US Online Holiday Sales to Hit $189B in 2020

A new prediction from Adobe Analytics indicates that the rapid move toward online shopping, accelerated by the current pandemic, will substantially influence U.S. online sales during the holiday season. Adobe Analytics forecasts that U.S. online sales for November and December of 2020 will total $189 billion, a 33% increase compared to the previous year and a new record high.

Adobe notes that this projected growth equates to two years’ worth of typical gains concentrated into a single season, significantly exceeding the 13% increase observed in 2019.

Should additional stimulus payments be issued to consumers and if widespread store closures occur due to further coronavirus outbreaks, sales figures could climb even higher. Under these circumstances, online spending is anticipated to increase by an additional $11 billion, resulting in total sales exceeding $200 billion – a 47% year-over-year rise.

The shopping behaviors of consumers this season are also expected to evolve.

Traditionally, the online holiday shopping period commenced with Black Friday promotions—an online equivalent to the in-store sales events. This then transitioned into Cyber Monday deals, as shoppers sought online availability of items unavailable in physical stores.

Over time, the distinctions between these individual sales events have become less defined. Online shopping activity began extending to Thanksgiving Day, and continued beyond Cyber Monday.

This year, Adobe Analytics anticipates that “Cyber Week” (spanning Thanksgiving through Cyber Monday) will transform into “Cyber Months.”

This shift will be fueled, in part, by substantial holiday discounts starting in the first half of November, culminating in the most significant price reductions during the Black Friday weekend and Cyber Monday.

Adobe Analytics also projects that online sales will exceed $2 billion daily from November 1st to November 21st, and subsequently rise to $3 billion per day from November 22nd through December 3rd.

Black Friday online sales are forecast to increase by 39% year-over-year, reaching $10 billion, while Cyber Monday is expected to become the largest online shopping day of the year, generating $12.7 billion in sales – a 35% year-over-year increase.

The most advantageous deals on televisions and appliances will likely remain available on Black Friday, while the best offers on toys and furniture are predicted to emerge on Sunday, November 29th – the day preceding Cyber Monday. Sporting goods are expected to see their best discounts on December 13th, and electronics on December 18th, according to Adobe.

Consistent with previous trends, mobile devices will represent an increasingly significant portion of e-commerce spending, with U.S. consumers spending $28.1 billion more via smartphones in 2020 compared to 2019, a 55% year-over-year increase.

Smaller retailers, those with annual online revenue between $10 million and $50 million, will also experience benefits from the heightened online activity. They are projected to see a larger boost to their online revenue (a 107% increase) than larger retailers with revenue exceeding $1 billion, which are expected to see an 84% increase.

Given that some U.S. consumers may forgo travel plans to visit family this year, Adobe Analytics anticipates that Americans will increase spending on gifts shipped directly from the retailer to recipients by 18%, compared to pre-pandemic years. However, consumers are generally unwilling to pay extra for faster shipping—64% indicated they would not pay for expedited service. This means retailers must clearly communicate their free shipping deadlines.

The trend of buying online and picking up in store (BOPIS) will also see a surge. With the addition of curbside pickup options by many retailers, BOPIS orders are expected to increase by 40% compared to last year and will account for 50% of all orders from retailers offering the option during the week before Christmas.

Due to the pandemic, Adobe Analytics anticipates that 9% of all holiday shoppers will be new to online purchasing. Conversion rates are also expected to rise by +13%, while revenue will increase +33%. Average order value, however, is projected to remain stable.

The U.S. election presents a potential factor that could influence these predictions. Past election years have shown an impact on online sales following the announcement of results. Sales decreased by 14% the day after the 2016 election and by 6% the day after the 2018 midterms. According to Adobe Analytics, 26% of consumers stated that the election outcome would affect their holiday spending.

The data supporting these predictions is sourced from Adobe Analytics, which currently analyzes one trillion visits to U.S. retail websites. This includes 100 million SKUs and 80 of the 100 largest retailers in the U.S., according to the company.