Online spending during the holiday season increased by 8.7% compared to the previous year, as per data from Adobe Analytics. This growth was attributed to the availability of deals and the utilization of AI-powered chatbots, which encouraged consumers to make purchases.
According to Adobe, sales on retailers’ websites and apps reached $241.4 billion between Nov. 1 and Dec. 31. The analysis by Adobe encompassed over 1 trillion visits to U.S. retail sites, 100 million unique items, and 18 different product categories.
Adobe reported that the rise in online spending was driven by increased demand rather than higher prices. The Digital Price Index by Adobe revealed that e-commerce prices have been decreasing for 27 consecutive months. Although the figures are not adjusted for inflation, if they were, overall consumer spending would show an increase.
The positive e-commerce results are a promising indicator for the retail industry, which is yet to disclose company-specific sales data. Major retailers like Walmart, Target, and Macy’s are expected to release their fiscal fourth-quarter results, including sales figures from the crucial holiday shopping season, in late February.
Early reports on the holiday season also showed strong performance. Mastercard SpendingPulse data indicated a 3.8% year-over-year increase in retail sales during the holiday season in the U.S., excluding automotive sales, from Nov. 1 to Dec. 24.
Deep discounts were a key factor in motivating holiday shoppers to spend more, according to Adobe. The data revealed that for every 1% decrease in prices, there was a corresponding 1% increase in demand compared to the previous holiday season, resulting in an additional $2.25 billion in online spending.
Vivek Pandya, lead analyst for Adobe Digital Insights, highlighted that consumers tend to wait for specific periods, like sales events, to make nonessential purchases when they anticipate lower prices. He referred to this behavior as “event-ized buying.”
The holiday season saw significant discounts in categories such as electronics, toys, TVs, and apparel. Electronics, apparel, and furniture/home goods were the top three categories contributing to 54% of total online spending, with groceries and cosmetics experiencing the highest year-over-year spending growth.
AI-powered shopping assistants like ChatGPT saw a surge in usage during the holiday season, with a 1,300% increase in traffic to retail sites compared to the previous year. These chatbots helped shoppers find gift ideas and locate cost-effective items.
Smartphones played a central role in e-commerce purchases during the season, accounting for nearly 55% of transactions. Additionally, the use of buy now, pay later options increased by 9.6% year over year, reaching $18.2 billion in online spending during the holiday period, with Cyber Monday setting a record high of $991.2 million in spending on this payment method.
