ONLINE SHOPS ARE IN FOR A BUSY CHRISTMAS SEASON, BUT ADVERTISING COSTS ARE RISING

According to Upgates, Czech e-commerce could see a five to ten per cent increase in turnover during this year’s pre-Christmas season. At the same time, average order values and customer acquisition costs are rising, which is putting pressure on margins. Retailers will therefore make greater use of loyalty schemes, bundles and their own customer databases, in addition to offering discounts.

Czech online shops could see a year-on-year increase in sales of between five and ten per cent during this year’s pre-Christmas season. According to estimates by Upgates, the average order value is also rising, and is now roughly four to six per cent higher than last year. At the same time, retailers are facing higher advertising costs and will therefore be keeping a closer eye on their margins. As well as discounts, they can also offer bundles, free gifts with purchase or loyalty schemes during Black Friday.

For large online shops, preparations for the peak season begin as early as the end of summer. In September, they focus primarily on stock levels, stock financing and marketing budgets. According to Upgates, October is then mainly spent finalising campaigns and preparing for an increased volume of orders. Black Friday represents the first major test of retailers’ readiness and also marks the start of the Christmas shopping season.

“In the summer, most people aren’t thinking about Christmas yet, but retailers have to. During September, it’s crucial to have stock and its financing secured, and to know what the campaigns will look like,” says Michal Benatzky, marketing manager at Upgates.

Christmas accounts for up to a third of turnover

According to Upgates, November and December can account for up to 30 per cent of a typical online shop’s annual turnover. In categories such as toys, board games and gift items, this share can reach as much as half of annual sales.

The average order value this year is, according to the company, approximately four to six per cent higher. Furthermore, during the Christmas season, customers often combine purchases of gifts for several family members into a single order. Categories expected to perform strongly include electronics, smart home devices, wearable electronics, cosmetics, toys and products related to a healthy lifestyle.

The biggest sales peak occurs during Black Friday and then again in early December. Based on Upgates’ experience, the peak of the Christmas season is around 10 December.

Retailers will keep a closer eye on margins

Customers remain price-sensitive, whilst at the same time e-shops are facing rising costs for operations, delivery and marketing. According to Upgates, the real average discount during Black Friday – taking into account the lowest price over the previous 30 days – ranges from approximately 15 to 25 per cent.

“Very few can afford aggressive loss-leading discounts. Retailers will therefore focus more on value-for-money bundles, loyalty schemes or free gifts with purchase,” says Benatzky.

At the same time, he notes that the cost of acquiring a new customer rises significantly in the run-up to Christmas. Based on Upgates’ experience, the cost per click in Google or Meta’s advertising systems can rise by approximately 20 to 40 per cent. For online shops, therefore, their own customer databases, email marketing and SMS communication are becoming increasingly important.

Next-day delivery is becoming the norm

Parcel lockers and a denser network of collection points make it easier to cope with the Christmas rush, but at the same time, according to Upgates, they raise customer expectations. Next-day delivery is increasingly seen as the norm, and any delays have a greater impact on customer satisfaction in the run-up to Christmas.

At the same time, Czech online shops are facing competition from international marketplaces. According to Upgates, alongside price, they can therefore capitalise on fast delivery, easy returns, customer support in Czech, quality guarantees and their own product range.

AI is making its mark on Christmas shopping

Artificial intelligence may also have a more significant impact on e-commerce this year. Online shops use it, for example, to estimate stock levels, personalise offers or automate customer support. AI tools can handle routine enquiries regarding, for example, the status of orders.

Customers themselves are also beginning to use artificial intelligence when choosing gifts. According to Upgates, they can provide information about the recipient, their interests and their planned budget, and receive recommendations for specific products.

“For online shops, this means that their products must be easily understood not only by customers and traditional search engines, but increasingly also by AI tools that can recommend specific items to them,” adds Benatzky.

Source: mediaguru.cz