Adobe Digital Economy Index – Final Look at 2021 – It Was Another Great Year for Online Sales

Adobe released its final Adobe Digital Economy Index analysis for 2021 as online merchants and marketplace sellers plan out their 2022 eCommerce strategy toward the build-up of the next holiday season so important to most online businesses.

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But first, let’s look at the finalized numbers for the 2021 holiday season (November 1 to December 31) from Adobe’s Digital Economy Index press release.

Adobe Digital Economy Index – 2021

The company provides a comprehensive view of US eCommerce by analyzing direct consumer transactions online which is based on Adobe Analytics data. The analysis covers over one trillion visits to US retail sites, 100 million SKUs, and 18 product categories.

Consumers spent a total of $204.5 billion over the 2021 holiday season, up 8.6% year-over-year (YoY).

A record 38 days surpassed $3 billion in daily spend (25 days in 2020 by comparison), as consumers spread out their shopping outside of big days like Cyber Monday and began earlier.

The weeks before Thanksgiving (Nov. 1 to Nov. 24) grew 19.2% YoY, while Cyber Week (5 days between Thanksgiving and Cyber Monday) was down 1.4% YoY. The weeks following (Nov. 30 to Dec. 31) grew 5.6% YoY.

Demand for online shopping was not deterred by persistent supply chain challenges, as retailers contend with congested ports, cargo delays, and disruptions in overseas manufacturing.

During the holiday season, consumers saw over 6 billion out-of-stock messages online. This represents a 253% increase over the 2019 holiday season (prior to the pandemic) and a 10% increase YoY.

“This holiday shopping season was the first time where big promotional moments like Cyber Monday and Black Friday took on less of the spotlight. Like we saw during the Covid-19 pandemic, eCommerce has become a ubiquitous daily activity and a flexible way for shoppers to navigate product availability and higher prices.”

Taylor Schreiner, senior director, Adobe Digital Insights

Discounts for the full season were weaker across major categories tracked by Adobe: In electronics, discount levels were at -8% compared to -21% in 2020; Computers at -10% (vs -22% in 2020); Appliances at -4% (vs -14%); Sporting Goods at -6% (vs -14%); Furniture/Bedding at -2% (vs -4%).

Discount levels for televisions were unchanged YoY (-11%) and consumers did see bigger discounts in apparel (-13% vs -11%) and toys (-19% vs -14%).

Additional Insights From Adobe Analytics  

Category Growth: This holiday season, online spending was driven by categories including toys (5.4 times more online sales, when compared to pre-season levels in Sept. 2021), video games (4.5x more), gift cards (3.6x more) and books (3.0x more).

Other categories of note include groceries (2.7x more, driven by holiday meals), jewelry (2.2x more), electronics (2.2x more), baby/toddler products (2.1x more) and appliances (2x more).

Top Sellers (Full Season): Top gaming consoles include Nintendo Switch OLED, PlayStation 5, and Xbox Series S/X. Top games include Call of Duty Vanguard, Battlefield 2042, Far Cry 6, FIFA 22, and Halo Infinite; Top toys include Baby Yoda products, Bluey products, Crystalina dolls, Gabby’s Dollhouse, and Got2Glow Fairy Finder.

Top electronics and other devices include AirPods/AirPods Max, drones, record players, Samsung TVs, and LG TVs. Other top sellers include air fryers, Instapot, smart mugs, smart water bottles, and weighted blankets.

Buy Now Pay Later (BNPL) saw double-digit growth this season, as consumers continue to try this emerging method of payment. Revenue was up 27% YoY while orders were up 10% YoY.

On average, consumers are spending $224 using BNPL (per order), with roughly 3 items in the shopping cart. Growth has slowed however, signaling challenges for gaining mass adoption: When indexed to 2019, revenue was up 475% and orders were up 479% over two years.

Curbside: For retailers who offer curbside/in-store pickup (BOPIS – Buy Online, Pick-Up In-Store/Curbside), the fulfillment option was used in 23% of all online orders this season. Despite the lack of growth (24% in 2020 and 22% in 2019), demand for curbside services remains durable. Shoppers likely value the convenience and speed of BOPIS or find it to be a safe fulfillment option during COVID-19 surges.

The day before Christmas Eve (Dec. 23), usage peaked at 40%. On average, curbside orders amount to $91 and roughly 2 items in the shopping cart.

Mobile: Over the holiday season, 43% of online sales came via smartphones, coming in at $88 billion overall. It is a modest increase from 2020 (at 40%), as consumers still rely on desktop and laptop computers as the primary way to shop online.

