Adobe Digital Insights...The map shows a representative indexed average per state per capita...

Unboxing 2020's Holiday Shopping ForecastAdobe Digital Insights

©2020 Adobe. All Rights Reserved. Adobe Confidential.

Methodology

• Analysis of more than 1 trillion visits to U.S. based retail websites.• Product and pricing insights based on analysis of sales of more than 100 million unique products.• Adobe Analytics measures transactions at 80 of the top 100* U.S. online retailers — more than

any other technology company.• Shipping and returns analysis based on millions of orders in 2019, email analysis using more than 29B emails sent

in 2019.• Companion research based on a survey of 1,000+ U.S. consumers (18+ years) in Oct 2020.

*Per Internet Retailer 2018 eGuide


Key findings

COVID-19 + holiday spending will drive record gains for e-commerce• Online holiday season spend could reach as much as $189 billion dollars at 33% YoY

growth.• COVID-informed online demand remains elevated and will ensure record-shattering Black

Friday & Cyber Monday sales days, while propelling shopping growth in early November. Black Friday is expected to reach $10 billion!

• To mitigate shipping, inventory, and logistical challenges, retailers will begin discounting in early November, in order to spur earlier purchasing and demand.

The new shopping playbook for the COVID era• Normally, holidays bring a sudden jolt to e-commerce websites. This year, going into the

holidays, online retailers are seeing shopping on steroids.• On smartphones, buying intent, and the number of products in them are already running

hotter than last holiday season, breaking all historical patterns.

A shipping season unlike any other• Online commerce and shipping behaviors are already at holiday levels before

even entering the season.• BOPIS (buy online, pickup in store) growth is expected to explode over the holiday

season, as consumers look to acquire items without shipping costs and fast delivery.

David vs. Goliath vs. COVID• Large retailers ($1 billion+) are expected to

initiate deals earlier and continue to grow their share of total holiday spend over small retailers ($10-50 million).

• However, the holiday season continues to be important for smaller retailers — they are able to drive higher sales boosts from the holiday season relative to the rest of the year.

• The smaller retailers have also been more effective in driving traffic from new customers.

Top gifts for an unprecedented holiday• New game consoles and related accessories are

expected to top gift lists, along with perennial favorites.

Smartphones to reach new heights despite in-home shopping• Consumers will do 42% of their shopping from

smartphones this holiday season.

Online Retail Spend PredictionsAn unprecedented year will lead to an uncertain holiday season.


E-commerce holiday season likely to see two years’ worth of growth, reaching $189B, +33% YoY• The online holiday season is forecast to break all

its past growth records and grow 33% YoY to $189B.*

• The uncertainty that 2020 has brought to the economy and the challenges around social distancing at physical stores make this holiday season unique.

• Since last holiday season e-commerce has seen growth of over 120% on some days, while hitting lows of 25% on others.**

** The highest growth day was May 9 at +128% YoY

Unchanged physical stores | Unchanged disposable income

*This forecast depends on the continuation of the current trend into the season.


There’s potential for over $200B, at +47% YoY, or “just” $171B, at +20%

• The two factors that had the biggest impact on the spike of e-commerce activity in May were the shutdowns of physical stores and the spike in consumer disposable income due to the stimulus check and extra unemployment benefits.

• If flu season brings with it a spike in cases and an increase in store restrictions, a reduced store capacity will drive more people online.

• E-commerce is still only around one out of every $4 spent on retail. That’s a large bucket of dollars that could move online, leading to potential for big swings this season.

Limited physical stores High disposable income

Available physical storesLow disposable income


Retailers vs. habit: Is 2020 the year when retailers manage to create Cyber Month?

• For the past couple of years, retailers have been trying to move sales up earlier in the season, encountering some resistance from consumers — although last year the seven days before Thanksgiving grew by 28% YoY.

• The “golden hours” of retail are the biggest manifestation of consumer propensity to delay their shopping. The last four hours of Cyber Monday draw more revenue than an average day.

• This year, with the shipping infrastructure already running hot, retailers have extra incentive to spread out the demand and decrease the delays in shipments.


Black Friday expected to reach the $10B mark this year• This year’s Black Friday won’t have as

much “door-busting” as per usual. Retailers are pushing deals up and promising Black Friday deals to last for “all of November and December.”

• However, many consumers have more than a decade of experience and a habit of going to the local mall to hunt for deals on the day after Thanksgiving.

• Store capacity limits will create big lines and turn many consumers away at the door, pulling them online. This large amount of spend that’s typically made offline could add enough spend to the digital version of Black Friday to surpass Cyber Monday.

