Holiday shopping patterns continuously change reflecting macroeconomic realities, consumer behaviour shifts, and the constant evolution of payment methods. As the season of joy is approaching, we cannot help but wonder what changes current online payment trends have brought to the holiday shopping routine.
All over the world, there’s a growing demand for convenient and fast digital payment solutions. In e-commerce, the demand is even greater than in other segments. Online shoppers are very picky about their checkout experience. About 60% of e-commerce buyers will abandon their carts if they don’t see their preferred payment method among the payment choices. Furthermore, between 25% and 50% of customers will abandon their carts if the checkout process is too complex or slow.
What Share of Holiday Shopping Happens Online?
To determine the impact of online payment trends on holiday shopping, I would like to start with understanding how much holiday-related purchases actually require those online payments.
China
In China, the world’s largest online retail market, online shopping plays a significant role not only in holiday sales but also in retail overall. As of the first half of 2024, e-commerce accounted for 27.6% of the country’s total retail sales. Digital platforms and online payment solutions have significantly boosted consumer participation, especially during major shopping events like Singles’ Day and Lunar New Year promotions.
UK
In the UK, almost 56 billion GBP of the total £88B holiday retail spending value is expected to be spent offline, however, about 36% of the total spending or 32.5 billion GBP will be gained through e-commerce channels.
India
In India, for example, online holiday shopping continues to grow significantly, especially during major festive seasons like Diwali and Christmas. Nevertheless, despite consistent growth, only around 5-6% of India’s total retail sales occur online, which is still far lower than in mature markets like China or the U.K.
Online Vs Offline Savings
In 2024, consumers in many economies are struggling to cover their daily essentials, not to mention holiday expenses. In this case, brick-and-mortar stores gain certain unexpected advantages. Numerous surveys find that people who want to save money prefer cash and physical stores. Their reasoning is not faulty as well. One of the latest examples that support the connection between splurging and virtual payment means is the Insurify survey which concluded that shoppers who plan to buy all holiday gifts online are 4.6 times more likely to overspend than shoppers who plan to make purchases only in stores.
Canada
This year’s Mastercard SpendingPulse report estimates that consumers in Canada will favour in-store shopping over online purchases, as many find it easier to discover deals and stretch their budgets by browsing physical stores than looking through online storefronts. Is the picture similar in other destinations? Not exactly.
U.S.
In the U.S., the vast majority of consumers (84%) plan to buy at least some holiday presents online this year, with 12% doing all their festive shopping online, according to the Insurify survey. Amazon is the most popular e-commerce platform used for holiday gift shopping in the U.S., with 73% of survey respondents expecting to buy at least some presents from the given site this season. To avoid overspending, four in 10 (41%) Americans are planning to schedule their online shopping on the most discount-heavy periods such as Thanksgiving Day, Black Friday and Cyber Monday.
Global Picture
In the end, what do we have? The share of online holiday shopping is growing in most regions of the world. The exact percentage may differ from 5% to 35%, however, it still translates into billions of dollars in transactional value. We may not know the 2024 data yet, but global holiday online sales grew 3% to reach $1.17 trillion last year.
What Changes for Holiday Shopping in 2024?
While the share of e-commerce purchases in holiday shopping is rising, changing online payment trends impact customer experience and shopping preferences. Here are some noticeable tendencies.
Mobile Shopping Surges
Every year, more and more shoppers are making purchases on the go, leveraging the convenience of their mobile devices. According to Adobe Analytics, this year, about 53% of online sales will come through mobile devices, a significant increase compared to 43% in 2021. The growth of convenient mobile payments is fueling the shift. In 2023, digital wallets were used for 50% of global e-commerce transactions and about 30% of POS transactions.
Western Consumers Turn to Chinese Shopping Apps
In an effort to save some money on holiday purchases, two-thirds of global shoppers are looking for good price deals, with less than one-third prioritising quality of the goods when they choose a shopping destination. Therefore, shopping apps like Temu, Aliexpress, Cider, Shein, and even TikTok stores are gaining traction in Western societies. More than a half (58%) of consumers believe these shopping platforms offer the lowest prices and even more (63%) plan to make holiday purchases there in 2024. Thus, it is expected that Chinese shopping applications will get $160 billion in global ecommerce market share outside of China this year. Not only low prices and discount deals attract consumers to similar apps. They offer personalised interface and targeted product search as well as simplified payment authorisation. The apps mentioned above support popular local digital wallets e.g. WeChat Pay and Alipay and other mobile payment methods. Reducing the number of steps to complete a purchase helps Chinese apps make shopping fast and enjoyable.
