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Two Seasons in One: Digital Holiday Sales Could Leap 47%

The wave of e-commerce growth throughout the Covid-19 pandemic isn’t slowing down this holiday season, with Adobe Analytics predicting that U.S. online peak-season sales will have two years of growth packed into one in 2020. Digital sales are expected to jump 33 percent to $189 billion, but these are just the low-end projections.

If consumers receive another round of stimulus checks and physical stores need to be shut down again in large parts of the country in the wake of the second wave of the virus, shoppers expected to spend an additional $11 billion online, surpassing a total of $200 billion. This could mark a whopping 47 percent year-over-year jump in total digital sales.

As expected, online’s leap will trickle down to mobile, with U.S. shoppers expected to spend $28.1 billion more on their smartphones than they did last year, accounting for 42 percent of all online sales and marking a 55 percent increase year over year.

The projections are based on Adobe Analytics’ analysis of more than 1 trillion visits to U.S. retail sites and 100 million SKUs from 80 of the 100 largest U.S. retailers.

‘Cyber Week’ becomes ‘Cyber Month’

In tune with holiday sales creeping earlier into October, and particularly the success of Prime Day, what was initially called “Cyber Week” in November appears to be taking over the entire month.

From Nov. 1-22, leading up to the Thanksgiving weekend, Adobe predicts that consumers will spend $56 billion, a 37 percent increase from the year-ago period. Online sales will surpass $2 billion every day between Nov. 1-21 and increase to $3 billion a day Nov. 22 to Dec 3.

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And although the whole month of November is getting a boost, Black Friday online sales are still projected to increase 39 percent to $10 billion, while Cyber Monday will  remain  the  biggest online shopping day of the year with $12.7 billion, a 35 percent jump.

Black Friday will be the best day for apparel shoppers looking for an online discount, with the average price dipping as much as 30 percent on the day.

Amid concerns around shipping delays, product demand and the uncertain economic environment, as many as 33 percent of consumers plan to have their holiday shopping complete by Black Friday.

But it appears there’s still a dichotomy in shoppers’ preference for spending during the season. Even with this early start, an NPD Group survey says that 52 percent of U.S. consumers plan to start their holiday shopping on Thanksgiving Day or later.

Smaller retailers get chance to outperform retail titans online

While many larger retailers have fared better during the Covid-19 pandemic, particularly if they were labeled essential and didn’t have to shut down their stores, smaller retailers that take in between $10 million and $50 million in annual online revenue will see a bigger boost to their digital sales (a 107 percent increase) compared to their much larger counterparts, according to Adobe Analytics.

The firm says that large retailers with an annual online revenue of more than $1 billion will have an 84 percent boost.

More than half (51 percent) of consumers plan to support small and local retailers on Small Business Saturday, while 38 percent plan to shop at smaller retailers throughout the season.

Although overall online shopping is expected to skyrocket, NPD says consumers plan to spend an average of $691 this holiday season overall across channels, which is less than last year’s anticipated holiday spending, but on par with 2018 plans. The number of those who plan to spend the same amount they did last year declined by 11 points compared to last year, mostly in favor of those who plan to spend less.

Free shipping is more important amid online shopping surge

The NPD Group survey and the Adobe data appear to be in alignment on the state of shipping as the holiday season forges ahead and more shoppers prefer buying online. Adobe says that 64 percent of consumers say they’re not going  to  pay for expedited shipping this year, signaling to retailers that free shipping cut-off dates  need to be communicated  early. The company says that retailers will offer the cheapest shipping options on Dec. 1, the day after Cyber Monday.

Additionally, the firm estimated that the “Spend X to get free shipping” threshold was down 4.1 percent overall during the holiday season, suggested retailers understand that more shoppers expect the free shipping without the high price requirement.

And NPD indicated that for the first time, free shipping was identified as the No. 1 factor influencing where consumers decide to shop this holiday.

As shoppers look to be frugal on shipping, they are more likely to recover their orders in other ways. Buy online, pick up in store (BOPIS) and curbside pickup will  have  over 40 percent  more orders  compared to 2019, Adobe Analytics said. As people panic buy the week leading up to Christmas, BOPIS is expected to top 50 percent of  all  orders at retailers that offer the function.

Shoppers are 9 percent more likely to buy at retailers offering services like BOPIS and curbside pickup on big sale days, while 19 percent of these shoppers are choosing these pickup options to be conscious of their health and safety—a significant jump over the 4 percent that said so in 2019.

Election, economic uncertainties could make holiday impact

Beyond retail operations, this year’s holiday season comes in the midst of a presidential election, which could potentially have an impact on seasonal sales. From Nov. 1-7, retail will reel in $16.3 billion in online sales, according to Adobe. But on Nov. 4, the day after the election, online sales will grow 11 percent slower than the growth that takes place throughout the full week.

Up to 26 percent of consumers say that the outcome of the election will affect their holiday spending. There’s precedent for this: based on past elections, online sales were negatively impacted after the outcome was known. Online sales were down 14 percent the day after the 2016 election, and online sales dropped by 6 percent  the day after the 2018 midterm election.

Retailers remain confident for the most part, with 63 percent believing that consumers will be more confident in spending after the presidential election.

In line with the uncertainty of the election, concern about the state of the U.S. economy is a contributing factor to consumers’ spending intentions. The NPD Group survey says that 57 percent of shoppers rate the state of the economy poorly (a big jump from 37 percent last year), and 30 percent say they will spend less because of the state of the economy (up from 23 percent in 2019).

On the flip side, consumer feelings about their personal financial situation have not changed since 2019, and 29 percent will spend more because they have fewer expenses related to travel and dining out as part of the current pandemic-induced departure from experiences.

“Through much of 2020, retail spending, as a whole, has not seen the big declines expected, pointing to the consumer’s willingness to spend despite economic uncertainty,” said Marshal Cohen, NPD’s chief industry advisor, retail. “This year consumers appear to have more interest in ‘retail therapy’ and an aspiration to return to normalcy. We also know that, historically, consumers are pre-conditioned when it comes to holiday shopping behaviors, which means even the best promotions won’t drastically alter the core trends of the season.”