For European and America businesses, the concept of peak season used to be simple: sales would surge in the run-up to Christmas, excess stock got shifted over the January sales period, then normality would resume.

But things have changed in recent years. Payment Service Provider Ingenico (now part of Worldline) processed nearly 1000 transactions per second on Black Friday in 2018. In the US, the value of Cyber Monday shopping grew from $608m in 2006 to $10.7bn in 2020 – making it the single biggest retail day in history. And as e-commerce has flourished, it has become more global. China’s “Singles’ Day”, on 11th November every year, surpasses Black Friday and Cyber Monday sales combined. Chinese e-commerce giant Alibaba registered purchases worth over $74bn in 2021 – a new company record – and witnessed a rise in its share price worth 9% in the days leading up to the event.

The advent of e-commerce and cross-border business has made the coming commercial peak both taller and longer. It has become pivotal for brands tapping into it. “A lot of our clients are doing 40% of their annual revenues in a very small window of the year,” Mike Goodenough of Worldline tells Electronic Payments International. “And what we see is that, because it’s such an important part of their sales cycle annually, it drives the development and the focus of their stocks throughout this period.” The peak sales season is continuing to change and businesses are continuing to adapt. Here is what they need to know.

Trends to watch

The rise of e-commerce has been the defining feature of recent peak seasons. In 2020, e-commerce was worth $4.2 trillion – 18% of all global retail. “We expected that to continue to grow,” says Goodenough, “but then we had Covid. And for anybody who had any doubts about whether e-commerce was for them, that period of time pushed the limit even further.”

This expansion cannot be understood without growth in cross-border e-commerce. The cross-border payments market will reach $250 trillion by 2027 according to the Bank of England, up from $100 trillion in 2017. Merchants have had to catch up: “it’s very much about offering the right product, in the right geography, at the right price,” says Goodenough. “From a technology perspective, ease of checkout, speed of delivery and choice of delivery are all important considerations.” Peak sales season has become a marathon rather than a sprint for global businesses. Checkouts for Chinese customers spending frantically for Singles Day in November cannot be the same as those in the US and Western Europe during January sales. Flexibility is crucial.

Another important trend relates to how people shop as much as where they shop. Finance app downloads hit over 4 billion in 2020 according to GlobalData estimates. In-app purchases are booming. This explosion in mobile shopping places a world of retail opportunity in customers’ pockets. As Goodenough points out, it also creates the potential for further evolution in e-commerce. Brands have to create shopping experiences that are as enticing to consumers sitting on as those in physical stores. Retail will become an “omnichannel” phenomenon, turbocharging retail peaks: “if you’re accessing Nike on TikTok or Instagram,” says Goodenough, “you will have the same experience and you’ll be able to purchase things, frictionlessly.”

One other trend sure to gather speed: as people do less physical shopping, they will buy fewer physical goods. Web 3.0 and the Metaverse will nudge customers towards carving out online personalities for themselves. They will demand more digital goods as a consequence. “I do believe that when I look at what the very big brands are doing in that space, they realise it’s going to be important, and they’re looking at what they need to do and how to design it to encompass some of the Metaverse technology,” according to Goodenough. GlobalData research suggests the blockchain market will be worth $200bn by 2030. Consumers will need cutting-edge payment systems to seamlessly convert fiat currencies into crypto and decentralised tokens. The digital goods they purchase will revolutionise peak retail seasons in years to come; the question for merchants is how quickly these trends will take off, and how they can futureproof themselves before they do.

Best practice

Merchants need sophisticated strategies to deal with peak sales season’s increasing volume and diversity. Three strategies can help make the most of the coming sales deluge – and avoid sinking beneath the tide.

One is localisation. For merchants operating in multiple countries, understanding where different peaks are likely to strike at different dates is crucial. Goodenough gives the example of Worldline clients whose transactions suddenly shoot up from ten to 1000 per second at peak season’s summit. Payments solutions must be optimised to allow customers to buy goods in their local currencies via the cards and banks with which they are most familiar. Goodenough recommends that brands “centralise a lot of this planning” – something that can be expedited by outsourcing the process to a partner like Worldline – to avoid the administrative hassle of setting up individual local operations.

Another is sensitivity to volume. Conglomerates receive huge volumes of relatively small payments – think Amazon or AliExpress. With higher volume comes a higher likelihood that a payment medium goes unrecognised and money is left on the table. In the Netherlands, for instance, iDEAL is a ubiquitous e-commerce payment system. Merchants need to have the right infrastructure in place to accommodate its users as their horizons broaden around peak season. High-end retailers, meanwhile, observe the reverse: smaller numbers of expensive transactions from wealthy buyers. But these buyers are likely to use a wider range of payment systems. Their transactions could come via cards tailored towards high-net wealth individuals, like American Express. Goodenough argues that a “consultative approach” with an experienced payment partner is vital, considering every eventuality and tailoring the solution to specific customers, volumes and payment media.

Finally, merchants cannot assume their payment solutions are foolproof. Peak season transaction volumes are so volatile; backups are mandatory. “If you think of acquiring banks, we would be making sure that we have redundancy for all of our larger clients,” says Goodenough. “If we had one acquirer processing a lot of transactions for a country, we would always have two or more configured in the background. If something was to happen to one of those, the consumer and merchant would still avoid any interruption.”

Getting a payment strategy in place, and having life support systems to ensure it runs smoothly throughout peak season, can be a brand’s “difference maker” according to Goodenough. But, for those preoccupied by their product lines and marketing strategies, it may fall through the cracks. Choosing Worldline as a payment partner takes the stress out of peak season, wherever a company is based and whatever their size. It helps brands ride the wave of coming changes in transaction sizes and volumes now. And it safeguards them against developments in the purchases people will make and how they will make them in future.

Worldline is here to help; click here to find out more about Global Collect, the firm’s international online payment solution.