After an unprecedented surge in digital holiday sales in 2020, U.S. consumer spending online is set to grow a far more modest 12.1% year over year this 2021 holiday season, Digital Commerce 360 projects. Limited inventory, rising costs that are being passed onto shoppers, and earlier holiday marketing in September and October will all work to temper gains during retail’s busiest time of year.

Digital revenue for the all-important November-December period is expected to surpass the $200-billion mark for the first time—reaching $215.45 billion in ecommerce sales, Digital Commerce 360 estimates. That’s up from a revised $192.19 billion over the same two months in 2020.

Retail sales through all channels—including physical stores—are likely to rise 9.4% for the season, Digital Commerce 360 estimates. Shoppers will spend $843.24 billion overall, up from a revised $771.06 billion last year, according to Digital Commerce 360. The digital share of total retail sales will hit 25.5%, meaning more than $1 in every $4 spent on retail purchases during the 2021 holiday season will come from online orders.

Modest online holiday growth still noteworthy given last year’s gains

Ecommerce sales growth will decelerate significantly from last year. In 2020, seasonal ecommerce spiked by a record 40.8%, Digital Commerce 360 estimates. That’s more than three times the rate that’s predicted for this year. If the 12.1% uptick plays out in 2021, it would be the lowest holiday growth since pre-2015, but that context can be misleading.

The fact that the industry would be achieving healthy growth on top of the historic jump last year is noteworthy. In the first pandemic holiday, shoppers turned to the web in response to a variety of realities: Some stores were closed, others operated with capacity constraints and there wasn’t a sufficient number of products on shelves. New online shoppers flocked to ecommerce sites and often tested out omnichannel services for the first time to avoid crowds, track down out-of-stock items or ship gifts to loved ones who weren’t able to gather.

This year, Digital Commerce 360 anticipates that online retailers will maintain gains from a lot of those changed behaviors and capture even more dollars. But, it will be a more moderate increase as ecommerce growth has tapered off more recently in 2021, so there’s less momentum heading into November.

Online penetration to build on 2020’s record jump

Historically, Q4 has the highest penetration of any quarter in a given year—boosted by Cyber Monday sales and the like. So, digital’s share of total retail sales is already at an elevated state for the November-December holiday season. Penetration changes are usually incremental, and anything around a 2 percentage-point gain from one year to the next is a huge deal. In pandemic-fueled 2020, holiday penetration jumped nearly 6 percentage points—to 24.9% from 19.2% in 2019. Digital Commerce 360 expects that penetration will hold and only inch up—less than 1 percentage point—to cross the 25% threshold this year.

Part of the reason why there won’t be a bigger uptick in penetration is that total retail sales through all channels are growing at a similar pace, so that doesn’t allow ecommerce to gain much share. The anticipated 9.4% holiday jump, which is very robust for total retail, is an increase over last year’s 8.4%. But that bump is largely driven by record surges in offline sales, which have staged a big recovery so far this year as vaccinated shoppers head back to stores. Digital Commerce 360 predicts store and other offline sales will increase by 8.5%—a massive jump compared with offline revenue remaining flat during the 2020 season.

How Digital Commerce 360 derives holiday projections

The Digital Commerce 360 research team examines a variety of factors when considering how the market might perform in the future. We’ve done extensive analyses of historical online and in-store spending behavior, and we followed how digital’s share of total retail has trended. We studied the year-to-date performance of the overall market, using retail data from the U.S. Department of Commerce as well as individual public online retailers. Additionally, we used the following insights to inform our numbers: traffic patterns to ecommerce sites, shipment volume, discounting levels, recent shifts in pricing and average order value, retailer and consumer surveys, consumer confidence indices, editorial interviews, holiday marketing that we track and more.

Here are five insights that contributed to Digital Commerce 360’s holiday projections: …


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