This article is part of our November 2018 series about the state of retail. Click here for more.
It’s the most digital time of the year for retailers, with the holiday shopping season now in full swing.
To be sure, consumers will be shopping and buying via the Web more this year than in years past. But how exactly will online retail sales pan out this year? And what consumer trends might arise? To answer those questions and more, Adobe Digital Insights (ADI) analyzed aggregated and anonymized data via Adobe Analytics and also conducted a companion survey of over 1,000 consumers in the United States.
The key finding: It’s going to be a holly jolly November-December holiday period. Here are ADI’s predictions.
Online Holiday Shopping Will Hit New Heights
Consumers will spend $124.1 billion online this holiday season in the U.S., which accounts for nearly $1 of $6 spent shopping overall during the November-December period, ADI forecasts. That’s 14.8% YoY growth.
“This consistent growth is itself a surprise,” said Taylor Schreiner, principal analyst at ADI. “To have a $100 billion industry continue to grow in double digits is unusual and impressive.”
Online retailers with physical storefronts stand to benefit most, ADI predicts, as these retailers have seen 28% higher online conversion year-to-date. In the consumer survey portion of the analysis, 47% of the 1,000 people surveyed indicated they will visit a store to see a product they intend to purchase later online.
ADI also expects buy online/pick up in-store will also be a big trend this time around. The use of this service in retail has more than doubled since January 2018 (119% growth), according to its research, and nearly half of the people ADI surveyed saw in-store pick-up as the best way to get last-minute gifts.
“One of the ways that online retail can continue to grow faster than offline is by making offline part of its supply chain and customer experience,” Schreiner explained. “Anecdotally, you see many retailers adopting this strategy, like Amazon buying Whole Foods or Apple building its own storefront presence. Nordstrom’s experimentation with inventory-free storefronts is also a reaction to this consumer demand.”
Five-Day Thanksgiving Weekend Will Set New Records
Consumers will spend $23.4 billion online during the five-day Thanksgiving holiday weekend (ending after Cyber Monday), according to ADI. That’s 19.4% more than what they spent last year.
Cyber Monday, ADI predicts, will be the biggest online shopping day in history, with $7.8 billion in e-commerce sales, up 17.6% year over year. Black Friday will come in second with $5.9 billion in online sales (+17.2% YoY), and Thanksgiving will clock in at $3.3 billion (+16.5% YoY).
“High-speed growth in online retail during the Thanksgiving holiday weekend is part of a consistent trend of consumers expecting the best shopping days to be holidays and retailers fulfilling that expectation,” Schreiner said. “We’ve seen this even on other holidays, like Labor Day and Memorial Day this year.”
Consumers will shop most on Cyber Monday from 7 p.m. to 10 p.m. PST, according to ADI. In fact, those three hours are expected to bring in as much revenue as an average day during the year.
Mobile Will Be Key In Influencing And Driving Holiday Revenue
Fifty-seven percent of retail visits will come from mobile devices (tablets and smartphones), accounting for 37% of total online purchases, ADI predicts. Indeed, Schreiner said, “commerce has moved beyond any storefront and into the hands of consumers.”
Drilling down, ADI predicts nearly half (48%) of all visits to retail websites will come from smartphones. And 27% of all online revenue will come from those smartphone visits. Tablets are on the decline, and will account for 9% and 10%, respectively.
“Retailers still have a huge set of opportunities in mobile,” Schreiner said. “If retailers could get consumers to turn shopping carts into purchases on mobile devices at the same rate they do on desktops, closing this gap equates to $9 billion in mobile sales.”
As for how consumers are shopping on mobile, mobile apps are twice more likely to convert shoppers than the traditional Web, ADI predicts. This higher conversion is correlated with 2.4 times higher time spent in apps, 30% better content relevancy, and 25% better return frequency.
Its analysis also looked into other devices and media that are emerging in the retail e-commerce space. Voice, Schreiner says, “looms large for retailers as smart speakers start to become ubiquitous.”
According to the analysis, while shoppers aren’t always buying using their smart speakers, these IoT devices are helping them make purchase decisions. Today, 32% of the U.S. population owns a smart speaker and 16% more are planning on getting one in the next two months. Forty-seven percent of smart speaker owners said they have conducted a product search via their speakers, 43% use them to create shopping lists, and 32% use them to compare prices. However, only 25% said they use their smart speakers to place online orders for delivery, and just 17% do so to place online orders for in-store pickup.
Don’t Expect Social Media To Be A Big Driver Of Holiday Revenue
Social media revenue-per-visitor has dropped 11% since the third quarter of 2016, despite rising referral traffic from social networks to retailer sites, according to ADI.
In fact, social media is the only marketing channel in ADI’s analysis to see a decline in revenue per visit. In addition, according to the consumer survey, 25% fewer people said they expect to consult social media for gift ideas, compared with two years ago.
Instead, search (+23% revenue per visitor) and referring domains (+15% revenue per visitor), including helper sites like RetailMeNot, will refer more valuable traffic to retail Web sites, ADI predicts. Of course, direct traffic is the highest value audience, with a 36% increase in revenue per visit.
“As social media becomes a larger and larger share of people’s media time, it has also grown significantly as a source of traffic, but that traffic isn’t converting,” Schreiner explained.
The Hottest Products Will Go Fast
Just 1% of product SKUs will drive 70% of online holiday sales, according to ADI. For comparison purposes, 1% of product SKUs typically drive 54% of online sales on an average day.
For consumers, the best day for online shopping depends on what they’re shopping for, ADI says. For example, Cyber Monday will have the biggest discounts for toys (save 19%), Black Friday will be good for computers (save 16%), tablets (save 33%), and televisions (save 22%), and Thanksgiving will be the day to buy sporting goods (save 13%).
Top product categories for this year will be 4K TVs, video games, and toys, ADI predicts. One of the top holiday products this year will be the PlayStation Classic. “Sony is following in Nintendo’s footsteps and bringing back its original PlayStation console to pick up on Millennial nostalgia,” Schreiner said.
Consumers also will be shopping for experiences this holiday season, ADI predicts. For example, in previous years cruises have seen six times more revenue on Cyber Monday compared with other Mondays. Similarly, on Cyber Monday airlines have seen twice as much revenue on Cyber Monday and hotels have seen nearly three times more revenue compared with other Mondays. One-third of consumers plan to spend more on experiences than things as gifts this holiday season
“Whether or not for themselves, they’ll be buying 4K TVs at cheaper-than-ever-prices and most likely with smart functionality,” Schreiner said. “They’ll be buying gaming consoles as Sony’s retro PlayStation enters the space that Nintendo mapped out in prior years with its small NES and SNES devices. And they’ll be looking for this year’s big toys, like Pomsies, Grumblies, and Scruff-a-Loves, or the quintessential online-to-offline gift: Fortnite Monopoly.”
About Adobe Digital Insights
Adobe Digital Insights publishes research on digital marketing, retail and other topics of interest to senior marketing and e-commerce executives across industries. Research is based on the analysis of select, anonymous, and aggregated data from more than 5,000 companies worldwide that use Adobe Experience Cloud to obtain real-time data and analysis of activity on websites, social media, and advertising.
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