23 November 2022
Even in 2022, ecommerce keeps rising on holiday shopping lists
One in four consumers plan to shop online more during BFCM this year, Pitney Bowes BOXpoll shows.
Photo by freestocks on Unsplash
One in four consumers plan to shop online more during BFCM this year, Pitney Bowes BOXpoll shows.
Shoppers have their lists. Brands and retailers have their best offers at the ready.
The heart of the holiday shopping season is getting underway as the Black Friday-Cyber Monday (BFCM) stretch of Thanksgiving weekend arrives.
As has been the case for most of the last decade, consumers will be increasingly be shopping online this holiday season as they search for deals, conduct research and take advantage of a wider selection of colors, sizes and styles that are available through the internet.
Even in a year that has seen a push back toward in-person experiences and injected uncertainty throughout the economy, ecommerce is still poised to continue playing a bigger role in the holiday rush. According to the latest BOXpoll from shipping company Pitney Bowes:
Let’s break down the dynamics behind this data:
It's a reminder that ecommerce is still growing, even as the so-called pandemic ecommerce boom recedes and inflation erodes discretionary budgets. In part, the fact that more online shopping is expected this year can be attributed to continuing strength in consumer spending. While inflation continues to be at 40-year highs, Pitney Bowes is finding that overall spending isn’t slowing down, said Vijay Ramachandran, vice president of go-to-market enablement and experience. They’re backed up by an October retail sales report from the US Commerce Department that showed a bump in spending during a month filled with early holiday shopping events.
Heading into the holidays, consumer spending levels in ecommerce may be more than 10% higher than last year, which would bring gains above the current inflation rate of 6-7%.
“The mindset this holiday seems to be more about inflation feels than inflation ordeals,” Ramachandran said. “Instead of pinching pennies, consumers are out to get more for their dollar. And the early and aggressive holiday promotions by retail leaders like Amazon, Walmart, Target, and many others — driven partly by excess inventory — is creating the sense among shoppers that there are even better deals out there.”
The deals available in what is expected to be an exceptionally promotional environment could even lead prices to reshape what consumers buy. Just over half of consumers (51%), three-quarters of Gen Z and two-thirds of millennials said holiday markdowns online will incentivize them to buy more of some items than usual. Top categories wher consumers plan to take advantage of BFCM deals include electronics (52%), apparel and footwear (50%) and toys, crafts & hobbies (45%).
The continued shift to more online shopping come is also notable because it comes in a year in which one of the biggest retail themes is the return to stores. With the lifting of pandemic restrictions in the first half of the year, people were eager to get back out and refresh closets for in-person work, social events and travel. But heading into the holiday season, there are signs that online shopping is not only poised to hold its ground with consumers, but in fact to gain favor.
According to the BOXpoll results, half of consumers plan to stick to their routine from last year, but the percentage of those buying online more this year (29%) outweighs those shopping online less (20%). Gen Z and Millennials are signaling an even larger net increase in online shopping, as well.
It underscores that getting out of the house more doesn’t necessarily mean in-store shopping. With mobile devices and online shopping experiences that are increasingly woven into their increasingly digital lives, shoppers are turning to ecommerce while on the go. At the same time, the in-store experience is becoming more digital. Many brick-and-mortar stores have pickup options. There’s still some peace of mind that comes from the knowledge that a can receive an item right when they buy it, but now some retailers allow them to check if it is in-stock before going to the store. This all changes how people think about convenience.
“Consumers no longer equate ‘convenience’ online to ‘fast delivery.’ If shoppers need a product quickly, they’ll run out to a store,” Ramachandran said. “This holiday season and heading into 2023, consumers define convenience as the ability to shop anywhere, anytime, and according to their own schedules.”
So the question for the years to come may be less about pitting online versus in-store. Holiday shopping is a time when the interplay between the two will be on display.
“This new definition of ‘convenience’ can play out the moment the idea for the perfect holiday gift hits a shopper while they’re on their lunch break at work,” Ramachandran said. “When it comes to Black Friday, it can look like being out of town for Thanksgiving but placing orders online that will arrive when they return home, rather than battling it out for a parking spot and the last PS5 doorbuster.”
With this shift, shoppers also want to have logistics options that will allow them to fit delivery into their lives. Their expectations are oriented around accuracy and follow-through, as opposed to being able to shave more seconds off the delivery time. Pitney Bowes is seeing a shift from ‘fast and free’ delivery, to a focus on scheduled delivery. In this mode, a consumer can select a specific delivery date at checkout, and have confidence they’ll be home when the purchase arrives.
