The Covid-19 pandemic created a rare step-change in eCommerce, as consumers spent months avoiding physical stores. By the end of 2020, $844 billion had been spent online, a staggering 42 percent more than consumers had spent in the year prior.
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In 2021, the question remains on where the ‘new bar’ for eCommerce has landed.
While the holiday shopping season would still be a major driver, consumers were now ordering everyday staples like groceries online and bigger ticket items like furniture. And as the eCommerce share of retail expanded, higher prices were also observed.
Adobe is issued a new report in advance of the holiday season via the Adobe Digital Economy Index—the only real-time barometer of eCommerce, analyzing over 1 trillion visits to U.S. retail sites and over 100 million product SKUs in 18 categories.
The Year So Far
Consumers have spent over $541 billion online from January 2021 through August 2021 (8 months), 9 percent more than the comparable period last year and 58 percent more than 2019.
Considering that many were unable to leave their homes in 2020, the year-over-year (YoY) growth highlights the staying power of habits formed during the pandemic.
Retailers are getting more people to hit ‘buy’ and not abandon cart as well: Conversion (percent of visitors who make a purchase) is now 4.1 percent on desktop (up 1%) and 1.9 percent on smartphones (up 3.7%) in the first 8 months of 2021.
Shoppers are making larger purchases also, with the average order value up 13% at $169. And with mobile, despite people spending more time at home, smartphone share-of-revenue is at 41 percent (up 8% YoY) while share-of-visits is at 59 percent (up 2% YoY) from Jan to Aug.
The improvement in these figures is a signal that online shopping experiences have become more refined during the pandemic, becoming stickier for consumers.
Adobe is forecasting a major milestone, that even before the big holiday season begins on November 1, consumers will have spent more online than they did in all of 2019—a year that had netted $575 billion in online spend.
Growth online has meant that eCommerce is now approaching roughly $1 of every $5 spent by consumers (up from $1 of every $6 spent in 2017).
As online shopping becomes more ubiquitous, convenience is also coming at a cost. Prices across the 18 categories tracked by Adobe have been rising for the first time in the history of online shopping.
And while supply chain disruptions have contributed, surging (and durable) consumer demand can create less discounting as retailers look to preserve margin.
For Aug 2021, online prices are up 3.1 percent year-over-year (YoY) and up 0.1 percent month-over-month (MoM). In July 2021, online prices were up 3.1 percent YoY, down 0.7 percent MoM.
This is the 15th consecutive month where online prices have risen on an annual basis. Consider that as a historical benchmark, from 2015 to 2019, online prices fell 3.9 percent on average each year.
“In addition to notable categories such as apparel and home furnishings, consumers continue to see prices rise online for everyday goods such as groceries, pet products, and personal care. As we hit this upcoming milestone for eCommerce, where all of 2019 spend will be observed before the holiday season, we are entering new territory in which the dynamics of the online world have greater implications for consumers, policymakers, and business leaders. Categories that once had a minor presence in eCommerce are now becoming staples, with unprecedented pricing trends that no longer hold down overall inflation.”Vivek Pandya, lead analyst, Adobe Digital Insights
Adobe Digital Economy Index – 18 Categories
In the 18 categories tracked by the Adobe Digital Economy Index, all but one (books) saw higher prices in August 2021 when compared to a pre-pandemic period (2015-2019 average).
Apparel prices elevated in both July (up 15.26%) and August (up 15.52%). This category is cyclical in nature, with predictable peaks and troughs. And historically, July and August see the greatest price drops, with heavy promotions for the back-to-school season and markdowns for summer items.
Online prices for apparel have even begun to outpace the Consumer Price Index (CPI) in recent months, which captures offline prices.
|Aug 2021 Data||July 2021 Data||Historical Data|
|Category||YoY Price Change||YoY Price Change||2015-2019 Avg|
|Personal Care Products||+1.09%||+1.29%||-1.23%|
|Furniture & Bedding||+2.60%||+0.88%||-2.56%|
|Home & Garden||-0.09%||-0.28%||-5.43%|
|Tools & Home Improvement||+2.53%||+1.56%||-0.67%|
|Flowers & Related Gifts||+1.47%||+1.91%||+0.37%|
|Medical Equipment & Supplies||+3.23%||+1.57%||-1.06%|
Medical equipment and supplies, which typically see prices fall 1.06 percent on average before the pandemic, rose by 3.23 percent in August 2021.
It is another category that is outpacing the CPI and is driven in part by the recent Covid-19/Delta variant surge.
Mask sales online for instance, which had been in decline since May 2021, jumped 24 percent in the last week of July 2021 (7/21-7/27).
Sales were then up 51 percent in the week after (7/28-8/3) and up 40 percent in the week after that (8/4-8/10).
Furniture and bedding, which typically saw prices fall 2.58 percent on average before the pandemic, rose by a higher amount (2.60 percent) in August 2021.
This is a category where historically, much of the shopping happened inside of a store. Consumers are now becoming more comfortable ordering furniture online, with higher sticker prices that make a sizable contribution to eCommerce’s growing share of retail.
It also makes a 2.60 percent price increase even more notable. Appliances are seeing a similar trajectory, with prices up 2.01 percent in August compared to a pre-pandemic period, where prices typically fell 2.67 percent.
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