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Predictions Series: Adobe Forecasts Record $207 Billion Holiday Season Online Sales in the US, $910 Billion Globally

As per Adobe, the upcoming holiday season would be the best time of the year for e-commerce companies. Holiday Season Online Sales in the US is expected to touch a record-breaking figure of $207 billion in the US and over $910 billion globally.

Today, Adobe released its online shopping forecast for the 2021 holiday season online sales period. The insights covers for the holiday shopping online sales figures between Nov. 1 and  Dec. 31).

As part of the Adobe Digital Economy Index, Adobe provides a comprehensive view of the US and global e-commerce by analyzing direct consumer transactions online. Based on Adobe Analytics data, the analysis covers over one trillion visits to U.S. retail sites, 100 million SKUs, and 18 product categories, with global views based on transactions in over 100 countries across three regions—more than any other technology company or research organization.

Adobe expects U.S. holiday sales online to hit $207 billion from Nov. 1 to Dec. 31, setting a new record. This represents a 10% 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% growth year-over-year (YoY). Adobe expects over $4 Trillion ($4.1T) to be spent globally in all of 2021—a new milestone for e-commerce.

In the U.S., as e-commerce becomes more ubiquitous, the major shopping days are losing prominence. Cyber Week (Thanksgiving through Cyber Monday) is expected to drive $36 billion in online spending—17% of the entire holiday season. The growth is slowing, however, coming in at just 5% YoY for the 5-day period (less than the season overall at 10% YoY). Adobe expects Cyber Monday to drive $11.3 billion (up 4% YoY) and remains the biggest day of the season (and year), with Black Friday coming in at $9.5 billion (up 5% YoY) and Thanksgiving at $5.4 billion (up 6% YoY). All three major shopping days are growing less than the season overall.

Supply Chain Challenges To Impact Holiday Shopping Season

Surging consumer demand for online shopping is happening as retailers contend with dire 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 (Jan 2020), the prevalence of out-of-stock messages has risen a whopping 172% 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.

Top E-commerce Trends: How E-commerce Growth Stems From a Customer-Centric Approach

A weakened supply chain is also driving up prices online. Adobe expects U.S. consumers will pay 9% 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% to 25% range across categories this season, compared to a historical average of 10% to 30%. 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% going into the holiday season (Sept 2021). In past years, online prices were down 5% 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% YoY (Sept 2021).

“We are entering a second holiday season where the pandemic will dictate the terms,” said Patrick Brown, vice president of growth marketing and insights, Adobe.

Patrick added, “Limited product availability, higher prices, and concerns about shipping delays will drive another surge towards e-commerce, as it provides more flexibility in how and when consumers choose to shop.”

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Insights on discounts, as well as the 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 for instance, will peak at 22% for the season, down from 27% in 2020. Other categories include computers at 25% (vs 30% in 2020), televisions at 15% (vs 18%), appliances at 16% (vs 20%), toys at 16% (vs 19%), sporting goods at 14% (vs 20%), apparel at 15% (vs 20%), furniture at 7% (vs 9%), and tools at 8% (vs 11%).
  • When to Shop: In an Adobe survey of over 1,000 U.S. consumers, 67% are concerned about gifts being more expensive this year. While seasonal discounts are expected to start this month (Oct) in the 5% to 15% range, as retailers look to manage supply chain challenges, the biggest discounts (5% to 25% range) are still expected to happen around Thanksgiving and Cyber Monday. Certain categories like electronics for instance 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 more: 

  • Buy Now Pay Later: Consumers are embracing new payment methods like Buy Now Pay Later (BNPL) as a way to free up cash this holiday season. Online revenue from BNPL this year has been 10% higher than 2020 and 45% 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% YoY to $225. In the Adobe survey, 25% of respondents said they have used BNPL in the last 3 months, with apparel (cited by 43%), electronics (33%), and groceries (30%) as the top categories.
  • Curbside Retakes Spotlight: In December 2020, curbside pickup was used in 25% 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% of shoppers are concerned about shipping delays this year. Adobe expects curbside pickup to peak from 12/22 to 12/23 (right before Christmas Eve) at a record 40% of all online orders, while remaining at 25% through November 2021.
  • PREDICTIONS-SERIES-2022Most 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 and sit in front of laptops for work, growth of smartphone driven shopping has hit a ceiling. Adobe expects smartphones to account for 42% of overall revenue this season ($86 billion), a modest 5% 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 70-79 inch range hit 22% of sales in 2020, up from 16% in 2019 and 9% in 2018; 80-inch (and larger) sets hit 3% of sales in 2020, up from 1% in 2019 and 1% in 2018.
  • Shopping Frenzy: On average, a consumer in the U.S. will spend 12 full 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 just 4 hours, 50% 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%) plan to purchase physical goods as gifts for others this holiday season, nearly one-fifth (17%) plan to gift an experience instead. Top categories include spa treatments (cited by 25%), concert tickets (25%), sporting event (22%), plane tickets (21%), and cooking classes (16%).

Methodology: The Adobe Digital Economy Index offers the most comprehensive set of insights of its kind, 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—more than any other technology company or research organization. Global views are based on transactions in over 100 countries across Americas, APAC and EMEA. Companion survey findings are based on responses from 1,012 U.S. consumers (over 18) fielded between Sept. 23 and Oct. 1.

[To share your insights with us, please write to sghosh@martechseries.com]

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