In this episode of Industry Focus: Technology, Dylan Lewis talks with fool.com's Dan Kline about the numbers and trends from Cyber Monday -- and Black Friday, Thanksgiving, Small Business Saturday, etc. -- and what they mean for retailers and shoppers. They'll discuss how much consumers spent this year, and how that compares to years past; which days of the big shopping weekend saw the most traffic, and where; why the rich are getting richer this holiday shopping season; what consumers are buying; how retailers could use data from this year to change their offerings next year; how Amazon did, and how its device sales are trending; and much more.
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This video was recorded on Dec. 6, 2019.
Dylan Lewis: Hey folks, Friday Tech show host Dylan Lewis here. Turns out that we had some technical difficulties on the episode from Dec. 6 and it never posted. We're going to be posting that episode today as a bonus. Hope you enjoy it!
Welcome to Industry Focus, the podcast that dives into a different sector of the stock market every day. It's Friday, Dec. 6, and we are recapping Cyber Monday. I'm your host, Dylan Lewis, and I've got fool.com's Dan Kline with me on Skype. Dan, twice in one week. Love to have another chat with you. How's it going, man?
Dan Kline: It's good. I'm glad to be here and out of the cold weather there.
Lewis: We did the Tuesday show together talking about Black Friday, it only seemed fitting to have you back on for Cyber Monday. Sadly, I have to Skype in because you aren't visiting the office for this one. I understand that you did a little shopping on Cyber Monday. What did you pick up?
Kline: I wasn't going to buy anything, but last year for Christmas, I got my wife an Echo Dot for the bedroom, and she couldn't use it because in the middle of the night, our cats would step on it and turn it and it would start talking. So this year, I bought an Alexa-integrated alarm clock that, in theory, it has just a very small button, so probably the cats won't get it. And the pricing was just great. You can buy Alexa-integrated devices for $30 and under.
Lewis: You are not the only person, as it turns out, that bought some Alexa-enabled devices. We're going to touch on a little bit more of that later in the show. But that sounds like the most on-brand thing a cat could do, Dan. They seem to be the peskiest and almost intentionally pesky animals out there.
Kline: Well, they do tend to, if they want you to get up, lick your eyeball. That's generally a good tactic.
Lewis: Gosh, that's terrifying. Alright, so, we're going to run through some Cyber Monday data. Now that we're a little later in the week, we have that. One of the big firms that we follow is Adobe Analytics when it comes to Cyber Monday. Dan, what were the numbers there?
Kline: Overall sales were $9.4 billion, up almost 20% from last year. Black Friday was a record, $5.4 billion, up 22.3%. Cyber Monday was actually lagging until between 10 p.m. and 2 a.m., [when] consumers spent $2.9 billion, about a third of the total. People who are shopping, they spent more. Checks were about 6% higher. If you're asking what they're buying, of course, we've talked about this before, they bought Frozen 2 toys, LOL Surprise! dolls -- I don't know what that is -- the Nintendo Switch -- I have one of those -- Samsung TVs and Apple laptops.
Lewis: That 10 p.m. to 2 a.m. slot, that doesn't sound surprising to me because I'm a night owl, so I'm usually up during those hours. To me, that sounds like maybe there are some parents hopping in there or some folks on the West Coast that are doing some shopping once things have settled down a little bit.
Kline: Yeah, and we have to remember that, while we've given it this name Cyber Monday, it's not actually a day off from work. Most people do not have an enormous amount of freedom to, during their work day, do some shopping. So, I think that sort of bump is based on, people go to work, maybe they looked a little bit online, they come home, they eat dinner, put the kids to bed, then they do a bunch of shopping. It makes sense. I think you might see retailers maybe tailor some specials, or do some late-night doorbusters, in line with that next year.
Lewis: I'm sure retailers will try pretty much everything if it's novel, Dan. We have data from Adobe, and we also have data from the National Retail Federation.