Extended Purchase Term Takes Over Same Day Deliveries
Statistics show that people are gradually changing their holiday shopping routines in favour of early purchases rather than a last day gift search. In some countries, like the U.S., almost 38% of the customers have started their holiday shopping before mid-November, with only 20% planning to wait until Black Friday. In the UK, 69% of consumers are starting holiday shopping by August and 85% by October. Fast or same-day deliveries that typically come at extra cost are not that popular for holiday shopping in a saving mode. Media reports even claim that e-commerce leader Amazon is shutting down a service that offers same-day delivery from mall and brick-and-mortar retailers.
Embedded Lending Gives Holiday Shoppers More Chances to Afford Gifts
Embedded loans at the point of sale are becoming increasingly popular, especially in emerging markets where traditional credit solutions are often inaccessible or unaffordable. Therefore, flexible embedded lending alternatives are rapidly growing. This trend enables individuals to access financial services effortlessly as part of their daily routines.
BNPL payment alternatives are particularly popular among Gen Z and Millennials. Over 45% of consumers out of these age cohorts use BNPL, and nearly 60% of consumers across all generations prefer BNPL over credit cards due to the ease of payments, the simple approval process and lack of interest charges.
This holiday season, in the U.S., almost 20% of consumers will make holiday purchases on a credit card and carry the balance, while 16.4% plan to resort to buy now pay later (BNPL) services to spread out the purchase cost.
Revenue from ‘buy now pay later’ (BNPL) services embedded in e-commerce platforms is forecast to account for over 50% of the whole embedded finance market in 2026.
Product Discovery Changes With AI and Tech Involved
Gift search looks different today than it was just a few years ago. Interestingly, 52% of U.S. consumers plan to use AI tools to assist with holiday shopping, with 24% relying on chatbots like Google Gemini, Microsoft Copilot, and ChatGPT. Last holiday season, AI influenced 17% of online purchases.
Furthermore, shopping platforms and online stores offer innovative ways to shop via immersive and virtual experiences. One illustration is Amazon’s Virtual Holiday Shop powered by the Amazon Beyond AR platform, an immersive 3D shopping experience that allows customers to browse over 300 curated gifts and holiday items, including toys, fashion, and tech from popular brands. All the items in the virtual store have clickable links so that you can effortlessly add them directly into your cart and check out as usual.
As for more traditional product discovery methods, brand websites are still a popular choice in the UK, where 30% of consumers begin their shopping journey directly on corporate online stores, with 57% more likely to make an online purchase when offered a discount code by the brand they follow.
One-fourth of shoppers are seeking other customers’ reviews to decide on their holiday gift purchases. As for social media, only 13% of consumers intentionally use social media to search for and ultimately buy gifts, however, 30% engage with random media ad content and may make purchases if they find something interesting. Younger consumers (Gen Z) clearly prefer influencer-created content over traditional brand or user-generated content when discovering new brands and products. At the same time, social media-integrated shopping is on the rise, provided it is coupled with faster, more intuitive checkouts.
Summary
Online payment trends are reshaping holiday shopping globally. In major markets like China, e-commerce accounts for nearly 28% of retail sales, bolstered by events like Singles’ Day. The UK sees 36% of holiday spending through online channels, while in the U.S., 84% of consumers plan to shop online, with Amazon dominating. However, emerging markets like India see slower online adoption, with only 5-6% of total retail sales happening online, though growth during festive seasons is significant.
Trends such as mobile shopping, simplified checkout processes, and the rise of “Buy Now, Pay Later” (BNPL) services are fueling this shift. AI and virtual shopping experiences, like Amazon’s Virtual Holiday Shop, are also influencing consumer behaviour. Holiday shopping becomes faster, simpler, and more automated. At the same time, gift choice still remains quite personal, as people resort to customer reviews and influencer opinions.
However, while online shopping grows, with holiday e-commerce sales having reached $1.17 trillion globally in 2023, many cost-conscious shoppers still turn to physical stores for savings. Exclusive online deals, discounts linked to certain online payment means and loyalty programs may stimulate the growth of holiday e-commerce.