Pandemic Shopping PlaybookShop early for the best discounts and delivery peace of mind.


BOPIS gives procrastinators options, not without potential frustration• BOPIS was the top fulfillment method in the days leading up to

Christmas 2019 (Dec 21 – 23), at nearly 40% of orders at retailers that offer BOPIS. We expect that to top 50% this year.

• As people scrambled to get last minute gifts last year, December 22 saw almost double the typical share of expedited orders, at 6%.

• Early this year we saw BOPIS usage surge in response to the pandemic from 15% of orders to 25% (65% share increase) —expect to see long lines for picking up orders during holiday shopping.

• Don’t count on expedited shipping to help avoid the BOPIS lines this year — fewer retailers have offered expedited shipping so far this year as they scrambled to keep up with the influx of orders in March and April, and consequently the expedited share dropped to 1%.

• 52% of shoppers prefer one-day shipping for last-minute purchases, while 37% choose in-store pickup.


Be on the lookout for free shipping being a key differentiator• Based on Adobe's Magento Commerce data, holiday shipping cost

historically decreases by 9.2% overall compared to the rest of the year.

• Much of that discount comes from free shipping, which might be harder to come by this year — excluding free shipping orders, shipping cost increasesby 1.7%.

• The “spend x to get free shipping” threshold drops by 4.1% overall during the holiday season, with the day after Cyber Monday threshold clocking in at almost 50% lower than the rest of the holiday season.

• Based on previous years trends (before COVID-19), December 11 (two Fridays before Christmas) would be the last day for cheaper shipping, with shipping cost peaking from there at 14.6% higher than the rest of the holiday season. Expect that to be pushed earlier this year!


Rushed last minute shopping means well but doesn’t always pan out

• Our survey indicates 15% of gift receivers returned more than a quarter of their gifts last season.

• Orders placed the day before Thanksgiving are 51% more likely to be returned than orders placed on Thanksgiving. It's likely that the items are being returned, in hopes of acquiring cheaper sales items, over the following sales days

• The most likely items to be returned are from orders purchased on December 23 — either the gift is unwanted or doesn’t show up on time. These orders are 52% more likely to be returned.*

• With discounts being pushed earlier this season, and potential shipping delays, make sure you’re planning on doing your holiday shopping early!

*Compared to the rest of Nov and Dec


Early discounting to escalate through November• Significant holiday discounting will be initiated within the first two weeks of November and will build to

the deepest category price drops over Black Friday through Cyber Week, and into December.• 49% of consumers believe they will get the best prices online on Black Friday and Cyber Monday.• Below are the dates expected to drive the best possible discounts, for their respective categories:


Adobe’s holiday toy watch list

• PlayStation 5• Xbox Series X• Nintendo Switch• Cyberpunk 2077• Call of Duty: Black Ops Cold War• Spider-Man: Miles Morales• Mario Kart Live Home Circuit• Super Mario 3D All-Stars

• Rainbocorns• Cutetitos• Little Live Pets• Star Wars Toys• Lego Sets • Hatchimals Pixies• L.O.L. Surprise!• Beyblade• Kindi Kids


Flexible payment purchasing expected to rise over holiday season

• The District of Columbia, California, Maryland, New York, Delaware, Georgia, and New Jersey are the highest utilizers of interest-free payment installment options, when purchasing, according to Klarna.*

*The statistics come from Klarna's database of transactions made with retailers offering Klarna as well as through the app (from Jan 1 – Sept 30, 2020), which enables consumers to shop with Klarna at any online store. The map shows a representative indexed average per state per capita compared to the national average US consumer.

Klarna leverages transaction data from its own systems to identify trends and insights to shopping behavior across 9 million consumers, 1.7 million monthly active app users, and more than 4,300 retail partners in the U.S.

Retailer PlaybookDeliver the best online shopping experience for the largest online crowd yet.


Use free shipping as a tool to drive sales earlier in the season

• Consumers have come to expect free shipping during Nov and Dec — the share of free shipping orders increases by 8.6% during the holiday season.*

• Over 70% of orders on Black Friday weekend have had free shipping, peaking on Sunday at almost 73%.

• 64% of respondents won’t pay for faster or expedited shipping this year — retailers need to communicate earlier free shipping cutoff dates to capture purchases earlier.

• According to our survey research, consumers have a strong affinity for free shipping, with 75% of them claiming that it's an important factor in their desire to buy online. By offering free shipping and communicating cutoff dates, retailers have an opportunity to drive sales earlier in the season, helping mitigate shipping issues.

