularly checking on marketplace items and manually changing the delivery dates to before Christmas. Use expedited shipping or even couriers to ensure those products are delivered on time so that sales aren’t lost.
To mitigate the risk of shipping delays and refunds, Faye and Simon recommend shipping early and shipping often. Don’t wait to get products out once an order is shipped. And because this time of year is often rife with return scams and stolen packages, it’s recommended that businesses require a signature on receipt and add extra insurance to the package for higher-value items.
5. Align sales and marketing to what’s trendy
Many of the sellers on our panel emphasized the importance of advertising what’s hot and trendy during the holiday season. Keep an eye on news cycles, pop culture, and trending items on social media or Google Trends to identify opportunities to promote relevant products.
For example, any business selling beaded jewelry or the ingredients to make beaded jewelry is likely in for a strong holiday season thanks to the Taylor Swift friendship bracelet trend.
Businesses who have items like this in stock should boost either production or procurement of those items to ensure they don’t sell out before the end of the season. At the same time, they should jump on these trends in the form of targeted advertising, sales prompts, and bundle packages.
6. Segment and nurture your audiences
Established retail businesses likely have an existing audience and database of contacts in their systems. These are either former buyers or individuals who have shown an interest in the company through a newsletter signup or another campaign.
This audience list should be a top priority for sales and marketing efforts during the holiday season. Communicate with them early and often about new products, deals, and exclusive offers.
Patricia from our panel recommends segmenting these users based on past purchases, interests, website behavior, and even geography. She gave the example of promoting ankle bracelets during the holiday season. Shoppers in snowy Minnesota likely won’t want one, but anyone living near a beach in Florida probably will.
Segmenting based on geography and weather ensure that promotions align with customers’ interests and lifestyle, no matter where they are.
7. Use Christmas template for social media graphics
Imagery plays a big role in how products are promoted during the holiday season. Images can capture and hold a shopper’s attention, or they can turn that same shopper off of a product altogether. The quality of the photograph, and the context in which it’s presented, play a big role in which reaction the shopper will have.
Small businesses often struggle with creating high-quality imagery that they can tailor at scale for specific campaigns and sales seasons. Christmas is no different. What’s needed is the ability to quickly repurpose existing product images to make them relevant for the holiday shopping season.
Photoroom helps expedite this process by offering pre-built Christmas background templates that retailers can quickly apply to their existing product images. Batch Mode, another Photoroom feature, allows users to upload multiple images at the same time and apply a universal background to align with a specific campaign or promotion.
Here are some examples of Photoroom’s Christmas templates at work.
8. Create unique product images at scale with Instant Backgrounds
“People buy with their eyes”, explains Eric from our Christmas panel. “If you can create an atmosphere that shoppers can picture themselves in, it helps to drive more sales.”
The example he gave was a pair of slippers, positioned in front of a warm fireplace. According to Eric, this simple image has driven a significant increase in sales to that one pair of slippers. Context matters, and backgrounds play a big role in creating context.
The problem that many business owners face is that swapping out backgrounds is difficult and time consuming. Not everyone has a fireplace, and can snap new product photos every time they need a new variation of an image.
This is where Photoroom’s Instant Backgrounds tool comes into play. This feature allows business owners to upload a product image, automatically remove its background, and replace it with either an auto-generated background or one created through custom prompts. Both options come thanks to Generative AI and give users enormous flexibility to create entirely new settings for their products.
Here’s an example.
The Christmas shopping season is the main event for retailers. It brings in big sales and big revenue that help position businesses for success in the new year. Retailers need to prepare early, and they need to be ready to pivot as needed throughout the shopping season.
Fast and efficient processes are key. When it comes to product photography, Photoroom is a tool that every retailer should have in their corner. With it, business owners can create and edit images in a matter of seconds whenever, and wherever, they need.
Want to try Photoroom this holiday season? It’s accessible on mobile devices and can be downloaded from the App Store or the Google Play Store, or you can sign up here directly. Set up your account in less than a minute, and start saving time and focusing on more important tasks right away.