It was a peak on top of a peak. For retailers, the stakes were high this holiday season as they faced unprecedented ecommerce demand from consumers who were anxious about visiting stores for their gift buying in a raging pandemic, while also grappling with low inventory levels and overburdened shipping carriers. But expectations largely were met. And the November-December period further extended massive gains made in digital retail throughout 2020.
U.S. shoppers spent $201.32 billion online during the season, up an enormous 45.2% from $138.65 billion in 2019, Digital Commerce 360 estimates. That’s more than triple the year-over-year growth rate during the holidays for the year prior, when web sales grew at a rather sluggish 13.6%.
COVID-19-related shifts in buying behavior translated into an additional $41.54 billion in digital revenue for November-December, according to Digital Commerce 360. If online holiday sales had accelerated at a more typical seasonal growth rate—a median 15.2% over the prior five years—revenue wouldn’t have reached 2020-estimated levels until 2022. A normal, pandemic-free holiday in 2020 likely would have resulted in consumers spending about $159.78 billion on the web.
Similarly, the coronavirus caused a big boost in digital penetration, jumping years ahead of the trend line. Online’s share of total retail sales in November-December soared to 25.7%, up from 19.2% in the year before, according to Digital Commerce 360. That means more than $1 in every $4 spent on retail purchases during the holidays came from online orders in 2020. This is the highest-ever ecommerce penetration and an enormous 6.5 percentage point gain in one year’s time—more than triple the highest gain of the prior five holiday seasons.
Typically, penetration increases by about 1-2 percentage points year over year, and anything surpassing 2 percentage points is noteworthy. Had the digital share of total retail sales advanced in the usual, more incremental manner—a median 1.4 percentage points over the last handful of years—penetration wouldn’t have hit 25.7% until 2024.
Holiday sales through all channels reached $784.40 billion, a sizable 8.5% lift from $722.98 billion in 2019, according to a Digital Commerce 360 analysis of U.S. Department of Commerce data. Ecommerce gains were enough to entirely offset declining store sales and still propel overall retail growth for the season—at the second-highest growth rate going back to 1992, the first year for which Commerce Department data is available. Digital Commerce 360’s calculation of total retail sales excludes purchases in segments that don’t typically sell online such as restaurants, bars, automobile dealers, gas stations and fuel dealers.
Here are five reasons why Digital Commerce 360 landed on our market estimates for the holidays:
1. Traffic and conversion rates jump
Online retailers ranked in the 2020 Digital Commerce 360 Top 1000, as well as the Next 1000 mid-market players collectively, saw visits to their ecommerce sites increase by 35.7% year over year for November-December, according to a Digital Commerce 360 analysis of data from site traffic tracker SimilarWeb.
The spike in traffic was largely driven by consumers who had discomfort with crowded, public spaces amid a rise in the number of COVID-19 cases in the U.S. and turned online in greater numbers to shop for holiday gifts. But the traffic spike’s impact on digital revenue was magnified by higher conversion rates during the season.
Data from research firm Adobe Analytics, the data insights arm of software company Adobe Inc., shows a 9% lift in conversion rate compared with the holiday period in 2019, meaning each site visit was more lucrative for retailers. Revenue per visit during the holiday period jumped 10% versus 2019 even though the average order value remained relatively flat, the firm also reported. Adobe’s analysis is based on more than 1 trillion visits to more than 4,500 retail sites and measures transactions from 80 of the top 100 online retailers ranked in the Top 1000.
2. Shipment volume surges during holidays
In November and December, retailers working with last-mile technology vendor Convey shipped 31.0% more than the same holiday period in 2019, when shipment volume jumped by a more modest 14.2% year over year. Convey’s data is based on tens of millions of packages shipped from more than 500,000 U.S. locations across the company’s client base of 130 retailers, which include The Home Depot Inc. (No. 5 in the Top 1000), Neiman Marcus (No. 40) and Eddie Bauer LLC (No. 137).
While 31.0% growth in shipments is notably lower than the 45.2% online holiday sales growth Digital Commerce 360 estimates, it’s important to note that Convey’s data doesn’t capture shipments from web giant Amazon.com Inc. (No. 1), which always is a leader and experienced significant growth for the season. In fact, more than one-third—37%—of consumers said they bought mostly from Amazon while 44% reported increasingly searching for products on Amazon last year, according to a Digital Commerce 360 and Bizrate Insights post-holiday survey of 1,137 shoppers in January.
3. Big retailers report big online seasonal showing
Amazon reported a record-breaking holiday season, although the retailer did not disclose overall sales or growth for the period. While consumers started holiday shopping earlier this year both because Amazon’s annual summer Prime Day sale was delayed until October and it debuted “Black Friday-worthy” promotions in October and early November, Amazon said there was still strong demand over Cyber 5, the period from Thanksgiving through Cyber Monday.
Amazon attributed much of its success for the five-day period to consumers’ desire to support small businesses that have been hard hit during the pandemic. Independent retailers selling on Amazon—which the company says are nearly all small to medium-sized businesses—had their best-ever Black Friday and Cyber Monday, according to Amazon. Third-party marketplace sellers surpassed $4.8 billion in worldwide sales from Black Friday through Cyber Monday, a more than 60% year-over-year increase from the same holiday weekend in 2019, according to Amazon. And sellers collectively grew global sales by more than 50% for the entire season.
