The holiday season 2021 ecommerce numbers are in, and it’s a mixed bag for sellers and retailers. Let’s begin with the fact that, in light of the ongoing global pandemic, there was a holiday shopping season at all is reason enough to give thanks. Even though an increase of COVID-19 cases and supply chain concerns threatened to upend the vital shopping season, overall retail holiday sales in the United States in 2021 came in at a better-than-expected $886.7 billion. Online holiday sales in 2021 in the US totaled $211.41 billion, up 10% from the previous year and 54.9% from the previous holiday season.
After a hiatus the previous year, shoppers returned to stores, resulting in a 14% increase in overall retail sales. There was a modest decline in the percentage of online sales, but overall, shoppers spent more. Online holiday sales in the US reached $200 billion for the first time in 2021. However, growth was subdued during the peak season compared to 2020, when online retailers battled to keep up with extraordinary demand during the first pandemic holiday period.
On the whole, and considering the circumstances, things were good for retailers in both the brick-and-mortar and online worlds. However, there were some distressing signs and downsides to the jolly season. Let’s dive deeper into the holiday sales bonanza and gaze into the future of 2022.
Holiday season 2021 was a mixed bag for sellers – here’s why.
For sellers, this season was like a Clint Eastwood film for ecommerce and marketplace sellers – there was a mix of good, bad, and ugly. Or maybe it was a Christmas stocking that held three items and a fortune cookie. Here’s why.
First, the good. This stocking item was a present in the form of the highest holiday ecommerce sales yet and the first time over $200 billion, with continued growth. Again, this can only be positive in the face of trying global circumstances.
Next, the bad. This stocking item is a piece of Christmas candy that’s gone a bit stale on the inside. What went bad? Early holiday sales did not meet expectations. Black Friday sales experienced a slight decline in growth of $0.1 billion from last year, while Cyber Week also didn’t see impressive gains. However, much of that was due to retailers beginning their holiday push in October. Cyber Week still managed a tidy $10.7 billion in revenue.
Then, there’s the ugly. This is a lump of coal at the bottom of your stocking. In December, retail sales fell 1.9 percent as customers cut back on their spending due to increasing prices. On top of that, supply chain issues dramatically affected sales this season. According to new data from Adobe Analytics, online shoppers saw more than six billion out-of-stock alerts for online purchases over the 2021 holiday season. Fewer online retailers were able to offer discounts, and consumers faced higher prices in general.
With all that in mind, what’s in store for 2022? We asked our crystal ball, and here’s what it said. Experts predict a slowing in ecommerce growth, more retailers launching their own marketplaces, inflation continuing to wreak havoc with pricing (especially in the US), and the supply chain being more sorted out by the second half of the year. With online marketplaces expected to continue to grow by 15% annually, this adds up to another wild ride for sellers – with more than a few bumps in the coming road but plenty of opportunity on the horizon. Read more at Digital Commerce 360.
More Chinese sellers on Amazon in 2021 despite bans
According to Amazon, the number of new Chinese sellers added to the marketplace increased by double digits last year. Amazon.com’s vice-president for Asia Global Selling, Cindy Tai, made the announcement in a video during an online seller conference. Despite the ban of 3,000 seller accounts and 600 brands as part of an investigation into review fraud this summer, Tai reported:
“The business of Chinese sellers on Amazon has not been impacted [by the crackdown on irregularities] … there was no change in the ratio of Chinese sellers in Amazon’s [overall] sales volume during the period, and the Chinese business maintained healthy and rapid growth.”
The purge of sellers found manipulating reviews was estimated to cost $15.4 billion in sales, and the Shenzhen Cross-Border E-Commerce Association claimed that the industry of Chinese manufacturers selling directly on Amazon was broken. Clearly, this was not the case, as Tai also announced Amazon’s intention to continue to “make it a priority to work with Chinese merchants to operate within the rules.”
For non-Chinese marketplace sellers, this means that the summer crackdown amounted to a blip in the overall scheme of things. In fact, many banned sellers have reappeared on the marketplace under new, often unpronounceable names. It seems that the competition – and sometimes “race to the bottom” – will continue as it has been for sellers until the next issue arises that gets Amazon’s attention.Read more at South China Morning Post.
Amazon bans Visa in UK, then changes their mind
In the ecommerce version of Godzilla vs. King Kong, a winner has emerged in the stand-off between Amazon and Visa in the UK. As previously covered in this space, a dispute over high transaction fees led Amazon to announce it would stop accepting Visa cards for purchases after January 18, 2022. Then, on January 17, Amazon emailed its UK customers to announce that there would be no ban, and that it and Visa were working closely on a solution.
While this comes as a relief to customers and sellers used to paying Amazon via Visa card, the real significance is that a major marketplace stood up to one of the globe’s biggest credit card players – and won. This has a significant impact going forward, and here’s why. First, the potential restriction by Amazon prompted Visa shares to plummet, showing the power the marketplace has over the payment providers. Second, similar negotiations were in progress for the US, and one can only assume that the US Visa brand will accept similar terms to their sister office in the UK.
Third, and most interesting, it brings up the future of Amazon payments. Will the various credit card services respond en masse? Will Amazon, at some point, dictate and control the entire payment process, including which services consumers may use? Or will it move in the same direction Walmart is heading by creating its own cryptocurrency token, redeemable only on Amazon? Amazon has become so large and powerful that no matter what happens next, it will have consequences for customers and sellers alike.Read more at Digital Commerce 360
Amazon issues new FBA canceled or deleted shipment policy
Sellers in Amazon’s FBA program have been put on notice not to submit canceled or deleted shipments to the company’s fulfillment facilities. It warned that not only would it refuse such shipments, but sellers found in violation of the new policy would find that their “ability to send…subsequent shipments may be suspended as well.”