“In a market where online ‘convenience’ is defined as ‘anywhere and anytime,’ what actually matters is a choice of specific date/time. Consumers are busy. They’re getting out of the house more than ever,” Ramachandran said. “They’re traveling—more now than even before the pandemic. That means that an inaccurate delivery estimate—even when a delivery shows up early—is an inconvenience. No one wants to leave a package sitting on the porch or in the mailroom any longer than necessary.”
With the supply chain crises of the last two years, consumers were focused on whether items would be available at all, then whether they would be able to have them in time.
For the 2022 peak season, the focus is moving toward whether items will arrive on time. With more people planning to shop online, there’s plenty of opportunity for brands and retailers to gain new customers and win loyalty from existing ones, despite all of the gloomy economic talk. Just don’t leave them waiting.
Inflation rose 6% across the US economy in February 2023, according to the Consumer Price Index.
U.S. inflation ticked down in February as food prices started to fall, but shelter prices continued to remain high. Meanwhile, ecommerce prices turned further into deflation, as both annual and monthly comparisons showed prices coming down.
Let’s take a look at data on inflation across the economy, and ecommerce:
The Consumer Price Index for February 2023 showed the following:
On an annual basis, inflation rose 6% from February 2022. That’s down from 6.4% in January, continuing a downward motion in prices.
On a monthly basis, prices increased 0.4%, which was down slightly from the 0.5% increase in January.
Core inflation, which leaves out volatile food and energy prices, rose 5.5% year-over-year, down only slightly from 5.6% in January. On a monthly basis, core inflation was up 0.5%.
Food inflation dipped below 10% for the first time in months, registering at 9.5%. Food at home, which includes grocery, was 10.2%, compared with 11.3% in January. Five of the six major grocery indexes increased on the month.
Snacks brought a rare decrease in the food category, falling 0.9% for the month.
Shelter continues to be the driver of inflation. The shelter index increased 0.8% for the month, and 8.1% for the year.
Among consumer goods categories, CPI showed the following:
The annual change in CPI year-over-year inflation. (Via US BLS)
The report brought the latest sign that growth of the headline inflation reading was slowing. This trend now dates to October 2022. However, there continues to be plenty of signs that inflation is remaining stubborn on the way down. Shelter inflation is particularly high, and only rising. Electricity was up 12.9%. Meanwhile, core inflation's rise only inched down. Inflation continues to be a presence for consumers, which means elevated prices could continue to lead to cutbacks in discretionary spending.
After months of high inflation, consumers are increasing credit card balances and dipping into savings as they seek to make ends meet, said GlobalData Managing Director Neil Saunders.
“On the surface, these adjustments have allowed the consumer economy to remain resilient in the face of persistent inflation,” Saunders said. “However, under the surface there are cracks: behaviors among the lowest income households have changed sharply, reduced volumes are putting pressure on many retail and consumer businesses, and the financial position of many households is deteriorating. In short, inflation is not an enemy that consumers can withstand indefinitely.”
Comparing DPI and CPI. (Image via Adobe)
The Adobe Digital Price Index showed a deflationary motion for February, indicating that ecommerce prices are coming down even as the wider economy still sees prices rising.
Overall, the DPI showed online inflation falling 1.4% year-over-year, and 0.3% on a monthly basis. It was the sixth straight month that annual prices decreased.
Digging further into the data, 10 out of 18 categories showed decreases. Notable categories included:
Electronics fell 12.6% year-over-year, and 1.7% month-over-month. This continues notable drops in electronics prices, even after holiday season discounting has long since been completed.
Toys fell 6.5% year-over-year, and 0.4% month-over-month.
Home and garden products fell 3.8% year-over-year, while rising 0.2% monthly.
Furniture and bedding prices fell for the first time in 33 months, down 0.1% year-over-year and 0.6% monthly. “Consumers have become increasingly comfortable buying furniture online, after a pandemic where many wanted to spruce up their living spaces and had no choice but to tap ecommerce,” Adobe states.
Price increases are also slowing in categories that have shown more stubborn inflation.
Grocery prices cooled for the fifth straight month. They rose 11.4% year-over-year, but that was down from a 12.6% increase in January. This is the rare digital category that moves in concert with the Consumer Price Index. That’s because more people are buying groceries online, and when they do, they are ordering mostly from the same grocery stores where people shop in person.
Apparel prices were up 5.1% year-over-year, which is down notably from 16.7% in February of 2022.
Tools and home improvement are also coming down. The increase was 6.2% year-over-year, falling from 8.3% in December.
Check out the full category breakdown below:
(Photo courtesy of Adobe)