Adobe Forecasts Record 2021 Holiday Season Despite Inventory Challenges

Adobe released its online shopping forecast for the 2021 holiday season, which covers November 1 to December 31, 2021, providing interesting insights into what buyers should expect this season.

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However, the data is also great information for smaller online merchants and sellers as they can make adjustments to their holiday season strategy, especially in light of supply chain challenges by large retailers.

The Adobe Digital Economy Index offers an overview of the US and global eCommerce markets by analyzing direct consumer transactions online.

Based on Adobe Analytics data, this analysis covers over one trillion visits to US retail sites, more than 100 million SKUs, 18 product categories, and global views based on transactions in over 100 countries in three regions — more than any other company or organization*.  

Adobe expects US holiday sales online to reach $207 billion from November 1 to December 31 — a 10% increase year-over-year (YoY) — surpassing last year’s bumper sales where the pandemic made eCommerce an essential service.

Globally, online spending is expected to hit $910 billion this season, 11% growth year-over-year (YoY). Adobe expects global online sales to surpass $4 Trillion in all of 2021, setting a new milestone for eCommerce.   

In the US, as eCommerce becomes more universal, the major retail shopping days are losing prominence.

Cyber Week (Thanksgiving Thursday through Cyber Monday) is expected to drive $36 billion in online spending or 17% of the entire holiday season.

However, the growth is slowing, coming in at just 5% YoY for the 5 days (less than the season overall at 10% YoY).

Adobe expects Cyber Monday to drive $11.3 billion (up 4% YoY) and it remains the biggest day of the season (and year), with Black Friday coming in at $9.5 billion (up 5% YoY) and Thanksgiving at $5.4 billion (up 6% YoY).

According to Adobe, Cyber Monday is expected to generate $11.3 billion (up 4% YoY) and it remains the biggest shopping day of the year, followed by Black Friday at $9.5 billion (up 5% YoY) and Thanksgiving at $5.4 billion (up 6% YoY).

All three major shopping days are growing less than the season overall.   

Supply Chain Challenges to Impact Holiday Season  

As consumer demand for online shopping surges, retailers are facing dire supply chain challenges, from crowded ports and cargo delays to disruptions in overseas manufacturing. 

Shoppers are feeling the impact: Going into the holiday season, the prevalence of out-of-stock messages is up 172% compared to a pre-pandemic period (January 2020).

Unfortunately, Adobe expects it to remain at this level, increasing for certain products throughout the busy shopping season.

Out of the 18 categories tracked by Adobe, apparel has the highest rate of out-of-stock problems, followed by sporting goods, baby products, and electronics.

Prices are also rising online due to a weakened supply chain. During Cyber Week this year, Adobe expects consumers to pay 9% more than they did during the holiday season last year.

This is due to smaller discounts on top of eCommerce inflation that has persisted all year.

Adobe expects discounts to range from 5% to 25% across categories this season, compared to a historical average of 10% to 30%.

This is happening as prices have already been elevated. eCommerce has been experiencing inflation since June 2020 (16 consecutive months), with online prices up 3.3% entering the holiday season (September 2021).

In previous years, online prices were down 5% YoY on average before the shopping season. However, eCommerce prices have not risen as quickly as offline prices with the latest Consumer Price Index up 5.4% YoY (September 2021).    

“We are entering a second holiday season where the pandemic will dictate the terms. Limited product availability, higher prices, and concerns about shipping delays will drive another surge towards e-commerce, as it provides more flexibility in how and when consumers choose to shop.”

Patrick Brown, vice president of growth marketing and insights, Adobe

Insights on Discounts – Best Days to Shop   

Category Discounts: Adobe expects smaller discounts in all major gifting categories tracked by the Digital Economy Index. Discount levels in electronics, for instance, will peak at 22% for the season, down from 27% in 2020.

Other categories include computers at 25% (vs 30% in 2020), televisions at 15% (vs 18%), appliances at 16% (vs 20%), toys at 16% (vs 19%), sporting goods at 14% (vs 20%), apparel at 15% (vs 20%), furniture at 7% (vs 9%), and tools at 8% (vs 11%).   

When to Shop: In an Adobe survey of over 1,000 US consumers, 67% are concerned about gifts being more expensive this year. While seasonal discounts are expected to start this month (October) in the 5% to 15% range, as retailers look to manage supply chain challenges, the biggest discounts (5% to 25% range) are still expected to happen around Thanksgiving and Cyber Monday.

Certain categories like electronics are expected to have the deepest discounts before Cyber Monday.

The best days to shop include:

• Thanksgiving (11/25) for toys.
• Black Friday (11/26) for furniture/bedding and tools/home improvement.
• Saturday (11/27) for electronics and appliances.
• Sunday (11/28) for apparel and sporting goods.
• Cyber Monday (11/29) for televisions.
• Wednesday (12/1) for computers.

Select Other Findings From the Adobe Report 

• Buy Now Pay Later: Online revenue from BNPL this year has been 10% higher than 2020 and 45% higher than 2019—based on Adobe Analytics data. In the Adobe survey, 25% of respondents said they have used BNPL in the last 3 months, with apparel (cited by 43%), electronics (33%), and groceries (30%) as the top categories.   
• Curbside Retakes Spotlight: In December 2020, curbside pickup was used in 25% of all online orders, as consumers looked for safer ways to shop. Adobe expects curbside pickup to peak from 12/22 to 12/23 (right before Christmas Eve) at a record 40% of all online orders, while remaining at 25% through November 2021.   
• Shopping on Smartphone Growth Slows: As consumers spend more time at home and sit in front of laptops for work, the growth of smartphone-driven shopping has hit a ceiling. Adobe expects smartphones to account for 42% of overall revenue this season ($86 billion), a modest 5% increase from 2020.
• Shopping Frenzy: On average, a consumer in the US will spend 12 full hours shopping online this holiday season. During the “golden hours” of eCommerce (7:00–11:00 pm PT on Cyber Monday), shoppers will spend nearly $3 billion online ($2.9B) in just 4 hours, 50% more than a typical full day in August 2021 ($1.9B). In the peak hour of Cyber Monday (8:00– 9:00 pm PT), consumers will spend over $12 million every minute.

The full Adobe report is available here.

*Methodology: Adobe says its Adobe Digital Economy Index offers the most comprehensive set of insights of its kind, based on analysis through Adobe Analytics that covers over one trillion visits to US retail sites and over 100 million SKUs in 18 product categories—more than any other technology company or research organization. Global views are based on transactions in over 100 countries across the Americas, APAC and EMEA. Companion survey findings are based on responses from 1,012 US consumers (over 18) fielded between September 23 and October 1, 2021.