Kline: The National Retail Federation looks at overall shopping. Their numbers, I would say, are a little less precise because they're not tracking actual transactions. They did a survey and they found that 124 million people shopped in stores, while 142.2 million people shopped on retail websites, and about half, 75.7 million, did both. People who shopped in both channels -- and this may not be surprising -- spent an average of $366.79, about 25% more than those who only shopped in one or the other.
When you look at the busiest days, for in-store, Black Friday was the biggest day. That was followed by Small Business Saturday. A lot of people did shop at small businesses. Thanksgiving Day, and then Sunday, which doesn't have that fancy of a name. Cyber Monday was the slowest day by far, with only about 21.8 million people in stores.
Lewis: Dan, we really have to come up with something for Sunday there. You can't have a four-day break where three of the days have some catchy nickname, and then there's just Sunday.
Kline: I was going to go with Send-Dan-A-Gift Sunday, but I don't think that one will catch on.
Lewis: Is that hyphenated? It sounds hyphenated.
Kline: It could be. I'm sure all the other Dans on the team would appreciate that. The reality is, Sunday is somewhat of the reset day. There are deals, there are specials, but a lot of the stores are gearing up for Cyber Monday. They're resetting their stock from what was a very busy Friday. But, yeah, it does seem like there could be a promotion or somebody could own it. I'm sure it's called something. Just like you see every day online, it's, you know, National Pepperoni Pizza Day or whatever. I'm sure Sunday is something.
Lewis: Sunday is kind of an interesting thing for me. I was actually traveling back over the weekend in New Jersey. I'm from Bergen County in New Jersey, where they have the blue light laws. So, the malls in Bergen County, a lot of the stores are closed because that is how the county has decided things should operate. So, it doesn't surprise me that we see a little bit of a dip on Sunday, but I do wish we had a fun nickname for it.
Kline: We also got -- I'm not ignoring you. I grew up with blue laws as well, but they've mostly gone away in Massachusetts -- some really interesting data from NRF. Take this with a grain of salt. For the first time, Black Friday topped Cyber Monday as the busiest day for online shopping, with 93.2 million people shopping compared to 83.3 million on Cyber Monday. The caveat is, is based on the dollars -- and the Adobe numbers are usually right on -- yes, more people shopped on Friday, but they bought less. So, people who were making big purchases waited for the deals on Cyber Monday.
Lewis: One of the things that I like digging through with all of this, Dan is also what we're getting in terms of the attitudes people have and the activity, and how dumb they are with their shopping at this point. One of the more interesting data points that I saw was, on average, consumers have completed about 52% of their shopping, up from 44% during the same weekend a year ago. What that says to me is, while some of the individual days may be less important -- we're talking about how this season is blending a little bit -- it does seem like people are loading a lot of their shopping into a pretty tight period of time.
Kline: It also shows that me that what retailers are doing is working. There was a lot of concern that there's six less days between Thanksgiving and Christmas this year. There was a lot of front-loaded advertising, a lot of pressure to start shopping on, like, Oct. 29 or Nov. 2. I think leading up to it, people saw some deals and snagged them. People maybe planned a little bit more about buying on Black Friday and buying on Cyber Monday, as opposed to years past, where maybe they go into it with the idea of, "I'm going to look, and if something jumps, I'll buy it." In this case, I think there was a lot of intention to finish some Christmas shopping because the calendar is actually pretty tight.
Lewis: Yeah. And we have to remind ourselves that, taking a step back, the National Retail Federation, when they're looking at the holiday season, considers Nov. 1 through the end of December, Dec. 31, the holiday season. So, when they are looking at retail trends, shopping trends, that tends to be the big picture look that they take with this stuff.
