Black Friday and Cyber Monday kick off the holiday shopping season not only for customers

By Michael Doron on 10. December 2014 in Inside PAY.ON, Market Insights
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On Black Friday (November 28th), the day that traditionally marks the start of the holiday shopping season in the US, PAY.ON’s total transaction volume was 43% higher than on the same day last year, while Cyber Monday (December 1st) saw a 38% YoY (year on year) increase. While Cyber Monday is the day more directly linked with eCommerce, Black Friday saw the higher transaction volumes, with around $75 million in payments processed by PAY.ON.

Our Operations team have developed an effective ‘resilience roadmap’ to ensure that PAY.ON’s IT infrastructure can comfortably handle spikes in transaction volume on these key shopping days. This year, PAY.ON recorded single merchant transaction peaks in excess of 30 transactions per second. Although this is very high, our system has been developed and tested to process much higher transaction volumes, to account for any eventuality.

Industry reports record-breaking eCommerce sales and shifting trends

Many retailers extended their traditional Black Friday sales period, with heavy discounts and promotions starting days (or even weeks) before Thanksgiving. Likewise, many eCommerce retailers have transformed Cyber Monday into Cyber Week. Sales events previously confined to a single day are increasingly dispersed, ultimately giving consumers more choice regarding where, when and how they shop.

 

According to figures released by comScore, Cyber Monday saw a 17% increase in desktop online spending between 2013 and 2014. This made Cyber Monday 2014 the biggest day ever for online sales in the US, with just over $2 billion spent. However, indicative of changing trends in online shopping, the 17% jump was eclipsed by the 32% increase in online spending on Thanksgiving Day (November 27th) and a 24% increase for the five-day period from Thanksgiving Day through until Cyber Monday.

In contrast to the steady growth in eCommerce, spending in brick-and-mortar stores was down on Black Friday, a consequence of retail sales being spread over a longer period, as well as the general shift towards online shopping – including increasing use of mobile devices. Highlighting the rapid rise in holiday shopping via mobile, PayPal reported a 62% YoY increase in global mobile payment volume on Black Friday.

As Black Friday has become less about standing in long line-ups at 4am to get the best deals, and more about serving customers when, where and how they want, it is critical that payment providers and their merchants are able to respond to changing consumer habits. To take advantage of this shift, an effective omni-channel strategy is needed, as well as support for locally-preferred alternative payment methods, due to the global traction these US shopping events have gained and their increasingly cross-border nature.

Growth in transaction volumes for PAY.ON above industry norm

PAY.ON saw a 43% increase in transaction volume on Black Friday, while Cyber Monday saw a year on year transaction volume increase of 38%. Interestingly, although Cyber Monday is the shopping day most strongly associated with online shopping, Black Friday saw both higher transaction volumes and year on year growth.

As mentioned, many retailers – both online and offline – have extended Black Friday and Cyber Monday to become multi-day shopping events. Therefore, it’s worth looking at transaction volumes across a longer period. From Wednesday November 26th until Tuesday December 2nd, PAY.ON saw an overall transaction volume increase of 40%, when compared to the same period last year. PAY.ON’s growth from 2013 to 2014 is significantly higher than the majority of figures reported across the industry.

Bigger than Black Friday

In a recent blog post we discussed the importance of IT resilience in coping with surges in transaction volumes that accompany major eCommerce shopping events. Two active redundant data centers in London form the backbone of PAY.ON’s payment processing infrastructure, which is specifically developed with ‘heavy traffic’ in mind. This first-class infrastructure will be increasingly important as we anticipate even bigger single day transaction volumes in the near future.

While online purchases topped $2 billion on Cyber Monday in the US, this spending pales in comparison to China Singles Day. During Singles Day 2014 (11.11), Alibaba’s eCommerce sites Tmall and Taobao reported sales of $9.3bn, up from $5.8bn in 2013. It’s also worth noting that in 2014, 42.6% of expenditure was via smartphones and tablets, reinforcing the importance of effective omni-channel payment processing. Alibaba’s global expansion in 2015 and the general trend towards cross-border eCommerce in China will mean that China Singles Day will be of increasing importance for many international payment providers and their merchants.

 

 

 

Michael Doron

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Michael DoronView all posts by Michael Doron

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