Surge in Online Spending during Holiday Season, According to Adobe Analytics
According to a new report from Adobe Analytics, online spending by U.S. shoppers increased by 5% during the holiday season. This boost was fueled by record levels of discounts and deferred payments options. From November 1 to December 31, consumers spent a total of $222.1 billion online, representing a 4.9% increase compared to the same period in 2022. The data also revealed that online spending in November surged by 6% year-over-year, reaching $123.5 billion. In December, shoppers spent $98.6 billion, marking a 3.7% increase from the previous year’s figures.
E-commerce Stocks Struggle Despite Increase in Online Spending
The surge in online spending during the holiday season did not translate into positive results for e-commerce companies in the stock market. Shares of major e-commerce players like Amazon, Shopify, Etsy, and eBay were either trading flat or lower in early trading sessions. Amazon stock, for instance, experienced a 2% decrease, while Shopify’s stock saw a slight increase of only a fraction. Etsy’s stock dropped around 3%, and eBay’s stock slipped slightly as well. Despite the increase in online spending, these companies did not see a corresponding boost in their stock performance.
Discounts and Deferred Payments Drive Online Shopping Growth
The Adobe Analytics report highlighted that discounts played a significant role in driving online shopping growth during the holiday season. Compared to the previous year, discounts across most major categories were stronger in 2023. Electronics discounts peaked at 31% off the listed price, compared to 25% in 2022. Similarly, apparel items were discounted up to 24%, compared to a peak of 19% discounts in 2022. In addition to discounts, the report also noted the rise in the use of deferred payment options, such as Buy Now, Pay Later (BNPL), which hit a record $16.6 billion. This represents a significant increase from the previous year’s figures.
Buy Now, Pay Later Reaches Record Levels in Online Spending
The growing trend of Buy Now, Pay Later (BNPL) made a significant impact on online spending during the holiday season. According to the Adobe report, BNPL reached a record $16.6 billion, up from 14% the previous year. This payment method allows shoppers to make purchases and pay for them in installments over a period of time, rather than upfront. The convenience and flexibility of this payment option likely contributed to its popularity among consumers during the holiday season.
Amazon Stock Fails to Rebound as TikTok Looks to Expand E-commerce Business
Despite the surge in online spending and strong holiday shopping kickoff, Amazon stock has been struggling to gain momentum in the new year. Bloomberg recently reported that TikTok is planning to rapidly scale-up its U.S. e-commerce business, which may have weighed on Amazon shares. The recent decline in Amazon stock has pushed it closer to a previous buy point, according to IBD MarketSmith. However, the company has not released exact numbers for its holiday shopping performance, and investors will have to wait until the release of its fourth-quarter earnings report later this month or early February for more detailed data.
Overall, the data from Adobe Analytics shows a positive trend of increased online spending during the holiday season, driven by discounts and deferred payment options. However, this growth did not translate into significant gains for e-commerce stocks like Amazon, indicating that other factors may be impacting investor sentiment. The entrance of TikTok into the U.S. e-commerce market could potentially be a factor contributing to Amazon’s stock struggles.
Analyst comment
Positive news: Surge in Online Spending during Holiday Season, According to Adobe Analytics
As an analyst, this surge in online spending during the holiday season indicates a positive trend for the market. The increase in consumer spending, fueled by discounts and deferred payment options, bodes well for e-commerce companies in the long run. However, the underperformance of e-commerce stocks suggests that other factors, such as competition from TikTok’s expansion into e-commerce, may be impacting investor sentiment and hindering stock performance. Investors should closely monitor the market and upcoming earnings reports for more insights.
