Holiday shopping season’s start is slower than expected, Signifyd data shows  

The roaring start to the holiday season that retailers were hoping for didn’t materialize, though online sales finished ahead of last October, according to Signifyd’s Holiday Season Pulse Tracker.

The slower-than-expected start to the crucial fourth quarter prompted Signifyd to lower by a percentage point its initial projection that the three-month holiday shopping period would finish with sales 5% higher than holiday 2022.

Online spending in the U.S. was up 4% over a year ago in October, according to Signifyd data. That’s significantly short of Signifyd’s initial projection of a 7% sales increase. Signifyd analysts noted that robust apparel sales failed to materialize and that early-season promotions — including Amazon Prime Day — didn’t ignite the same level of buying enthusiasm that experts expected.

Key takeaways from Signifyd’s October holiday ecommerce sales data

For a look at how October’s numbers provide a snapshot of a holiday season that continues to defy expectations, consider the following conclusions drawn from Signifyd’s monthly Pulse report: 

• Disappointing ecommerce sales in October will temper the year-over-year increase in online holiday sales this fourth quarter. Signifyd’s latest projection calls for ecommerce sales to increase by 4% during Q4, rather than by 5% as it originally forecast.
• Amazon Prime Day did provide a halo effect for retailers other than Amazon. Unfortunately for those retailers, the boost lasted about 24 hours, rather than providing the multi-day sales increases that Prime Day had provided in the past.
• Apparel sales were flat in October compared to a year ago. That was far below the 9% increase Signifyd had predicted for the month.
• Consumers more enthusiastically embraced discounts this year, increasing the portion of orders accompanied by discount codes from 22% in 2022 to 25% this October. That two percentage point increase in deals contributed to tamping down overall revenue.

“When I talk to retailers, what they saw with consumers, was that the pull-ahead with Amazon and the early-days-kind-of-sales, there was some success there, but not nearly as much as they projected,” Signifyd Chief Customer Officer J. Bennett said. “What we saw was that Prime Day actually had a really good halo effect across the ecosystem, but it was only about 24 hours. In previous years, that halo effect actually wasn’t so concentrated.”

Prime Day’s ‘halo effect’ was not so shiny in October 

Amazon’s Prime Day typically prompts other merchants to offer competing promotions and creates a national buying event across ecommerce, whether Amazon is doing the selling or not. Prime Day, Oct. 10, did see the month’s largest daily increase in year-over-year sales on Signifyd’s Commerce Network, but the upswing lacked the staying power of Prime Days past. By October 11, sales had fallen back to where they were earlier in the week, an indication that consumers weren’t as anxious to buy early as retailers expected.

“We didn’t see that as much this year,” Bennett said. A portion of consumers appear to have said, “I’ll wait,” Bennett added. “There’s no reason to buy right now.”

Signifyd downgraded its forecast for the holiday season in light of October’s miss. It’s now projecting that online sales from Oct. 1, through December will be up 4% rather than the 5% it predicted in early September. Signifyd bases its projections on recent transaction and growth trends and seasonality factors. When those elements change, the projections do, too.

Slow apparel sales a major culprit in Signifyd lowering its holiday sales expectations

Slow apparel sales contributed significantly to the gap between Signifyd’s October projection and actual sales. While Signifyd’s forecast predicted a 9% increase in apparel sales for the quarter over last year, sales were in fact flat for the month.

“We actually projected that apparel would have a breakout year this holiday season,” Bennett said. “I’m still projecting that for November. It’s just not happening in the earliest part of this holiday season.”

The holidays will play out differently by retail vertical

But as always, the story will vary by retail vertical. While apparel had a disappointing month, online grocery sales were up 26% year over year — owing in part to stubbornly high prices. Sales of products in the alcohol, tobacco and cannabis category increased 19% and leisure and outdoor goods sales were 14% higher than last October.

Was Singles Day weekend a sign of better things ahead?

For the glass-half-full crowd, data from online sales over Singles Day weekend — Nov. 10 through 12 — provides evidence that consumers are still ready to buy for special occasions. That’s only right given that Singles Day is a declaration of optimism and happiness in the face of those who believe being a couple is a requirement on the road to fulfillment. 

While momentum for Singles Day sales has been building in the U.S. in recent years, the China-born shopping holiday celebrating the romantically unattached clearly made a mark in 2023.

Online sales of “treat yourself” items in the beauty and cosmetics vertical and the luxury vertical had strong showings during the Singles Day weekend, according to data from Signifyd’s Live Holiday Season Pulse Tracker. Sales in both verticals from Nov. 10 through Nov. 12, were up 9% over last year’s Singles Day weekend.

Singles Day, celebrated on Nov. 11, originated in China in the 1990s and has grown globally into the largest shopping day of the year. Nov. 11, which is also Veterans Day in the United States, has been growing as a prominent shopping day in the U.S. In recent years, more U.S. retailers have offered promotions linked to Singles Day.

Singles Day bounce was in full force

This year, overall online sales in the U.S. increased 5% over the Singles Day weekend compared to a year ago, Signifyd data shows. That boost was in keeping with higher sales for the holiday season, which are also up 5% year-over-year. However, when compared to a typical holiday shopping season weekend, the Singles Day bounce was evident — sales were 10% higher than the first weekend in November and 22% higher than the second weekend in October. 

Bigger Singles Day basket sizes also matched the overall holiday shopping season, which began Oct. 1. Average order values for the season so far and for the Singles Day weekend, both came in at up 1%.

Interestingly, AOV in the beauty and cosmetics category declined 3% over a year ago, as shoppers turned to discounts to stretch their shopping budgets. Maybe when buying for oneself, money is indeed an object. The share of sales accompanied by discount codes reached 57% in the beauty and cosmetics category over the weekend, Signifyd data shows. Last year only 31% of sales in the category were rung up with a discount code attached.

Luxury sales were a different story, with discount codes increasing only 5% over last year, while average order value in the luxury category soared by 32%.

Singles showed themselves to be bargain hunters

Overall, one-fifth of all online transactions arrived with a discount code over the Singles Day weekend. And those deals were good ones. In fact, the size of the discounts provided by merchants over the weekend increased by 6% over last year. For all of November so far, the discount size was up only 2% over a year ago.

Despite the flurry of shopping activity over Singles Day weekend, fraud pressure — or the measure of orders deemed very risky by Signifyd — declined by 25%. That’s in contrast to fraud pressure during the overall holiday season so far, which is running 10% higher than a year ago.

The nature of the fraud threat did shift over the weekend — with criminal fraud claims taking share from first-party fraud claims. Criminal fraud claims gained 4% in their share of claims.

 More on Signifyd’s methodology and data

Signifyd’s Holiday Season Pulse Tracker data is derived from U.S. transactions on Signifyd’s Commerce Network of thousands of ecommerce retailers and brands. Commerce Network intelligence also powers Signifyd’s Commerce Protection Platform, which leverages AI-driven machine learning models and data from millions of transactions to detect and block fraudulent activity.

The platform also recognizes and approves legitimate customers, ensuring their orders are fulfilled rapidly. Through its network, Signifyd has seen more than 600 million unique digital wallets[1] globally, meaning that 98% of the time when a shopper comes to a Signifyd-protected site, Signifyd’s machine-learning models recognize the shopper instantly.

For a tutorial explaining the methods and meanings behind Signifyd’s Holiday Season Pulse Tracker data visit Signifyd’s YouTube channel.

[1] A digital wallet is a distinct combination of signals present in an online transaction.

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