Online retailers haven’t waited until Black Friday to offer consumers hefty discounts, especially in categories like toys and electronics. Those deals likely are depressing average order values and possibly total sales.
Purchases from web retailers totaled $64.59 billion from Nov. 1-21, up only 0.1% from the same period of 2021, says the Adobe Analytics arm of software firm Adobe Inc. But, reflecting the strong online shopping growth during the pandemic, that’s up 67.1% from the same period in 2019. Adobe bases its estimate on sales from its e-retailer clients, which the company says includes 85 of the 100 leading online retailers in North America according to Digital Commerce 360.
Another tech provider with a different client base, however, says it’s seen higher online sales this month. Signifyd, which provides fraud prevention services to online retailers, estimates web sales for its clients are up 11.5% from Nov. 1-22.
Both companies report heavy discounting. Adobe says discounts on toys peaked at 30% compared to list price in early November, and online toy sales during that period rose 172% compared to October. Discounts averaged 22% in electronics, 14% for computers, 13% for appliances and televisions, 12% for apparel, 8% for sporting goods and 4% for furniture. Adobe projects steeper discounts over the five-day Cyber 5 period from Thanksgiving Day through Cyber Monday.
Signifyd says the use of discount codes with online orders is up 60% compared to last year, and that average order value from Nov. 1-22 is down 10.4% compared to last year. That could reflect heavy discounting or shoppers trading down to lower-cost items.
Despite essentially no year-over-year growth in early November, Adobe says the online sales results show consumer resilience in the face of such economic headwinds as inflation and rising interest rates.
“We are beginning to see the impact of earlier holiday deals, as retailers contend with oversupply and a softening spending environment,” says Vivek Pandya, lead analyst at Adobe Digital Insights. “Ecommerce has remained resilient thus far per Adobe Analytics, a strong start to the season as we look towards Cyber Monday, which is expected to set new records for online shopping.”
Online sales growth projected for Cyber 5
Adobe projects consumers will spend $34.8 billion online in the five-day period from Thanksgiving through Cyber Monday, up 2.8% over last year and representing 16.3% share of e-retail sales for November and December. Cyber Monday will be the biggest shopping day, bringing in $11.2 billion, an increase of 5.1% over 2021, Adobe says. But the firm projects Black Friday online sales will be up only 1% to $9 billion and that Thanksgiving Day will be down 1% at $5.1 billion.
Signifyd predicts for the week around Thanksgiving will account for 19% of online retail sales this year, versus 21% last year. It projects total sales will increase 8% over 2021 but that order volume will grow only 5%, an indication that prices overall will be higher. This would not be surprising given that inflation for the 12-month period ending October 2022 was 7.7%.
One indication of solid online growth ahead: A survey by payments company Klarna, 73% of U.S. consumers say they will shop more online this holiday season than they did last year. 68% say web shopping saves them time, 64% say there is a wider selection and 57% that prices are lower. However, 54% say shopping in physical stores is a better overall experience.
Digital Commerce 360 predicts online sales will increase 6.1% this holiday season versus 2021.
Mobile accounts for half of holiday retail ecommerce
Both Adobe and Signifyd agree that consumers are making at least half their online purchases via mobile devices. Adobe says mobile accounted for 52.6% of sales so far and Signifyd 50%. While Signifyd says the mobile share is essentially unchanged from the same period last year, the percentage of sales attributed to mobile apps ticked up to 6.2% this year from 4.3% in 2021.
However, consumers convert at a higher rate and buy more items on desktop, Adobe says. For example, on Veterans Day, a holiday when many retailers offered deals, the conversion rate was 4.3% on desktop and 2.1% on mobile. One reason is that consumers often use their smartphones when in stores to research products and compare prices: In the Klarna survey, 33% of U.S. consumers said they always do that and another 41% that they sometimes do.
The average number of items in an online order on Veterans Day was 3.7 on desktop, 2.8 on smartphone and 2.7 on tablet, Adobe says.
Online grocery and luxury sales grow during the holiday period
Other data reported by Signifyd shows:
- Online sales growth is strongest in the grocery category so far this November, up 30% over last year. Luxury goods are up 23%, general merchandise 16% and apparel, accessories and luggage 12%.
- Average order value is up 11% in the beauty and cosmetics and leisure and outdoor categories, but only 4% in apparel, accessories and luggage.
- Fraud pressure, defined as orders deemed very risky by Signifyd, is up 43%, with the largest increases in collectibles and luxury goods.
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