Yet, many of these third-party merchants use the Fulfillment by Amazon program, or FBA, which handles warehousing and shipping on behalf of participating sellers. And so the growth in the number of marketplace shipments would further amplify trends seen in Convey’s shipment data.
A number of other large retailers saw impressive holiday numbers as well. Victoria’s Secret, the L Brands Inc.-owned lingerie chain (No. 27), reported online holiday sales were up 24% year over year. And while Lululemon Athletica Inc. (No. 54) didn’t share specifics on its holiday period, the sportswear brand said it’s now expecting fourth quarter sales to come in at the high end of its prior outlook thanks to a strong performance during a season in which digital investments paid off.
Target Corp. (No. 12) reported digital sales grew 102% year over year for the November-December holiday period, with the curbside pickup program seeing a more than 500% surge. The explosion in consumers using retailers’ omnichannel offerings to avoid exposure to crowds was one of the big headlines in 2020, and the holidays were no exception. During the November-December season, an average of one in four orders was fulfilled using the buy online pick up in store, or BOPIS, option for retailers offering the feature, according to Adobe. That was up 40% from about 18% in 2019.
Additionally, retailers that offered curbside and other omnichannel options grew almost twice as fast as those that didn’t, according to data from software provider Salesforce.com Inc. On average, U.S. retailers with omnichannel options increased digital revenue by 49% year over year while retailers without them only grew online sales by 28%. Omnichannel retailers also boosted digital revenue by 54% year over year in the five days leading up to Christmas versus 34% growth for retailers without those pickup features.
The performance of those at the top is important because this group has a disproportionate effect on the showing of the overall ecommerce market. Large retailers raking in $1 billion or more in annual online revenue grew their share of total holiday revenue over smaller retailers that sell $10 million-$50 million annual, according to Adobe data. During November-December, large retailers received a 110% boost to daily sales versus October and had an average 5% conversion rate to smaller retailers’ 3%.
4. Cyber 5’s sales growth subdued but early spending boosts season
Retailers offered earlier and longer promotions to encourage a jump start on holiday shopping and minimize the strain on fulfillment networks. While that diminished the impact of the traditional Cyber 5 spending frenzy on the overall season, it was still a banner year.
U.S. shoppers spent a record $34.36 billion on retail websites over the five-day period, up 20.6% from $28.49 billion for the same period the prior year, according to Adobe. But digital revenue missed projections as shoppers heeded retailer warnings to shop earlier to avoid out-of-stock items or shipping delays and took advantage of pre-Thanksgiving discounts, softening Cyber 5 sales.
The holiday season extended back into October more dramatically than ever with the unofficial kickoff during Prime Day. Long-running Black Friday preview deals and “Cyber Days” discounts that were promoted long before Thanksgiving cut into gains for big retail days like Cyber Monday. On Oct. 13, nearly a quarter—24%—of the top 100 online retailers ranked in the Top 1000 promoted holiday shopping on their sites, according to an analysis of data collected by Digital Commerce 360 researchers. That was roughly six weeks before Cyber 5 and more than two months before Christmas. By Nov. 23, 76% of the top 50 retailers in the Top 1000 offered Black Friday deals—four days before the actual retail holiday.
The early push worked. More than half of all holiday shoppers—over 52%—said they took advantage of early seasonal sales, according to a National Retail Federation survey of 6,615 consumers conducted over Cyber 5 by research firm Prosper Insights & Analytics. For Nov.1-19, digital revenue increased a notable 29% over the same time frame in 2019, according to Adobe. And online sales early in the week of Thanksgiving grew at an impressive rate for non-traditional retail days: 72% year over year on Tuesday, Nov. 24, and 48% on Wednesday, Nov. 25, according to Salesforce data.
This all led to a spreading out of sales during November-December. And Cyber 5’s share of digital sales over the entire holiday season decreased to 17.1% in 2020 from 20.5% in 2019, according to Digital Commerce 360 estimates.
5. Other ecommerce sales data points to a momentous year
Research firms, payment companies and technology providers with insight into online transactions have reported a variety of ecommerce growth figures for the 2020 holiday period, and Digital Commerce 360’s estimated 45.2% falls within the same range.
U.S. ecommerce sales received a 32.2% boost for November-December, according to Adobe. Seasonal ecommerce growth registered 47.2%, according to data from Mastercard SpendingPulse, which defines the holiday period as Nov. 1-Dec. 24. SpendingPulse reports are based on aggregate sales activity in the Mastercard payments network plus survey-based estimates for other payment forms.
Salesforce estimated holiday sales rose 43.0% year over year for the overall market. The company aggregates data from the activity of more than 1 billion global shoppers flowing through its Commerce Cloud platform and extrapolates its clients’ findings to the broader retail industry. Digital sales for Commerce Cloud clients spiked a massive 76% for the same period.
Percentage changes may not align exactly with dollar figures due to rounding.
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