Ecommerce Spending Grows but Consumers Trade Down to Cheaper Goods

Adobe has released its online shopping data for the first four months of 2024, showing a resilient ecommerce landscape despite economic challenges. According to Adobe Analytics, which analyzes over one trillion visits to U.S. retail sites and 100 million SKUs across 18 product categories, consumers spent $331.6 billion online from January to April 2024, reflecting a 7% year-over-year (YoY) increase.

Despite economic uncertainty, ecommerce growth has remained strong. Consumers spent $331.6 billion online in the first four months of 2024, marking a 7% increase from the same period in 2023. The growth was driven by stable spending in categories like electronics and apparel, along with a surge in online grocery shopping.

• Electronics: $61.8 billion spent, up 3.1% YoY
• Apparel: $52.5 billion spent, up 2.6% YoY
• Groceries: $38.8 billion spent, up 15.7% YoY

Adobe predicts that the first half of 2024 will see over $500 billion in online spending, representing a 6.8% YoY growth.

Persistent inflation has led consumers to favor cheaper goods across various ecommerce categories. Adobe tracked the share of units sold in the cheapest quartiles from January 2019 to April 2024, finding significant increases in categories such as:

• Personal Care: up 96%
• Electronics: up 64%
• Apparel: up 47%
• Home/Garden and Furniture/Bedding: Both up 42%
• Grocery: up 33%

While categories like sporting goods, appliances, tools/home improvement, and toys saw smaller increases in the cheapest goods sold, the trend highlights a shift towards cost-saving among consumers.

The shift to cheaper goods has impacted revenue differently across categories. For groceries, products with low inflation saw revenue grow by 13.4%, while those with high inflation experienced a 15.6% revenue drop. In cosmetics, revenue for low-inflation goods increased by 3.06%, with only a 0.34% decline for high-inflation goods, indicating strong brand loyalty.

Consumers are increasingly adopting BNPL options for greater budget flexibility. From January to April 2024, BNPL drove $25.9 billion in e-commerce spending, up 11.8% YoY. Adobe expects BNPL to account for $81 billion to $84.8 billion in online spending for the entire year, representing an 8% to 13% YoY growth.

Mobile shopping continues to grow, with mobile revenue surpassing desktop for the first time during the 2023 holiday season. In the first four months of 2024, mobile drove $156.9 billion in online spending, up 9.8% YoY. Adobe expects mobile to account for 52.5% of online revenue in the upcoming holiday season.

Retailers’ marketing investments show that paid search remains the leading driver of online sales, accounting for 28.2% of total sales. Other major contributors include direct web visits (19.6%), affiliates/partners (17.1%), organic search (15.9%), and email (15.4%). Social media’s share of sales, though less than 5%, has grown by 5.2% YoY. Conversely, organic search has declined by 5.6% YoY.

Consumer spending has been driven by net new demand rather than higher prices. Adobe’s Digital Price Index, which tracks online prices across 18 product categories, shows a 5.6% YoY decline in e-commerce prices as of April 2024. This decline in prices indicates that the increase in spending is due to higher consumption rather than inflation.

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