Leading brands are outpacing their sector by growing 10% faster than the average, with much of this success attributed to significant investments in eCommerce technology. Companies are channeling over $100 million into upgrading their tech infrastructure, viewing this as key to capturing a larger slice of holiday sales.
Tech investments are designed to help brands scale quickly and respond to fluctuations in demand. With an eye on the busy shopping season, companies are spending on platforms and tools and on specialized tech talent.
When bringing in data engineers, developers, and eCommerce specialists, brands make sure they can capitalize on the holiday rush and fine-tune customer experiences in real time.
By 2025, nearly one in four global sales will take place online, representing a major shift in consumer behavior. Retail eCommerce alone is expected to generate $6.3 trillion. As brands prepare for this future, their investments are focused on capturing the growing share of online sales, particularly during high-demand shopping events.
Supercharging spending for shopping frenzies
Black Friday and Cyber Monday continue to dominate holiday shopping strategies. This year, 69% of brands will increase their eCommerce spending for Black Friday, while 68% will boost their budgets for Cyber Monday.
The end-of-year holiday season sees 63% of brands planning to increase their investment, with 53% focusing on Amazon Prime Day.
A portion of these brands aren’t making minor adjustments, 28% of them are increasing their holiday budgets by more than 20%, particularly for the end-of-year season. Similarly, 24% of brands are raising their Black Friday spend by over 20%, reflecting the importance of these events in driving annual revenue.
Holiday shopping events
For top brands, holiday shopping events like Black Friday and Singles Day contribute more than 10% of their total annual eCommerce revenue. Yet, a quarter of lagging brands fail to even participate in these major events, missing out on this lucrative opportunity.
Brands that do capitalize on these shopping holidays are proactive. They negotiate deals, align promotions, and secure inventory well in advance to meet the surge in demand. Moreover, they allocate additional budget and headcount, making sure they are fully equipped to handle the holiday rush and maximize their earnings.
Tech as the ultimate growth weapon
Around 20% of leading brands are pouring over $100 million into eCommerce technology, a move designed to give them a strategic edge. Investments help them innovate and adapt at a rapid pace, especially during periods of high demand.
When upgrading infrastructure and increasing capabilities, brands can handle sudden surges in traffic without compromising on user experience. Scalability is key to managing both planned peaks, such as holiday sales, and unexpected increases in demand, ensuring uninterrupted service for customers.
Generative AI
Generative AI is becoming a top priority for nearly 20% of leading brands. In contrast, fewer than 5% of lagging brands are making this a focus. Generative AI has become central to how brands are rethinking the customer experience, with 30% of leaders planning to allocate more than 10% of their eCommerce budgets to AI initiatives in the next year. For 10% of these brands, AI will account for more than 25% of their total eCommerce spend.
A surge in AI investment is largely driven by the need for deeper customer insights, especially as third-party cookies phase out. AI provides a way to better understand customer behavior, helping brands to offer personalized recommendations and tailored shopping experiences.
In-house talent matters more than ever
Leading brands are investing heavily in tech talent to develop their in-house eCommerce capabilities. Big brands are hiring data engineers, data scientists, and software developers at a rate 50% higher than their lagging counterparts.
The preference for in-house talent reflects a shift in strategy. Instead of relying on third-party agencies or outsourcing partners, brands are bringing expertise in-house to make sure they can swiftly adapt to new challenges and opportunities.
In-house talent also provides more direct control over operations, making it easier to pivot strategies and innovate.
B2B and B2C brands are going all in on digital
As digital channels gain prominence, 30% of B2B and B2C leaders report that their online sales are significantly more profitable than those from offline channels. This profitability is prompting brands to double down on customer touchpoints.
60% of leaders (versus 54% of laggards) are focusing on online marketplaces, while 63% of leaders (compared to 50% of laggards) are investing in social commerce.
A strategic focus on digital means increasing sales and creating direct and meaningful interactions with customers, using data to drive personalized experiences and loyalty.
Only 15% of leading brands have fully integrated their online and offline channels, compared to just 2% of laggards. Integration means customers can enjoy a smooth shopping experience, whether they’re buying online and picking up in-store, or returning items through any channel.
Direct-to-consumer platforms also remain a top focus, with 56% of leaders prioritizing this channel compared to 48% of lagging brands.
Big brands are prioritizing the smooth flow of information across all platforms, whether it’s company-owned, third-party marketplaces, or social channels. When doing so, they improve the buying experience and simplify returns and post-purchase engagement, keeping customers satisfied long after their purchase.
How the best brands are innovating across every department to delight customers
Top brands are investing in technology and are integrating their R&D, logistics, warehousing, marketing, and sales functions to stay ahead. A holistic approach like this makes sure that all departments work together, leading to better customer experiences and faster innovation.
McKinsey experts note that this level of integration is rare, with only a few brands successfully pulling it off. Those that do manage it are accelerating their growth by responding to market demands more efficiently and launching new products and services faster.
McKinsey’s experts reveal the future of eCommerce
According to Arun Arora, Senior Partner at McKinsey & Company, next-gen eCommerce is essential for growth across both B2B and B2C sectors. Yet, only a small number of brands have fully cracked the code of integrating their operations to deliver top-tier customer experiences.
Rodney Zemmel, another Senior Partner at McKinsey, highlights that brands treating technology as a strategic advantage are growing 10% faster than their market peers. However, Zemmel emphasizes that technology alone is not enough, successful brands are also transforming their operating models and talent strategies to capture value and sustain growth.
Stephan Zimmerman, Senior Partner at McKinsey, explains that the holiday season is a critical period for many brands. Those that excel are the ones that prepare thoroughly, often staffing “war rooms” with experts in marketing, pricing, data science, and engineering. This allows them to quickly identify and act on opportunities during the shopping frenzy, giving them an edge over the competition.
Inside McKinsey’s 500-leader survey on the future of eCommerce
The study surveyed 500 leaders across eCommerce, digital, and marketing roles in the UK, US, Germany, China, and Brazil. Leaders represent a diverse set of industries, including B2B products, B2B software, consumer packaged goods, electronics, fashion, financial services, and retail. This broad range of sectors offers a comprehensive view of the strategies and investments brands are making to navigate the evolving eCommerce landscape.
Key takeaways
Leading brands are positioning themselves to capture massive growth during the holiday shopping season through substantial investments in eCommerce technology and talent. With $100 million investments in infrastructure and prioritization of AI, these companies are pushing the boundaries of what’s possible in digital commerce.
A focus on in-house talent, especially data engineers and software developers, explains the shift toward internal control over eCommerce capabilities. Digital channels are proving more profitable than offline counterparts, and integration between online and offline platforms is becoming a key differentiator for top performers.
Ultimately, success hinges on the ability to innovate quickly, optimize operations across departments, and provide a superior, cohesive customer experience.
