Salesforce: Platforms Like Shein and Temu Could Grab 21 Percent of Holiday Spending

Holiday season may be the most wonderful time of the year for consumers, but for brands and retailers, Santa’s workshop begins months in advance.

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Just ahead of Christmas in July, Salesforce has put forth several trends it believes will heavily impact the shopping and purchase landscape this holiday season.

It suspects shoppers will migrate toward apps like Shein and Temu as they search for value; retailers will face serious cost struggles with the middle mile in their supply chains and companies will continue seeking out first-party data to bolster customer experiences with artificial intelligence .

Value shoppers turn to Shein, Temu

While price always influences consumers’ shopping patterns, Salesforce expects that consideration will be exacerbated this holiday season. As a result, the company predicts that players like Shein and Temu will command serious market share among Western shoppers.

According to Salesforce, 63 percent of consumers have indicated they plan to shop from what the technology giant calls “Chinese shopping applications.” By its definition, that includes Shein, Temu, Cider, TikTok and AliExpress, though several of those companies no longer have their headquarters in China.

In the past six months, two-thirds of shoppers in Western markets said they have ordered from one of those marketplaces. While Shein grabbed about 50 percent of Gen Zers , Temu beat the fast-fashion giant out when it came to overall market share. Over 40 percent of Western consumers have purchased items from Temu in the last half a year.

Salesforce projects that Chinese shopping apps will grab $160 billion in Western spending for holiday 2024, partly because of the value consumers continue to seek among inflationary pressure.

“As the consumer leans more into value, these apps are playing right into that hand,” Caila Schwartz, director of consumer insights and strategy, said.

Schwartz noted that Salesforce data shows that 37 percent of shoppers said they use their credit card more now than they did a year ago. In a similar vein, 32 percent of consumers said they use buy now, pay later ( BNPL ) services like Klarna and Afterpay more frequently than they previously have.

In December, Salesforce projected that 17 percent of purchases for holiday 2023 would come from the resale market. Secondhand shopping is often associated with consumers that would be considered value shoppers or those that have an interest in shopping more sustainably .

But Rob Garf, vice president and general manager of retail at Salesforce, said he doesn’t expect Chineses shopping apps’ rise to steal resale’s thunder this year because of three major macro trends that drive consumers to purchase secondhand pieces.

“We don’t anticipate the Chinese shopping [apps] taking too much market share from resale. The reason being is, the resale market plays so nicely into the value equation,” he said. “Especially younger consumers do really value, to the degree they can afford it, saving the planet; they’re more conscious of that than other generations. The other piece is, vintage is really in still, and so [resale] is a very easy way to find vintage…merchandise.”

Middle-mile costs could bring additional price burden for retailers and brands

Salesforce projects that brands and retailers will face a significant burden when it comes to middle-mile logistics this year.

It estimates companies will pay a cumulative $197 billion extra in middle-mile costs, a 97 percent increase from last year.

“On the middle-mile side, we’re seeing rising container costs and longer flight times. We haven’t seen rising container costs since 2021. In 2022 and 2023, they came back down to normal pricing. We’re now starting to see them spike back up and stay elevated. We’re also seeing longer freight times because of the challenges happening overseas with global conflict, so it’s putting strain on getting not only product into port but getting it into port at a reasonable price,” Schwartz said.

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Schwartz also noted brands and retailers may face issues with last-mile delivery , which could further drive up costs. But Salesforce continues to recommend that brands and retailers decline to pass logistics costs along to the consumer, given that it expects value will be king this holiday season. According to Salesforce data 45 percent of consumers prioritize purchases with free shipping, and the proportion of shoppers willing to wait longer for goods shipped for free has increased.

For shoppers on a time crunch, or in the case that retailers and brands decide against free shipping offerings, Salesforce anticipates a rise in buy online, pick up in store (BOPUS) transactions.

Customers are ‘begging’ for loyalty programs

2024 continues to bring about chatter around loyalty programs. Several companies have reactivated loyalty programs , while others have more recently introduced them.

While the data retailers and brands can garner from loyalty programs can also help train AI models on personalization , consumer sentiment around discounting gives companies a chance to bring in—and retain—shoppers with the right benefits.

Behind price, earning and redeeming loyalty points has the second-highest impact on where consumers choose to spend their money, Salesforce data shows. The company predicts that 40 percent of holiday purchases will be made by loyal buyers for brands and retailers.

“We see a unique opportunity this year to lean into loyalty because shoppers are becoming more loyal. Over the last two years, we’re seeing the rate of repeat buyers…is growing at 8 percent year over year. So retailers are seeing a more engaged audience than they have, and we know that that consumers are begging for more loyalty programs,” Schwartz said.

To attract and maintain shoppers’ trust, particularly during a season of heavy discounting, brands and retailers should consider offering benefits beyond mere price slashing, Garf said, noting that comapnies could consider offering loyalty program members advantageous shipping and delivery options; early access to new collections or exclusive experiences.

Consumers continue to up their AI savviness

Brands continue to implement AI-powered systems to amp the consumer experience, and a primary way they have done so is through search and recommendation upgrades.

Schwartz said Salesforce projects that brands and retailers using AI systems to enhance their search will see conversion rates three times higher than those not yet integrating the tools.

“We know that 20 percent of online orders today are being driven by site search, and when a brand or retailer implements AI-embedded search functionalities into their site search feature on their website, search conversion goes up even higher,” Schwartz said.

But as companies use the technology to their benefit, consumers don’t want to be left behind. According to Salesforce, 53 percent of consumers indicated interest in using generative AI for gift inspiration.

That could be boon for marketplaces and brands already integrating the technology, particularly in a shopping environment where 40 percent of consumers reported purchasing less and 47 percent of consumers said their purchase levels have remained the same, as compared with 2023.

Etsy, for instance, used generative AI to create its Gift Mode feature, which exists primarily to help shoppers find the perfect gift for a loved one. Meanwhile, other companies have employed image search or generative AI-powered chatbots to aid product discovery.

“We expect that consumer adoption and ease with engaging and using AI is going to become even more pervasive now that these big tech platforms [like Apple] are adopting it into their strategy,” Schwartz said.

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