Adobe: E-commerce spending grows to $331.6 billion as consumers switch to cheaper goods online

Adobe has released online shopping data for the first four months of 2024, covering the period from January 1 to April 30, 2024. Powered by Adobe Analytics data, the report provides the most comprehensive view of U.S. e-commerce through analysis of online trade transactions, spanning over one trillion US retail site visits, 100 million SKUs and 18 product categories.

Adobe Analytics is part of Adobe Experience Cloud, used by over 85% of the top 100 U.S. online retailers* to deliver, measure and personalize their online shopping experiences.

The development of e-commerce remains stable

From January 1 to April 30, 2024, consumers spent $331.6 billion online, up 7% year-over-year (y/y). This growth is supported by stable spending in discretionary categories, including electronics and apparel, as well as continued growth in online grocery shopping. Adobe expects online spending to reach more than $500 billion in the first half of 2024, up 6.8% year-over-year.

In the first four months of the year, consumers spent $61.8 billion online on electronics (up 3.1% y/y) and $52.5 billion on clothing (up 2.6% y/y). Despite modest year-over-year growth, both categories account for 34.5% of total e-commerce spend and have helped sustain revenue growth. This was further amplified by grocery shopping, which generated $38.8 billion in online revenue and grew significantly, growing 15.7% year-over-year.

Another growing category on the Internet is cosmetics, which Adobe is profiling for the first time; the category generated $35 billion in online spending in 2023, with year-over-year growth of 15.6%. The upward trend continues – so far in 2024, consumers have spent $13.2 billion on cosmetics online, an increase of 8% y/y.

“In an unpredictable economic environment, the latest data from Adobe Analytics shows the continued resilience of the digital economy as consumers engage with new categories online,” said Vivek Pandya, principal analyst at Adobe Digital Insights. “Grocery is a standout and Adobe expects the category to be a dominant force in e-commerce over the next three years, matching electronics and apparel in revenue share.”

Consumers are switching to cheaper goods online

Months of persistent inflation have led shoppers to choose cheaper goods in major e-commerce categories. For each category tracked by Adobe, prices are divided into four quartiles, from highest to lowest. Then, the shares of apartments sold in the most expensive and cheapest quartiles were tracked from January 2019 to April 2024.

Adobe found that the share of cheapest goods increased significantly in the following categories, including personal care (up 96%), electronics (up 64%), clothing (up 47%), home/garden (up 42%), furniture/bedding (by 42%) and food (increase by 33%). However, the share of the cheapest goods increased less dramatically in sports goods (by 28%), household appliances (by 26%), tools/renovations (by 26%) and toys (by 25%) – in categories strengthened by brand loyalty or a stronger willingness of consumers to invest in the highest quality products.

Adobe also got more specific about the impact on revenue: in a category like grocery, the data showed that revenue for low-inflation items increased by 13.4%, while for high-inflation products, revenue decreased by 15.6%. The effect was less pronounced in the cosmetics category (revenue up 3.06% for low-inflation goods, down only 0.34% for high-inflation goods) as consumers show greater loyalty to their favorite brands.

Buy now, pay later, further development continues

Consumers continue to choose Buy Now, Pay Later (BNPL) to provide greater flexibility in managing their budgets. From January to April 2024, BNPL generated $25.9 billion in e-commerce spending, a significant increase of 11.8% compared to the same period last year. Adobe expects strong growth for the remainder of the year, and BNPL is expected to reach $81 billion to $84.8 billion in 2024, representing year-over-year growth of between 8% and 13%.

Additional information Adobe Analytics

–Online shopping is becoming more and more mobile. During the 2023 holiday shopping season, the share of revenue from mobile devices exceeded the level of desktop computers for the first time and amounted to 51% (peak on Christmas Day was 61%). This trend is expected to continue in 2024; in the first four months of 2024, mobile spending totaled $156.9 billion online, an impressive 9.8% year-over-year growth. Adobe expects mobile devices to once again overtake desktops to account for 52.5% of online revenues in the next holiday season (November-December 2024).
–Retailer marketing investment: Across all major marketing channels, paid search remains the largest sales driver for retailers so far this year (28.2% of online sales attributable to this channel). Direct web visits (19.6%), affiliates/partners (17.1%), organic search (15.9%), and email (15.4%) also had a strong impact. Revenues directly attributable to social media remained at less than 5% of total sales, but this share increased by 5.2% y/y. On the other hand, organic search volume declined by 5.6% YoY, now generating 15.9% of total sales.