There were 6 days where over 50% of sales came via smartphones: 11/25 (Thanksgiving), 12/18 (Super Saturday), 12/19, 12/24 (Christmas Eve), 12/25 (Christmas Day), and 12/26. In 2020, only one day (Christmas Day) exceeded 50%.

Online Inflation in 2021 From Adobe Digital Price Index

Adobe also issued an additional press release about online inflation from its Adobe Digital Price Index (DPI).

In December 2021, online prices increased 3.1% year-over-year (YoY) and 0.8% month-over-month (MoM). Meanwhile, consumer spending online for all of 2021 reached a record $855 billion, an increase of 9% YoY, attesting to the strength of the digital economy overall.

December’s price increases marked the 19th consecutive month of YoY online inflation and followed the record high of November 2021, when online prices increased 3.5% YoY. In December, groceries and apparel were standout categories, with grocery prices seeing their highest annual increase in more than a year (4.9% YoY, 0.7% MoM). Apparel increased 16.6% YoY (0.6% MoM).

“Inflation online is showing no signs of easing, as durable consumer demand is being met with the same, persistent supply challenges that produced over six billion out-of-stock messages online this holiday season. As consumers contend with higher offline prices for everything from gas to rent, they are finding that eCommerce is still a less expensive option when it comes to goods like toys, electronics and even jewelry.” 

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

In December 2021, 12 of the 18 categories tracked by the DPI saw YoY price increases, with apparel rising faster than any other category. Price drops were observed in six categories: electronics, office supplies, jewelry, books, toys and computers. 

On a MoM basis, 13 of the 18 categories saw December price increases, with price drops observed in five categories, including toys, pet products, home/garden, computers and flowers/related gifts.  

Notable Categories

Groceries: Prices were up 4.9% YoY (up 0.7% MoM), the highest increase on an annual basis since October 2020, when prices jumped 5.2% YoY. It is the only category that has moved in lockstep with the Consumer Price Index, which captures prices consumers are paying in physical stores.

Apparel: Prices were up 16.6% YoY (up 0.6% MoM). This is the ninth consecutive month where online prices have risen on an annual basis in a category that typically sees consistent periods of deflation when seasonal discounts kick in.

Appliances: Prices were up 4.1% YoY (up 3.0% MoM). This marks the 20^th consecutive month of inflation for the category, at a time when consumers are keen to invest in their homes. Over the holiday season (November 1 to December 31), online sales for appliances doubled compared to pre-season (September 2021) levels. Furniture and bedding followed a similar trend, after 20 consecutive months of inflation, where December 2021 prices were up 3.3% YoY and up 0.8% MoM.

Tools & Home Improvement: Prices were up 7.1% YoY (a record high for the category) and up 1.0% MoM, marking the 13^th consecutive month of online inflation as consumers continue to spend more in this category. Over the holiday season (November 1 to December 31), online sales in the category grew by 1.7 times pre-season (September 2021) levels.

Electronics: Prices were down 2.6% YoY (up 0.4% MoM). This is a greater price drop compared to November 2021, when prices for products in the category were only down 0.4% YoY and nearly moved into inflationary territory for the first time since Adobe began tracking price trends in 2014.

2022 – Another Year of Challenges and Opportunities

With the Covid-19 pandemic again creating a lot of uncertainties for 2022 this year will continue to have challenges.

From renewed concerns about Covid-19 outbreak lockdowns impacting manufacturing, extending supply chain challenges further, and Apple’s newest push for more privacy and other major changes in digital marketing, there will be plenty of headaches all around and new problems to conquer.

But, logistics operators, including the US Postal Service, proved they learned from 2020, and the 2021 peak shipping season was much smoother. This logistic bright spot should hopefully put that stress point behind us and become less of a concern to worry about this year, knowing that the shipping industry on the delivery side is in much better shape now.

But what will 2022 bring? Social commerce seems to make the top of the list as one of the most promising opportunities in online commerce this year.

Social media companies and online platforms have been catching up on their integrations to enable more entrepreneurs to take advantage of social commerce. While some online marketplaces are being built or expanded around that shopping style, others will integrate deeper with existing social media networks.

But there could be other opportunities such as finding the right trend, products, or product category to grow an online business.

The key for entrepreneurs is to not get complacent and always seek out new directions. eCommerce is a growing and changing business, one that requires flexibility and sone amount of problem-solving to keep customers satisfied and coming back for more.

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