Kline: Yeah, and as a former retailer myself, I would actually argue that it's like Jan. 10. You get the big flood of people that got gift cards to your store. In my case, the toy store I ran got very few returns, but your average store has a lot of returns. Gift cards and returns are an opportunity to extend the season. If you get a flood of people that maybe weren't customers, or maybe they're only casual customers being driven in by the fact that grandma got them an ugly sweater and they want to return it, that is an opportunity to turn them into a customer. So I take an even broader view of it.
Lewis: So, big picture, the number I've seen for the holiday season is that the average consumer is spending about $1,000. That includes some purchases made slightly earlier in the year. That number is up a bit, I think about 4%. That's, again, based on National Retail Federation data. It seems like all in all, we're looking at a pretty solid holiday season so far, Dan.
Kline: Yeah, I mean, NRF is saying between 3.8% and 4.2% higher, which would be up from the last few years, where it was about 2%. There does seem to be an optimism. It's interesting that this is happening without a hot, expensive product. We listed some of the things people are buying, but there's no new technology or phone. People are buying Roombas, but that's not new. People are buying VR headsets, but those existed last year. There's nothing really driving this other than sort of, "We're pretty comfortable with where we are economically, so we're giving gifts and spending money."
Lewis: Yeah. Further to that point, smartphones wind up being a very popular gift. If you have teens or tweens in your life, I'm sure that's high on a lot of shopping lists. There haven't really been any major form-factor upgrades over on the smartphone side in a while. That product category hasn't seen anything revolutionary that's really getting people to buy products, either.
Kline: No, and the same thing is true in the video game side. Yes, you have the portable Switch. Well, it was always portable, but you have the one that won't plug into a TV, that's purely a remote unit. That's a really cool product. We have a Switch. It's really fun to use. We've taken it all over the world, really, all sorts of different places. But, again, we don't have new consoles. There's nothing revolutionary going on. This isn't people buying things to have the thing. It's generally the traditional Christmas-Hanukkah holiday season shopping where it's gift buying, it's gift giving. And because the economy has been good, we're at near-record levels of unemployment, and even though wages have only inched up slightly, and buying power is actually the same as it was, I don't know, a decade ago, it's going on the same, people generally feel good about things because of the availability of work.
Lewis: So Dan, earlier I teased that you were not the only person that bought an Alexa-enabled device. As it turns out, a lot of people did. The e-commerce giant Amazon (NASDAQ:AMZN) wound up releasing some details about their Cyber Monday, and wouldn't you know, it wound up being a pretty successful day for them.
Kline: Yeah. I don't even think you can really bring up the numbers. Something like 42% of all online shopping happened on Amazon. What's a bigger thing about that is, they're selling a lot of their own devices. And while they haven't done a great job of using Alexa as a sales platform, I have to believe they'll eventually figure that out, and this puts us, whether it's next year or two years from now, where you're just going to be in your living room or in your dining room, and you're going to say, "Alexa, can I have the doorbuster deal on that big-screen TV I was looking at?" And it's just going to order it for you and probably also make you a sandwich. It's really Amazon getting a big foothold into your house.
Lewis: Yeah. We've talked about some of these data points before. There's the average Amazon customer that does not have Prime. They spend less than the average customer who has Prime, who spends less than the average person who has Prime and an Alexa device in their home. It really just shows how, the deeper you get into that ecosystem, the more tied you are to Amazon, and the more you're going to spend with Amazon. That's exactly how they want it. We were light on specifics with what Amazon was willing to give us, but they said shoppers purchased millions more Amazon devices than last year. I'm sure the company is pretty happy about that.
Kline: Yeah, and it's also important to note that Amazon keeps upping the bar from its competition. I have an Amazon order coming today. Actually, instead of having it come one day, I picked having all my Amazon orders come on quote an "Amazon day," which is not about speed. It's about, "I don't want to get called to my front desk 17 different times for things I purchased." But I can see not only where my order is, but how many stops the driver has before he gets to my condo building, along with an estimated time. That is dramatically better than what I'm seeing from other retailers. So, as Amazon keeps doing these things, it just makes you more and more loyal. I don't comparison shop if I'm buying an item under, say, $200 on Amazon. I'm going to assume that that clock I bought was the best price possible. But even if it was two cents more, is it really worth creating a login on Best Buy or trying to remember what my Walmart credentials are? It isn't, and I don't think it is for most people.
