U.S. consumers are set to spend a record $38.21 billion online during the five-day stretch from Thanksgiving to Cyber Monday, Digital Commerce 360 projects. This is up from $28.33 billion in 2019 and would be a huge 34.9% year-over-year jump in digital revenue for the biggest U.S. retail weekend of the year. That’s nearly double the 18.4% spike for the same period in 2019.
With the coronavirus pandemic causing many stores to close on key shopping days as retailers grapple with how to limit crowds on other high-traffic dates to avoid spreading the virus, shoppers will have both the time and inclination to seek deals from the safety of their couches this year.
Nearly $1 in $3 spent over the five-day period—coined Cyber 5—will come from online purchases, according to Digital Commerce 360 estimates. Consumers have always turned to the web in greater numbers during Q4 versus other quarters or years overall, and that shopping pattern magnifies during the November-December holiday period. Historically, online penetration is even further amplified during Cyber 5, and the realities of shopping amid 2020’s pandemic will result in an enormous hike: skyrocketing to 32.1% ecommerce penetration from 23.8% in 2019. That’s also higher than the upwardly revised 28.8% penetration for the overall 2020 holiday period.
While these are all astronomical jumps—especially given that no quarter or overall year increased penetration by even 2 percentage points year over year prior to 2020—they make sense given the context. In Q2, during the peak of the first pandemic wave, online penetration increased a gigantic 6.1 percentage points over the prior second quarter. And medical experts warn that current conditions are painting an even grimmer picture heading into the holidays with a more ferocious second wave of the virus, making it likely that ecommerce will benefit in an even bigger way.
The dramatic shift in buying behavior will lead to a $4.88 billion pandemic-fueled boost to ecommerce sales for the long weekend. Had digital revenue grown at normal seasonal rates, Cyber 5 web sales would not have reached this year’s predicted level until 2021.
The fastest-growing day for the period will be Thanksgiving, which will increase its smaller weekend revenue by 40.1% year over year to reach $5.86 billion in online sales, Digital Commerce 360 predicts. But the big story will be Black Friday when ecommerce will grow 38.5% over 2019 to hit $10.23 billion. Cyber Monday will still reign supreme, remaining the biggest online shopping day of the year with $12.16 billion and registering 29.8% growth.
Here are five reasons why projections shaped up the way they did:
1.) Election distractions derailed early digital spending.
Online sales were off to a slow start in November, negatively impacted by the chaos surrounding the presidential election. People were largely distracted following results and related news for prolonged periods of time rather than concentrating on gift lists.
U.S. consumers spent less early in the month before ecommerce began to ramp up again, according to data from Adobe Analytics, the data insights arm of software company Adobe Inc. On Nov. 4, digital revenue declined 12% versus the three days prior, and spending on Nov. 5 was down 2% year over year. By Nov. 6, online sales increased 9% versus the same day in 2019, and spending rose 11% year over year on Nov. 7. That was significantly slower than the mid-30% to upper-40% growth range for the November-December holiday season that was projected by a number of research firms, including Digital Commerce 360.
After the election was called for President-elect Joe Biden on Nov. 7, Adobe data showed a rebound in consumer spending online. On Nov. 8, digital revenue received a 26% year-over-year uptick. The upward trajectory continued on Nov. 9, with ecommerce sales up 24% year over year. And Nov. 10 online sales got a 27% jump from the same day in 2019. From Nov. 1-Nov. 10, consumers spent $21.7 billion online, up 21% from the same period in the prior year, according to Adobe. The momentum has carried on through Nov. 19, with season-to-date digital revenue reaching $46.0 billion, a 29% boost from $35.8 billion for the same time frame in 2019, the firm reports. Adobe’s data is based on transactions from more than 1 trillion anonymous online visits to retail sites, including 80 of the top 100 retailers in the Digital Commerce 360 Top 1000.
This all means shoppers are scurrying to make up for lost time, and there will be more holiday dollars to spend later in November—including Cyber 5 weekend. Digital revenue has been swelling at higher rates as the month goes on, and that bodes well for online retail’s performance in the next week.
2.) New demographics are shopping online with plans to spend more this season.
The pandemic has forced at-risk groups like senior citizens, who are typically less likely to shop online, to get comfortable placing orders on the web. Online data collection provider Luminati Networks and market research firm Vanson Bourne conducted a survey of 2,000 shoppers evenly split between the U.S. and U.K. and found a giant shift in the buying behavior of consumers age 65 and over. The share of seniors that do a majority of their shopping online more than doubled to 39% this year from 15% last year.
And Baby Boomers are the biggest spenders, according to a survey of 1,010 consumers conducted by researchers at professional services firm PwC. On average, consumers in this group plan to spend $1,454 on holiday shopping this season—roughly $150 more than millennials, who were the second-highest spenders at $1,307. Given that most of this shopping will occur online, it stands to reason that this will give ecommerce and online penetration a sizable bump—especially since Boomers account for about a quarter of the adult population in the U.S.
What’s more, digital revenue from new customers overall increased more than 49% year over year since April 1 for larger retailers and 65% for smaller merchants, Adobe says. And during big retail days including Thanksgiving, Black Friday and Cyber Monday, brands will see a 50% uptick in online spending from new customers, the firm notes.