Effective April 1, 2022, the efficiency-minded marketplace has unveiled a new policy that includes a list of actions that can cause delays, including deleting previously approved shipping plans, misrouting shipments, and sending shipments that have been marked as canceled or deleted. Also included is a new list of guidelines for avoiding problems that cause delays due to additional processing, handling, and rerouting.
Not surprisingly, seller comment boards are chock full of complaints regarding issues with Amazon’s handling and processing of these very shipments, including allegations of outright shipment theft and slow inventory processing. On the whole, it seems like more FBA rules and fees have been put in place that makes sellers’ lives more difficult and easier for Amazon to do business as usual.Read more at Amazon.
How much warehouse space does Amazon have, anyway?
A new report on the Amazon Fulfillment Centers in the US shows just how much space the world’s largest ecommerce retailer is taking up in the physical plane. Here are some of the key takeaways:
- Amazon will have 319 million square feet of warehousing and sorting centers in the US by the end of 2023. By our math, that works out to 11.44 square miles, or approximately 0.0000001% of the Earth’s surface.
- 138,695 average-sized homes could fit into Amazon’s US warehousing space.
- For our UK readers, the average size of an Amazon Warehouse is roughly equal to Buckingham Palace.
- Delaware is the second-smallest state in the US. Amazon has 7.1 square feet/person of warehouse space in Delaware, which leads all US states. Delaware also boasts Amazon’s largest warehouse, at 3.8 million square feet (or about 66.6 American football fields) in size.
- California contains the most warehouse space at 31,9654.398 square feet. The top ten states in this category contain a total warehouse space of 166,187,236 square feet – about one-fifth the size of Florida’s Walt Disney World, but with far less spinning teacups and animatronic mice.
The report also paints a picture of negative warehouse issues, including an 80% higher employee injury rate than competitor’s warehouses, increases in shipping costs, and slowing growth. It’s a fascinating snapshot in time as well as a rare look inside the belly of the fulfillment beast that Amazon has become.Read more at BigRentz.
Also in the news
- equent online shoppers make half their web purchases on marketplaces. Digital Commerce 360
- UK launches Export Support Service to help businesses sell goods abroad. SoStocked.
- Amazon issues warning on price-gouging on COVID-related products. Amazon.
- eBay rolls out Video In Listing to more sellers. Value Added Resource.
- eBay pushing sellers to offer discounts & pay for more advertising. Value Added Resource.
- Walmart filings reveal plans to create cryptocurrency, NFTs. Digital Commerce 360.
Webinars in the week ahead
January 25: Top Ecommerce Trends for 2022 Digital Commerce 360
Various dates: Amazon advertising’s global webinar program continues with 20+ webinars scheduled, covering Sponsored Products, Sponsored Brands, reporting, optimization and tips. Amazon.
For US sellers
January 26: Amazon Marketing Cloud 101 and 201: Tinuiti
Various Dates: Amazon Small Business Academy Pathways Series January Amazon
For UK sellers
January 25-27: Tamebay Live Masterclasses for marketplace merchants, retailers, and brands (includes 3 masterclasses from Amazon). Tamebay.
The latest supply chain glitch – train robberies affecting Amazon deliveries
And finally, raise your hand if you chose “train robberies” on your “2022 Supply Chain Issues” bingo card. You win your choice of items from a deep pile of damaged and opened parcels found alongside the East Los Angeles railways, aka the New Wild West.
In yet another sign of our ongoing supply chain apocalypse, Union Pacific Railroads has reported train robberies are up a shocking 356%. Enterprising thieves are raiding boxcars and cargo containers on trains waiting in railyards, and heisting undelivered packages from Amazon, UPS, and other carriers. Groups of thieves wearing backpacks enter the railyards between 3-4 am daily and loot about 90 freight cars each day. Among the items reported stolen or found near the crime scene are medical supplies such as EpiPens, aircraft components, luggage, pillows, and designer purses.
While upset customers who never got their holiday packages are certainly part of the equation here, there’s also a potential impact on Amazon sellers receiving negative reviews for undelivered products to consider, not to mention the issuance of refunds. Authorities have responded to the new old-style crime wave with more patrols and drone surveillance, and the railroad has brought in the big guns – the Union Pacific Police Department.
The former Pinkerton Detective Agency dates back to the Wild West in the 1800s. It was renowned for tracking and apprehending (and in some cases, killing) infamous train-robbing outlaws such as the James Gang, the Reno Gang, and the Wild Bunch, which included Butch Cassidy and the Sundance Kid. While the current crisis is blamed on “a near-perfect storm of an ongoing train robbery problem, the pandemic, and the Los Angeles County District Attorney’s policy of no-cash bail arrests,” could there be more to the story?
Could legendary train robbers The Dalton Gang, whose last living member retired to Los Angeles in 1907, be back in action? Is this all part of some new, unreleased Western film by Quentin Tarantino with a modern take on the banditos of the Southwest? Or could this just be the latest sign that as weird and wild as the last two years have been, we haven’t seen anything yet?
Keep this in mind the next time you find out that an order hasn’t been delivered. It’s possible that somewhere, a black-hatted cowboy on horseback is trotting away from an open boxcar with an Amazon box stuffed firmly in his backpack – and you’ll be stuck sending the buyer a refund. Read more at CNBC.