What's more is that 43% of consumers are carrying more debt compared to 2023.

This isn't unique to one income bracket — consumers across all levels are tapping into their credit lines more today than they were in 2023.

However, this increased reliance on credit isn't due to consumers buying more. According to the Salesforce Shopping Index, online order volumes have been falling since 2022 and decreased by 2% year over year in the first quarter of 2024. When they do buy, they're trading down, buying discounted merchandise and seeking private labels.

Chinese Shopping Apps Will Take Market Share

As consumers face uncertainty around rising prices, they're changing shopping habits. Long gone are the pandemic times when the fastest shipping time could win over new business. Now it comes down to price.

Shoppers are looking for the best deal. Two-thirds of global shoppers report that prices dictate where they chose to shop, with less than one-third prioritising quality of the goods.

Temu is the clear winner, with 43% of Western shoppers purchasing on this platform within the last six months. But for Gen Zers, Shein is the top destination, with half of this group placing an order recently.

This holiday season, we predict that Chinese shopping applications will capture USD$160-billion in global e-commerce market share outside of China.

Middle-Mile Shipping Puts Strain on Margins

The Houthi attacks in the Red Sea and rising crude oil prices are driving up container costs worldwide, putting strain on the middle-mile infrastructure for the first half of 2024. 

Additionally, last-mile challenges are also stacking up thanks to events like the collapse of the Francis Scott Key Bridge and rising delivery costs — stalling delivery times and adding expenses for retailers.

But retailers shouldn't push the shipping expenses back on shoppers. Free shipping offers are a top-three reason why consumers choose to make a purchase from a particular brand or retailer. Over half of shoppers say they are more likely to purchase online than in-store if delivery is free.

This holiday season, we predict brands and retailers will spend an extra USD$197-billion in middle-mile expenses, increasing 97% over 2023.

Shoppers Embrace AI to Search for the 'Perfect Gift'

Last holiday season, 17% of online purchases were influenced by AI — both predictive and generative.

That totalled a whopping USD$199-million of online sales worldwide in November and December. In 2024, consumers will increasingly leverage AI — knowingly or not — to search for the right gift at the right price.

In fact, 53% of shoppers surveyed said they are interested in using generative AI to inspire the perfect present. As retailers increasingly embed AI into search experiences, we predict search will drive a nearly three times better conversion rate compared to traffic not engaging with site search.

Black Friday Becomes Cyber Friday

Over the years, as online shopping grew in popularity and consumers could shop from anywhere, holiday shopping started earlier and earlier in the month of November. In 2023, Black Friday gained back 4% of online holiday sales, establishing itself as the biggest online shopping day of the year. 

We're expecting the same of the upcoming holiday shopping season. Two-thirds of shoppers say they're holding out on making big purchases until Cyber Week, anticipating better deals.

The big news is that Black Friday is going to be the biggest day for digital. Salesforce research predicts online sales will take 7% of in-store sales on Black Friday.

Retailers Tap Loyal Shoppers to Avoid Skyrocketing Digital Marketing Costs

Customer acquisition continues to be costly for retailers.

In the face of a busy election cycle, and as Chinese companies buy up advertising inventory, digital marketing costs continue to get more expensive, and opportunities to get in front of the right audience grow scarce.

This means that brands and retailers have to better engage their existing customer base amid this tug-of-war over digital advertising space. 

But there are other opportunities. Shoppers are doubling down on loyalty. According to our index, the rate of repeat buyers in the first quarter increased by 8% over the last two years.

Shoppers are prioritising brands and retailers that offer loyalty programmes. Our research shows 63% of shoppers are making more purchases from stores where they can earn and redeem loyalty points. This holiday season, we predict that two out of five holiday purchases will be made by a loyal repeat buyer.

For more information, visit www.salesforce.com. You can also follow Salesforce on Facebook, LinkedIn, X, or on Instagram. 

*Image courtesy of contributor