So, you're going to see as the years go on, this is a rich-get-richer scenario, where the biggest players that have your info, where it's really easy for you to make a purchase, they're going to take more and more of the business.
Lewis: As an aside, Dan, I think Amazon has gotten so good at creating joyous events out of nothing. I think Prime Day is a great example of that. They basically created a shopping holiday because they decided they wanted to have one. I get the same idea here with Amazon Day. You're saying, you're ordering so regularly, this is the day where all these little gifts that you've bought yourself, basically, are coming to your house or to your apartment. They've been so slick in how they've branded e-commerce and how they've created this excitement around their own products arriving.
Kline: Yeah. It's also brilliant for them because in theory, I probably ordered eight or nine different things from Amazon, mostly household, everyday-use things. Almost nothing that I needed immediately. So, I have the choice of, I can have them almost all one-day delivered, and they will show up the next day. And Amazon has to go through the trouble of 17 different deliveries. Maybe some of them are in the same box because they came out of the same fulfillment center and were ordered at the same time. Or, if I opt to use the Amazon Day, I do get some digital credit back. Not exactly sure how that works, but I got a couple of emails saying, "Oh, because you did this ... " And then I know, I'm just going to get one box. It's a lot easier from a recycling-the-box point of view. There's less trash in my house. I'm actually doing something less convenient that's better for Amazon, and I'm not really saving any money. So it's a very, very smart idea.
Lewis: All told, Cyber Monday was the company's largest shopping day in history, which says a lot given all of the events that they've had to push people to their platform. Some of the top selling items that we have from Amazon, going to be echoing some of the things we've talked about before, but a lot of Amazon devices, the LOL Surprise! dolls -- I don't know if that's L-O-L or LOL. I'm clearly too old for that product -- the Keurig coffee maker...
Kline: You are not going to like what I got you for Christmas, then.
Lewis: [laughs] I'll look for it in the mail room, Dan. Some Oral-B electric toothbrushes, and Champion fleece hoodies, showing that fashion is indeed cyclical and brands can come back.
You mentioned the rich getting richer, and that being the theme of the holidays. We have some data that backs that up as well. Retailers with more than a billion dollars in annual revenue saw their online sales jump over 500% compared to the average day. You look at the smaller retailers, folks that have less than $50 million in yearly sales, they also see a benefit from the holiday shopping, but I think their increase was like 300% over the standard day. To your point, Dan, I think a lot of people are starting to consolidate their shopping habits, especially when there are a couple really good deals to get them onto the site.
Kline: Yeah, and Amazon, Walmart, Target, with third-party marketplaces, have so many things. There used to be things like specialty K-Cups, that I used to buy not from a major retailer, but actually from a local guy. Well, more and more of that stuff might cost a little bit more, but it's already on Amazon, and it comes with Prime shipping, or at least you'll know when it's going to show up. And there's also a security to buying something through one of the big retailers. So, I think you'll find more and more small players having to use Amazon, Walmart, Target, somebody, eBay maybe, as a distribution method, because I don't know that I'm that comfortable giving credit card info to Joe's Coffee Shack or the place that has a cool sweatshirt I want, and I'm probably going to find the next closest thing on Amazon.
Lewis: Especially if you're already paying for Prime, right?
Kline: Yeah. Here's the thing. I don't even think about the value of Prime because, since I moved to a building and it's a pain -- I park a quarter-mile away and I don't want to carry stuff -- I buy so much from Amazon that I've probably paid for Prime for the year in like two months of value. I am the nightmare customer sometimes, because I will buy $3 worth of tea in the morning and $5 worth of aspirin in the afternoon, and they'll have to come in separate boxes. I get my value there. But, yeah, again, for consumers, you don't want to have to type in your info. You don't want to have to pull out your credit card and go to a new place, even if it's a place you really trust. The idea of having already-captured payment info is just unbelievably valuable.
