Online Shopping Dominates Holiday Sales Results so Far

Online holiday spending jumps nearly 5% to record, Adobe Analytics says

E-commerce experienced a significant surge during the holiday season, with online spending increasing by 4.9% compared to the previous year, reaching a record high.

Online holiday spending jumps nearly 5% to record, Adobe Analytics says

Shoppers took advantage of discounts and increasingly relied on buy now, pay later options to finance a larger portion of their purchases, according to Adobe Analytics.

Adobe reported that sales on retailers' websites and apps reached $222.1 billion between November 1 and December 31.

The data, which encompasses over 1 trillion visits to U.S. retail websites, 100 million unique items, and 18 product categories, highlights a shift in spending trends, with a focus on more purchases rather than higher prices this year, as noted by Adobe.

Prices in various online product categories, including electronics, have been consistently decreasing. According to Adobe's Digital Price Index, which monitors online prices across 18 product categories, e-commerce prices experienced a year-over-year decline of 5.3% in December, marking a continuous downward trend that has persisted for over a year. Notably, if Adobe accounted for inflation, online consumer spending would have shown even greater growth during the holiday season.

Robust spending during the crucial season may signal positive outcomes for Walmart, Amazon, Target, Macy's, and other retailers, provided they managed to capture a substantial portion of those expenditures. The beginning of February marks the start of the fourth-quarter earnings season for most major retailers, and these financial reports will provide a more definitive insight into which companies were preferred by gift givers and party hosts.

While robust online holiday sales are evident, it doesn't necessarily guarantee that consumers will continue to spend liberally in the new year. Some individuals may have exceeded their budgetary limits during the peak shopping season and might curtail their spending in the upcoming months as they face the consequences of accumulated bills.

A contributing factor to the substantial spending in November and December was the prevalence of significant discounts. Adobe discovered that the levels of discounts reached unprecedented highs during the holiday season.

Illustratively, in the electronics category, discounts reached a pinnacle of 31% off the listed price, surpassing the peak of 25% observed during the 2022 holiday season. Similarly, price reductions reached a maximum of 24% for apparel, exceeding the peak of 19% recorded during the holidays in 2022.

Cyber Week, spanning the five days from Thanksgiving to Cyber Monday and renowned for its enticing deals, contributed $38 billion to online holiday sales, representing almost one-fifth of the total expenditure in November and December. The spending during this promotional period witnessed a year-over-year increase of 7.8%.

During this holiday season, the buy now, pay later financing option, which has become increasingly accessible on retailers' websites, experienced heightened popularity. Provided by companies such as Affirm and Klarna, these payment plans enable shoppers to settle their purchases through smaller installments over an extended period.

The utilization of buy now, pay later reached a record high, contributing $16.6 billion to online spending during the holiday season, as revealed by Adobe. This marks a 14% increase compared to the same holiday period the previous year.

Additionally, other holiday spending figures have surpassed initial expectations. Preliminary data from Mastercard SpendingPulse indicates a 3.1% year-over-year increase in retail sales during the holiday season, excluding automotive sales, in the United States. The company assesses both in-store and online retail sales across various payment methods, and its total is not adjusted for inflation.

According to Mastercard, online retail sales saw a 6.3% year-over-year increase, surpassing the 2.2% growth observed in in-store spending. However, it's worth noting that online shopping still constitutes a smaller proportion of the total holiday spending landscape.