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Discounts and social media are expected to be primary motivators for consumer behavior throughout the rest of the holiday season and into the beginning of 2023, according to a new report.
Discounts driving holiday shopping
Inflation may have started to cool over the last month, but prices still remain elevated across numerous consumer categories, with essentials like gas, food and rent being particularly high. Meanwhile, 60% of consumers are noticing higher prices in their everyday shopping on items such as cleaning supplies, clothing and beauty products.
That’s putting pressure on consumers to save elsewhere, and it’s showing up in purchase intent for the holiday season.
The survey found the following:
Consumers are expecting to spend nearly 40% less on holiday-related expenses this year, when compared to the 10-year national average, according to the National Retail Federation, while Jungle Scout found that 67% of consumers are planning to spend under $500.
At the same time, 33% of consumers are planning to cut back on their expenses for the holiday season, with the top ways being buying fewer gifts and decorations.
As they shop, more than 58% of consumers are searching for deals and discounts as they shop.
Digital is a mode of discovery
Holiday shopping is increasingly an online practice, and that means people are discovering what they want to buy through digital channels, as well.
As they scroll, 20% of U.S. consumers get holiday gift ideas from social media. Facebook leads as a source of inspiration, followed by Instagram and TikTok.
People are also ranking virtual gifts like streaming and music subscriptions among the most popular gifts of 2022.
The outlook for 2023: Responsible self-indulgence
Heading into 2023, people will still view financial security as a top priority, as 79% of consumers said they plan to re-evaluate finances while facing worries about inflation, gas prices and interest rates. Nearly equally, 89% of consumers believe the U.S. is headed for a recession, or already in one. The latter measure has ticked up from 76% in Q3.
But this doesn’t mean they are completely sitting on the sidelines of life. The survey found that people will also be looking to spend on experiences and themselves, albeit in a way that is fiscally prudent.
Jungle Scout found that 54% of consumers are making travel plans for 2023, which is up 16% from last year as pandemic restrictions move further into the rearview. Plus, dining out and getting manicures still rank among non-negotiable expenses.
In the end, 2023 is set to bring more change to consumer behavior, extending this period of upheaval well beyond the peak of the pandemic.
"Consumer expectations and priorities will shift in 2023, as inflation continues to impact spending," says Michael Scheschuk, president of small & medium business at Jungle Scout, in a statement. "As ecommerce advances, consumers will seek personalization at every stage of the customer journey. Brands should diversify sales channels and consider expanding into social commerce through popular platforms like TikTok, allowing them to engage with new audiences in more authentic and memorable ways."
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The cuts amount to 4% of the ecommerce platform's workforce.
eBay is set to become the latest ecommerce platform to conduct layoffs.
The company announced plans on Tuesday to lay off 500 employees, which amounts to about 4% of its workforce. Layoffs were set to take place over the next 24 hours, the company said Tuesday evening.
In an SEC filing, CEO Jamie Iannone said the decision to make layoffs came after consideration of the macroeconomic environment and where the company could best invest for the long-term.
Iannone said the moves “are designed to strengthen our ability to deliver better end-to-end experiences for our customers and to support more innovation and scale across our platform.”
“Importantly, this shift gives us additional space to invest and create new roles in high-potential areas — new technologies, customer innovations and key markets — and to continue to adapt and flex with the changing macro, ecommerce and technology landscape,” Iannone wrote. “We’re also simplifying our structure to make decisions more effectively and with more speed.”
eBay is one of the oldest ecommerce platforms, and remains an active marketplace for both new and resale items. The San Francisco-based company has yet to report results for the fourth quarter of 2022. In the third quarter, the company said gross merchandise volume was down 11%, and revenue was down 5% year-over-year.
Yet the company has also continued to invest. In 2022, it acquired collectibles platform TCGPlayer and myFitment, which provides parts and accessories for automotive and powersports. It also opened a secure vault for trading cards, and launched livestreaming.
eBay is also seeing a boost from advertising, with revenue driven by promoted listings up 19% in the third quarter.
With the layoffs, eBay joins other tech companies that provide the infrastructure of ecommerce in making layoffs. Amazon, Shopify, Salesforce, BigCommerce and Wayfair have all recently announced layoffs. Technology giants like Meta, Google and Microsoft have also made job cuts.
It comes as inflation is weighing on consumers’ discretionary spending, and the return to more in-person shopping throughout 2022 led to a correction following aggressive hiring during the pandemic.