Across new and repeat shoppers, more than a quarter—28%—plan to spend more on online holiday purchases this year compared with the 2019 season due to COVID-19, according to a fall survey of 2,042 U.S. shoppers by on-demand pay platform DailyPay and market researchers with The Harris Poll. That’s a higher share than those who plan to spend less.
3.) Consumers still prefer Cyber Monday for online shopping.
More than half of consumers—53%—plan to shop on the web on Cyber Monday, according to a Digital Commerce 360 and Bizrate Insights survey of 1,000 online shoppers in September. That’s higher than the 47% share of consumers who reported they’ll be taking advantage of online Black Friday promotions, although that number has likely increased more recently with the news of dramatic surges in COVID-19 infection rates across the U.S. Cyber Monday’s share is also substantially higher than the 15-30% who plan to shop on any other day during Cyber 5.
This year, Black Friday will achieve higher dollar gains in online sales over last year than its Cyber Monday counterpart—$2.84 billion for the former and $2.79 billion for the latter—and continues to close in on the historical winner as retailers extend more Black Friday sales to their ecommerce sites. Black Friday will make the largest gain in share of Cyber 5 sales, up to 26.8% from 26.1% in 2019. Cyber Monday will lose the largest share for any day during the holiday weekend, dropping to 31.8% from 33.1% last year.
4.) Thanksgiving is canceled, and in-store doorbusters aren’t as tempting.
Given how alarming the rate of the coronavirus spread has been in this new wave, the CDC is strongly encouraging families to skip traditional Thanksgiving gatherings and celebrate just with those in the same household. Plus, a notable number of large retail chains decided to remain closed for the holiday this year.
Walmart Inc. (No. 3 in the Top 1000), Target Corp. (No. 12), Best Buy Co. Inc. (No. 10), The Home Depot Inc. (No. 5), Kohl’s Corp. (No. 21), Dick’s Sporting Goods (No. 43), Ulta Beauty (No. 67) and others have announced their doors will be closed on Thanksgiving. Shoppers who visited stores on the holiday in prior years will have to rely instead on ecommerce sites to score limited-inventory items—another reason why Thanksgiving will be the fastest-growing day for online sales during Cyber 5.
Black Friday also will face a drastically different landscape this year. 88% of consumers say they will not shop the traditional in-store doorbuster deals this year, and Black Friday shopping will occur mostly online, according to data from multiple surveys of thousands of U.S. consumers in August conducted by promotion tracker RetailMeNot.
Research from ecommerce marketing platform Yotpo shows similar findings. In the company’s 2019 survey of 1,000 shoppers, 47% of U.S. consumers did most of their holiday shopping online, which was within 1 percentage point of the share that did most seasonal shopping in stores. However, in 2020, 71% of respondents expect to complete the majority of their shopping online and just 22% in stores. Only 6% of consumers plan to shop only in person on Black Friday this year, and 40% say they are interested in only online deals that day. Because of all of this, Black Friday stands to benefit from the largest fluctuation in shopping channels.
Conversely, Cyber Monday has always been an online-focused holiday. Although it will still eclipse Black Friday as the largest online shopping day of Cyber 5, some retail fatigue may set in by then, and digital revenue will grow the slowest on that day. Consumers also may be nervous to wait that long to place orders for coveted items as retailers have struggled to keep products stocked amid supply chain challenges this year.
5.) Deal-savvy shoppers bide their time for the best promo days.
Nearly two-thirds of consumers—63%—surveyed by Digital Commerce 360 and Bizrate Insights named competitive pricing as one of the most important considerations in choosing an online retailer during the holidays—a higher share than those who selected even delivery speed. Additionally, 40% of respondents chose promotions as a crucial factor for where they shop online. So there is an underlying expectation for robust discounting around this time of year, and those who are deal watchers know Black Friday and Cyber Monday own the deepest category price drops on the web, Adobe says.
There is much evidence suggesting retailers are offering significant holiday sales far earlier this year to help spread out peak season volume and keep up with remarkable pandemic-related surges in ecommerce that have overwhelmed shipping carriers. But perception still matters, and old habits die hard. When Amazon.com Inc. (No. 1) ran its postponed Prime Day promotion in mid-October, 29% of consumers who shopped during the sales event didn’t make any purchases or made fewer than the prior year because they expected to find better deals on Black Friday or Cyber Monday, according to a Digital Commerce 360 survey of 530 consumers. This means there is pent-up demand going into Cyber 5.
More than half of consumers expect to make a big-ticket purchase of $500 or more by the end of the year, including technology and major appliances, according to a July survey of 1,000 U.S. consumers conducted by advertising technology provider OpenX and The Harris Poll. So it makes sense that many of these shoppers will opt to buy on Black Friday, which Adobe says is the best day for online discounts on appliances (an average of 11% price slash) and TVs (19%).
But Cyber Monday is historically the best day for online deals overall, with an average 29% discount rate in 2019, according to software provider Salesforce.com Inc., which aggregates data from the activity of more than 1 billion global shoppers flowing through its Commerce Cloud platform.
Percentage changes may not align exactly with dollar figures due to rounding.