Adobe Predicts 10% Online Holiday Sales Spike Despite Supply Chain Woes

Despite higher prices and a surge in out-of-stock items due to the COVID-19 pandemic, U.S. online holiday season sales will jump 10% year on year to a record $207 billion, Adobe forecast Wednesday. Globally, e-commerce sales will rise 11% to over $4 trillion Nov. 1-Dec. 31, also a new milestone, it said.

“We are entering a second holiday season where the pandemic will dictate the terms,” said Patrick Brown, Adobe vice president-growth marketing and insights. “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.”

“Dire” supply chain challenges -- including crowded ports, cargo delays and disruptions in overseas manufacturing -- resulted in a 172% jump in out-of-stock messages vs. January 2020, Adobe said. That’s expected to continue through the season and increase for certain products, particularly apparel, it said. Discounts for electronics will peak at 22%, down from 27% last year.

The weakened supply chain is driving prices higher; consumers will pay 9% more on average during Cyber Week -- Thanksgiving through Cyber Monday -- vs. 2020 due to smaller discounts and e-commerce inflation that began in June 2020, Adobe said. Online prices were up 3.3% year on year in September, it said, forecasting discounts of 5%-20% across categories vs. the historical average of 10%-30% for the season. E-commerce prices haven't risen as quickly as offline prices, however, with the latest consumer price index up 5.4% year on year in September. Some 67% of consumers are concerned about rising gift prices, said Adobe, citing a survey of over 1,000 U.S. consumers.

Mobile shopping “has hit a ceiling,” Adobe said, citing work-at-home trends with laptops that have taken share. It expects smartphones to generate 42% of overall revenue this season at $86 billion, a 5% year-on-year hike. More time spent at home propelled sales of larger TVs as people look to replicate the big-screen experience at home, it said. TVs in the 70-to-79-inch range were 22% of sales in 2020, up from 16% in 2019 and 9% in 2018; 80-inch and larger sets were 3% of sales in 2020, increasing from 1% in both 2019 and 2018, it said.

Electronics are expected to have the deepest discounts before Cyber Monday, Adobe said, saying the Saturday of Cyber Week is the best day to shop for electronics. Cyber Monday will have the prices on TVs, and Dec. 1 is seen as the best day to buy a computer, it said.

Major Cyber Week shopping days are “losing prominence,” said the analytics firm, projecting $36 billion in online spending for the five-day span, a 5% year-on-year bump. Adobe predicts a 4% Cyber Monday sales increase to $11.3 billion, making it the highest producer of the year. Black Friday will be $9.5 billion, a 5% rise, and Thanksgiving $5.4 billion, up 6%. The three high-profile shopping days are growing less than the overall season, it said.

Consumers are embracing new payment methods such as buy now, pay later (BNPL) to free up cash for the holiday season, Adobe said, saying BNPL is up 10% vs. 2020 and 45% higher than 2019. Consumers are using the option increasingly for less expensive orders, with the minimum order value of BNPL dropping 12% year on year to $225. A quarter of respondents in the survey said they used BNPL in the past three months, 33% of electronics shoppers.

Curbside pickup, which got a pandemic boost from customers looking for safer ways to shop, was used for a quarter of online orders last year, Adobe said. It expects the fulfillment option to peak Dec. 22-Dec. 23 at a record 40% of all online orders vs. 25% through November.

Electronics items among the most anticipated gifts are the Nintendo Switch OLED, PlayStation 5, Xbox Series S/X, AirPods, smart mugs and record players. Over half of survey respondents (51%) plan to buy physical goods as gifts for others this holiday season, while 17% plan to give an experience, Adobe said. Top categories include spa treatments (25%), concert tickets (25%), sporting events (22%), plane tickets (21%) and cooking classes (16%).