*Comparing daily sales in Nov - Dec vs. Jan – Oct


BOPIS gives retailers with a physical presence an edge

• Retailers who offer BOPIS will have an advantage this year as shoppers try to avoid crowds and paying high shipping costs.

• On big days during holiday shopping, people are 9% more likely to purchase with a retailer who offers BOPIS. In March and April, that jumped to 30%.

• Already this year we’ve seen BOPIS growth skyrocket in April and May to over 120% YoY. Last holiday season, BOPIS order growth reached 22%. We expect growth this holiday to reach over 40% YoY.

• The main reason 19% of consumers choose BOPIS this year is because it’s safer than buying in store — in 2019, that number was only 4%.

• 71% of consumers expect to shop for more items while picking up an item with BOPIS, down from 82% in 2019.


A visit will be much more valuable, an order not so much

• The value of a visit is predicted to grow at an unprecedented rate.

• Consumers aren't wasting time —they're visiting 18% fewer pages per order and spending 17% less time per order.

• However, an order won’t be bigger or more valuable this year.

• The order value being flat brings challenges to the profitability and shipping logistics. There will be an increase in packages this holiday season that will follow directly the increase in spend.


Smartphones taking over online shopping despite increase in work from home

• With the decrease in time spent commuting combined with continued usage of computers while working from home, some thought the advance of smartphones as preferred shopping device would stall.

• However, smartphone shopping growth has continued at an accelerated rate.

• We predict that consumers will do 42% of their shopping from smartphones this holiday season.

• $28B more will be spent on smartphones this year.


Shoppers will be reliant on retailers delivering a good gift experience

• As fewer people are traveling to be with family this year, expect an increase in gifts being shipped directly from the retailer. Gift wrapping and gift guides will shape the shopping experience.

• Shoppers typically send 18% more gifts to other people's addresses during the holiday season, peaking at 67% more on December 17 (the Tuesday of the week before Christmas).

• The Saturday of Thanksgiving weekend is when consumers are shopping for themselves, with gift purchases 22% under the average.

increase in holiday gifts shipped


Search engines will be more important than ever during Holiday 2020• Search will drive a 9% higher share of

purchases this holiday season, almost reaching the 50% mark at 46.5% of total online shopping revenue.

• In the high-intent e-commerce environment, it’s natural that organic search is set to see the biggest increase in shopping driven at +12% YoY.

• Email is the channel taking the biggest hit this season, with an 8% decrease in share.

• Social networks are notorious at driving mostly awareness instead of direct purchases. While growing 14% over last year, it’ll barely surpass 3% of purchases this season.


New customers will be the defining segment this holiday season

• According to our survey, 31% of the consumers who shopped online in April were consumers who “rarely” shopped online. Nine percent were net new.

• In May of this year, Adobe Analytics data showed that new customers doubled the growth in revenue for e-commerce retailers.

• Labor Day and Memorial Day both showed new customers lifting revenue 50% more than the loyal segment.

• With the first six months attracting new customers online and holidays being overrepresented by the occasional online shoppers, we fully expect this holiday season to be dominated by the new and inexperienced online shoppers.

• The biggest downside to new shoppers is that they generally tend to make smaller orders.

David & Goliath vs. COVIDFor retailers, winning and losing in the COVID era is a question of both strategy and sheer size.


COVID is changing growth for small vs. large retailers• Small businesses ($10M – $50M in yearly revenue)

see a larger boost to their revenue during the holidays (Nov – Dec) than large ($1B+) retailers — small retailers increase revenue by 107% while the large retailers see an 84% revenue boost.*

• COVID-19 has been a boost to small businesses so far this year, with small retailers seeing 95% revenue boost since the announcement of the national state of emergency — large retailers have only seen a 52% boost.** Comparing the same time period YoY, small businesses have experienced 56% growth while large retailers had 50% growth.

• Large retailers continue to grow their holiday share, however, with holiday season YoY revenue growth for large retailers hitting 55%, and small retailers seeing only 8% growth.

**Comparing Mar 15 – Sep 30 vs. Jan 1 – Mar 14

*Comparing daily sales in Nov – Dec vs. Oct


Large retailers drive sales earlier during holiday• The boost difference for big days is most pronounced on

Thanksgiving, with large retailers having more than twice as much of a boost* on that day than small retailers, indicating they are pushing the deals earlier and capturing more of the sales. This will be even more pronounced as retailers work to drive sales earlier to avoid shipping delays.