Lewis: Alright, Dan, before we wrap up today's show, I want two give to listener shout outs. Mike hit us up on Twitter @MFIndustryFocus, or maybe it was the @MarketFoolery Twitter account. Either way, he said, "I have heard Dan Kline on two shows since Black Friday. The phrase he is searching for," and I think this was when we were talking about what is a deal, and how neurotic should you get about deals, Mike says, "A deal is a state of mind. Regardless of what you paid for an item, if it feels like a deal, stop looking."
Kline: Thank you, Mike! Very appreciated. Yeah, I probably did not explain that quite as concisely.
Lewis: And I like that. I think that's great. It speaks to making sure that the commercial side of the holidays don't wind up overtaking your enjoyment of them. If you get something that feels like a deal, just enjoy the fact that you save a little bit of money, and then go spend some time with your family.
Kline: Yeah. I'll also point out, though, do your homework, and make sure it's at least somewhat of a deal. I think what I was talking about is, if you buy something and you know you saved money, don't focus on that maybe the day before Christmas, it's going to cost a little bit less. Just let it go.
Lewis: Yeah, exactly. The other listener that I want to give a shout out to is Fred. He had DM-ed me on Twitter after I mentioned that my Lebanese grandmother's cooking was something that was included in a gift that I received a couple years ago. He said that he, too, was Lebanese, and tried to replicate his older family members' cooking to no avail. Dan, I know we've talked about gifts that don't cost much, and the idea of getting back to family, reprioritizing the family during the holidays. I think that my experience and Fred's here is a great way to highlight, if you're a parent or a grandparent, an aunt or an uncle, see if the young folks in your family, especially if they're college age or older, are interested in hopping into the kitchen and learning how to make the things that they expect every holiday. You only have so many years to do that, and I think it can be a really wonderful experience to share.
Kline: Yeah, and I'll take it one step further. My wife lost her grandfather, who was, I believe, 98 this year. He was a cook. He made food at a lot of the family events. And one of the comforting things since he passed has been that I make some of his recipes. It's sort of a way to keep someone alive, to have them be at the holiday, even if they're not there. And in this case, it's just very simple, old-school Italian recipes that don't cost a lot of money, but they do sort of bring that person back and into the room.
Lewis: And if you're a younger person in your family, if you're in the millennial generation, and you are looking to make someone's day, spend some time in the kitchen with the folks that are making the food. Ask them questions, write down the recipes. I don't think anything makes people happier than sharing that kind of family tradition and passing that stuff down from one generation to the next.
Lewis: Well, Dan, that's a nice, heartwarming note to end on here. I like that. I think that feels good. That's a nice way to send people off into the weekend.
Kline: Merry Christmas! Happy Holidays!
Lewis: Merry Christmas! Happy Holidays! Dan, thanks for hopping on today's show.
Listeners, that's going to do it for this episode of Industry Focus. If you have any questions or you want to reach out and say hey, shoot us an email over at firstname.lastname@example.org, or you can tweet us @MFIndustryFocus. I mentioned some of the stuff that we got from listeners on this episode. We love getting ideas for episodes. It makes our job easier. We don't have to think of stuff to talk about, you guys are telling us what to do. So please write in or tweet us. We love getting that interaction with our listeners. Of course, if you're looking for more stuff, subscribe on iTunes, or you can catch video content over on YouTube.
As always, people on the program may own companies discussed on the show, and The Motley Fool may have formal recommendations for or against stocks mentioned, so don't buy or sell anything based solely on what you hear. Thanks to Austin Morgan for all his work behind the glass today. For Dan Kline, I'm Dylan Lewis, thanks for listening and Fool on!