Adobe* expects U.S. holiday sales online to hit $207 billion from November 1 to December 31, setting a record high. This represents a 10 percent increase from 2020, a strong growth rate after a year where the pandemic made e-commerce an essential service.
Globally, online spending is expected to hit $910 billion this season, 11 percent growth year-over-year (YOY). Adobe expects over $4 trillion ($4.1T) to be spent globally in 2021, a new milestone for e-commerce.
In the U.S., as e-commerce becomes more mainstream, the major shopping days are losing prominence. Cyber Week—Thanksgiving through Cyber Monday—is expected to drive $36 billion in online spending, 17 percent of the entire holiday season. The growth is slowing; however, coming in at just 5 percent YoY for the five-day period, less than the season overall at 10 percent YoY. Adobe expects Cyber Monday to drive $11.3 billion, up 4 percent YoY, and remain the biggest day of the season, and year, with Black Friday coming in at $9.5 billion, up 5 percent YoY, and Thanksgiving at $5.4 billion, up 6 percent YoY. All three major shopping days are growing less than the season overall.
Supply Chain Challenges To Impact Shopping season
Increased consumer demand for online shopping is happening as retailers are grappling with supply chain challenges, from crowded ports and cargo delays to disruptions in overseas manufacturing. Shoppers are feeling the impact. Compared to a pre-pandemic period, January 2020, the prevalence of out-of-stock levels has risen 172 percent going into the holiday season. Adobe expects it to remain at this level, increasing for certain products throughout the season. Of the 18 categories tracked by Adobe, apparel has the highest out-of-stock levels currently, followed by sporting goods, baby products and electronics.
A weakened supply chain is also driving up prices online. Adobe expects U.S. consumers will pay 9 percent more on average during Cyber Week this year, compared to the last holiday season. This is the result of smaller discounts, on top of e-commerce inflation that has persisted through the year. Adobe forecasts discounts will be in the 5 percent to 25 percent range across categories this season, compared to a historical average of 10 percent to 30 percent.
This is happening as pricing levels have been elevated. Inflation in e-commerce has been observed since June 2020 (16 consecutive months) with online prices up 3.3 percent going into the holiday season (September 2021). In past years, online prices were down 5 percent YoY on average prior to the shopping season. E-commerce prices have not risen as quickly as offline prices however, with the latest Consumer Price Index up 5.4 percent YoY (September 2021).
“We are entering a second holiday season where the pandemic will dictate the terms,” said Patrick Brown, vice president, growth marketing and insights, Adobe. “Limited product availability, higher prices and concerns about shipping delays will drive another surge toward e-commerce as it provides more flexibility in how and when consumers choose to shop.”
Insights On Discounts And Best Days To Shop
- Category Discounts. Adobe expects smaller discounts in all major gifting categories tracked by the Digital Economy Index. Discount levels in electronics will peak at 22 percent for the season, down from 27 percent in 2020. Other categories include computers at 25 percent (versus 30 percent in 2020), televisions at 15 percent (versus 18 percent), appliances at 16 percent (versus 20 percent), toys at 16 percent (versus 19 percent), sporting goods at 14 percent (versus 20 percent), apparel at 15 percent (versus 20 percent), furniture at 7 percent (versus 9 percent), and tools at 8 percent (versus 11 percent).
- When To Shop. In an Adobe survey of over 1,000 U.S. consumers, 67 percent are concerned about gifts being more expensive this year. While seasonal discounts are expected to start this month (October) in the 5 percent to 15 percent range, as retailers look to manage supply chain challenges, the biggest discounts (5 percent to 25 percent) are still expected to happen around Thanksgiving and Cyber Monday.
Certain categories, like electronics, are expected to have the deepest discounts before Cyber Monday. The best days to shop include Thanksgiving (11/25) for toys, Black Friday (11/26) for furniture/bedding and tools/home improvement, Saturday (11/27) for electronics and appliances, Sunday (11/28) for apparel and sporting goods, Cyber Monday (11/29) for televisions, and Wednesday (12/1) for computers.
Insights On Buy Now Pay Later, Top gifts, Curbside Pickup, And Other
- Buy Now Pay Later. Consumers are embracing new payment methods like Buy Now Pay Later (BNPL) to free up cash. Online revenue from BNPL this year has been 10 percent higher than 2020 and 45 percent higher than 2019, based on Adobe Analytics data. Shoppers are also using BNPL for increasingly less expensive orders, with the minimum order value dropping 12 percent YoY to $225. In the Adobe survey, 25 percent of respondents said they have used BNPL in the last 3 months, with apparel, (cited by 43 percent), electronics (33 percent) and groceries (30 percent) as the top categories.
- Curbside Retakes Spotlight. In December 2020, curbside pickup was used in 25 percent of all online orders, as consumers looked for safer ways to shop. In this upcoming season, delays are expected to drive even more usage. In Adobe’s survey, 65 percent of shoppers are concerned about shipping delays this year. Adobe expects curbside pickup to peak from 12/22-23 (right before Christmas Eve) at a record 40 percent of all online orders, while remaining at 25 percent through November 2021.
- Most Anticipated Gifts. Based on Adobe data, along with analysis of market trends and social media buzz, the top toys this season are expected to be the Tamagotchi Pix, Pop Fidget, Got2Glow Fairy Finder, Baby Yoda, and Gabby’s Dollhouse. Top gaming devices include the Nintendo Switch OLED, PlayStation 5, Xbox Series S/X, and Stream Deck. Top games are expected to be Metroid Dread, Battlefield 2042, Pokemon Brilliant Diamond & Shining Pearl, Halo Infinite, and FIFA 22. Other top gifts include Airpods Max, smart mugs, Instant Pot, air fryers, smart water bottles, drones, and record players.
- Bigger Screens. As consumers spend more time at home using laptops for work, the growth of smartphone-driven shopping has escalated. Adobe expects smartphones to account for 42 percent of overall revenue this season ($86 billion), a 5 percent increase from 2020. More time spent at home has also driven interest in larger TV screens, as people look to replicate the theatre experience at home. TVs in the 70- to 79-inch range hit 22 percent of sales in 2020, up from 16 percent in 2019 and 9 percent in 2018; 80-inch (and larger) hit 3 percent of sales in 2020, up from 1 percent in 2019 and 1 percent in 2018.
- Shopping Frenzy. On average, U.S. consumers will spend 12 hours shopping online this holiday season. During the “golden hours” of e-commerce (7:00–11:00 pm PT on Cyber Monday), shoppers will spend nearly $3 billion online ($2.9B) in 4 hours, 50 percent more than a typical full day in August 2021 ($1.9B). In the peak hour of Cyber Monday (8:00–9:00 pm PT), consumers will spend over $12 million every minute.
- Gifting An Experience. In the Adobe survey, while over half of respondents (51 percent) plan to purchase physical goods as gifts for others this holiday season, nearly one-fifth (17 percent) plan to gift an experience instead. Top categories include spa treatments (cited by 25 percent), concert tickets (25 percent), sporting events (22 percent), plane tickets (21 percent), and cooking classes (16 percent).
*The Adobe Digital Economy Index offers comprehensive insights based on analysis through Adobe Analytics that covers over one trillion visits to U.S. retail sites and over 100 million SKUs in 18 product categories. Global views are based on transactions in over 100 countries across the Americas, APAC and EMEA. Companion survey findings are based on responses from 1,012 U.S. consumers (over 18) fielded between September 23 and October 1.
Photo courtesy Target