• The big day boost difference is smallest on Small Business Saturday, indicating this dedicated day during the holiday season is gaining traction among small retailers and consumers. The boost difference shrunk by 6 percentage points from 2018 to 2019, and we expect that trend to continue.

• 51% of survey respondents plan to support small and local retailers on Small Business Saturday, and 38% plan to make a deliberate effort to shop at smaller retailers throughout the holiday season.

*Comparing daily sales in Nov – Dec vs. Oct


Good news for small businesses with new customer growth

• New customers are incredibly important for both small and large businesses, with new customers making up 30% more of the share of total revenue for small businesses than for large businesses on average.

• Growth in the new customers drives small businesses as well, with holiday new customer revenue experiencing 22% growth for small businesses. Large businesses only see 2% growth from that group.

• Since April, new customer revenue has grown by 65% for small businesses vs. 49% for large businesses, highlighting the need to continue to attract new customers.

• Small businesses see a much broader average order value spread though, with loyal customers coming in highest at $166 vs. new customers at $95. For large companies, that spread is loyal at $141 and new at $138.

Election HangoverThe presidential election outcome is expected to have an impact on e-commerce.


Election impact

• Day after election predictions: 13% drop in sales the day after election vs. the previous three days expected

Spending 11% slower than the other days of the week

Look back: 14% slower growth day after 2016 election and 6% slower the day after the 2018 election

o $158M reduction in spend vs. expected sales in 2016

• Election week (11/1 – 11/7) will see a total of $16.3 billion in online retail spend

• 26% consumers say knowing the election outcome will impact their holiday spend*

• 63% of retailers believe consumers will be more confident in spending after the presidential election*

Online sales will be impacted over the election as Americans await clarity

*According to survey

Regional DifferencesCOVID, weather, unemployment, and a host of other factors have impacted different parts of the U.S. differently.


The Northeast is rushing to e-commerce this holiday season

• Rhode Island’s share of U.S. e-commerce sales is going to increase by +28% this holiday season.

• Michigan, Connecticut, Massachusetts, Vermont, and Maine aren’t far behind —their shares will see more than a 10% increase.

• The Northeast is gaining more share, despite already having the highest rate of online shopping per capita in the nation.

Creative Cloud InsightsShopping changes necessitate changes in shopping imagery.


Shopping imagery has shifted as creatives promote online shopping

Most licensed “shopping” images Oct. 2019

Most licensed “shopping” images Oct. 2020

As we move into a holiday shopping season that we have not experienced before, we are seeing a shift in “shopping” imagery.

This year “shopping” imagery takes us away from the crowds and puts us in the comfort of our home.

Holiday TravelTravelers have mixed feelings about traveling home for the holidays this year.


Spending time with family during holidays draws travelers• Domestic flight bookings for the holiday season (Nov –

Dec) are down 70% YoY. More people are planning on traveling for Christmas than Thanksgiving, with Christmas down only 62% and Thanksgiving bookings down 67%.

• Travelers in the Midwest continue to be the most willing to travel, especially for Christmas — flights originating in the Midwest for Christmas are only down 56% YoY.

• Hotel bookings for all of November and December are only down 51% YoY. Thanksgiving is down 60%, and Christmas is down 50%.

• Our survey indicates 8% of people are planning to travel to celebrate Thanksgiving, and 11% are planning to travel for Christmas.

• Domestic flight prices are climbing from their initial slump but are still in the traveler’s favor, at –19% cumulative deflation in September (since Jan 2018).


With all the uncertainty, holiday travel has potential to grow• According to our survey, 8% of people haven’t decided

what their holiday plans are yet.

• Travelers continue to book flights fewer days in advance, (20 days on average right now, vs. 25 last year), showing there is still room for more flight growth.

• Hotels are booked more last minute than flights, with 41% of bookings expected to happen in the week leading up to the stay. 14% of flights are booked in the week prior, so a lot of ground is yet to be gained.

• December 27, 2019, saw 2.3x as many hotel bookings as the average daily bookings in November and December.

• 27% of people will only be celebrating Christmas and Thanksgiving with their household or will have a virtual guest.


An uncertain year won’t stop HalloweenStrong search growth for Halloween and Thanksgiving assets is showing early on in October, while Halloween is seeing a slightly larger share of asset licenses over 2019.

Adobe Digital Insights...The map shows a representative indexed average per state per capita...

Documents

Transcript of Adobe Digital Insights...The map shows a representative indexed average per state per capita...